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) AUGUST 20, 1998
The Money Store Trust 1998-B and the Originators as listed below
under a Pooling and Servicing Agreement dated as of July 31, 1998,
providing for the issuance of The Money Store Asset Backed
Certificates, Series 1998-B.
The Money Store Trust 1998-B
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)
* 333-32775 *
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
707 THIRD STREET, WEST SACRAMENTO, CALIFORNIA 95605
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (916) 617-1000
N/A
(Former name or former address, if changed since last report)
* See Schedule A attached hereto.
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) EXHIBITS
EXHIBIT NO.
1.1 Underwriting Agreement, dated August 7, 1998, among The Money Store
Inc., the Originators and the various Underwriters named therein.
1.2 Pricing Agreement, dated August 17, 1998, among The Money Store Inc.,
the Originators and the various Underwriters named therein.
4.1 Pooling and Servicing Agreement, dated as of July 31, 1998, among The
Money Store Inc., the Originators, The Bank of New York, as Co-Trustee
and Norwest Bank Minnesota, National Association, as Co-Trustee.
<PAGE>
Schedule A
State of IRS Employer
Registrant Incorporation ID 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/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Senior Vice President
Dated: September 3, 1998
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBITS
1.1 Underwriting Agreement, dated August 7, 1998, among
The Money Store Inc., the Originators and the
various Underwriters named therein.
1.2 Pricing Agreement, dated August 17, 1998, among The
Money Store Inc., the Originators and the various
Underwriters named therein.
4.1 Pooling and Servicing Agreement, dated as of July 31,
1998, among The Money Store Inc., the Originators
and The Bank of New York, as Trustee.
$1,246,416,000
THE MONEY STORE INC.
The Money Store Trust Asset Backed Certificates
Series 1998-B
UNDERWRITING AGREEMENT
August 7, 1998
First Union Capital Markets, a division
of Wheat First Securities, Inc.
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
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 First Union Capital
Markets, a division of Wheat First Securities, Inc. (the "Representative") 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 Trust Asset Backed
Certificates, Series 1998-B," Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class AF-5, Class AF-6, Class AF-7, Class AF-8 and Class-AF-9 (collectively, the
"Pool I Certificates"), Class AV (the "Pool II Certificates") and 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 (collectively, the "Pool III Certificates," and, together with
the Pool I Certificates and the Pool II Certificates, the "Offered
Certificates") to be issued pursuant to a Pooling and Servicing Agreement, to be
dated as of July 31, 1998, (the "Pooling and Servicing Agreement"), among the
Company, as Representative, Servicer and Claims Administrator, the Originators
and The Bank of New York ("Bank of New York") as Co-Trustee and Norwest Bank
Minnesota, National Association ("Norwest") as Co-Trustee (and, together with
The Bank of New York, collectively, the "Co-Trustees"). 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 three sub-trusts, consisting of: one pool of one- to
four-family ("single family") fixed rate first and second lien home equity
mortgage loans (the "Pool I Home Equity Loans"); one pool of adjustable rate
first lien single family home equity mortgage loans (the "Pool II Home Equity
Loans"); and 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 certain related properties. The Pool I Home
Equity Loans, Pool II Home Equity Loans and Pool III Home Improvement 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 Trust Asset Backed
Certificates, Series 1998-B, Class R-1 and Class R-2" (the "Class R
Certificates"), and "The Money Store Trust Asset Backed Certificates, Series
1998-B, 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/or its affiliates
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 II 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 Representative, as representative 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
Representative, as representative 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
statement on Form S-3 (No. 333-32775) 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
Representative, as representative 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 Representative, as representative 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 Representative 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 August 1, 1998 among the Company, the Originators, the
Custodian, the Co-Trustee for Pool I and Pool II 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 August 1, 1998 (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 Co-Trustees,
each Co-Trustee will have acquired good title on behalf of the Trust Fund
to the related Loans for which it is serving as Co-Trustee, 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 Representative, as representative 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 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
Representative, as representative 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 August 20, 1998, or such other time not
later than ten business days after such date as shall be agreed upon by the
Representative, as representative 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 99.9975151% 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 Representative, as
representative 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 Representative, as representative 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 Representative, as representative 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 Representative, as representative of the Underwriters, or counsel
for the Underwriters shall reasonably object.
(c) The Company will deliver to the Representative, as representative
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 Representative may
reasonably request.
(d) The Company will furnish to the Representative, as representative
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 Representative 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
Representative, as representative 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 Representative, as representative 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
Representative, as representative 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 Representative, as representative of the
Underwriters, as promptly as practicable, such information concerning the
Company, the Originators or the Certificates as the Representative 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 a comfort letter,
(D) Deloitte & Touche LLP, accountants for this transaction and issuer of a
comfort letter, (E) the Co-Trustees and their respective counsel and (F) DTC in
connection with the book-entry registration of the DTC Certificates
[Euroclear/Cedel]; (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, a division of
The McGraw-Hill Companies Inc. ("Standard & Poor's") and Fitch IBCA Inc.
("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 Representative, as
representative 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 Representative's
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 Representative, as representative of the
Underwriters, shall have received:
(i) The favorable opinion, dated as of Closing Time, of Stroock &
Stroock & Lavan LLP, counsel for the Company, and the Originators 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 this Underwriting
Agreement and the Pooling and Servicing Agreement is sufficient fully
to transfer to the applicable 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 applicable
Co-Trustee to enforce such Mortgages.
(J) The Certificates, assuming due execution by the Company,
due authorization by the Co-Trustees 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 Co-Trustees and public
officials or, as to matters of law other than New York, 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 Sills
Cummis Zuckerman Radin Taschman Epstein & Gross, P.A., special New Jersey
counsel for the Company and TMS Mortgage Inc. (one of 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. TMS Mortgage Inc. has been duly organized under the laws of
its jurisdiction of incorporation and is qualified to transact
business in New Jersey.
(B) Each of the Company and TMS Mortgage Inc. has 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 and the Certificates, and has 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 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 and this Agreement, the Pooling
and Servicing Agreement and the Insurance Agreement each have been
duly authorized, executed and delivered by TMS Mortgage Inc.
(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 TMS Mortgage Inc., or (B)
any statute or order, rule, regulations, writ, injunction or decree of
any court, governmental authority or regulatory body to which the
Company or TMS Mortgage Inc. is subject or to which it is bound.
(E) 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 TMS Mortgage Inc. of, or
compliance by the Company and TMS Mortgage Inc. 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.
(F) The delivery by TMS Mortgage Inc. 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 applicable Co-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 Mortgage Inc. 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 Mortgage Inc. at the time of
such delivery.
(iii) The favorable opinion, dated as of Closing Time, of Bruce
Hurwitz, Senior Corporate Counsel to the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that, 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.
(iv) 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 are the valid and binding obligations 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. 333-32775) 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 Co-Trustees,
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.
(v) The favorable opinion, dated as of Closing Time, of Emmet,
Marvin & Marvin, counsel for The Bank of New York, in form and substance
satisfactory to counsel for the Underwriters.
(vi) The favorable opinion, dated as of the Closing Time, of
counsel for Norwest, in form and scope satisfactory to counsel to the
Underwriters, which may include, among other items, opinions to the effect
that:
(A) Norwest has been duly incorporated and is validly
existing as a national banking association in good standing under the
laws of the United States of America.
(B) Norwest has duly authorized, executed and delivered the
Pooling and Servicing Agreement, which constitutes the legal, valid
and binding agreement of Norwest, enforceable against Norwest in
accordance with its terms, subject, as to enforcement of remedies, to
(A) applicable bankruptcy, insolvency, reorganization, and other
similar laws affecting the rights of creditors generally, and (B) to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(C) Upon the execution, authentication and delivery of the
Certificates by Norwest on the Closing Date, the Certificates will
have been duly issued on behalf of the Trust Fund.
(D) The execution and delivery by Norwest of the Pooling and
Servicing Agreement and the performance by Norwest of its obligations
thereunder, including the execution and authentication of the
Certificates, do not conflict with or result in a violation of the
certificate of incorporation or bylaws of Norwest or any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over Norwest or any of its properties or
assets.
(E) Norwest has full power and authority to execute and
deliver the Pooling and Servicing Agreement and to perform its
obligations thereunder.
(F) There are no actions, proceedings or investigations
pending or threatened against or affecting Norwest before or by any
court, arbitrator, administrative agency or other governmental
authority which, if decided adversely to Norwest, would materially and
adversely affect the ability of Norwest to carry out the transactions
contemplated in the Pooling and Servicing Agreement.
(G) No consent, approval or authorization of, or
registration, declaration or filing with, any court or governmental
agency or body of the United States of America or any state thereof is
required for the execution, delivery or performance by Norwest of the
Pooling and Servicing Agreement.
(vii) The favorable opinion, dated as of the Closing Time, of
counsel for First Union National Bank, Trust Department as the the
Custodian, in form and substance satisfactory to counsel for the
Underwriters.
(viii) The favorable opinion, dated as of the Closing Time, of
Dorsey & Whitney LLP, counsel for Norwest in Minnesota, in form and
substance satisfactory to counsel for the Underwriters, regarding Norwest's
perfected security interest in the Pool III Mortgage Loans.
(ix) 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
Representative, as representative 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 Representative,
as representative 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 Representative, as representative of the
Underwriters, shall have received from Stroock & Stroock & Lavan LLP, a letter,
dated as of Closing Time, authorizing the Representative, as representative 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
Representative, as representative 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 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) 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 Representative, as representative 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 Representative, as representative 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
Representative, as representative 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 and (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.
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
Representative, as representative of the Underwriters, an additional letter
covering such information within 5 business days of the Closing Time.
(f) At Closing Time, the Representative, as representative of the
Underwriters, shall have received from each of the Co-Trustees, the Custodian or
the FHA Custodian a certificate signed by one or more duly authorized officers
of the respective party, dated as of Closing Time, as to its due acceptance of
the Pooling and Servicing Agreement and the due authentication of the
Certificates by the Co-Trustees and such other matters as the Representative, as
representative of the Underwriters, shall request.
(g) At Closing Time, the Representative, as representative 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 Representative,
as representative of the Underwriters, shall request.
(h) At Closing Time, the Representative, as representative 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 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; and
(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.
(i) At Closing Time, each Class of the Offered Certificates shall have
been rated as follows by Moody's, Standard & Poor's and 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 --
AF-9 AAA Aaa --
AV AAA Aaa --
AH-1 AAA -- AAA
AH-2 AAA -- AAA
AH-3 AAA -- AAA
AH-4 AAA -- AAA
AH-5 AAA -- AAA
AH-6 AAA -- AAA
MH-1 AA -- AA+
MH-2 A -- A
BH BBB -- BBB
(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 Representative, as representative of the Underwriters, and counsel for
the Underwriters.
(k) 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 First Union Trust Company, National Association, as
FHA Custodian.
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 Representative, as representative 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 [first] 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 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 Representative, as representative 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 Representative, as
representative 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 Representative, as
representative 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 Representative, as representative 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 First Union Capital Markets, as representative
of the Underwriters, One First Union TW-8, Charlotte, North Carolina 28288,
Attention: Patrick J. Tadie (Fax: (704) 383-6382); and notices to the Company or
any Originator shall be directed to it at 707 3rd Street, West Sacramento,
California 95605, Attention: Executive Vice President (Fax: 916-617-2690).
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: Senior Vice President
<PAGE>
CONFIRMED AND ACCEPTED, as of
the date first above written:
FIRST UNION CAPITAL MARKETS, a division
of Wheat First Securities, Inc.
By: /S/ CURTIS Y. ARLEDGE
Name: Curtis Y. Arledge
Title: Managing Director
Acting on behalf of themselves
and as the representative of
the Underwriters of the Offered
Certificates
<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
FIRST
UNION CAPITAL
MARKETS, A
DIVISION OF PRUDENTIAL MORGAN
WHEAT FIRST SECURITIES LEHMAN STANLEY & SALOMON BEAR STEARNS
SECURITIES INCORPORATED BROTHERS INC. CO. INCORPORATED BROTHERS INC. & CO. INC. TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
POOL I CERTIFICATES
<S> <C> <C> <C> <C> <C> <C> <C>
Class AF-1 $35,200,000 $26,400,000 - - $26,400,000 - $88,000,000
Class AF-2 $26,000,000 $19,500,000 - - $19,500,000 - $65,000,000
Class AF-3 $52,800,000 $39,600,000 - - $39,600,000 - $132,000,000
Class AF-4 $20,000,000 $15,000,000 - - $15,000,000 - $50,000,000
Class AF-5 $14,000,000 $10,500,000 - - $10,500,000 - $35,000,000
Class AF-6 $19,200,000 $14,400,000 - - $14,400,000 - $48,000,000
Class AF-7 $20,969,000 $16,000,000 - - $16,000,000 - $52,969,000
Class AF-8 $11,600,000 $8,700,000 - - $8,700,000 - $29,000,000
Class AF-9 $9,329,000 $7,000,000 - - $7,000,000 - $23,329,000
POOL II CERTIFICATES
Class AV $210,381,000 $157,000,000 $157,000,000 $524,381,000
POOL III CERTIFICATES
Class AH-1 $39,113,000 - $39,113,000 - - - $78,226,000
Class AH-2 $7,043,000 - $7,043,000 - - - $14,086,000
Class AH-3 $12,679,000 - $12,679,000 - - - $25,358,000
Class AH-4 $5,672,500 - $5,672,500 - - - $11,345,000
Class AH-5 $4,735,000 - $4,735,000 - - - $9,470,000
Class AH-6 $6,501,000 - $6,501,000 - - - $13,002,000
Class MH-1 $7,949,500 - $7,949,500 - - - $15,899,000
Class MH-2 $7,477,500 - $7,477,500 - - - $14,955,000
Class BH $8,198,000 - $8,198,000 - - - $16,396,000
===================================================================================================================
Total $518,847,500 $157,100,0000 $99,368,500 $157,100,000 $157,100,000 $157,000,000 $1,246,416,000
</TABLE>
<PAGE>
EXHIBIT A
$1,246,416,000
THE MONEY STORE INC.
The Money Store Trust Asset Backed Certificates,
Series 1998-B
PRICING AGREEMENT
August ___, 1998
First Union Capital Markets, a division
of Wheat First Securities, Inc.
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
Reference is made to the Underwriting Agreement, dated August 7, 1998 (the
"Underwriting Agreement"), relating to $1,246,416,000 aggregate principal amount
of The Money Store Trust Asset Backed Certificates, Series 1998-B, 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 AF-9 (collectively, the "Pool I Certificates"), Class AV (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, and Class BH (collectively, the "Pool III
Certificates," and together with the Pool I Certificates and the Pool II
Certificates, the "Offered Certificates"). Pursuant to the Underwriting
Agreement, The Money Store Inc. (the "Company") agrees with First Union Capital
Markets, a division of Wheat First Securities, Inc., as representative of the
Underwriters, that the Initial Class Certificate Balance and the Pass-Through
Rates, shall be as follows:
<PAGE>
to Exhibit A
Initial Class Pass-
Certificate Through
CLASS BALANCE RATE(1)
----- -------- ------
Class AF-1 $88,000,000 6.290%
Class AF-2 $65,000,000 6.115%
Class AF-3 $132,000,000 6.040%
Class AF-4 $50,000,000 6.115%
Class AF-5 $35,000,000 6.225%
Class AF-6 $48,000,000 6.315%
Class AF-7 $52,969,000 6.650%
Class AF-8 $29,000,000 6.110%
Class AF-9 $23,329,000 6.335%
Class AV $524,381,000 (2)
Class AH-1 $78,226,000 6.145%
Class AH-2 $14,086,000 6.000%
Class AH-3 $25,358,000 6.070%
Class AH-4 $11,345,000 6.175%
Class AH-5 $9,470,000 6.325%
Class AH-6 $13,002,000 6.550%
Class MH-1 $15,899,000 6.550%
Class MH-2 $14,955,000 7.060%
Class BH $16,396,000 7.895%
Total $1,246,416,000
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.
- --------
(1) Interest will accrue at the applicable Pass-Through Rate from August 1,
1998 for each Class of Pool I and Pool III Certificates and from August 15,
1998 for the Class AV Certificates.
(2) The Pass-Through Rate for the Class AV Certificates will adjust on
one-month LIBOR, as described in the Prospectus Supplement.
<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:
Name: Michael H. Benoff
Title: Executive Vice President
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By:
Name: Michael H. Benoff
Title: Senior Vice President
<PAGE>
CONFIRMED AND ACCEPTED, as of
the date first above written:
FIRST UNION CAPITAL MARKETS, a division
of Wheat First Securities, Inc.
By: ______________________________
Name:
Title:
Acting on behalf of themselves
and as the representative of
the Underwriters of the Offered
Certificates.
$1,246,416,000
THE MONEY STORE INC.
The Money Store Trust Asset Backed Certificates,
Series 1998-B
PRICING AGREEMENT
August 17, 1998
First Union Capital Markets, a division
of Wheat First Securities, Inc.
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
Reference is made to the Underwriting Agreement, dated August 7, 1998 (the
"Underwriting Agreement"), relating to $1,246,416,000 aggregate principal amount
of The Money Store Trust Asset Backed Certificates, Series 1998-B, 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 AF-9 (collectively, the "Pool I Certificates"), Class AV (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, and Class BH (collectively, the "Pool III
Certificates," and together with the Pool I Certificates and the Pool II
Certificates, the "Offered Certificates"). Pursuant to the Underwriting
Agreement, The Money Store Inc. (the "Company") agrees with First Union Capital
Markets, a division of Wheat First Securities, Inc., as representative of the
Underwriters, that the Initial Class Certificate Balance and the Pass-Through
Rates, shall be as follows:
<PAGE>
Initial Class Pass-
Certificate Through
CLASS BALANCE RATE(1)
----- -------- ------
Class AF-1 $88,000,000 6.290%
Class AF-2 $65,000,000 6.115%
Class AF-3 $132,000,000 6.040%
Class AF-4 $50,000,000 6.115%
Class AF-5 $35,000,000 6.225%
Class AF-6 $48,000,000 6.315%
Class AF-7 $52,969,000 6.650%
Class AF-8 $29,000,000 6.110%
Class AF-9 $23,329,000 6.335%
Class AV $524,381,000 (2)
Class AH-1 $78,226,000 6.145%
Class AH-2 $14,086,000 6.000%
Class AH-3 $25,358,000 6.070%
Class AH-4 $11,345,000 6.175%
Class AH-5 $9,470,000 6.325%
Class AH-6 $13,002,000 6.550%
Class MH-1 $15,899,000 6.550%
Class MH-2 $14,955,000 7.060%
Class BH $16,396,000 7.895%
Total
$1,246,416,000
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.
- --------
(1) Interest will accrue at the applicable Pass-Through Rate from August 1,
1998 for each Class of Pool I and Pool III Certificates and from August 15,
1998 for the Class AV Certificates.
(2) The Pass-Through Rate for the Class AV Certificates will adjust on
one-month LIBOR, as described in the Prospectus Supplement.
<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:
Name: Michael H. Benoff
Title: Executive Vice President
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By:
Name: Michael H. Benoff
Title: Senior Vice President
<PAGE>
CONFIRMED AND ACCEPTED, as of
the date first above written:
FIRST UNION CAPITAL MARKETS, a division
of Wheat First Securities, Inc.
By: ______________________________
Name:
Title:
Acting on behalf of themselves
and as the representative of
the Underwriters of the Offered
Certificates.
<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.
Execution Copy
POOLING AND SERVICING AGREEMENT
Dated as of July 31, 1998
THE BANK OF NEW YORK
(Co-Trustee for Pool I and Pool II)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Co-Trustee for Pool III)
and
THE MONEY STORE INC.
(Representative, Servicer and Claims Administrator)
and
THE ORIGINATORS LISTED HEREIN
The Money Store Asset Backed Certificates, Series 1998-B
<PAGE>
TABLE OF CONTENTS
--------------------
SECTION PAGE
ARTICLE I DEFINITIONS...................................................I-1
ARTICLE II SALE AND CONVEYANCE OF THE TRUST FUND.......................II-1
Section 2.01 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests...................II-1
Section 2.02 Possession of Mortgage Files............................II-2
Section 2.03 Books and Records.......................................II-2
Section 2.04 Delivery of Mortgage Loan Documents.....................II-2
Section 2.05 Acceptance by Trustee and Custodian of the Trust
Fund; Certain Substitutions; Certification by Co-Trustee
and Custodian..........................................II-5
Section 2.06 Designations under REMIC Provisions; Designation of
Startup Day............................................II-8
Section 2.07 Authentication of Certificates..........................II-9
Section 2.08 Fees and Expenses of the Trustee, Co-Trustees, FHA
Custodian, Trust Administrator and Custodian...........II-9
Section 2.09 [Reserved]..............................................II-9
Section 2.10 Optional Repurchase of Defaulted Mortgage Loans.........II-9
Section 2.11 Assignment Event........................................II-10
ARTICLE III REPRESENTATIONS AND WARRANTIES............................III-1
Section 3.01 Representations of Representative, Servicer, Claims
Administrator and Originators.........................III-1
Section 3.02 Individual Mortgage Loans..............................III-8
Section 3.03 Purchase and Substitution..............................III-18
ARTICLE IV THE CERTIFICATES............................................IV-1
Section 4.01 The Certificates........................................IV-1
Section 4.02 Registration of Transfer and Exchange of Certificates...IV-4
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates.......IV-9
Section 4.04 Persons Deemed Owners...................................IV-9
ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...............V-1
Section 5.01 Duties of the Servicer..................................V-1
Section 5.02 Liquidation of Mortgage Loans...........................V-5
Section 5.03 Establishment of Principal and Interest Accounts;
Deposits in Principal and Interest Accounts............V-6
Section 5.04 Permitted Withdrawals From the Principal and Interest
Accounts...............................................V-8
Section 5.05 Payment of Taxes, Insurance and Other Charges...........V-9
Section 5.06 Transfer of Accounts....................................V-10
Section 5.07 Maintenance of Hazard Insurance.........................V-10
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy.....V-11
Section 5.09 Fidelity Bond...........................................V-11
Section 5.10 Title, Management and Disposition of REO Property.......V-12
Section 5.11 Certain Tax Information.................................V-13
Section 5.12 Collection of Certain Mortgage Loan Payments............V-13
Section 5.13 Access to Certain Documentation and Information
Regarding the Mortgage Loans...........................V-14
Section 5.14 Superior Liens..........................................V-14
Section 5.15 Duties of the Claims Administrator......................V-14
ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS..........................VI-1
Section 6.01 Establishment of Certificate Accounts; Deposits in
Certificate Accounts; Permitted Withdrawals from
Certificate Accounts...................................VI-1
Section 6.02 [Reserved]..............................................VI-2
Section 6.03 Establishment of Expense Accounts; Deposits in
Expense Accounts; Permitted Withdrawals from
Expense Accounts.......................................VI-2
Section 6.04 Establishment of Insurance Accounts; Deposits in
Insurance Accounts; Permitted Withdrawals from
Insurance Accounts.....................................VI-4
Section 6.05 Establishment of Spread Account; Deposits in Spread
Account; Permitted Withdrawals from Spread Account.....VI-5
Section 6.06 Establishment of FHA Premium Account; Deposits in
FHA Premium Account; Permitted Withdrawals from
FHA Premium Account....................................VI-7
Section 6.07 Investment of Accounts..................................VI-8
Section 6.08 Priority and Subordination of Distributions.............VI-9
Section 6.09 Allocation of Realized Losses...........................VI-15
Section 6.10 Statements..............................................VI-16
Section 6.11 Advances by the Servicer................................VI-21
Section 6.12 Compensating Interest...................................VI-22
Section 6.13 Reports of Foreclosure and Abandonment of
Mortgaged Property....................................VI-22
Section 6.14. Allocation of Total Monthly Excess Cashflow.............VI-22
Section 6.15 Establishment of Servicing Accounts; Collection of
Taxes, Assessments and Similar Items...................VI-24
ARTICLE VII GENERAL SERVICING PROCEDURE................................VII-1
Section 7.01 Assumption Agreements...................................VII-1
Section 7.02 Satisfaction of Mortgages and Release of Mortgage
Files..................................................VII-2
Section 7.03 Servicing Compensation and Contingency Fee..............VII-3
Section 7.04 Annual Statement as to Compliance.......................VII-4
Section 7.05 Annual Independent Public Accountants' Servicing
Report.................................................VII-4
Section 7.06 Co-Trustees', Co-Trustee's and Certificate Insurer's
Right to Examine Servicer Records and Audit
Operations.............................................VII-4
Section 7.07 Reports to the Co-Trustees and the Certificate Insurer;
Principal and Interest Account Statements..............VII-5
ARTICLE VIII REPORTS TO BE PROVIDED BY SERVICER........................VIII-1
Section 8.01 Financial Statements....................................VIII-1
ARTICLE IX THE SERVICER................................................IX-1
Section 9.01 Indemnification; Third Party Claims.....................IX-1
Section 9.02 Merger or Consolidation of the Representative, the
Servicer and the Claims Administrator..................IX-2
Section 9.03 Limitation on Liability of the Servicer and Others......IX-2
Section 9.04 Servicer and Claims Administrator Not to Resign.........IX-2
Section 9.05 Appointment of Assistant Claims Administrator...........IX-3
Section 9.06 Right of Certificate Insurer to Replace Servicer and
Claims Administrator...................................IX-3
Section 9.07 Appointment of Trust Administrator......................IX-3
ARTICLE X DEFAULT......................................................X-1
Section 10.01 Events of Default.......................................X-1
Section 10.02 Co-Trustees to Act; Appointment of Successor............X-3
Section 10.03 Waiver of Defaults......................................X-5
Section 10.04 [Reserved]..............................................X-5
Section 10.05 Control by Majority Certificateholders..................X-5
ARTICLE XI TERMINATION.................................................XI-1
Section 11.01 Termination............................................XI-1
Section 11.02 Termination Upon Loss of REMIC Status..................XI-3
Section 11.03 Additional Termination Requirements....................XI-4
Section 11.05 Accounting Upon Termination of Servicer and Claims
Administrator.........................................XI-5
ARTICLE XII THE CO-TRUSTEE.............................................XII-1
Section 12.01 Duties of Co-Trustees...................................XII-1
Section 12.02 Certain Matters Affecting the Co-Trustees...............XII-3
Section 12.03 Co-Trustees Not Liable for Certificates or Mortgage
Loans..................................................XII-5
Section 12.04 Co-Trustees May Own Certificates........................XII-5
Section 12.05 Representative to Pay Co-Trustees', Trust
Administrator's and FHA Custodian's Fees and
Expenses...............................................XII-5
Section 12.06 Eligibility Requirements for Co-Trustees................XII-6
Section 12.07 Resignation and Removal of the Co-Trustees..............XII-6
Section 12.08 Successor Co-Trustees...................................XII-7
Section 12.09 Merger or Consolidation of Co-Trustees..................XII-8
Section 12.10 Appointment of Co-Trustee or Separate Trustee...........XII-8
Section 12.11 Authenticating Agent....................................XII-9
Section 12.12 Tax Returns and Reports.................................XII-10
Section 12.13 Appointment of Custodians...............................XII-11
Section 12.14 Protection of Trust Fund................................XII-12
Section 12.15 Calculation of LIBOR....................................XII-13
ARTICLE XIII MISCELLANEOUS PROVISIONS..................................XIII-1
Section 13.01 Acts of Certificateholders..............................XIII-1
Section 13.02 Amendment...............................................XIII-1
Section 13.03 Recordation of Agreement................................XIII-2
Section 13.04 Duration of Agreement...................................XIII-2
Section 13.05 Governing Law...........................................XIII-2
Section 13.06 Notices.................................................XIII-2
Section 13.07 Severability of Provisions..............................XIII-3
Section 13.08 No Partnership..........................................XIII-3
Section 13.09 Counterparts............................................XIII-3
Section 13.10 Successors and Assigns..................................XIII-4
Section 13.11 Headings................................................XIII-4
Section 13.12 The Certificate Insurer.................................XIII-4
Section 13.13 Paying Agent............................................XIII-4
Section 13.14 Notification to Rating Agencies.........................XIII-5
Section 13.15 Third Party Rights......................................XIII-5
<PAGE>
SCHEDULE I Description of Certain Litigation
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/Custodian Initial Certification
EXHIBIT F-1 Form of Trustee/Custodian Interim Certification
EXHIBIT F-2 Form of Pool III Co-Trustee Certification
EXHIBIT G Form of Trustee/Custodian 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 I List of Originators
EXHIBIT J Request for Release of Documents
EXHIBIT J-1 Request for Release of Documents of 90 Day
Delinquent FHA Loans
EXHIBIT K Transfer Affidavit
EXHIBIT L-1 Form of Notice Under Certificate Guaranty Insurance
Policy Relating to the Pool I Certificates
EXHIBIT L-2 Form of Notice Under Certificate Guaranty Insurance
Policy Relating to the Class AV Certificates
EXHIBIT M Form of 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 Sub-servicing Agreement
EXHIBIT T Prices for Low Interest Mortgage Loans
<PAGE>
Agreement dated as of July 31, 1998, among The Bank of New York, as
co-trustee for Pool I and Pool II (the "Pool I and Pool II Co-Trustee"), Norwest
Bank Minnesota, National Association, as co-trustee for Pool III (the "Pool III
Co-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 Co-Trustees. The
Originators are selling the Pool I and Pool II Mortgage Loans to the Pool I and
Pool II Co-Trustee and the Pool III Mortgage Loans to the Pool III Co-Trustee
(or, with respect to the FHA Loans, to the FHA Custodian, who is transferring
such FHA Loans to the Pool III Co-Trustee) for the benefit of the
Certificateholders, pursuant to which the following classes of Certificates are
being issued, denominated on the face thereof as The Money Store Asset Backed
Certificates, Series 1998-B, 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 AF-9, Class AV, 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 X, Class R-1 and Class R-2, respectively,
representing in the aggregate a 100% undivided ownership interest in the
Mortgage Loans. The Pool I, Pool II and Pool III Mortgage Loans have an
aggregate outstanding principal balance of $523,298,797.93, $524,381,512.80 and
$198,737,777.34, respectively (and an aggregate outstanding Principal Balance of
$1,246,418,088.07, which gives effect to the discounts on the Low Interest
Mortgage Loans of $0), as of July 31, 1998 (the "Cut-Off Date"), after
application of payments received by the Originators on or before such date.
Except for the Low Interest Mortgage Loans in the related Pool, if any, each
Mortgage Loan in such Pool has 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
1998-B, 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 AF-9, Class AV, 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 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.
ACCOUNT: The Certificate Accounts, Expense Accounts, Spread Account,
Servicing Account or Insurance Accounts (including any sub-accounts of any of
the foregoing) established and held in trust by the respective Co-Trustees for
the Certificateholders and the FHA Premium Account established and held in trust
by the Pool III Co-Trustee for the benefit of the Certificateholders of the Pool
III Certificates to reimburse the Servicer 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.
ADJUSTABLE RATE CERTIFICATES: The Class AV 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 II 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 and (v) the Contingency 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
II.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: With respect to each Pool, an amount equal to
the product of (i) 0.01275% per annum (in the case of Pool I), 0.01275% per
annum (in the case of Pool II) or 0.02% per annum (in the case of Pool III) and
(ii) the aggregate Class Principal Balances of the Class A, Class M and Class B
Certificates of the applicable Pool, which is computed and payable on a monthly
basis and represents the estimated annual fees of the applicable Co-Trustee, the
Trust Administrator Fee and, in the case of Pool III, the FHA Custodian Fees,
and the expenses of the Trust Fund.
ASSIGNMENT EVENT: The occurrence of any of the following (unless otherwise
waived by the Certificate Insurer): (i) an Event of Default occurs and continues
for 30 days; (ii) FUNB's long-term unsecured debt rating is reduced below A2 by
Moody's or A by S&P; (iii) the suspension, termination or withdrawal of FUNB's
long-term unsecured debt rating by Moody's and S&P's; (iv) (a) the
Representative's stockholders' equity reported in accordance with generally
accepted accounting principles is less than $5,000,000 as of the end of any
fiscal quarter beginning September 30, 1998; or (b) the Representative is in
default of any material financial obligation; (v) a lease agreement acceptable
to the Certificate Insurer (the "Lease") between the Custodian, as lessee and
the Representative, as lessor with respect to the space on the Representative's
premises where the Custodian holds the Trustee's Mortgage Files (the "On-Site
Custodial Space") is not executed within 60 days following the Closing Date;
(vi) any of the facts set forth in the Officer's Certificate of the Custodian
and the Representative dated as of August 20, 1998, describing the initial
custodial arrangement with respect to the Trustee's Mortgage Files (the "On-Site
Custodial Arrangement") become untrue in a material and adverse manner; (vii)
the rating on the Pool I and Pool II Certificates (without regard to the
Certificate Insurance Policies) is downgraded below BBB by S&P or Baa2 by
Moody's; (viii) so long as the Custodian holds any of the Trustee's Mortgage
Files at the on-site custodial space, any event of default shall have occurred
and is continuing under the Lease, the Lease is not in effect, or the Lease is
deemed unenforceable against either party thereto or (ix) FUNB is no longer
acting as Custodian.
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 applicable Co-Trustee for the benefit of the
Certificateholders.
AUTHENTICATING AGENT: Initially, (i) with respect to Pool I and Pool II,
The Bank of New York and (ii) with respect to Pool III, Norwest Bank Minnesota,
National Association, 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 California, Minnesota, New York or
North Carolina 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.
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 AF-9, Class AV, 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 X, Class R-1 or Class R-2 Certificate executed by the
Servicer and authenticated by the applicable Co-Trustee or the applicable
Authenticating Agent substantially in the forms annexed hereto in Exhibit B.
CERTIFICATE ACCOUNTS: As described in Section 6.01.
CERTIFICATE INSURANCE POLICIES: Collectively, the certificate guaranty
insurance policies relating to the Certificates of Pool I and Pool II, 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, (i) with respect to Pool I and Pool II,
The Bank of New York, and (ii) with respect to Pool III, Norwest Bank Minnesota,
National Association, and thereafter, any successor appointed pursuant to
Section 4.02.
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 Remittance Rate is based upon the applicable Net Funds Cap for Pool
II, the excess of (i) the amount of interest the Class AV Certificates would be
entitled to receive on such Remittance Date had interest been calculated at a
rate equal to LIBOR plus the applicable Margin (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 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
Certificates after the Class Principal Balance of such Class is reduced to zero.
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
on behalf of the FHA Custodian 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
AF-9, Class AV, Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class AH-5 or
Class AH-6 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 of the Pool I and Pool II Certificates, means the
applicable Senior Percentage multiplied by the applicable Pool Principal
Distribution Amount, provided, however, that, with respect to any Remittance
Date, the Class A Pool Formula Principal Distribution Amount for a Pool 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 or the Pool
III Class A Certificates, as applicable.
CLASS A POOL PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date and the Pool I or Pool II 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 the Pool Current
Interest Requirement for Pool I or Pool II, as applicable, 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, Class AF-8 or
Class AF-9 Remittance Rate, as the case may be, with respect to a Pool I
Mortgage Loan, (b) the then current Class AV Remittance Rate with respect to a
Pool II Mortgage Loan, or (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, (ii)
0.02175% per annum (with respect to a Pool I Mortgage Loan), 0.02175% per annum
(with respect to a Pool II Mortgage Loan) or 0.02% per annum (with respect to a
Pool III Mortgage Loan), in each case, relating to the Annual Expense Escrow
Amount, (iii) with respect to the Pool I and Pool II Mortgage Loans the
applicable per annum rate relating to premiums payable to the Certificate
Insurer as set forth in the Insurance Agreement, and (iv) 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 6.290%.
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 6.115%.
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-2 Certificateholders, which shall be equal to 6.040%.
CLASS AF-4 CERTIFICATE: A Certificate denominated as a Class AF-4
Certificate.
CLASS AF-4 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-4 Certificateholders, which shall be equal to 6.115%.
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 6.225%.
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 6.315%.
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 6.650%.
CLASS AF-8 CERTIFICATE: A Certificate denominated as a Class AF-8
Certificate.
CLASS AF-8 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-8 Certificateholders, which shall be equal to 6.110%.
CLASS AF-9 CERTIFICATE: A Certificate denominated as a Class AF-9
Certificate.
CLASS AF-9 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-3 Certificateholders, which shall be equal to 6.335%.
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 6.145%.
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 6.000%.
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 6.070%.
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 6.175%.
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 6.325%.
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 6.550%.
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 5.79844% for the first Remittance
Date. Thereafter, the Class AV Remittance Rate shall be equal to the lesser of
(i) LIBOR plus 0.15% (or plus 0.30% 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 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 III Class B Certificates, the lesser of (x) the Class Principal
Balance of the Pool III Class B Certificates (after taking into account the
distribution of the Class BH Principal Distribution Amount on such Remittance
Date, but prior to the application of the Class B Pool Applied Realized Loss
Amount, if any, on such Remittance Date) and (y) the Pool Applied Realized Loss
Amount as of such Remittance Date.
CLASS B POOL REALIZED LOSS AMOUNT: Means, as of any Remittance Date and the
Pool III Class B Certificates, the lesser of (x) the Unpaid Realized Loss Amount
for the Class BH 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)-(xv),
inclusive.
CLASS BH CERTIFICATE: A Certificate denominated as a Class BH Certificate.
CLASS BH PRINCIPAL DISTRIBUTION AMOUNT: On each Remittance Date, an amount
equal to (a) prior to the Stepdown Date, and for any Remittance Date on or after
the Stepdown Date on which the Trigger Event for Pool III is in effect and the
Pool III Class A Certificates, the Class MH-1 Certificates or the Class MH-2
Certificates are still outstanding, zero and (b) on any other Remittance Date,
the excess, if any, of (i) the sum of (A) the Class Principal Balance of the
Pool III Class A Certificates after giving effect to the payment of the Pool III
Class A Principal Distribution Amount on such Remittance Date, (B) the Class
Principal Balance of the Class MH-1 Certificates after giving effect to the
payment of the Class MH-1 Principal Distribution Amount on such Remittance Date,
(C) the Class Principal Balance of the Class MH-2 Certificates after giving
effect to the payment of the Class MH-2 Principal Distribution Amount on such
Remittance Date and (D) the Class Principal Balance of the Class BH Certificates
immediately prior to such Remittance Date over (ii) the lesser of 87.60% of the
outstanding Principal Balance of the Pool III Loans as of the last day of the
related Due Period and (B) the outstanding Principal Balance of the Pool III
Loans as of the last day of the related Due Period minus 0.50% of the Pool III
Original Collateral Amount.
CLASS BH REMITTANCE RATE: The annual rate of interest payable to the Class
BH Certificateholders, which shall be equal to 7.895%.
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, the
actual number of days since the last Remittance Date for such Class to but not
including the related Remittance Date) at the related Class Remittance Rate
(which, for the Adjustable Rate Certificates, will be limited to the applicable
Net Funds Cap) on the Class Principal Balance for such Class outstanding
immediately prior to such Remittance Date; provided, however, that with respect
to the September 1998 Remittance Date, interest on the Adjustable Rate
Certificates shall accrue at the applicable Class Remittance Rate from and
including August 15, 1998 to but not including the September 1998 Remittance
Date. 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 or Class
MH-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 PRINCIPAL DISTRIBUTION AMOUNT: On each Remittance Date, an
amount equal to (a) prior to the Stepdown Date, and for any Remittance Date on
or after the Stepdown Date on which the Trigger Event for Pool III is in effect
and the Pool III Class A Certificates are still outstanding, zero and (b) on any
other Remittance Date, the excess, if any, of (i) the sum of (A) the Class
Principal Balance of the Pool III Class A Certificates after giving effect to
the payment of the Pool III Class A Principal Distribution Amount on such
Remittance Date and (B) the Class Principal Balance of the Class MH-1
Certificates immediately prior to such Remittance Date over (ii) the lesser of
(A) 56.05% of the outstanding principal balance of the Pool III Loans as of the
last day of the related Due Period and (B) the outstanding principal balance of
the Pool III Loans as of the last day of the related Due Period MINUS 0.50% of
the Pool III Original Collateral Amount.
CLASS MH-1 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for the 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 6.600%
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 PRINCIPAL DISTRIBUTION AMOUNT: On each Remittance Date, an
amount equal to (a) prior to the Stepdown Date, and for any Remittance Date on
or after the Stepdown Date on which the Trigger Event for Pool III is in effect
and the Pool III Class A Certificates or the Class MH-1 Certificates are still
outstanding, zero and (b) on any other Remittance Date, the excess, if any, of
(i) the sum of (A) the Class Principal Balance of the Pool III Class A
Certificates after giving effect to the payment of the Pool III Class A
Principal Distribution Amount on such Remittance Date, (B) the Class Principal
Balance of the Class MH-1 Certificates after giving effect to the payment of the
Class MH-1 Principal Distribution Amount on such Remittance Date and (C) the
Class Principal Balance of the Class MH-2 Certificates immediately prior to such
Remittance Date over (ii) the lesser of (A) 71.10% of the outstanding Principal
Balance of the Pool III Loans as of the last day of the related Due Period and
(B) the outstanding Principal Balance of the Pool III Loans as of the last day
of the related Due Period MINUS 0.50% of the Pool III Original Collateral
Amount.
CLASS MH-2 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for the 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 7.060%.
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 II 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 II 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
Pool 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 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 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 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 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 Remaining Amount Available for each Pool, and (ii) the
Remainder Excess Spread Amount, net of reimbursements to the Servicer or the
Representative of Reimbursable Amounts pursuant to Section 5.04(f), less any
amounts payable to the Class R-2 Certificateholders pursuant to Sections
6.08(d)(X)(vi) and 6.08(d)(Z)(xix).
CLOSING DATE: August 20, 1998.
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 0.25% 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: Each of the Pool I and Pool II Co-Trustee and the Pool III Co-
Trustee
CROSS-OVER DATE: The date on which the Pool Maximum Subordinated Amounts
for Pool I and Pool II and the Pool Available Maximum Subordinated Amount for
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. The
initial Custodian for the Pool I and Pool II Loans shall be the Trust Department
of FUNB; provided, however, that following the occurrence of an Assignment
Event, the Pool I and Pool II Co-Trustee (or such other Person acceptable to the
Certificate Insurer) shall be the successor Custodian for the Pool I and Pool II
Mortgage Loans.
CUT-OFF DATE: July 31, 1998.
DEALER LOANS: Pool III Mortgage Loans in which a dealer-contractor
participates in the financing.
DEFAULTED MORTGAGE LOAN: Means any Mortgage Loan as to which the related
Mortgagor has failed to pay in full three or more consecutive Monthly Payments.
DEFICIENCY AMOUNT: Means with respect to any Remittance Date and the Pool I
or Pool II 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 II, (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
II 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 II
(minus the amount to be withdrawn from the applicable Certificate Account for
deposit in 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 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 or the weighted average Class Adjusted
Mortgage Loan Remittance Rates for each Class of Pool III Certificates with
respect to a Pool III 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 and (iv) 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.
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
Co-Trustees 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 CUSTODIAN: First Union Trust Company, National Association, a national
banking association headquartered in Wilmington, Delaware.
FHA CUSTODIAN FEE: As to each Pool III Mortgage Loan, the annual fee
payable to the FHA Custodian. Such fee shall be calculated and payable monthly
and shall accrue at the rate of .0005% 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 such Pool III Mortgage Loan is computed.
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 Pool III
Co-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 FHA Custodian maintained by the FHA
with respect to the FHA Loans and certain other loans 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 IBCA, Inc., or any successor thereto.
FNMA: The Federal National Mortgage Association and any successor thereto.
FUNB: First Union National Bank, a national banking association
headquartered in Charlotte, North Carolina, and any successor thereto.
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 or Pool III Certificate.
INSURANCE ACCOUNTS: The insurance accounts established and maintained by
the Pool I and Pool II Co-Trustee in accordance with Section 6.04 hereof.
INSURANCE AGREEMENT: The agreement dated as of August 1, 1998 by and among
the Certificate Insurer, The Money Store Inc., the Custodian, the Originators
listed in Schedule I thereto and the Pool I and Pool II Co-Trustee, as amended
from time to time by the parties thereto.
INSURANCE PAYING AGENT: With respect to any Pool I or Pool II Mortgage
Loan, The Bank of New York or any successor as appointed herein.
INSURANCE PROCEEDS: With respect to any Mortgage Loan, proceeds (other than
FHA Payments) paid (i) to the applicable Co-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: With respect to the Adjustable Rate Certificates (i)
initially, the period commencing August 15, 1998 and ending on the day
immediately preceding the Remittance Date in September 1998 and (ii) thereafter,
the period commencing on a Remittance Date and ending on the day immediately
preceding the next Remittance Date.
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 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)(Z) of this
Agreement and (ii) one month's interest on the amount determined pursuant to
clause (i)(b) at the applicable Class Remittance Rate.
"LEASE": shall have the meaning assigned thereto in the Insurance
Agreement.
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 or Pool I Mortgage Loan, as the case may be, 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 or Pool I Mortgage Loan, as the case may be, 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 or a Low
Interest Pool III Mortgage Loan.
LOW INTEREST POOL I MORTGAGE LOAN: [RESERVED]
LOW INTEREST POOL III 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 affected
Classes of Class A, Class M and Class B Certificates.
MARGIN: With respect to the Class AV Certificates, the rate per annum of
0.15% (or for each Remittance Date occurring after the Optional Servicer
Termination Date, 0.30%) that is added to LIBOR to determine the Class AV
Remittance Rate for each Remittance Date.
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 product of (i) the amount calculated
pursuant to 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.
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 II, 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 pursuant to
this Agreement to (i) in the case of the Pool I and Pool II Mortgage Loans, the
Pool I and Pool II Co-Trustee, and (ii) in the case of the Pool III Mortgage
Loans, the Pool III Co-Trustee, 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 and
Pool III Mortgage Loan Schedules delivered to (i) in the case of the Pool I and
Pool II Mortgage Loans, the Custodian and the Pool I and Pool II Co-Trustee, and
(ii) in the case of the Pool III Mortgage Loans, the Pool III Co-Trustee as
Exhibits H, H-1 and H-2, 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 and
H-2), 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 (i) Pool I and Pool II
Mortgage Loans delivered to the Custodian on behalf of the Pool I and Pool II
Co-Trustee and (ii) the Pool III Mortgage Loans delivered to the Pool III
Co-Trustee, as Exhibits H, H-1 and H-2, 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 for the
Pool III Mortgage 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.
NAS CLASS CERTIFICATES: The Class AF-8 and Class AF-9 Certificates.
NAS CLASS PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date, the
product of (i) the applicable NAS Class Principal Percentage for such Remittance
Date and (ii) the NAS Class Pro Rata Principal Distribution Amount for such
Remittance Date; provided, however, that in no event will the NAS Class
Principal Distribution Amount on any Remittance Date be greater than the Pool
Principal Distribution Amount for Pool I for such Remittance Date or the sum of
the Class Principal Balances of the NAS Class Certificates.
NAS CLASS PRINCIPAL PERCENTAGE: For each Remittance Date, the NAS Class
Principal Percentage shall be as follows:
NAS Class
Remittance Dates Principal Percentage
September 1998 - August 2001 0%
September 2001 - August 2003 45%
September 2003 - August 2004 80%
September 2004 - August 2005 100%
September 2005 and thereafter 300%
NAS CLASS 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
sum of Class Principal Balances of the NAS Class Certificates immediately prior
to such Remittance Date and the denominator of which is the aggregate Class
Principal Balances 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.
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 the percentages used in determining the
Servicing Fee, the Contingency Fee, the premium due the Certificate Insurer for
the Pool II Certificates, the fee due the Pool I and Pool II Co-Trustee for the
Pool II Mortgage Loans, the fee due the Trust Administrator with respect to the
Pool II Mortgage Loans and, commencing with the Remittance Date on April, 1999,
0.50%.
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 1933, 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 a Co-Trustee or the
Custodian, 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 applicable Co-Trustee and the
Certificate Insurer and experienced in matters relating thereto; except that any
opinion of counsel relating to (a) the qualification of REMIC I and REMIC II
each 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: $88,000,000.
ORIGINAL CLASS AF-2 PRINCIPAL BALANCE: $65,000,000.
ORIGINAL CLASS AF-3 PRINCIPAL BALANCE: $132,000,000.
ORIGINAL CLASS AF-4 PRINCIPAL BALANCE: $50,000,000.
ORIGINAL CLASS AF-5 PRINCIPAL BALANCE: $35,000,000.
ORIGINAL CLASS AF-6 PRINCIPAL BALANCE: $48,000,000.
ORIGINAL CLASS AF-7 PRINCIPAL BALANCE: $52,969,000.
ORIGINAL CLASS AF-8 PRINCIPAL BALANCE: $29,000,000.
ORIGINAL CLASS AF-9 PRINCIPAL BALANCE: $23,329,000.
ORIGINAL CLASS AH-1 PRINCIPAL BALANCE: $78,226,000.
ORIGINAL CLASS AH-2 PRINCIPAL BALANCE: $14,086,000.
ORIGINAL CLASS AH-3 PRINCIPAL BALANCE: $25,358,000.
ORIGINAL CLASS AH-4 PRINCIPAL BALANCE: $11,345,000.
ORIGINAL CLASS AH-5 PRINCIPAL BALANCE: $ 9,470,000.
ORIGINAL CLASS AH-6 PRINCIPAL BALANCE: $13,002,000.
ORIGINAL CLASS AV PRINCIPAL BALANCE: $524,381,000.
ORIGINAL CLASS BH PRINCIPAL BALANCE: $16,396,000.
ORIGINAL CLASS MH-1 PRINCIPAL BALANCE: $15,899,000.
ORIGINAL CLASS MH-2 PRINCIPAL BALANCE: $14,955,000.
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 BH 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.
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 Pool I and Pool II Co-Trustee with respect to
the Pool I, Pool II, Class X and Class R Certificates, and the Pool III
Co-Trustee with respect to the Pool III Certificates, or any other Person that
meets the eligibility standards for the Paying Agent specified in Section 13.13
hereof and is authorized by the applicable Co-Trustee to make payments on the
Certificates on behalf of the applicable Co-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 100%. The Pool I, Pool II and
Pool III Certificates are issuable only in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000.00 and integral multiples of
$1.00 in excess thereof, except that one Pool I, Pool II, and Pool III
Certificate of each Class may be issued in a different denomination.
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 (including those funds managed
or advised by a Co-Trustee or any affiliate thereof) 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 applicable Co-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 applicable Co-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 applicable
Co-Trustee or third party custodian acting as agent for the
applicable Co-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
applicable Co-Trustee or custodian for the applicable
Co-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 applicable
Co-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 Co-Trustees.
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 or Pool III
Certificates, as the case may be, and with respect to the Mortgage Loans, the
Pool I, Pool II or Pool III Mortgage Loans, as the case may be.
POOL AMORTIZED SUBORDINATED AMOUNT REQUIREMENT: With respect to Pool I and
Pool II and as of any date of determination, the product of (x) 6.20% and
10.70%, 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 II exists,
the Pool Amortized Subordinated Amount Requirement for such Pool shall equal the
product of 6.20% or 10.70%, 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 III, an
amount equal to the excess, if any, of (i) the aggregate Class Principal
Balances of the Pool III Class A, Class M and Class B Certificates, as
applicable, (after taking into account the distribution of principal (including
the Pool III Accelerated Principal Distribution Amount) with respect to the Pool
III Certificates on such Remittance Date) over (ii) the aggregate Principal
Balance of the Pool III Mortgage Loans as of the end of the prior Due Period
(after taking into account all Realized Losses relating to Pool III Mortgage
Loans 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 II, pursuant to Section 6.01(b)(i) to deposit amounts
related to required premiums in the applicable Insurance Account, and (b) 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
Pool II.
POOL AVAILABLE MAXIMUM SUBORDINATED AMOUNT: With respect to Pool III and
any Remittance Date, the Pool Maximum Subordinated Amount for Pool III less all
distributions made on Certificates of Pool III with respect to Shortfall Amounts
on prior Remittance Dates and when determining if the Pool Available Maximum
Subordinated Amount with respect to Pool III has been reduced to zero, all
distributions on Certificates of Pool III 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, less (iii) 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 applicable Co-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
II 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 II
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 II 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 aggregate Principal
Balances as of the Cut-Off Date of all Mortgage Loans in such Pool.
POOL MAXIMUM SUBORDINATED AMOUNT: The initial Pool Maximum Subordinated
Amount for Pool I and Pool II shall be $62,795,856 and $89,144,857,
respectively, which amounts equal 12.0% and 17.0%, respectively, of the original
Pool Principal Balances of each such Pool. On any Remittance Date, the
applicable Pool Maximum Subordinated Amount for Pool I or Pool II 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 II 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 II shall never be less than zero. The
Pool Maximum Subordinated Amount for Pool III shall be $7,334,266.
POOL ORIGINAL COLLATERAL AMOUNT: For each Pool the aggregate Principal
Balances of the related Mortgage Loans as of the Cut-Off Date.
POOL PRINCIPAL BALANCE: With respect to any Pool, the sum of the Class
Principal Balances of the Certificates of such Pool.
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 (including Defaulted
Mortgage Loans) 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 applicable Co-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 II, the amount of any
Subordination Deficit with respect to such Pool for such Remittance
Date,
(vii) [Reserved],
(viii) with respect to Pool I or Pool II the amount of any
Subordination Increase Amount with respect to the related Pool for
such Remittance Date, and
(ix) with respect to Pool III, the Pool III Accelerated Principal
Distribution Amount 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 II, 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 II the sum
of payments made with respect to the applicable Pool pursuant to Sections
6.08(d)(X)(i) through (iv) 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 II 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 Pool I and Pool II Co-
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 SPREAD AMOUNT STEPDOWN DATE: Means with respect to Pool III the later
to occur of (i) the Remittance Date occurring in September 2001 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, and (ii) 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 AND POOL II CO-TRUSTEE: The Bank of New York, or its successor in
interest, or any successor appointed as herein provided.
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, Class AF-8 or Class AF-9 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, Class AF-8 and Class AF-9
Certificates.
POOL I INITIAL SPECIFIED SUBORDINATED AMOUNT: $16,222,238.
POOL I MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H delivered to the
Custodian on behalf of the Pool I and Pool II Co-Trustee, as such Exhibit may be
amended from time to time.
POOL I SPECIFIED SUBORDINATED AMOUNT: means 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;
(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; 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.
Notwithstanding the foregoing, the Pool I Specified Subordinated Amount for
any date shall, in no event be greater than the then applicable Pool Maximum
Subordinated Amount for Pool I.
POOL I TRANSACTION FEES: For any Remittance Date, the sum of the portion of
the Servicing Fee, the Contingency Fee, the Annual Expense Escrow Amount and the
Monthly Premium payable to the Certificate Insurer allocable to Pool I.
POOL II CERTIFICATE: A Class AV Certificate.
POOL II CLASS A CERTIFICATES: The Class AV Certificates.
POOL II INITIAL SPECIFIED SUBORDINATED AMOUNT: $28,054,383.
POOL II MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-1 delivered to
the Custodian on behalf of the Pool I and Pool II Co-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 the greater of (i) the Pool II
Initial Specified Subordinated Amount or (ii) two times the difference between
(x) one-half of the aggregate Principal Balances of all Pool II Mortgage Loans
that are 90 or more days delinquent (including REO Properties) minus (y) the
Pool Projected Net Monthly Excess Cashflow for Pool II 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 II has been received in respect of the Pool
II 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 II Initial Specified Subordinated Amount,
(ii) the Pool Amortized Subordinated Amount Requirement for Pool II or (iii) two
times the Pool II Initial Specified Subordinated Amount stated as a percentage
of the Pool Maximum Collateral Amount for Pool II times the then current
outstanding Pool Principal Balance for Pool II;
(b) two times the difference between (i) one-half of the aggregate
Principal Balances of all Pool II Mortgage Loans that are 90 or more days
delinquent (including REO Properties) minus (ii) the Pool Projected Net Monthly
Excess Cashflow for Pool II as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for Pool
II; or
(d) $500,000 times a fraction, the numerator of which is the Pool Principal
Balance of Pool II 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.
Notwithstanding the foregoing, the Pool II Specified Subordinated Amount
for any date shall, in no event be greater than the then applicable Pool Maximum
Subordinated Amount for Pool II.
POOL II TRANSACTION FEES: For any Remittance Date, the sum of the portion
of the Servicing Fee, the Contingency Fee, the Annual Expense Escrow Amount and
the Monthly Premium payable to the Certificate Insurer allocable to Pool II.
POOL III ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance
Date, the lesser of (i) the positive difference, if any, of (x) the Total
Monthly Excess Cashflow allocated to Pool III for such Remittance Date MINUS (y)
the Interest Shortfall Carryforward Amount for the Pool III Class A Certificates
for such Remittance Date and (ii) the Subordinated Deficiency Amount for Pool
III for such Remittance Date, calculated for this purpose without giving effect
to payment of the Pool III Accelerated Principal Distribution Amount and prior
to taking into account the Pool Applied Realized Loss Amount for Pool III for
such 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 A PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date (a)
prior to the Stepdown Date, and for any Remittance Date on or after the Stepdown
Date on which the Trigger Event for Pool III is in effect, the lesser of (i)
100% of the Pool Principal Distribution Amount for Pool III and (ii) the Class
Principal Balance of the Pool III Class A Certificates and (b) on or after the
Stepdown Date on which the Trigger Event for Pool III is not in effect, the
excess, if any, of (i) the Class Principal Balance of the Pool III Class A
Certificates immediately prior to such Remittance Date over (ii) the lesser of
(A) 40.05% of the outstanding Principal Balance of the Pool III Loans as of the
last day of the related Due Period and (B) the outstanding Principal Balance of
the Pool III Loans as of the last day of the related Due Period MINUS 0.50% of
the Pool III Original Collateral Amount.
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 CO-TRUSTEE: Norwest Bank Minnesota, National Association, or its
successor in interest, or any successor appointed as herein provided.
POOL III DELINQUENCY PERIOD: [RESERVED]
POOL III INITIAL SPECIFIED SUBORDINATED AMOUNT: $12,321,742.
POOL III MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-2 delivered to
the Pool III Co-Trustee as such Exhibit may be amended from time to time.
POOL III ORIGINAL COLLATERAL AMOUNT: $198,737,777.34.
POOL III SENIOR ENHANCEMENT PERCENTAGE: For any Remittance Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Class Principal
Balance of the Pool III Class M Certificates and the Pool III Class B
Certificates and (ii) the Spread Amount for Pool III, in each case after giving
effect to the distribution of the Pool Principal Distribution Amount for Pool
III on such Remittance Date by (y) the aggregate Principal Balance of the Pool
III Loans as of the last day of the related Due Period.
POOL III SENIOR SPECIFIED ENHANCEMENT PERCENTAGE: 59.95%.
POOL III SPECIFIED SUBORDINATED AMOUNT: means (a) prior to the Pool Spread
Amount Stepdown Date for Pool III, 6.2% 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) 12.4% 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 the Pool III Specified Subordinated Amount as of
the immediately preceding Remittance Date and in any event, the Pool III
Specified Subordinated Amount shall never exceed the then Class Principal
Balance of the Pool III Certificates.
PREFERENCE AMOUNT: means any amount previously distributed to a holder of a
Pool I or Pool II Certificate (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.
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
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 II 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
Pool III 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.
REFERENCE BANKS: Leading banks selected by the Trust Administrator 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 Trust Administrator 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. 333-32775)
filed by the Representative with the Securities and Exchange Commission in
connection with the issuance and sale of the Pool I, Pool II and Pool III
Certificates, including the Prospectus dated August 17, 1998 and the Prospectus
Supplement dated August 17, 1998.
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 Spread
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 4.01.
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
September 1998; 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 Co-Trustees 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 a Co-Trustee or the
Custodian, (a) 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 either Co-Trustee or the
Custodian 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, and (b) who shall have
responsibility for the administration of this Agreement. 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.
SENIOR PERCENTAGE: means for any Remittance Date for the Pool I and Pool II
Class A Certificates, 100%.
SERIES: 1998-B.
SERVICER: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Servicer hereunder.
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 or the weighted average
Remittance Rate of the Pool III Certificates for a Pool III 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 August 31, 2002, if the Total Expected
Losses (as defined below) of the Pool I, Pool II and Pool III Mortgage Loans,
exceed 9.00%, 13.25% and 20.75%, respectively, of the aggregate Principal
Balances of the Pool I, Pool II and Pool III Mortgage Loans, respectively, as of
the Cut-Off Date and (ii) after August 31, 2002, but on or prior to August 31,
2007, if the Total Expected Losses of the Pool I, Pool II and Pool III Mortgage
Loans exceed 13.50%, 19.875% and 31.125%, respectively of the aggregate
Principal Balances of the Pool I, Pool II and Pool III Mortgage Loans,
respectively, as of the Cut-Off Date.
For purposes of the foregoing definition, the "Total Expected Losses" of
the Pool I, Pool II and Pool III Mortgage Loans on any date of determination
shall equal the sum of (i) the cumulative Realized Losses on the Pool I, Pool II
and Pool III 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 and Pool III Mortgage
Loans 30-59 days delinquent multiplied by 10.75%, 10.75% and 25.00%,
respectively;
(ii) the Principal Balance of all Pool I, Pool II and Pool III
Mortgage Loans 60-89 days delinquent multiplied by 21.50%, 21.50% and
50.00%, respectively; and
(iii) the Principal Balance of all Pool I, Pool II and Pool III
Mortgage Loans 90 days or more delinquent multiplied by 43.00%, 43.00% and
100.00%, 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 applicable Co-Trustee or the Custodian by the Servicer or
Claims Administrator, as such list may from time to time be amended.
SHORTFALL AMOUNTS: Means, as of any Remittance Date, 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 related 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
related Due Period.
S&P: Standard & Poor's, a division of The McGraw-Hill Companies, or any
successor thereto.
SPECIAL HOLDINGS: TMS Special Holdings Inc., a Delaware corporation.
SPECIFIED SUBORDINATED AMOUNT: As applicable, the Pool I Specified
Subordinated Amount, the Pool II Specified Subordinated Amount or the Pool III
Specified Subordinated Amount.
SPREAD ACCOUNT: The Spread Account that may be established and maintained
with the applicable Co-Trustee in accordance with Section 6.05 hereof.
SPREAD ACCOUNT PORTION: With respect to Pool I or Pool II 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)(v)) 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 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.
STEPDOWN DATE: The earlier to occur of (i) the later to occur of (x) the
Remittance Date in September 2001 and (y) the first Remittance Date on which the
Pool III Senior Enhancement Percentage (after taking into account distributions
of principal on such Remittance Date) is greater than or equal to the Pool III
Senior Specified Enhancement Percentage and (ii) the Remittance Date on which
the Class Principal Balance of the Pool III Class A Certificates has been
reduced to zero.
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 II,
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 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 II 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, and
(ii) 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)(iii) 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) and (viii) of the definition
of Pool Principal Distribution Amount with respect to such Pool and Remittance
Date.
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 applicable Co-Trustee and, in the case of
Pool I or Pool II 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 II 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
REMIC I and REMIC II.
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 REMIC I and REMIC II due to their classification each 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 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 III Senior Enhancement
Percentage; 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 10% or (y) the Cumulative Realized Losses for Pool III
Mortgage Loans as of such Remittance Date exceed $25,835,521; 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
$8,943,200.
TRUST ADMINISTRATOR: FUNB, or its successor in interest.
TRUST ADMINISTRATOR FEE: As to each Mortgage Loan, the annual fee payable
to the Trust Administrator. Such fee shall be calculated and payable monthly and
shall accrue at the rate of .0085% per annum, in the case of the Pool I and Pool
II Mortgage Loans, and .0145% per annum, in the case of the Pool III Mortgage
Loans, and shall be computed on the basis of the same principal amount and for
the period respecting which any related interest payment on such Mortgage Loan
is computed.
TRUST ADMINISTRATOR'S CERTIFICATE: The certificate as defined in Section
6.10.
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, Spread
Account, FHA Premium Account and Insurance Accounts, (iii) the rights of the
applicable Co-Trustee 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 three separate sub-trusts, one for the Pool
I Mortgage Loans, one for the Pool II Mortgage Loans and one for the Pool III
Mortgage Loans.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the Custodian, on
behalf of the Pool I and Pool II Co-Trustee, or the Pool III Co-Trustee, as the
case may be, pursuant to Section 2.04.
TWO FAMILY HOUSE: Two dwelling units under one roof.
UNPAID REALIZED LOSS AMOUNT: Means with respect to Pool III for any Class
of the Pool III 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
(i) to the Pool I and Pool II Co-Trustee, the Pool I and Pool II Mortgage Loans,
(ii) to the Pool III Co-Trustee, the Pool III Mortgage Loans (other than the FHA
Loans) and (iii) to the FHA Custodian, the FHA Loans (including the related
Reserve Amount), in each case 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 Pool I,
Pool II and Pool III 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 three separate sub-trusts, one for
the Pool I Mortgage Loans, one for the Pool II Mortgage Loans and one for the
Pool III Mortgage Loans. The FHA Custodian is accepting the transfer of the FHA
Loans (including the Reserve Amount) solely on behalf of the Trust Fund and,
immediately following such acceptance (and prior to the issuance of the
Certificates), the FHA Custodian shall, and hereby does, sell, transfer, assign,
set over and convey to the Pool III Co-Trustee, for the benefit of the
Certificateholders, subject to the terms of this Agreement, the FHA Loans (but
not the Reserve Amount) without recourse, but with and under the "guaranty" of
the FHA Custodian made to the Pool III Co-Trustee, that the FHA Custodian shall
file or cause to be filed Claims with respect to the FHA Loans pursuant to
Section 5.15.
(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 and Pool III
Certificateholders and Class X Certificateholders, to receive payments in
respect of the Pool I, Pool II and Pool III Certificates and Class X
Certificates, respectively, and the ownership interests of the Pool I, Pool II
and Pool III 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 (i)
the Pool I and Pool II Mortgage Loans is vested in the Pool I and Pool II
Co-Trustee and (ii) the Pool III Mortgage Loans (other than the Reserve Amount)
is vested in the Pool III Co-Trustee, in each case for the benefit of the
Certificateholders of the related Pool. Further, the Reserve Amount relating to
the FHA Loans shall be transferred by the Originators to the FHA Custodian for
the benefit of the Pool III Certificateholders.
(b) Pursuant to Section 2.04, the Originators have delivered or caused to
be delivered each Trustee's Mortgage File relating to the Pool I and Pool II
Mortgage Loans to the Custodian, on behalf of the Pool I and Pool II Co-Trustee,
and each Trustee's Mortgage File relating to the Pool III Mortgage Loans to the
Pool III Co-Trustee.
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 applicable Co-Trustee for the
benefit of the Certificateholders.
Section 2.04 DELIVERY OF MORTGAGE LOAN DOCUMENTS.
Each Originator contemporaneously with the delivery of this Agreement, has
delivered or caused to be delivered (i) to the Custodian, the following
documents relating to the Pool I and Pool II Mortgage Loans and (ii) to the Pool
III Co-Trustee, the following documents relating to the Pool III Mortgage Loans.
(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 ][Norwest Bank Minnesota,
National Association], as Co-Trustee under the Pooling and Servicing Agreement
dated as of July 31, 1998, 1998-B" 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), (also provided, however, that the Person delivering
such Assignment shall not be required to record an assignment of a Mortgage if
(i) except as set forth in the next sentence, in the case of Pool I or Pool II,
an Assignment Event has not occurred or (ii) in the case of Pool III, such
Person furnishes to the Pool III Co-Trustee on or before the Closing Date, at
the Person's expense, an opinion of counsel with respect to the relevant
jurisdiction that such recording is not necessary to perfect the Pool III
Co-Trustee's interest in the related Mortgage Loans (in form and substance and
from counsel satisfactory to the Rating Agencies); or (iii) a copy of such
Assignment of Mortgage certified as a true copy by a Responsible Officer of the
Originator where the original has been transmitted for recording (provided,
however, that where the original Assignment of Mortgage is not being delivered,
each such Responsible Officer of the Originator 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). Notwithstanding the
foregoing, the Custodian or the Pool I and Pool II Co-Trustee shall cause to be
recorded each Assignment or Mortgage relating to the Pool I and Pool II Mortgage
Loans upon the earliest to occur of (a) the Certificate Insurer delivering a
written request to the Representative and the Custodian to record the
Assignments of Mortgage with respect to such Pool I and Pool II Mortgage Loans,
with such request specifying that the Certificate Insurer is making such request
because the Certificate Insurer has determined, in its reasonable judgment, that
such recordation is necessary to protect the Certificate Insurer's interest with
respect to such Pool I and Pool II Mortgage Loans because (I) a material adverse
change has occurred with respect to the Representative or (II) the Certificate
Insurer has been so advised by its counsel as a result of a change that occurred
after the Closing Date in applicable law or the interpretation thereof or (b)
with respect to a particular Pool I or Pool II Mortgage Loan, the insolvency of
the related Mortgagor;
(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) With respect to any intervening assignments, if applicable, 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 of the Originator 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, deliver or cause to be
delivered to the Custodian, with respect to the Pool I and Pool II Mortgage
Loans, and FUNB (who shall deliver or cause to be delivered to the Pool III
Co-Trustee), with respect to the Pool III Mortgage Loans: (a) the original
recorded Mortgage in those instances where a copy thereof certified by a
Responsible Officer of the Originator was delivered to the Custodian or Pool III
Co-Trustee, as the case may be; (b) if required pursuant to Section 2.04(c), the
original recorded Assignment of Mortgage to the applicable Co-Trustee, as the
case may be, which, together with any intervening assignments of Mortgage,
evidences a complete chain of title from the originator to the applicable
Co-Trustee in those instances where copies thereof certified by a Responsible
Officer of the Originator were delivered to the Custodian or Pool III
Co-Trustee, as the case may be; (c) any intervening assignments of Mortgage in
those instances where copies thereof certified by a Responsible Officer of the
Originator were delivered to the Custodian or Pool III Co-Trustee, as the case
may be; 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 Custodian or, in the case of the Pool
III Mortgage Loans, FUNB (who shall forward such documents to the Pool III
Co-Trustee), as the case may be, 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 Custodian or in the case
of the Pool III Mortgage Loans, FUNB (who shall forward such documents to the
Pool III Co-Trustee), as the case may be, additional original documents
evidencing an assumption or modification of a Mortgage Loan. All Mortgage Loan
documents held by the Custodian or Pool III Co-Trustee, as the case may be, 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 OF THE TRUST FUND; CERTAIN SUBSTITUTIONS;
CERTIFICATION BY CO-TRUSTEE AND CUSTODIAN.
(a) The Custodian, on behalf of the Pool I and Pool II Co-Trustee, with
respect to the Pool I and Pool II Mortgage Loans, and FUNB, on behalf of the
Pool III Co-Trustee, with respect to the Pool III Mortgage Loans, each agree to
execute and deliver (with a copy to the Certificate Insurer in the case of the
Custodian) on the Closing Date with respect to the 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. Each of the Custodian, with respect to the Pool I and Pool II Mortgage
Loans, and the Pool III Co-Trustee, with respect to the Pool III Mortgage Loans,
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 Custodian or Pool III Co-Trustee, as the
case may be, in trust upon and subject to the conditions set forth herein for
the benefit of the Certificateholders. Each of the Custodian, with respect to
the Pool I and Pool II Mortgage Loans, and FUNB, with respect to the Pool III
Mortgage Loans, agrees, for the benefit of the Certificateholders, to review
each Trustee's Mortgage File relating to the applicable Pool of Mortgage Loans
within 60 days after the Closing 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 II Mortgage Loans, the Certificate Insurer, and with
respect to the Pool III Mortgage Loans, the Pool III Co-Trustee, a certification
in the form attached hereto as Exhibit F-1 to the effect that, as to each
Mortgage Loan listed in the applicable 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 pursuant
to this Agreement are in its possession (or in the case of the Pool III Mortgage
Loans, have been delivered to the Pool III Co-Trustee) (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 applicable 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. The
Custodian and FUNB 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 Custodian, with respect to the Pool
I and Pool II Mortgage Loans, and FUNB, with respect to the Pool III Mortgage
Loans, shall deliver to the Servicer, the Representative, the Certificate
Insurer (with respect to the Pool I and Pool II Mortgage Loans), the Pool III
Co-Trustee (with respect to the Pool III Mortgage Loans) and any
Certificateholder who requests a copy 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)). In no
event shall either of the Co-Trustees have any liability or responsibility for
reviewing any of the Trustee's Mortgage Files or any of the documents contained
therein or for the Custodian's or FUNB's failure to perform any of its
respective obligations hereunder to conduct any such review.
(b) If the Certificate Insurer or the Custodian (with respect to the Pool I
and Pool II Mortgage Loans) or FUNB (with respect to the Pool III Mortgage
Loans) 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 or the Custodian (with respect
to the Pool I and Pool II Mortgage Loans) or FUNB (with respect to the Pool III
Mortgage Loans) shall promptly so notify the Servicer, the Representative and
the applicable Co-Trustee (or, with respect to the Pool I and Pool II Mortgage
Loans, the Custodian and the Certificate Insurer) (or with respect to the Pool
III Mortgage Loans, FUNB), respectively. In performing any such review, the
Custodian and FUNB 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 Custodian's (or, with respect to the Pool III
Mortgage Loans, FUNB'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.
If, however, within 60 days after 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 or the weighted average Class Adjusted
Mortgage Loan Remittance Rates for the Pool III Certificates, with respect to a
Pool III 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 II 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 II Mortgage Loan, which shall
be paid directly by the Representative to the Certificate Insurer.
(c) Upon receipt by the Custodian (or, with respect to the Pool III
Mortgage Loans, the Pool III Co-Trustee) 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 Custodian (or, with
respect to the Pool III Mortgage Loans, the Pool III Co-Trustee and, if
applicable, the FHA Custodian) shall release to the Servicer for release to the
Representative the related Trustee's Mortgage File and the Custodian (or, with
respect to the Pool III Mortgage Loans, the Pool III Co-Trustee and, if
applicable, the FHA Custodian) 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 1999, the
Custodian (and, with respect to the Pool III Mortgage Loans, FUNB) shall deliver
to the Representative, the Servicer and (in the case of the Pool I and Pool II
Mortgage Loans) the Certificate Insurer a certification detailing all
transactions with respect to the Mortgage Loans for which the Custodian or the
Pool III Co-Trustee 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 II Mortgage Loans. Such certification shall list all
Trustee's Mortgage Files which were released by or returned to the Custodian or
the Pool III Co-Trustee 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 August 15, 2039.
(c) The latest possible maturity dates of the Pool I, Pool II and Pool III
Certificates and the Class X Certificates are as follows:
Latest Possible Latest Possible
CLASS MATURITY Class MATURITY
AF-1 February 15, 2006 AH-1 July 15, 2009
AF-2 June 15, 2010 AH-2 January 15, 2011
AF-3 August 15, 2017 AH-3 April 15, 2015
AF-4 June 15, 2021 AH-4 May 15, 2017
AF-5 September 15, 2023 AH-5 May 15, 2019
AF-6 July 15, 2026 AH-6 February 15, 2024
AF-7 August 15, 2039 MH-1 February 15, 2024
AF-8 May 15, 2010 MH-2 February 15, 2024
AF-9 August 15, 2039 BH February 15, 2024
AV August 15, 2029 X August 15, 2039
(d) The Trust Administrator, at the direction of the Originators, shall
acquire and retain at least 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.
(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 Pool I and Pool II Co-Trustee acknowledges the assignment to it of the
Pool I and Pool II Mortgage Loans and the delivery to the Custodian of the
Trustee's Mortgage Files relating to the Pool I and Pool II Mortgage Loans (as
set forth in the acknowledgment of receipt delivered by the Custodian in
accordance with Section 2.05 hereof), the Pool III Co-Trustee acknowledges the
assignment to it of the Pool III Mortgage Loans (as set forth in the
acknowledgment of the Pool III Co-Trustee, in the form of Exhibit F-2, delivered
on the Closing Date) and the delivery to it of the Trustee's Mortgage Files
relating to the Pool III Mortgage Loans and, concurrently with such delivery,
(i) the Pool I and Pool II Co-Trustee has authenticated or caused to be
authenticated and delivered to or upon the written order of the Representative
on behalf of the Originators, in exchange for the Pool I and Pool II Mortgage
Loans, the Certificate Insurance Policies, the Trustee's Mortgage Files relating
to the Pool I and Pool II Mortgage Loans and the other assets included in the
definition of the Trust Fund relating to the Pool I and Pool II Mortgage Loans,
the Pool I Certificates, the Pool II Certificates, the Class X Certificates and
the Class R Certificates duly authenticated by the Pool I and Pool II Co-Trustee
in authorized denominations, and (ii) the Pool III Co-Trustee, has authenticated
or caused to be authenticated and delivered to or upon the written order of the
Representative on behalf of the Originators, in exchange for the Pool III
Mortgage Loans, the Trustee's Mortgage Files relating to the Pool III Mortgage
Loans and the other assets included in the definition of the Trust Fund relating
to the Pool III Mortgage Loans (other than the Reserve Amount), the Pool III
Certificates duly authenticated by the Pool III Co-Trustee in authorized
denominations.
Section 2.08 FEES AND EXPENSES OF THE CO-TRUSTEES, FHA CUSTODIAN, TRUST
ADMINISTRATOR AND CUSTODIAN.
The fees and expenses of the Co-Trustees, the FHA Custodian and the Trust
Administrator 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
Custodian agrees to perform its duties hereunder without charge to the Trust.
Any fees or expenses payable to the Custodian shall be paid by the Servicer. The
parties hereto hereby covenant with the Certificateholders that every material
contract or other material agreement entered into by the applicable party, 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 [Reserved].
Section 2.10 OPTIONAL REPURCHASE OF DEFAULTED MORTGAGE LOANS.
The Servicer shall have the right, but not the obligation, to repurchase
any Defaulted Mortgage Loan for a purchase price equal to the Principal Balance
of such Mortgage Loan as of the date of repurchase, plus accrued but unpaid
interest (whether through payments by the applicable Mortgagor, Monthly Advances
or otherwise) on such Principal Balance, computed at the applicable Mortgage
Interest Rate (net of the per annum rate used in calculating the Servicing Fee
and the Contingency Fee) as of the next succeeding Determination Date, plus any
accrued unpaid Servicing Fees, Monthly Advances and Servicing Advances
reimbursable to the Servicer, which purchase price shall be deposited in the
Principal and Interest Account on the next succeeding Determination Date. Any
such repurchase shall be accomplished in the manner specified in Section
2.05(b). In no event shall the aggregate Principal Balance of all Defaulted
Mortgage Loans purchased pursuant to this Section 2.10 exceed 5% of the
aggregate Pool Original Collateral Amounts for each of the Pools.
Section 2.11 ASSIGNMENT EVENT.
Immediately upon the occurrence of any Assignment Event, the Representative
or the Servicer shall notify the Certificate Insurer and the Pool I and Pool II
Co-Trustee of such occurrence or the Certificate Insurer shall notify the
Representative, the Servicer and the Pool I and Pool II Co-Trustee. Thereafter,
the Custodian shall (i) begin transferring all Trustee's Mortgage Files in its
possession relating to the Pool I and Pool II Mortgage Loans to the Pool I and
Pool II Co-Trustee (or such other Person acceptable to the Certificate Insurer)
and (ii) either cause proper assignments of each Pool I and Pool II Mortgage to
be recorded in the relevant real property recording office for each such
Mortgage or to deliver assignments of the Mortgages, in recordable form, to the
Pool I and Pool II Co-Trustee, together with an opinion of counsel, addressed to
and acceptable to the Certificate Insurer, to the effect that recordation of
such assignments is not necessary to perfect the interest of the Pool I and Pool
II Co-Trustee in such Mortgages. The Custodian shall undertake such transfer and
recording in a manner that will result in the completion of the transfer of all
such Trustee's Mortgage Files relating to the Pool I and Pool II Mortgage Loans
to the successor Custodian and the recording of such assignments of mortgage (or
delivery of such opinion of counsel) within 30 days following the occurrence of
an Assignment Event. From and after the occurrence of an Assignment Event, and
the delivery of the Trustee's Mortgage Files relating to the Pool I and Pool II
Mortgage Loans to the Pool I and Pool II Co-Trustee, the Pool I and Pool II Co-
Trustee shall act as custodian or it may engage the services of another Person
approved by the Certificate Insurer to act as Custodian. The Custodian hereby
acknowledges that it is bailee of the Pool I and Pool II Co-Trustee and is
holding all of the Trustee's Mortgage Files relating to the Pool I and Pool II
Mortgage Loans delivered to it solely in trust for the Pool I and Pool II
Co-Trustee.
From time to time following delivery of the Trustee's Mortgage Files
relating to the Pool I and Pool II Mortgage Loans to the Pool I and Pool II
Co-Trustee pursuant to this Section 2.11, the Pool I and Pool II Co-Trustee may
appoint a Custodian who is acceptable to the Certificate Insurer and the Trust
Administrator. The Trust Administrator shall notify the Rating Agencies of any
appointment of a successor Custodian.
<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 Co-Trustees 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 Co-Trustees, as trustees;
(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 Mortgage
Loans evidenced by the Certificates;
(xi) No Originator sold any interest in any 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;
(xiii) No Certificateholder is subject to state licensing requirements
solely by virtue of holding the Certificates; and
(xiv) The Servicer's computer and other systems used in servicing the
Mortgage Loans will be modified and maintained to operate in a manner such
that at all times, including on and after January 1, 2000, the Servicer can
service the Mortgage Loans in accordance with the terms of this Agreement.
(b) Each Originator hereby represents and warrants to the
Certificateholders and the Co-Trustees 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 Co-Trustees, as trustees.
(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
Custodian (or, with respect to the Pool III Mortgage Loans, the Pool III
Co-Trustee) under this Agreement, the Pool I and Pool II Co-Trustee (or,
with respect to the Pool III Mortgage Loans, the Pool III 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 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 Mortgage Loans have been in all material respects legal,
proper, prudent and customary in the mortgage origination and servicing
business;
(xii) Each Mortgage Loan was selected from among the existing Mortgage
Loans in the respective Originator's portfolio at the date hereof 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 in exchange for the sale of the interest in the Mortgage
Loans evidenced by the Certificates;
(xv) Such Originator did 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 Co-Trustees and the
Certificateholders, with respect to each Mortgage Loan, as of the Closing Date:
(a) The information with respect to each Mortgage Loan set forth in the
Mortgage Loan Schedule and the Schedules of Mortgage Loans 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 Custodian (or with respect to the Pool III Mortgage Loans, the
Pool III Co-Trustee) on the Closing Date or as otherwise provided in Section
2.04;
(c) Each Mortgage Loan being transferred to the Trust Fund is 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 Mortgage Loan has been 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 each Mortgage
Loan is being serviced by the Servicer or one or more Subservicers and, with
respect to each Mortgage Loan originated by an Originator, there is 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 Pool I and Pool III Mortgage
Loan bears a fixed Mortgage Interest Rate and the Mortgage Note with respect to
each Pool II Mortgage Loan bears an adjustable Mortgage Interest Rate, 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 Pool I Mortgage Loans, the
initial Class Adjusted Mortgage Loan Remittance Rate for Class AV in the case of
the Pool II Mortgage Loans, and the Class Adjusted Mortgage Loan Remittance Rate
for Class BH in the case of the Pool III 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 Pool I Mortgage Loans may be Low Interest Pool I Mortgage Loans, (B) up
to $0 aggregate principal amount of the Pool III Mortgage Loans may be Low
Interest Pool III Mortgage Loans and (C) 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 3.88% of the 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) 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, and (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.
(h) Each Mortgage is, with respect to the Mortgage Loans, a valid and
subsisting lien of record on the Mortgaged Property (with 79.81%, 100.00% and
6.29% of the Pool I, Pool II and Pool III Mortgage Loans, respectively (measured
by Principal Balances as of the Cut-Off Date) being secured by first 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 applicable 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 Mortgage Loan is 60 days or more delinquent
in payment and, except as provided in the next sentence, no 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 3.0% of the
Mortgage Loans for Pool I and 4.50% of the Mortgage Loans for 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 Cut-Off Date, no more than 0%%
of the Mortgage Loans (by principal balance) will be delinquent in payment;
(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 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 applicable Co-Trustee and the FHA
Custodian 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 applicable Co-Trustee, and the
Originator of any FHA Loan has the authority and power to transfer to the FHA
Custodian the FHA Reserve Amount relating to the FHA Loans;
(t) No more than approximately 0.5%, 0.5% and 0.5% of the Principal
Balances of the Pool I, Pool II or Pool III 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 20.87% and 79.13% of the 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 Pool I, Pool II and Pool III Mortgage Loans are
Single-Family Loans (provided, however, that 0.20% and 0.01% of the Pool I and
Pool III Mortgage Loans, measured by Principal Balance as of the Cut-Off date,
may be Multifamily Loans). None of the Pool I, Pool II and Pool III Mortgage
Loans are secured by a mobile home or a co-op.
(z) With respect to each Multifamily Loan, no less than approximately 90%
of the related Mortgaged Property, measured by square footage, number of units
and projected rent, is 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 Custodian or, with
respect to the Pool III Mortgage Loans, the Pool III Co-Trustee. 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
Custodian or, with respect to the Pool III Mortgage Loans, the Pool III
Co-Trustee;
(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 Mortgage Loan was 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 Mortgage Loan has 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;
(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 Mortgage Loan was not 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
Mortgage Loans have been deposited into the applicable Principal and Interest
Account and are, as of the Closing Date with respect to the 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 or Pool II Mortgage Loans, had a Loan-to-Value Ratio which
exceeded 100% and 100%, 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% of the Pool I Mortgage Loans and 28%
of the 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 5% of the Pool I Mortgage Loans were originated without verifying
the Mortgagor's income;
(fff) At the applicable dates of origination, each Pool I, Pool II and Pool
III Mortgage Loan had an original term to maturity of no greater than 40, 30 and
25 years, respectively;
(ggg) [Reserved];
(hhh) [Reserved];
(iii) As of the Cut-off Date, for each Pool II Mortgage Loan, 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 Initial
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 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 FHA Loan is 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 FHA Loan has been submitted to the FHA for insurance pursuant to
the FHA Title I loan program and, except for no more than 25% of the FHA Loans
(measured by outstanding principal balance as of the Closing Date) (the
"Non-Acknowledged FHA Loans"), each 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;
(mmm) The Reserve Amount with respect to each FHA Loan will be transferred
to the FHA Custodian's FHA Reserve Account within 180 days after the Closing
Date and the Originators will give the Certificate Insurer, the Pool III
Co-Trustee, the FHA Custodian 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 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, the Custodian, any Co-Trustee or, in the case of any Pool I or Pool
II Mortgage Loan, the Certificate Insurer of a breach of any of such
representations and warranties 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 II 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
applicable Co-Trustee, and, in the case of any Pool I or Pool II 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 Custodian (or, with respect to the Pool III
Mortgage Loans, FUNB, who shall deliver to the Pool III 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 applicable Co-Trustee, the Representative and,
in the case of any Pool I or Pool II Mortgage Loan, the Certificate Insurer and
the Custodian 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 Co-Trustees, the FHA Custodian, the Custodian, the
Certificateholders and, in the case of any Pool I or Pool II 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 Co-Trustees, the FHA
Custodian, the Custodian, and, in the case of any Pool I or Pool II Mortgage
Loan, the Certificate Insurer as provided in Sections 2.05 and 3.03 constitute
the sole remedies of the Trustee, the FHA Custodian, 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 applicable
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 applicable Co-Trustee for all amounts payable in respect
of such Mortgage Loan.
For as long as the Trust Fund shall exist, the Servicer and the Co-Trustees
shall act in accordance herewith to assure continuing treatment of each of REMIC
I and REMIC II as a REMIC. In particular, the Co-Trustees shall not (a) sell or
knowingly 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 applicable 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 Pool I and Pool II Co-Trustee, with respect to the Pool I, Pool
II, Class X and Class R Certificates, and the Pool III Co-Trustee, with respect
to the Pool III Certificates for authentication and redelivery to or upon the
written order of the Representative, on behalf of the Originators, upon receipt
by the applicable Co-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 applicable Co-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 applicable Co-Trustee, as the
case may be, shall bind the Servicer or the applicable Co-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 Co-Trustees 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) [Reserved]
(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-AF-9, Class II-AV, 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 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.
That portion of the Excess Spread used to accelerate payments of principal
on the REMIC I Certificates to create or increase overcollateralization
(collectively, the "Turbo Amount") will not be used to accelerate payments on
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-II QQQ and Class-II MMM Certificates) in the same manner
in which the Turbo Amount is distributed as principal among the REMIC I
Certificates bearing the same designations (other than the II-) (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-).
Notwithstanding the above, principal payments on the Mortgage Loans that are
attributable to the Subordination Reduction Amount shall be allocated 98% and 2%
to the Class II-QQQ and Class II-MMM Certificates, respectively, until paid in
full. 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-AF-9, Class II-AV, 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 and Class
II-BH 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:
<TABLE>
<CAPTION>
Pass Allocation Allocation
REMIC II Initial Through of of
CERTIFICATES BALANCE RATE PRINCIPAL INTEREST
- ------------ ------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
QQQ $1,221,489,726.31 (1) (6) (3),(4)
MMM $12,464,201.76 (1) (6) (3),(4)
II-AF-1 $880,000.00 (1) (2) (3),(4)
II-AF-2 $650,000.00 (1) (2) (3),(4)
II-AF-3 $1,320,000.00 (1) (2) (3),(4)
II-AF-4 $500,000.00 (1) (2) (3),(4)
II-AF-5 $350,000.00 (1) (2) (3),(4)
II-AF-6 $480,000.00 (1) (2) (3),(4)
II-AF-7 $529,690.00 (1) (2) (3),(4)
II-AF-8 $290,000.00 (1) (2) (3),(4)
II-AF-9 $233,290.00 (1) (2) (3),(4)
II-AV $5,243,810.00 (1) (2) (3),(4)
II-AH-1 $782,260.00 (1) (2) (3),(4)
II-AH-2 $140,860.00 (1) (2) (3),(4)
II-AH-3 $253,580.00 (1) (2) (3),(4)
II-AH-4 $113,450.00 (1) (2) (3),(4)
II-AH-5 $94,700.00 (1) (2) (3),(4)
II-AH-6 $130,020.00 (1) (2) (3),(4)
II-MH-1 $158,990.00 (1) (2) (3),(4)
II-MH-2 $149,550.00 (1) (2) (3),(4)
II-BH $163,960.00 (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 the Mortgage Interest Rates
of the Mortgage Loans (net of all expenses of the Trust Fund).
(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 Class II-QQQ Certificates), 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 Regular
Certificate 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.
</TABLE>
(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 AF-9, Class AV, 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 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. Any amount remaining in REMIC I
after payments on the regular interests in REMIC I shall be distributed to the
Class R-1 Certificate.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Pool I and Pool II Co-Trustee, with respect to the Pool I, Pool II,
Class X and Class R Certificates, and the Pool III Co-Trustee, with respect to
the Pool III Certificates 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 the applicable Classes of Certificates and of transfers and
exchanges of the applicable Classes of Certificates as herein provided. Each
Certificate Register shall contain the name, remittance instructions, Class and
Percentage Interest of each Certificateholder of the applicable Class. The Bank
of New York is initially appointed Certificate Registrar for the purpose of
registering Pool I, Pool II, Class X and Class R Certificates and transfer and
exchanges of such Certificates and Norwest Bank Minnesota, National Association,
is initially appointed Certificate Registrar for the purpose of registering Pool
III Certificates and transfer and exchanges of such Certificates, as herein
provided (each, a "Certificate Registrar").
(b) It is intended that the Pool I, Pool II and Pool III 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 and Pool III
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
and Pool III Certificates shall have an aggregate denomination equal to the
following:
CLASS DENOMINATION
- ----- ------------
Class AF-1 $88,000,000
Class AF-2 $65,000,000
Class AF-3 $132,000,000
Class AF-4 $50,000,000
Class AF-5 $35,000,000
Class AF-6 $48,000,000
Class AF-7 $52,969,000
Class AF-8 $29,000,000
Class AF-9 $23,329,000
Class AV $524,381,000
Class AH-1 $78,226,000
Class AH-2 $14,086,000
Class AH-3 $25,358,000
Class AH-4 $11,345,000
Class AH-5 $9,470,000
Class AH-6 $13,002,000
Class MH-1 $15,899,000
Class MH-2 $14,955,000
Class BH $16,396,000
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 each Co-Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
(c) With respect to Pool I, Pool II or Pool III Certificates registered in
the Certificate Register in the name of Cede & Co., as nominee of the
Depository, the Representative and the Co-Trustees shall have no responsibility
or obligation to Direct or Indirect Participants or beneficial owners for which
the Depository holds Pool I, Pool II or Pool III Certificates from time to time
as a Depository. Without limiting the immediately preceding sentence, the
Representative and the Co-Trustees 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 or Pool III 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 or Pool III 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 or Pool III Certificate as shown in the Certificate Register, of
any amount with respect to any distribution of principal or interest on the Pool
I, Pool II or Pool III Certificates. No Person other than a registered Holder of
a Pool I, Pool II or Pool III Certificate as shown in the Certificate Register
shall receive a certificate evidencing such Pool I, Pool II or Pool III
Certificate.
(d) Upon delivery by the Depository to the applicable Co-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 or Pool III 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
Co-Trustees 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 or Pool III 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 or Pool III Certificates shall no longer be restricted to being
registered in the Certificate 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 or Pool III 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 or Pool III
Certificates may be registered in whatever name or names registered Holders of
Pool I, Pool II or Pool III Certificates transferring Pool I, Pool II or Pool
III 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 or Pool III 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 or Pool III Certificates and all notices
with respect to such Pool I, Pool II or Pool III 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 Pool I and Pool II Co-Trustee or the Certificate Registrar for Pool I
and Pool II 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 Pool I and Pool II Co-Trustee or the Certificate Registrar for Pool I and
Pool II in writing the facts surrounding such disposition. Unless the Pool I and
Pool II Co-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 Pool I and Pool II Co-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 Pool I and
Pool II Co-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 Pool I and
Pool II Co-Trustee shall not register the transfer of a Class R Certificate
unless the Pool I and Pool II Co-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 Pool I and Pool II Co-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 Pool I and Pool II Co-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 Pool I and Pool II Co-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 Pool I and Pool II
Co-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 Pool I
and Pool II Co-Trustee shall be paid and delivered by the Pool I and Pool
II Co-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 M or Class B Certificates or any interest therein shall be
acquired by or on behalf of an employee benefit plan or other retirement
arrangement subject to Title I of the Employee Retirement Income Security Act of
1974, as amended, or Section 4975 of the Code (each a "Plan"), unless such Plan
is purchasing such Class M or Class B Certificates pursuant to Section III of
Prohibited Transaction Class Exemption ("PTCE") 95-60 Fed. Reg. 35925 (July 12,
1995) relating to acquisitions by insurance company general accounts. The
purchase of a Class M or Class B Certificate will be deemed a representation by
the purchaser that either (i) it is not purchasing such Class M or Class B
Certificate, directly or indirectly, for, or on behalf of, a Plan or (ii) the
purchaser is an insurance company which is purchasing such Class M or Class B
Certificate with funds contained in an "insurance company general account" as
such term is defined in Section V(e) of PTCE 95-60 and that the purchase and
holding of such Class M or Class B Certificate is covered under PTCE 95-60.
Notwithstanding the foregoing, neither the Pool III Co-Trustee nor the
Certificate Registrar for Pool III shall be required to monitor, determine or
inquire as to compliance with the transfer restrictions with respect to the
Class M or Class B Certificates in the form of Book-Entry Certificates, and
neither of the Co-Trustees nor their respective Certificate Registrars shall
have any liability for transfers of Book-Entry Certificate made through the
book-entry facilities of the Depositary or between or among participants
therein, made in violation of the foregoing restrictions.
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
applicable Co-Trustee. The applicable Certificate Registrar shall notify the
Representative and the applicable Co-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 applicable Co-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 applicable
Co-Trustee.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to a Certificate Registrar,
or a Co-Trustee and such Certificate Registrar and Co-Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Servicer, the applicable Co-Trustee and the
applicable 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 applicable Co-Trustee and the applicable Certificate Registrar
that such Certificate has been acquired by a bona fide purchaser, the Servicer
shall execute and deliver, and the applicable Co-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 applicable Co-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 applicable Co-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 applicable Co-Trustees,
the Certificate Insurer and the applicable Certificate Registrar shall not be
affected by notice to the contrary.
<PAGE>
ARTICLE V
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 the Trust Administrator covenants and agrees that it shall act as Tax
Matters Person on behalf of REMIC I and REMIC II. The Trust Administrator (and
in the case of (iv) and (v) below, the Servicer) 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 each of the Co-Trustees, 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 Trust
Administrator or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Trust Administrator 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; and (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. In connection with any
FHA Loan, the Servicer shall timely pay to the FHA the FHA Insurance Premium
required to be paid for each FHA Loan. Each Co-Trustee will cooperate with the
Servicer and the Trust Administrator in the foregoing matters and will sign, as
Co-Trustee, any and all Tax Returns required to be filed by the REMIC I and
REMIC II. The Servicer shall indemnify the Co-Trustees and REMIC I or REMIC II,
as applicable, for any liability they may incur in connection with this Section
5.01(a) including, in the case of Pool I and Pool II, 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 II Mortgage
Loans, if any, which indemnification shall survive the termination of REMIC I
and REMIC II; provided, however, that the Servicer shall not indemnify a
Co-Trustee for its negligence or willful misconduct.
With respect to any Mortgage Note relating to a Pool I or Pool II Mortgage
Loan released by the Custodian, on behalf of the Pool I and Pool II Co-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 Pool I and Pool II Co-Trustee shall (a) complete all
endorsements in blank so that the endorsement reads "Pay to the order of The
Bank of New York, as Co-Trustee under the Pooling and Servicing Agreement dated
as of July 31, 1998, 1998-B" 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
July 31, 1998, 1998-B" with respect to those Mortgage Notes relating to a Pool I
or Pool II 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 Pool III 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, FUNB shall (a) complete all
endorsements in blank so that the endorsement reads "Pay to the order of Norwest
Bank Minnesota, National Association, as Co-Trustee under the Pooling and
Servicing Agreement dated as of July 31, 1998, 1998-B" and (b) complete a
restrictive endorsement that reads "Norwest Bank Minnesota, National Association
is the holder of the mortgage note for the benefit of the Certificateholders
under the Pooling and Servicing Agreement dated as of July 31, 1998, 1998-B"
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 and the applicable Co-Trustee 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 Co-Trustees, the
Certificateholders and, in the case of Pool I and Pool II 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 Co-Trustees 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), each Co-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 with respect to related Pool of Mortgage
Loans, unless the applicable Co-Trustee is then permitted and elects to
terminate any Subservicing Agreement in accordance with its terms. Each
Co-Trustee, its designee or the successor servicer for such Co-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 a
Co-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 and Pool III Certificateholders or, with respect to the Pool I
and Pool II 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 II 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 Co-Trustees 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 Co-Trustees, the Custodian and the FHA
Custodian shall execute any powers of attorney furnished by the Servicer 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 Co-Trustees 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 Pool I
and Pool II Co-Trustee or its designee (or, with respect to the Pool III
Mortgage Loans, the Pool III 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 a Co-Trustee but at the expense of the Servicer,
deliver to the applicable Co-Trustee or 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 II 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 applicable Co-Trustee (subject to the provisions of Section
12.10) 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; provided, however, that the
Servicer shall not take title to any Mortgaged Property in the name of the
applicable Co-Trustee with respect to any such Mortgaged Property if the
Servicer has actual knowledge or reasonably believes that any such environmental
substance or waste exists and it determines that it would not be commercially
reasonable to foreclose on such 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 applicable Co-Trustee, the Certificate
Insurer (if such Liquidated Mortgage Loan is a Pool I or Pool II 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 1998-B and various Mortgagors"; provided, however, that for
so long as (i) (A) the Servicer remains an affiliate of FUNB, (B) no Event of
Default shall have occurred and be continuing and (C) FUNB maintains a
short-term rating of at least A-1 by S&P and P-1 by Moody's, and for five
Business Days following any reduction, suspension, termination or withdrawal in
either such rating, or (ii) following the occurrence and continuation of any
event described in subclause (i) of this paragraph, an arrangement is
established that is satisfactory to the Rating Agencies and the Certificate
Insurer which does not in itself result in (I) any reduction of any rating
issued in respect of the Certificates or (II) any reduction below investment
grade of the Certificates without the benefit of the Certificate Insurance
Policy, the Servicer, notwithstanding anything to the contrary herein provided,
may establish and maintain the Principal and Interest Account as a deposit
account with FUNB. 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 Co-Trustees, 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 or Pool III 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 or Pool III Mortgage Loans, as the case may
be;
(iii) all Net Liquidation Proceeds received with respect to the Pool
I, Pool II or Pool III Mortgage Loans, as the case may be;
(iv) all Insurance Proceeds received with respect to the Pool I, Pool
II or Pool III 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 or Pool III Mortgage Loans, as the case may be;
(vi) any amounts paid in connection with the purchase of any Pool I,
Pool II or Pool III Mortgage Loan, as the case may be, and the amount of
any Substitution Adjustment received with respect to the Pool I, Pool II or
Pool III 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 Trust on the Closing Date
that was originated on or after August 1, 1998, 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 applicable
Co-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 Co-Trustees 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 Pool for the related Remittance Date to the applicable Co-Trustee for
deposit in the applicable 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 II;
(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 Pool I and Pool II Co-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(a).
(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 1998-B." 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 Co-Trustees 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 Co-Trustees 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 or a Co-Trustee, the
Servicer shall cause to be delivered to the Certificate Insurer and such
Co-Trustee, 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 Co-
Trustees 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 a Co-Trustee or the Certificate Insurer, the
Servicer shall cause to be delivered to such Co-Trustee or the Certificate
Insurer 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, subject to Section 12.10, be taken in the name of the
Pool I and Pool II Co-Trustee (or, with respect to the Pool III Mortgage Loans,
the Pool III 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 II 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 II Mortgage Loan) and the Pool I, Pool II or Pool III
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 or Pool III Certificateholders, as the
case may be and (with respect to any REO Property that was a Pool I or Pool II
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 or Pool III
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 before the end of the third
calendar year following the year of its acquisition unless the Servicer shall
have received an Opinion of Counsel also addressed to the applicable Co-Trustee
and the Certificate Insurer (if such Mortgage Loan is a Pool I or Pool II
Mortgage Loan) to the effect that the holding of such Mortgaged Property
subsequent to such period will not result in the imposition of taxes on
"prohibited transactions" as defined in section 860F of the Code or cause either
REMIC I or REMIC II to fail to qualify as a REMIC at any time that any Pool I,
Pool II, Pool III 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 the
three calendar year period referred to above is permitted under this Agreement
and is necessary to sell any REO Property, the Servicer shall give appropriate
notice to the Pool I and Pool II Co-Trustee and the Certificate Insurer (with
respect to a Pool I or Pool II Mortgage Loan) or the Pool III Co-Trustee (with
respect to a Pool III Mortgage Loan) and shall report monthly to the applicable
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 Co-Trustees, 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 Pool I and Pool
II Co-Trustee's interest (or, with respect to a Pool III Mortgage Loan, the Pool
III 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 II 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 Pool I and Pool II Co-Trustee and the Certificate Insurer
(with respect to a Pool I or Pool II Mortgage Loan) or the Pool III Co-Trustee
(with respect to a Pool III Mortgage Loan) 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 II 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, the FHA Custodian 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 the FHA Custodian 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, on behalf of the FHA
Custodian, 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 FUNB, the Pool III Co-Trustee and the FHA
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 Pool III Co-Trustee shall, no later than the
later of the related Remittance Date and the date that is three Business Days
after the request is received, release to FUNB, for delivery to the Claims
Administrator, the related Trustee's Mortgage File and the Pool III Co-Trustee
and the FHA Custodian shall execute and deliver such instruments furnished by
the Claims Administrator or FUNB necessary to enable the Claims Administrator to
file a Claim with the FHA on behalf of the FHA Custodian. 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 FUNB, for delivery to the Pool
III 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 Pool III Co-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 Claims Administrator shall not request the transfer of
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).
<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, (i) the Pool I and Pool II Co-Trustee
will establish and maintain with itself in its trust department two separate
trust accounts, which shall not be interest-bearing, titled "TMS Certificate
Account 1998-B-I" and "TMS Certificate Account 1998-B-II," and (ii) the Pool
III Co-Trustee will establish and maintain with itself in its trust department a
separate trust account, which shall not be interest bearing, titled "TMS
Certificate Account 1998-B-III" (each a "Certificate Account" and together, the
"Certificate Accounts"). The Co-Trustees 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 to the applicable Co-Trustee 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, and the Class Adjusted Mortgage Loan Remittance Rates for the
Classes of Pool III Certificates, in the case of Pool III, remitted to the
applicable Co-Trustee by the Servicer;
(iii) amounts transferred from the Spread Account pursuant to Section
6.05(b)(iii) and Insured Payments received by the applicable Co-Trustee
after a claim pursuant to Section 6.08(c); and
(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.
(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 II shall be withdrawn to make deposits pursuant to subclause
(i), and (y) Pool III shall be withdrawn pursuant to subclause (ii) below):
(i) by the Pool I and Pool II Co-Trustee, to make deposits in the
applicable Insurance Account pursuant to Section 6.04(a)(i);
(ii) by the Pool III Co-Trustee, to make deposits in the FHA Premium
Account pursuant to Section 6.06(a)(i);
(iii) [Reserved];
(iv) by the applicable Co-Trustee, or the applicable 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 applicable Co-Trustee, to invest amounts on deposit in the
applicable Certificate Account in Permitted Instruments pursuant to Section
6.07;
(vi) by the applicable Co-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 applicable Co-Trustee, to withdraw any amount not
required to be deposited in the applicable Certificate Account or deposited
therein in error; and
(viii) by the applicable Co-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 [Reserved]
Section 6.03 ESTABLISHMENT OF EXPENSE ACCOUNTS; DEPOSITS IN EXPENSE
ACCOUNTS; PERMITTED WITHDRAWALS FROM EXPENSE ACCOUNTS.
(a) No later than the Closing Date, (i) the Pool I and Pool II Co-Trustee
will establish with itself in its trust department two separate trust accounts,
which shall not be interest-bearing, titled "TMS Expense Account 1998-B-I" and
"TMS Expense Account 1998-B-II," and (ii) the Pool III Co-Trustee will establish
and maintain with itself in its trust department a separate trust account, which
shall not be interest-bearing, titled "TMS Expense Account 1998-B-III" (each, an
"Expense Account" and together the "Expense Accounts"). The applicable
Co-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 (as determined by the Servicer
or the Trust Administrator( relating to the Pool I, Pool II or Pool III
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 Co-Trustees,
the FHA Custodian and the Trust Administrator (as calculated by the Servicer)
then due with respect to the Trust Fund, the applicable Co-Trustee, FHA
Custodian or Trust Administrator, as the case may be, shall make demand on the
Servicer to advance the amount of such insufficiency, and the Servicer shall
promptly advance such amount to the applicable Co-Trustee for deposit in the
applicable Expense Accounts. 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 applicable Co-Trustee, the FHA Custodian or the Trust
Administrator, as the case may be, pursuant to Section 6.08(d)(X)(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 Co-Trustees may invest amounts on deposit in each Expense Account
in Permitted Instruments pursuant to Section 6.07 hereof, and the Co-Trustees
shall withdraw amounts on deposit in the applicable Expense Account to:
(i) pay the applicable Co-Trustee's, the FHA Custodian's and the Trust
Administrator's fees and expenses with respect to the Trust Fund in
accordance with written instructions provided by the Servicer or the Trust
Administrator;
(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 Co-Trustees 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 applicable Co-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 Pool I and Pool II Co-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
1998-B-I" and "TMS MBIA Insurance Account 1998-B-II" (each an "Insurance
Account, and together, the "Insurance Accounts"). The Pool I and Pool II
Co-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
II 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 II 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 Pool I and Pool II Co-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 Pool I and Pool II Co-Trustee may invest amounts on deposit in each
Insurance Account in Permitted Instruments pursuant to Section 6.07, and the
Pool I and Pool II Co-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 II Certificates, as the case may be, on each Remittance
Date commencing in May 1998 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 Pool I and Pool II Co-Trustee has received from the
Servicer any information necessary to determine the amount of the Monthly
Premium and the Pool I and Pool II Co-Trustee and the Insurance Paying Agent (if
the Insurance Paying Agent and the Pool I and Pool II Co-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 Pool I and Pool II Co-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) If required by the Certificate Insurer, the Representative shall, no
later than the Closing Date, establish and maintain with the Pool I and Pool II
Co-Trustee in its trust department a trust account, which shall not be
interest-bearing, titled "TMS Spread Account 1998-B" (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.
The Pool I and Pool II Co-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 II);
(ii) [Reserved];
(iii) [Reserved];
(iv) [Reserved];
(v) [Reserved]; and
(vi) amounts, if any, received pursuant to Section 6.14(b)(v).
(b) The Pool I and Pool II Co-Trustee may invest amounts on deposit in the
Spread Account in Permitted Instruments pursuant to Section 6.07, and the Pool I
and Pool II Co-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 II 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 II exceeds its respective Specified Subordinated Amount
and the amount deposited into the Spread Account pursuant to Section
6.14(b)(v) 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 II for such Remittance Date over the Pool I and Pool II
Specified Subordinated Amounts, respectively, 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 II and/or any current Realized
Loss which would otherwise be allocated to 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)(ix) 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.
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 Pool III Co-Trustee will establish
with itself in its trust department a trust account, which shall not be interest
bearing, titled "TMS FHA Premium Account 1998-B" (the "FHA Premium Account").
The FHA Premium Account shall not be available for payment of Certificates. The
Pool III Co-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 from the applicable Certificate
Account, an amount equal to the FHA Premium Amount as specified by the
Servicer or the Claims Administrator; 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 Pool III Co-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 as specified by the
Servicer or the Claims Administrator then due.
(b) The Pool III Co-Trustee may invest amounts on deposit in the FHA
Premium Account in Permitted Instruments pursuant to Section 6.07, and the Pool
III Co-Trustee shall withdraw amounts on deposit in the FHA Premium Account to:
(i) remit, upon certification by the Servicer 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 a Co-Trustee shall be invested and reinvested by such
Co-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, 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, a Co-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 Pool I and Pool II
Co-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 a
Co-Trustee and sufficient uninvested funds are not available to make such
disbursement, such Co-Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Account. The Co-Trustees
shall not be liable for any investment loss or other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, the Co-Trustees shall not in any way
be held liable by reason of any insufficiency in any Account held by the
Co-Trustees resulting from any investment loss on any Permitted Instrument
included therein (except to the extent that a Co-Trustee is the obligor
thereon).
(d) The Co-Trustees shall invest and reinvest funds in the Accounts held by
them 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 a Co-
Trustee shall be deposited in such Account, immediately on receipt, and such
Co-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 applicable Co-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 Pool I
and Pool II Co-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 II 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 II Certificates under the applicable
Certificate Insurance Policy, it shall remit such amounts to the Pool I and Pool
II Co-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 II 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 Pool I and Pool II Co-Trustee shall, on such Remittance
Date, transfer such amount to the applicable Certificate Account from the Spread
Account.
The Pool I and Pool II Co-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 Pool I and Pool II Co-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
Pool I and Pool II Co-Trustee shall direct and (iii) take such other actions
with respect to the Certificate Insurer and the Certificate Insurance Policies
as the Pool I and Pool II Co-Trustee shall direct. The Pool I and Pool II Co-
Trustee shall act initially as the Insurance Paying Agent.
The Pool I and Pool II Co-Trustee shall receive through the Insurance
Paying Agent, as attorney-in-fact of each Holder of Pool I or Pool II
Certificates, any Insured Payment from the Certificate Insurer and disburse the
same to each Holder of Pool I or Pool II Certificates in accordance with the
provisions of this Section 6.08. Insured Payments disbursed by the Pool I and
Pool II Co-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 II
Certificates, and the Certificate Insurer shall become the owner of such unpaid
amounts of Insured Payments due from the Trust Fund in respect of such
Certificates. The Pool I and Pool II Co-Trustee hereby agrees on behalf of each
Holder of Pool I or Pool II 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 II Certificateholders, the
Certificate Insurer will be subrogated to the rights of the such Pool I or Pool
II 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 Pool I and Pool II Co-Trustee shall, or shall cause the
applicable Certificate Registrar to, note the Certificate Insurer's rights as
subrogee on the registration books maintained by the Pool I and Pool II
Co-Trustee or the applicable Certificate Registrar upon receipt from the
Certificate Insurer of proof of payment of any Insured Payment.
Each Pool I or Pool II Certificateholder shall promptly (i) notify the Pool
I and Pool II Co-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 Pool I and Pool II Co-Trustee.
(d) (X) With respect to Pool I and Pool II, on each Remittance Date, and
after making the allocations set forth in Section 6.14, the Pool I and Pool II
Co-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 (based solely upon
information received from the Servicer):
(i) to the Expense Account relating to Pool I or Pool II, 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 Pool I and Pool II Co-Trustee or the Trust Administrator 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 sum
of the Pool Remaining Amount Available for Pool I and the Pool Remaining
Amount Available for Pool II and;
(vi) then to the Class R-2 Certificateholders, any remainder.
(I) 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 and Class AF-9 Certificateholders,
sequentially in that order, until the Class Principal Balance of each such Class
is reduced to zero, an amount equal to the NAS Class 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, Class AF-8 and Class AF-9 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.
(II) On each Remittance Date, the amount to be distributed to the Pool II
Certificates pursuant to clause (ii) above will be allocated in the following
order of priority:
(A) first, to the Certificateholders of the Class AV Certificates, the
Class Current Interest Requirement for the Class AV Certificates for such
Remittance Date; and
(B) second, to the Class AV Certificateholders, the excess, if any, of the
amount to be distributed to the Pool II Certificates on such Remittance Date
over the amount distributed pursuant to (A) above, until the Class Principal
Balance of such Class 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.
(Y) [Reserved]
(Z) With respect to Pool III, on each Remittance Date, and after making the
allocations set forth in Section 6.14, the Pool III Co-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 or Trust Administrator):
(i) to the Expense Account relating to Pool III, 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 Pool III
Co-Trustee, the Trust Administrator or the FHA Custodian pursuant to
Section 6.03(a) resulting from insufficiencies in such 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 Pool III Class A Pool Principal Distribution Amount
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 Pool
III 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 BH 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) [Reserved]
(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 with respect to Pool III to the extent
the Servicer has not previously netted such amounts from Monthly Payments
with respect to Pool III;
(xviii) after payment of the amounts specified in clauses (i) through
(xvii) above, to the Paying Agent for Pool I and Pool II for distribution
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 Paying Agent for Pool I and Pool II for distribution
to the Class R-2 Certificateholders, any remainder.
(e) All distributions made to the Certificateholders on each Remittance
Date will be made on a pro rata basis 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.
Section 6.09 ALLOCATION OF REALIZED LOSSES.
(a) With respect to Pool I and Pool II, 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 II. 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 II 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 III, on and after the Remittance Date on which the
Pool Available Maximum Subordinated Amount for Pool III has been reduced to
zero, (i) no further Interest Shortfall Carryforward Amounts or Unpaid Realized
Loss Amounts for the 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 III Certificates on such
Remittance Date, the aggregate Class Principal Balance of the Pool III
Certificates, as applicable exceeds the aggregate Principal Balance of the Pool
III Mortgage Loans, respectively, as of the end of the related Due Period, then
the Class Principal Balance of the 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 III Class M and/or Class B
Certificates in reverse order of seniority, I.E., first against the Class BH
Class Principal Balance until it is reduced to zero, then against the Class MH-2
Class Principal Balance until it is reduced to zero, and then against the Class
MH-1 Class Principal Balance 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 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 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 MH-1, Class MH-2 or Class BH
Realized Loss Amounts, as applicable.
Section 6.10 STATEMENTS.
Each month, not later than 12:00 noon New York time on the Determination
Date, the Trust Administrator shall deliver to the Certificate Insurer and to
the Co-Trustees, by telecopy, for distribution to the Certificateholders, 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 an officer of the Trust Administrator (a " Trust
Administrator'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
and Pool III 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 and Pool III 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 and Pool III
Certificates;
(iv) the total amount of any Insured Payments included in the Pool
Available Remittance Amount for Pool I or Pool II 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 III;
(vi) the number and Principal Balances of all Mortgage 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 II and the
Class Current Interest Requirement and the Pool Principal Distribution
Amount for 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, and any Interest Shortfall Carryforward
Amount or Pool Carry-Forward Amount, as the case may be, relating to each
Class of Certificates;
(xiv) the Reimbursable Amounts and the Class X Remittance Amount
payable pursuant to Section 6.08(d)(X)(v) 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, 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 Remittance Rate with respect to the Remittance
Date and if the Class AV Remittance Rate was based on the applicable Net
Funds Cap, what it would have been if based on LIBOR plus the applicable
Margin;
(xxiv) the rate of LIBOR with respect to the Remittance Date;
(xxv) the Net Funds Cap for the Class AV Certificates with respect to
the Remittance Date;
(xxvi) if the Remittance Rate for the Class AV 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 III is in effect;
(xxix) the Senior Percentage and the Class B Pool Percentage for the
current Remittance Date;
(xxx) the amount of any Pool Applied Realized Loss Amount, Realized
Loss Amount and Unpaid Realized Loss Amount for each Class of Pool III
Certificates as of the close of such Remittance Date;
(xxxi) the Accelerated Principal Distribution Amount for 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 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, stated separately for each Pool;
(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) The number and Principal Balance of all Defaulted Mortgage
Loans purchased during the Due Period, stated separately for each Pool;
(xl) Such other information as the Certificate Insurer and the
Co-Trustees may reasonably require.
Each Co-Trustee shall forward such report to the Certificateholders of the
applicable Pool and, with respect to the report on the Pool I and Pool II
Mortgage Loans, to the Certificate Insurer on the Remittance Date, together, if
requested by a Certificateholder, 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), and 6.08(d)(Z) (all reports prepared by the Co-Trustees of such
withdrawals and deposits will be based in whole or in part upon the information
provided to the Co-Trustees by the Servicer, the Trust Administrator or the
Claims Administrator).
To the extent that there are inconsistencies between the telecopy of the
Trust Administrator's Certificate and the hard copy thereof, the Co-Trustees
shall be entitled to rely upon the telecopy. In the discretion of the Trust
Administrator, 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 $25,000 original dollar amount as
of the Cut-Off Date.
Each month, not later than the third Business Day prior to the
Determination Date occurring in such month, the Servicer shall deliver to the
Trust Administrator the Servicer's Monthly Computer Tape in the form attached
hereto as Exhibit R (both in hard copy and in computer tape form).
In making any payments or distributions required to be made by them
pursuant to any of the provisions hereof, the Co-Trustees shall make such
payments and distributions based solely upon the information contained in the
applicable Trust Administrator's Certificate or, if such information is not
included in the applicable Trust Administrator's Certificate, upon written
instructions of the Servicer or the Trust Administrator. The Co-Trustees may
rely fully upon and shall have no liability with respect to any such information
provided to them by the Servicer or the Trust Administrator. Neither Co-Trustee
shall be obligated to verify, recompute, reconcile or confirm any information
contained in any Trust Administrator's Certificate or otherwise provided by the
Trust Administrator or the Servicer.
(a) Within a reasonable period of time after the end of each calendar year,
the Trust Administrator shall furnish to the Co-Trustees for distribution to
each Person who at any time during the calendar year was a Certificateholder of
the applicable Pool the amount of interest and principal distributed with
respect to each Class of Certificates plus such other customary information as
the Trust Administrator 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 Trust Administrator shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trust Administrator pursuant to any
requirements of the Code as from time to time are in force.
(b) On each Remittance Date, the Co-Trustees 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, as the case
may be, and a statement, prepared by the Servicer or the Trust Administrator,
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 or Trust Administrator provides and deems necessary or
appropriate.
(c) Within a reasonable period of time after the end of each calendar year,
the Trust Administrator shall furnish to the Pool I and Pool II Co-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 Trust Administrator shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Trust Administrator 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 applicable Co-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 Adjustable
Rate Certificates, the actual number of days since the last Remittance Date or,
in the case of the September 1998 Remittance Date, from August 15, 1998) 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. 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 applicable Co-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 applicable
Co-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 September 1998 Remittance
Date, from August 15, 1998) 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 Co-Trustees shall execute and return to the Servicer for
filing the reports of foreclosures and abandonments of any Mortgaged Property of
the applicable Pool prepared by the Servicer 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 Co-Trustees 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 Co-Trustees to
meet the reporting requirements imposed by such Section 6050J.
Section 6.14 ALLOCATION OF TOTAL MONTHLY EXCESS CASHFLOW.
(a) On each Remittance Date, for each Pool of Mortgage Loans the applicable
Co-Trustee shall, based solely 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 II
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 II and (B) the excess of (x) the sum of the aggregate Current
Interest Requirements for the Certificates of such respective Pool, plus
the Pool III Class A, Class MH-1, Class MH-2 and Class BH 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 II 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 II 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 III, to reduce the Pool III Class A
Interest Carryforward Amount, and, in the case of Pool I and Pool II, to
reduce the Pool Carry-Forward Amount;
(ii) SECOND, [Reserved];
(iii) THIRD, to the related Pool, in an amount up to the Subordinated
Deficiency Amount for such Pool as of such Remittance Date;
(iv) FOURTH, in the case of Pool III to reduce the related Class M and
Class B Interest Shortfall Carryforward Amounts and then the Class Realized
Loss Amounts in the order provided under Section 6.08(d)(Z)(xi)-(xvi),
respectively;
(v) FIFTH, [Reserved];
(vi) SIXTH, to the Servicer to the extent of any unreimbursed
Servicing Advances and accrued and unpaid Servicing Fees;
(vii) SEVENTH, in the case of Pool I and Pool II, 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 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);
(ix) NINTH, to provide funds to Pool I and/or Pool II 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 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
(x) TENTH, 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 II, the Servicer must obtain the prior approval of the
Certificate Insurer. The Servicer shall notify the applicable Co-Trustee (and,
with respect to Pool III Mortgage Loans, the FHA Custodian and, with respect to
Pool I or Pool II Mortgage Loans, the Certificate Insurer), that any such
substitution or assumption agreement has been completed by forwarding to the
Custodian (or, with respect to the Pool III Mortgage Loans, FUNB (who shall
forward it to the Pool III Co-Trustee)) the original of such substitution or
assumption agreement and in the case of Pool I and Pool II Mortgage Loans, a
duplicate thereof to the Certificate Insurer and the Pool I and Pool II
Co-Trustee, which original shall be added by the Custodian (or, with respect to
the Pool III Mortgage Loans, the Pool III Co-Trustee) 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 applicable
Co-Trustee (and, with respect to the Pool I and Pool II 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 Custodian (or, with respect to the Pool III
Mortgage Loans, the Pool III Co-Trustee) 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 Custodian (or, with respect to the Pool
III Mortgage Loans, the Pool III Co-Trustee) shall, upon request of the
Servicer and delivery to the Custodian (or, with respect to the Pool III
Mortgage Loans, the Pool III Co-Trustee) 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 Custodian (or, with respect to
the Pool III Mortgage Loans, the Pool III Co-Trustee and the FHA Custodian)
shall execute such documents furnished by the Servicer as shall be necessary to
the prosecution of any such proceedings. Such servicing receipt shall obligate
the Servicer to return the Trustee's Mortgage File to the Custodian (or, with
respect to the Pool III Mortgage Loans, the Pool III Co-Trustee) 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
applicable Co-Trustee for deposit in the applicable Certificate Account or the
Trustee's 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 Custodian (or, with respect to the Pool III Mortgage Loans, the
Pool III Co-Trustee) a certificate of a Servicing Officer certifying as to the
name and address of the Person to which such Trustee's 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 Custodian (or,
with respect to the Pool III Mortgage Loans, the Pool III Co-Trustee) to the
Servicer.
The applicable Co-Trustee upon the request of the Servicer and receipt of
the applicable documents by the Custodian (or the Pool III Co-Trustee with
respect to the Pool III Mortgage Loans) 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 applicable Co-Trustee a certificate
of a Servicing Officer requesting that such pleadings or documents be executed
by the applicable Co-Trustee and certifying as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
applicable 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 applicable Co-Trustee shall, upon receipt of
a written request from a Servicing Officer, execute any document provided to the
applicable 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 applicable 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
applicable Co-Trustee's receipt of such certificate or documents. Such
certificate or documents shall establish to the applicable 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.
Notwithstanding anything in this Agreement to the contrary, with respect to
the Pool III Mortgage Loans, all requests for release, and certificates of the
Servicer relating to releases of the related Trustee's Mortgage Files shall be
delivered by the Servicer to FUNB, which shall forward such requests to the Pool
III Co-Trustee, and all releases of Pool III Trustee's Mortgage Files shall be
made by delivery of such files by the Pool III Co-Trustee to FUNB, which shall
be responsible for delivering such files to the Servicer or its designee. The
Pool III Co-Trustee shall not be liable for FUNB's failure or delay in
forwarding a request for release to the Pool III Co-Trustee or for FUNB's
failure or delay in delivering a Trustee's Mortgage File to the Servicer or its
designee or returning such file to the Pool III Co-Trustee.
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
applicable Co-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 Co-Trustees and
each of the Rating Agencies, on or before May 31 of each year beginning May 31,
1999, 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 May 31 of each year beginning May 31, 1999, the Servicer, at
its expense, shall cause a firm of independent public accountants reasonably
acceptable to the Co-Trustees and the Certificate Insurer to furnish a letter
or letters to the Certificate Insurer, the Co-Trustees 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 CO-TRUSTEES' AND CERTIFICATE INSURER'S RIGHT TO EXAMINE
SERVICER RECORDS AND AUDIT OPERATIONS.
The Co-Trustees 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 CO-TRUSTEES AND THE CERTIFICATE INSURER;
PRINCIPAL AND INTEREST ACCOUNT STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall forward
to the Co-Trustees 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 II to the Certificate Insurer. In addition, the Servicer shall deliver
to the Certificate Insurer on a quarterly basis, beginning in October 1998, a
computer diskette containing a quarterly summary of the information provided in
the statement forwarded to the Certificate Insurer pursuant to the previous
sentence, and also containing information similar to the information provided in
the Mortgage Loan Schedule delivered 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 Co-Trustees, the
Custodian, the FHA Custodian, FUNB, 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 Co-Trustees, the Custodian, the FHA Custodian, FUNB, 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 Co-Trustees, the Custodian, the FHA
Custodian, FUNB, 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 applicable indemnified parties) 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
Co-Trustees, the Custodian, the FHA Custodian, FUNB, the Certificate Insurer
and/or Certificateholder in respect of such claim. The applicable Co-Trustee
shall 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 Co-Trustees, the
Custodian, the FHA Custodian, FUNB, 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 Co-Trustees, the Custodian, the FHA Custodian, FUNB, 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
Co-Trustees, the Custodian, the FHA Custodian, FUNB, 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
applicable indemnified parties) 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 Co-Trustees, the Custodian, FUNB,
the FHA Custodian, the Certificate Insurer and/or Certificateholder in respect
of such claim. The applicable Co-Trustee shall 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 Co-Trustees 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
Co-Trustees 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 Co-Trustees, 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 FHA Custodian and the Claims Administrator hereby appoint 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 Co-Trustees, the FHA Custodian 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 II, the Certificate Insurer or (ii) with respect to
Pool III, the Majority Certificateholders of Pool III Certificates taken
together may, upon written notice to the Co-Trustees 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.
Section 9.07 APPOINTMENT OF TRUST ADMINISTRATOR.
The Representative and Servicer hereby appoint First Union National Bank, a
national banking association, as Trust Administrator and, in such capacity, the
Trust Administrator shall have all the rights, powers, obligations and duties
respecting the Trust Administrator set forth herein.
<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 applicable Co-
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 a Co-Trustee or to
the Servicer and a Co-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 a Co-Trustee or to the Servicer, the
Claims Administrator or the Representative, as the case may be, and a
Co-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, marshaling 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, marshaling 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 applicable
Co-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 Pool I and Pool II Co-Trustee
(or, with respect to the Pool III Mortgage Loans, the Pool III 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 Pool I and Pool II Co-Trustee or its
designee (or, with respect to the Pool III Mortgage Loans, the Pool III
Co-Trustee or its designee) and the Pool I and Pool II Co-Trustee (or, with
respect to the Pool III Mortgage Loans, the Pool III 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 Co-Trustees in effecting the
termination of the Servicer's and the Claims Administrator's responsibilities
and rights hereunder, including, without limitation, the transfer to the
applicable Co-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 CO-TRUSTEES 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 Co-Trustees receive 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
Pool I and Pool II Co-Trustee (or, with respect to the Pool III Mortgage Loans,
the Pool III 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 Co-Trustees
shall not be liable for any actions of any servicer or claims administrator
prior to it, and that the Co-Trustees 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 applicable Co-Trustee, 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 applicable Co-Trustee. As compensation therefor, the Pool I and
Pool II Co-Trustee (or, with respect to the Pool III Mortgage Loans, the Pool
III 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 Servicing Fee, the Contingency Fee or otherwise as provided in
Sections 7.01 and 7.03.
Notwithstanding the above, a 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 a 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 applicable Co-Trustee and remitted directly to such
Co-Trustee or, at the direction of a Co-Trustee, to the successor servicer. The
compensation of any successor servicer and claims administrator (including,
without limitation, a 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 for the related Pool.
In the event a Co-Trustee is required to solicit bids as provided herein, such
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 applicable Co-Trustee shall negotiate and effect
the sale, transfer and assignment of the servicing rights and responsibilities
hereunder with respect to the related Pool or Pools to the qualified party
submitting the highest qualifying bid. The applicable Co-Trustee shall deduct
from any sum received by such 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 applicable 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 Co-Trustees 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 Co-Trustees 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 Co-Trustees 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 applicable 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 Co-Trustees 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 applicable Co-Trustee
to each Certificateholder and the Certificate Insurer and the applicable
Co-Trustee shall have consented thereto. No 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 applicable Co-Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, such
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
Co-Trustees, 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 [RESERVED].
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 Co-Trustees
with respect to the Certificates or exercising any trust or power conferred on
the Co-Trustees 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 Co-Trustees shall have been provided with indemnity
satisfactory to them; and
(iii) the Co-Trustees may take any other action deemed proper by the
Co-Trustees which is not inconsistent with such direction; PROVIDED,
HOWEVER, that the Co-Trustees 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
Co-Trustees 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 five (5) percent of the aggregate Principal
Balances of the Mortgage Loans as of the Cut-Off Date (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) accrued but unpaid interest thereon (whether through
payments by the applicable Mortgagor, Monthly Advances or otherwise) 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, Class AF-8 and Class AF-9 Remittance Rates in the case
of the Pool I Mortgage Loans, the Class AV Remittance Rate in the case of the
Pool II Mortgage Loans, and 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 (z) with
respect to the Pool I and Pool II 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 II Mortgage Loans with aggregate original Principal Balances that equal or
exceed 25% of the aggregate Principal Balance of the Initial Mortgage Loans as
of the Cut-Off Date 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, the Co-Trustee, the Custodian and the
Servicer. In connection with such purchase, the Servicer shall remit to the
applicable Co-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 Co-Trustees an opinion of counsel
experienced in federal income tax matters in form and substance satisfactory to
the Co-Trustees 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 applicable Co-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
applicable Co-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 Co-Trustee therein specified. The
Servicer shall give such notice to the Co-Trustees 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, the Co-Trustees, the Trust Administrator and the
FHA Custodian 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 Co-Trustees 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 Co-Trustees 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 Co-Trustees 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 Co-Trustees 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 Co-Trustees 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 Co-Trustees the direction described
in clause (a)(i) above, the Co-Trustees 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 Co-Trustees
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 Co-Trustees 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.
(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 Co-Trustees 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 Co-Trustees have 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 Co-Trustees
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 Co-Trustees shall (x) deposit into and withdraw from the
applicable 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, 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 and
after payment of all amounts due and owing to the Co-Trustees, the Trust
Administrator and the FHA Custodian hereunder 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 [Reserved]
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 applicable Co-Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Custodian (or, with respect to the Pool III Mortgage Loans, the Pool III
Co-Trustee) 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 applicable Co-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 moneys 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 CO-TRUSTEES
Section 12.01 DUTIES OF CO-TRUSTEES.
Each Co-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,
each Co-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.
Each Co-Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to such
Co-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
Co-Trustees 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
applicable Co-Trustee shall take action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to such
Co-Trustee's satisfaction, the Co-Trustee will provide notice thereof to the
Certificateholders.
The Pool III Co-Trustee represents and warrants that the Pool III
Co-Trustee's computer and other systems used in performing its duties and
obligations under this Agreement will be modified and maintained to operate in a
manner such that at all times, including on and after January 1, 2000, (1) the
Pool III Co-Trustee can perform such duties and obligations in accordance with
the terms of this Agreement and (2) the Pool III Co-Trustee can operate its
business in the same manner as it is operating on the date hereof.
The Pool I and Pool II Co-Trustee hereby warrants that it will use
commercially reasonable efforts to ensure that the computer software and
hardware (as used in this subsection, the "Systems") that are owned by the Pool
I and Pool II Co-Trustee and used to provide the services to be provided by the
Pool I and Pool II Co-Trustee under this Agreement (as used in this subsection
"Services") are 2000 Compliant or will be made 2000 Compliant before December
31, 1999. With respect to software that the Pool I and Pool II Co-Trustee
licenses from third parties and uses in providing the Services ("Third Party
Software"), the Pool I and Pool II Co-Trustee warrants that it has used or will
use commercially reasonable efforts to test the same by September 30, 1999 to
certify, in accordance with the Pool I and Pool II Co-Trustee's standard
practices, that the Third Party Software is 2000 Compliant. If the Pool I and
Pool II Co-Trustee cannot certify any Third Party Software as 2000 Compliant,
the Pool I and Pool II Co-Trustee will use commercially reasonable efforts to
replace such Third Party Software that is warranted or certified by its vendor
as 2000 Compliant, if such replacement is available, compatible with the Pool I
and Pool II Co-Trustee's Systems and deemed by the Pool I and Pool II
Co-Trustee as appropriate under the circumstances. In the event that the Pool I
and Pool II Co-Trustee uses third party service providers to provide the
Services or any portion thereof ("Third Party Services"), the Pool I and Pool II
Co-Trustee warrants that it has in place a program under which it will use
commercially reasonable efforts to contact such service providers and obtain
from them assurances that the Systems that they use in providing Third Party
Services are 2000 Compliant. As used herein, the term "2000 Compliant" means
that the Systems will function without material error caused by the introduction
of dates falling on or after January 1, 2000. Notwithstanding the foregoing, the
parties hereto acknowledge and agree that the Pool I and Pool II Co-Trustee
cannot and does not warrant that the Systems, Third Party Software or Third
Party Services will continue to interface with the hardware, firmware, software
(including operating systems), records or data used by the Representative,
Servicer Claims Administrator, Trust Administrator, Custodian or third parties,
nor does the Pool I and Pool II Co-Trustee make any warranties hereunder with
respect to any public utility, communications service provider, securities or
commodities exchange, or funds transfer network.
No provision of this Agreement shall be construed to relieve a Co-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 a Co-Trustees shall be determined solely by the express
provisions of this Agreement, the Co-Trustees 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 Co-Trustees and, in the absence of bad
faith on the part of a Co-Trustee, such Co-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 such
Co-Trustee and conforming to the requirements of this Agreement;
(ii) A Co-Trustee shall not be personally liable for an error of
judgment made in good faith by officers of such Co-Trustee, unless it shall
be proved that such Co-Trustee was negligent in ascertaining the pertinent
facts;
(iii) A Co-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 such
Co-Trustee, or exercising any trust or power conferred upon such
Co-Trustee, under this Agreement;
(iv) In the absence of actual knowledge of a Responsible Officer of a
Co-Trustee of an Event of Default other than an Event of Nonpayment, a
Co-Trustee shall not be required to take notice or be deemed to have notice
or knowledge of any default or Event of Default unless a Responsible
Officer of such Co-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, a Co-Trustee may
conclusively assume that there is no default or Event of Default; and
(v) A Co-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 Co-Trustees.
(a) Except as otherwise provided in Section 12.01:
(i) A Co-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) A Co-Trustee may consult with counsel of its selection 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) A Co-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 such Co-Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve such Co-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) A Co-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, a Co-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 such Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of such Co-Trustee, not reasonably assured
to such Co-Trustee by the security afforded to it by the terms of this
Agreement, such Co-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 a Co-Trustee, shall be repaid by the Servicer upon demand
from the Servicer's own funds;
(vi) The right of a Co-Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and such
Co-Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(vii) A Co-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
(viii) A Co-Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys.
(ix) The Co-Trustees shall have no liability or responsibility in
connection with or arising out of the appointment of the Custodian or the
FHA Custodian or any acts or omissions on the part of the other Co-Trustee,
the Custodian or the FHA Custodian.
(b) Following the Startup Day, except for deposits, if any, into the Spread
Account pursuant to Section 6.05, the Co-Trustees shall not knowingly accept any
contribution of assets to the Trust Fund, unless the Co-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 CO-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 Co-Trustees assume no responsibility for
their correctness. The Co-Trustee make no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Co-Trustees 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 Co-Trustees 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 CO-TRUSTEES MAY OWN CERTIFICATES.
A Co-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 a
Co-Trustee, and may otherwise deal with the parties hereto.
Section 12.05 REPRESENTATIVE TO PAY CO-TRUSTEES', TRUST ADMINISTRATOR'S AND
FHA CUSTODIAN'S FEES AND EXPENSES.
The Representative covenants and agrees to pay to the Co-Trustees, the
Trust Administrator, the FHA Custodian and the Custodian from time to time
compensation for their services in accordance with separate agreements or fee
schedules (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust). The Representative will pay or
reimburse the Co-Trustees, the Trust Administrator, the FHA Custodian and the
Custodian upon request for all reasonable expenses, disbursements and advances
incurred or made 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 Co-Trustees, the Trust Administrator and the FHA Custodian 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
Co-Trustees, the Trust Administrator or the FHA Custodian 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 Representative shall reimburse
the respective party for such shortfall out of its own funds without
reimbursement therefor, except as provided in Section 6.03. The Co-Trustees, the
Trust Administrator, the FHA Custodian and the Custodian and any director,
officer, employee or agent of the Co-Trustees, the Trust Administrator and the
FHA Custodian shall be indemnified by the Representative and held harmless
against any loss, liability or expense 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 thereunder or by reason of
reckless disregard of obligations and duties hereunder or thereunder. The
obligations of the Representative under this Section 12.05 shall survive payment
of the Certificates. Notwithstanding the foregoing, the Representative covenants
and agrees to pay to the Pool III Co-Trustee from time to time compensation for
its services as custodian of the Pool III Trustee's Mortgage Files in accordance
with a separate agreement or fee schedule.
Section 12.06 ELIGIBILITY REQUIREMENTS FOR CO-TRUSTEES.
Each Co-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 initial Co-Trustees, 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 a
Co-Trustee shall cease to be eligible in accordance with the provisions of this
Section, such Co-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 Co-Trustees.
A Co-Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the Trust
Administrator, the Certificate Insurer, the other Co-Trustee and to all
Certificateholders. Upon receiving such notice of resignation, the Trust
Administrator 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 Co-Trustee and to the successor trustee. A copy of
such instrument shall be delivered to the Certificateholders by the Trust
Administrator. 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 Co-Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee. If the resigning
Co-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 Co-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 Trust Administrator, or if at any time the Co-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
Trust Administrator may remove such Co-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 Trust Administrator.
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 a Co-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 Trust Administrator, one complete set to the
Co-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 CO-TRUSTEES.
Any successor co-trustee appointed as provided in Section 12.07 shall
execute, acknowledge and deliver to the Trust Administrator and to its
predecessor co-trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor co-trustee shall become
effective and such successor co-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 co-trustee herein. The predecessor co-trustee shall deliver to the
successor co-trustee all Mortgage Files and related documents and statements
held by it hereunder, and the Servicer and the predecessor co-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
co-trustee all such rights, powers, duties and obligations.
No successor co-trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor co-trustee shall be
eligible under the provisions of Section 12.06.
Upon acceptance of appointment by a successor co-trustee as provided in
this Section, the Trust Administrator shall mail notice of the succession of
such co-trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Trust Administrator fails to mail such
notice within 10 days after acceptance of appointment by the successor
co-trustee, the successor co-trustee shall cause such notice to be mailed at the
expense of the Trust Administrator.
Section 12.09 MERGER OR CONSOLIDATION OF CO-TRUSTEES.
Any Person into which a Co-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 such Co-Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of such Co-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 a Co-Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by such
Co-Trustee, and the Certificate Insurer pursuant to the procedure set forth
below, to act as co-trustee or co-trustees, jointly with the applicable
Co-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 applicable Co-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, a Co-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 co-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 applicable Co-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 such Co-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 applicable Co-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 such Co-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 and the applicable
Co-Trustee shall have no liability to the Certificateholders in respect of its
failure to appoint such co-trustee or separate trustee.
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 applicable Co-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 Co-Trustee hereunder or
as successor to the Servicer hereunder), the Co-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 applicable
Co-Trustee.
Any notice, request or other writing given to a Co-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 Co-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
applicable Co-Trustee. Every such instrument shall be filed with the applicable
Co-Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
applicable Co-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 applicable
Co-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
applicable Co-Trustee, to the extent permitted by law, without the appointment
of a new or successor trustee.
Section 12.11 AUTHENTICATING AGENT.
Upon the request of the Trust Administrator, each Co-Trustee shall appoint
an Authenticating Agent, with power to act on the applicable Co-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 applicable
Co-Trustee. Such Authenticating Agent shall at all times be a Person meeting the
requirements for a Co-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 applicable Co-Trustee and the Trust Administrator. A
Co-Trustee may at any time terminate the agency of any Authenticating Agent
appointed by it 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 applicable Co-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.
Each Co-Trustee, upon request, will furnish the Trust Administrator with
all such information within such Co-Trustee's possession as may be reasonably
required in connection with the Trust Administrator'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 a Co-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 Trust Administrator for filing.
For Federal income tax purposes, the taxable year of the Trust Fund shall
be a calendar year and the Trust Administrator shall maintain or cause the
maintenance of the books of REMIC I and REMIC II on the accrual method of
accounting.
The Trust Administrator 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 Trust Administrator shall provide the name,
address and telephone number of the person who can be contacted to obtain
information required to be reported to the holders of regular interests in REMIC
I and REMIC II (the "REMIC Reporting Agent") as required by IRS Form 8811. The
Trust Administrator 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, 1998 and each calendar year thereafter) in such manner as the Code
or applicable Treasury regulations may prescribe. The applicable Co-Trustee
shall sign all tax information returns provided to it by the Trust Administrator
to be 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 Trust
Administrator. The Trust Administrator 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 Trust Administrator 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 a Co-Trustee from signing
tax or information returns or other statements, or the Trust Administrator from
acting as Tax Matters Person (as an agent or otherwise), such Co-Trustee or the
Trust Administrator 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 Pool I and Pool II Co-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 Pool I and Pool II Co-Trustee may (or, with respect to the Pool III
Mortgage Loans, the Pool III Co-Trustee may), with the consent of the Trust
Administrator, appoint one or more Custodians to hold all or a portion of the
Trustee's Mortgage Files for the related Pool as agent for such Co-Trustee by
(except with respect to the initial Custodian for the Pool I and Pool II
Mortgage Loans) entering into a Custodial Agreement. Subject to this Article
XII, each Co-Trustee agrees to comply with the terms of each such Custodial
Agreement to which it is a party and to enforce the terms and provisions thereof
against the Custodian for the benefit of the Certificateholders and the
Certificate Insurer. Each Custodian (other than First Union National Bank) 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 Pool I and Pool II Co-Trustee and the Trust Administrator hereby
appoint First Union National Bank, Corporate Trust Department, as Custodian with
respect to the Trustee's Mortgage Files relating to all Pool I and II 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 I and Pool II Mortgage Loans.
The Custodian shall be entitled to rely and act upon advice of counsel with
respect to its performance hereunder as Custodian and shall be without liability
for any action reasonably taken in good faith pursuant to such advice, provided
that such action is not in violation of applicable Federal or State law. The
Custodian shall have no duties or obligations other than those specifically set
forth herein, and no further duties or obligations shall arise by implication or
otherwise. The Custodian shall have no responsibility or duty with respect to
the Trustee's Mortgage Files that it has relinquished from its possession
pursuant to the terms hereof during the period of time that the Custodian is not
in possession of such Trustee's Mortgage Files. The Custodian agrees to use its
best judgment and good faith in the performance of such obligations and duties
and shall incur no liability for its acts or omissions hereunder, except as may
result from its negligence or willful misconduct. No provision of this Agreement
shall require the Custodian to expend or risk its own funds or otherwise incur
financial liability in the performance of its duties hereunder if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity is not reasonably assured to it.
Section 12.14. PROTECTION OF TRUST FUND.
(a) Each Co-Trustee will hold the related portion of 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
applicable Co-Trustee, and the ownership interests of the Owners
represented thereby, in the Trust Fund against the claims of all Persons
and parties.
Each Co-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, each Co-Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement and, in the case of the Pool I and Pool II Co-Trustee, 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 a Co-Trustee unless such 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 Trust Administrator in accordance with the terms of
this Agreement.
(c) Each Co-Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
such Co-Trustee's fiduciary duties.
Section 12.15. CALCULATION OF LIBOR.
(a) On each Interest Determination Date, the Trust Administrator 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 Remittance Rate 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 Trust Administrator will
request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
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 Trust
Administrator, 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 Co-Trustees 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
Remittance Rates the Trust Administrator 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 Co-Trustees shall
have liability or responsibility to any Person for (i) the Trust Administrator's
selection of Reference Banks for purposes of determining LIBOR or (ii) the Trust
Administrator'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 Remittance Rate by the Trust
Administrator shall (in the absence of manifest error) be final, conclusive and
binding upon each Holder of a Certificate, the Representative and the Servicer.
The Trust Administrator 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
Co-Trustees 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 Co-Trustees, 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 Co-Trustees, 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 Co-Trustees receive 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.
(d) Any amendment to this Agreement shall also require the consent of the
FHA Custodian, the Trust Administrator, FUNB and/or the Custodian if such
proposed amendment affects any of their respective rights, duties or obligations
hereunder.
(e) Any Opinion of Counsel delivered to the Co-Trustees pursuant to this
Section 13.02 also shall state that the amendment being made is permitted by the
terms of this Agreement.
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., 707 Third Street, West Sacramento, California
95605, 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 Bank of New York as
Co-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 Norwest as Co-Trustee, Norwest Bank Minnesota, National Association, 11000
Broken Land Parkway, Columbia, Maryland 21044, Attention: Trust Department, The
Money Store 1998-B. (iv) in the case of the Certificateholders, as set forth in
the Certificate Register, (v) in the case of Moody's, to Moody's Investors
Service, Inc., Home Equity Group, 99 Church Street, 4th Floor, New York, New
York 10007, (vi) in the case of S&P, to Standard & Poor's, 25 Broadway, 20th
Floor, New York, New York 10004, Attention: Residential Mortgages, (vii) in the
case of Fitch, to Fitch IBCA, Inc., One State Street Plaza, New York, New York
10004, Attention: Residential Mortgage Loan Structured Finance, (viii) in the
case of the FHA Custodian, First Union Trust Company, National Association, One
Rodney Square, First Floor, 920 King Street, Wilmington, Delaware 19801,
Attention: Corporate Trust Department, (ix) in the case of the Custodian, First
Union National Bank, Trust Department, 9639 Doctor Perry Road, Suite 124,
Ijamsville, Maryland 21754, Attention: Robin Belanger, or (x) in the case of the
Trust Administrator, First Union National Bank, 230 South Tryon Street, 9th
Floor, Charlotte, NC 28288, Attention: The Money Store Series 1998-B or to such
other address as such party may hereafter specify in writing. 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 Co-Trustees 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 II 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: Insured Portfolio Management-SF (The Money Store).
Section 13.13 PAYING AGENT.
The Co-Trustees may, subject to the eligibility requirements for the
Co-Trustees set forth in Section 12.06 hereof, other than Section 12.06(iv),
respectively 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 respective Co-Trustee.
Each such Paying Agent other than the respective Co-Trustee shall execute
and deliver to the respective Co-Trustee an instrument in which such Paying
Agent shall agree with the respective Co-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 respective Co-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 respective Co-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 respective Co-Trustee.
Any such Paying Agent may be removed at any time by an instrument filed with
such Paying Agent signed by the respective Co-Trustee.
In the event of the resignation or removal of any Paying Agent other than
the respective Co-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 respective Co-Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the respective Co-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 Representative 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 Union National Bank), (3) any change of the
Co-Trustees 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 II
Certificates, which notice shall acknowledge that the Representative, or such
affiliate understands that such Pool I or Pool II 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 II Certificates are owned by the Representative or any such affiliate.
Section 13.15 THIRD PARTY RIGHTS.
The Co-Trustees, the Representative, the Servicer and each of the
Originators listed herein agree that each of the Certificate Insurer, the FHA
Custodian, the Trust Administrator and FUNB and the Custodian 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 Co-Trustees 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 Co-Trustee
for Pool I and Pool II
By:/s/ Robert P. Muller
---------------------
Name: Robert P. Muller
Title: Assistant Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Co-Trustee for Pool III
By: /s/ Amy Wahl
---------------------
Name: Amy Wahl
Title: Assistant Vice President
<PAGE>
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: Senior 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: Senior Vice President
<PAGE>
ACCEPTANCE OF FHA CUSTODIAN
First Union Trust Company, National Association hereby accepts its
appointment pursuant to Section 12.10 of the within instrument to serve as FHA
Custodian 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 FHA Custodian
By:/s/ Dan Ober
--------------------
Name: Dan Ober
Title: Vice President
<PAGE>
ACCEPTANCE OF CUSTODIAN
First Union National Bank, Corporate Trust Department, hereby accepts its
appointment pursuant to Section 12.13 of the within instrument to serve as
Custodian with respect to the Pool I and Pool II Mortgage Loans and hereby
acknowledges that it is bailee of the Pool I and Pool II Co-Trustee and is
holding all of the Trustees' Mortgage Files relating to the Pool I and Pool II
Mortgage Loans delivered to it solely in trust for the Pool I and Pool II
Co-Trustee. In connection therewith, First Union National Bank agrees to be
bound by all applicable provisions of such instrument.
FIRST UNION NATIONAL BANK, as
Custodian
By:/s/ Dan Ober
------------------------
Name: Dan Ober
Title: Vice President
<PAGE>
ACCEPTANCE OF FUNB AND TRUST ADMINISTRATOR
First Union National Bank hereby accepts its appointment pursuant to the
within instrument to serve in its individual capacity and as Trust Administrator
for the purposes specified therein. In connection therewith, First Union
National Bank agrees to be bound by all applicable provisions of such
instrument.
FIRST UNION NATIONAL BANK,
individually and as Trust
Administrator
By:/s/ Dan Ober
---------------------
Name: Dan Ober
Title: Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 20th day of August 1998 before me, a Notary Public in and for said
State, personally appeared Robert P. Muller, 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.
/s/ Maria K. Montgomery
----------------------------
Notary Public
My Commission expires
April 4, 2000
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 20th day of August 1998 before me, a Notary Public in and for said
State, personally appeared Amy Wahl, known to me to be an officer of Norwest
Bank Minnesota, National Association, a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said national banking association, and acknowledged to
me that such national banking association, 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.
/s/ Maria K. Montgomery
---------------------------
Notary Public
My Commission expires
April 4, 2000
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ___________ )
On the 20th day of August 1998 before me, a Notary Public in and for the
State of California, personally appeared Michael H. 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.
/s/ Future Swan
--------------------
Notary Public
My Commission expires
August 13, 1999
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ____________ )
On the 20th day of August 1998 before me, a Notary Public in and for the
State of California, personally appeared Michael H. Benoff known to me to be the
Senior 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.
/s/ Future Swan
---------------------
Notary Public
My Commission expires
August 13, 1999
<PAGE>
SCHEDULE I
DESCRIPTION OF CERTAIN LITIGATION
None.
<PAGE>
EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include a
copy of any of the following items delivered to the respective Co-Trustee and an
original of any of the other following items, all of which shall be available
for inspection by the Certificateholders:
1. The original Mortgage Note, endorsed "Pay to the order of holder"
or "Pay to the order of ______________" and signed 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.
2. Either: (i) the original recorded 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.
3. Either (i) the original Assignment of Mortgage from the Person
delivering such Assignment, in the case of the Pool I and Pool II
Mortgage Loans, to "The Bank of New York, as Co-Trustee of Pool I
and Pool II under the Pooling and Servicing Agreement, dated as
of July 31, 1998, Asset Backed Certificates Series 1998-B", or in
the case of the Pool III Mortgage Loans (other than the FHA
Loans), to Norwest Bank Minnesota, National Association, as
Co-Trustee of Pool III, under the Pooling and Servicing
Agreement, dated as of July 31, 1998, Asset Backed Certificates
Series 1998-B" or, in the case of the FHA Loans, to "First Union
Trust Company, National Association, as FHA Custodian under the
Pooling and Servicing Agreement, dated as of July 31, 1998,
Series 1998-B" 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 the Assignment of Mortgage
certified as a true copy by a Responsible Officer of the
Originator where the original was transmitted for recording
(provided, however, that where the original Assignment of
Mortgage is not being delivered to either Co-Trustee or the FHA
Custodian, as applicable, each such Responsible Officer may
complete one or more blanket certificates attaching copies of one
or more of such Assignments of Mortgage relating to the Mortgages
originated by the related Originator).
4. 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 a Originator, 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.
5. Originals of all assumption and modification agreements, if any.
6. Either: (i) original intervening assignments, if any, showing a
complete chain of title from the originator to the Person
delivering such Assignment, including warehousing assignments,
with recording information thereon, if such assignments were
recorded, (ii) copies of any assignments certified as true copies
by a Responsible Officer of the Originator where the original has
been transmitted for recording until such time as the originals
are returned by the public recording office, or (iii) copies of
any assignments certified by the public recording office in those
instances where the original recorded assignments have been lost.
7. Mortgage Loan closing statement and any other truth-in-lending or
real estate settlement procedure forms required by law.
8. Residential loan application.
9. Verification of employment and income, and tax returns, if any.
10. Credit report on the mortgagor.
11. Except with respect to 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 and
identifying the type thereof.
12. Copy of any Prior Lien.
13. All other papers and records developed or originated by the
Originator or others, required to document the Mortgage Loan or
to service the Mortgage Loan.
<PAGE>
EXHIBIT B
FORMS OF CERTIFICATES
<PAGE>
<PAGE>
THE MONEY STORE TRUST 1998-B
_____% THE MONEY STORE TRUST ASSET BACKED CERTIFICATES
CLASS AF___
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
(This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a Fractional
Undivided Interest in the Trust described herein.)
No.: AF___ --------------- -----------------------
Startup Day Initial Remittance Rate
- ------------------ --------------- -------------
Original Principal Final Scheduled CUSIP
Amount Distribution
$--------------
Original Class
Principal Amount
CEDE & CO.
- --------------------------------------------------------------------------------
Registered Holder
<PAGE>
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of three sub-trusts, including one pool ("Pool I") of
one- to four-family ("single family"), residential first and second mortgage
loans, substantially all having fixed rates, (the "Pool I Home Equity Loans"),
one pool ("Pool II") of single family residential first mortgage loans,
substantially all having adjustable rates, (the "Pool II Home Equity Loans"),
and one pool ("Pool III") of primarily fixed rate single family residential
first, second and more junior home improvement mortgage loans (the "Pool III
Home Improvement Loans"), certain of which loans (the "FHA Loans") are partially
insured by the Federal Housing Administration under Title I of the National
Housing Act of 1934, and certain other related assets. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1998
(the "Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative," "Servicer" and "Claims Administrator"), certain subsidiaries
of the Representative (the "Originators") and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees").
The Holder hereof is entitled to principal payments on each
Remittance Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Remittance Date of the Class of Certificates represented by
this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Remittance Date be less
than the Original Principal Amount set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
EXCEPT THE FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in twenty-two Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Service Agreement. The Holder of this Certificate by virtue of acceptance hereof
assents and is bound by such Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Remittance
Date"), commencing September 1998, the Holders of the Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which such Remittance Date occurs (the "Record Date") will
be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the applicable Co-Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the applicable Certificate Account, and payments received by the undersigned
Co-Trustee pursuant to the related MBIA Policy, all as more specifically set
forth hereinabove and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect
to each Class of Certificates shall be given by the applicable Co-Trustee to the
Certificateholders of each Class after the applicable Co-Trustee determines that
a final distribution is required to be made, specifying (i) the final Remittance
Date upon which final distribution on each Class of Certificates will be made
upon presentation and surrender of the Certificates of such Class at the office
of such Co-Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the applicable Co-Trustee.
The Holders of a majority of the Percentage Interests represented
by the Pool I, Pool II and Pool III Certificates, upon compliance with the
requirements set forth in the Pooling and Servicing Agreement, have the right to
exercise any trust or power set forth in the Pooling and Servicing Agreement
with respect to the Certificates or the Trust Fund.
As provided in the Pooling and Servicing Agreement, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The undersigned Co-Trustee is required to furnish certain
information on each Remittance Date to the Holder of this Certificate, as more
fully described in the Pooling and Servicing Agreement.
The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1.00. As provided in the Pooling and Servicing Agreement,
Certificates are exchangeable for new Certificates of the same Class as this
Certificate in authorized denominations evidencing the same aggregate Percentage
Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or applicable Co-Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The undersigned Co-Trustee and any agent of such Co-Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither such Co-Trustee nor any such agent shall be
affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed
by the undersigned Co-Trustee or an Authenticating Agent, by manual signature,
this Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to
be duly executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________________
Name: Michael H. Benoff
Title: Executive Vice President
This is one of the Class AF-___
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE BANK OF NEW YORK,
as Co-Trustee
By:________________________
Authorized Signatory
Date: August 20, 1998
<PAGE>
THE MONEY STORE TRUST 1998-B
ADJUSTABLE RATE THE MONEY STORE TRUST ASSET BACKED CERTIFICATES
CLASS AV___
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
(This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a Fractional
Undivided Interest in the Trust described herein.)
No.: AV___ ----------- ----------------------
Startup Day Initial Remittance Rate
$----------------- --------------- ---------------
Original Principal Final Scheduled CUSIP
Amount Distribution
$-----------------------
Original Class Principal
Amount
Cede & Co.
- --------------------------------------------------------------------------------
Registered Holder
<PAGE>
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of three sub-trusts, including one pool ("Pool I") of
one- to four-family ("single family"), residential first and second mortgage
loans, substantially all having fixed rates, (the "Pool I Home Equity Loans"),
one pool ("Pool II") of single family residential first mortgage loans,
substantially all having adjustable rates, (the "Pool II Home Equity Loans"),
and one pool ("Pool III") of primarily fixed rate single family residential
first, second and more junior home improvement mortgage loans (the "Pool III
Home Improvement Loans"), certain of which loans (the "FHA Loans") are partially
insured by the Federal Housing Administration under Title I of the National
Housing Act of 1934, and certain other related assets. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1998
(the "Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative," "Servicer" and "Claims Administrator"), certain subsidiaries
of the Representative (the "Originators") and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees").
The Holder hereof is entitled to principal payments on each
Remittance Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Remittance Date of the Class of Certificates represented by
this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Remittance Date be less
than the Original Principal Amount set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
EXCEPT THE FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in twenty-two Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Service Agreement. The Holder of this Certificate by virtue of acceptance hereof
assents and is bound by such Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Remittance
Date"), commencing September 1998, the Holders of the Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which such Remittance Date occurs (the "Record Date") will
be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the applicable Co-Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Initial Remittance Rate for the Class of Certificates
represented by this Certificates shall be as set forth on the face hereof. For
each Remittance Date thereafter, the Remittance Rate for such Class of
Certificates shall adjust a based upon LIBOR, as described in the Pooling and
Servicing Agreement, and subject to the Net Funds Cap.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the applicable Certificate Account, and payments received by the undersigned
Co-Trustee pursuant to the related MBIA Policy, all as more specifically set
forth hereinabove and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect
to each Class of Certificates shall be given by the applicable Co-Trustee to the
Certificateholders of each Class after the applicable Co-Trustee determines that
a final distribution is required to be made, specifying (i) the final Remittance
Date upon which final distribution on each Class of Certificates will be made
upon presentation and surrender of the Certificates of such Class at the office
of each Co-Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the applicable Co-Trustee.
The Holders of a majority of the Percentage Interests represented
by the Pool I, Pool II and Pool III Certificates, upon compliance with the
requirements set forth in the Pooling and Servicing Agreement, have the right to
exercise any trust or power set forth in the Pooling and Servicing Agreement
with respect to the Certificates or the Trust Fund.
As provided in the Pooling and Servicing Agreement, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The undersigned Co-Trustee is required to furnish certain
information on each Remittance Date to the Holder of this Certificate, as more
fully described in the Pooling and Servicing Agreement.
The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1.00. As provided in the Pooling and Servicing Agreement,
Certificates are exchangeable for new Certificates of the same Class as this
Certificate in authorized denominations evidencing the same aggregate Percentage
Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or applicable Co-Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The undersigned Co-Trustee and any agent of such Co-Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither such Co-Trustee nor any such agent shall be
affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed
by the undersigned Co-Trustee or an Authenticating Agent, by manual signature,
this Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to
be duly executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________________
Name: Michael H. Benoff
Title: Executive Vice President
This is one of the Class AV___
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE BANK OF NEW YORK,
as Co-Trustee
By:____________________
Authorized Signatory
Date: August 20, 1998
<PAGE>
THE MONEY STORE TRUST 1998-B
_____% THE MONEY STORE TRUST ASSET BACKED CERTIFICATES
CLASS AH___
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
(This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a Fractional
Undivided Interest in the Trust described herein.)
No.: AH___ -------------- -----------------------
Startup Day Initial Remittance Rate
$----------------- -------------- ------------------
Original Principal Final Scheduled CUSIP
Amount Distribution
$-----------------------
Original Class Principal
Amount
Cede & Co.
- --------------------------------------------------------------------------------
Registered Holder
<PAGE>
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of three sub-trusts, including one pool ("Pool I") of
one- to four-family ("single family"), residential first and second mortgage
loans, substantially all having fixed rates, (the "Pool I Home Equity Loans"),
one pool ("Pool II") of single family residential first mortgage loans,
substantially all having adjustable rates, (the "Pool II Home Equity Loans"),
and one pool ("Pool III") of primarily fixed rate single family residential
first, second and more junior home improvement mortgage loans (the "Pool III
Home Improvement Loans"), certain of which loans (the "FHA Loans") are partially
insured by the Federal Housing Administration under Title I of the National
Housing Act of 1934, and certain other related assets. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1998
(the "Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative," "Servicer" and "Claims Administrator"), certain subsidiaries
of the Representative (the "Originators") and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees").
The Holder hereof is entitled to principal payments on each
Remittance Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Remittance Date of the Class of Certificates represented by
this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Remittance Date be less
than the Original Principal Amount set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
EXCEPT THE FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in twenty-two Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Service Agreement. The Holder of this Certificate by virtue of acceptance hereof
assents and is bound by such Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Remittance
Date"), commencing September 1998, the Holders of the Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which such Remittance Date occurs (the "Record Date") will
be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the applicable Co-Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the applicable Certificate Account, and payments received by the undersigned
Co-Trustee pursuant to the related MBIA Policy, if any, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect
to each Class of Certificates shall be given by the applicable Co-Trustee to the
Certificateholders of each Class after the applicable Co-Trustee determines that
a final distribution is required to be made, specifying (i) the final Remittance
Date upon which final distribution on each Class of Certificates will be made
upon presentation and surrender of the Certificates of such Class at the office
of such Co-Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the applicable Co-Trustee.
The Holders of a majority of the Percentage Interests represented
by the Pool I, Pool II and Pool III Certificates, upon compliance with the
requirements set forth in the Pooling and Servicing Agreement, have the right to
exercise any trust or power set forth in the Pooling and Servicing Agreement
with respect to the Certificates or the Trust Fund.
As provided in the Pooling and Servicing Agreement, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The undersigned Co-Trustee is required to furnish certain
information on each Remittance Date to the Holder of this Certificate, as more
fully described in the Pooling and Servicing Agreement.
The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1.00. As provided in the Pooling and Servicing Agreement,
Certificates are exchangeable for new Certificates of the same Class as this
Certificate in authorized denominations evidencing the same aggregate Percentage
Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or applicable Co-Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The undersigned Co-Trustee and any agent of such Co-Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither such Co-Trustee nor any such agent shall be
affected by notice to the contrary.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to
be duly executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________________
Name: Michael H. Benoff
Title: Executive Vice President
This is one of the Class AH___
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Co-Trustee
By:____________________
Authorized Signatory
Date: August 20, 1998
<PAGE>
THE MONEY STORE TRUST 1998-B
% THE MONEY STORE TRUST ASSET BACKED CERTIFICATES
CLASS MH-__
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS AH
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
The purchase of a Class M or Class B Certificate will be deemed a
representation by the purchaser that either (i) it is not purchasing such Class
M or Class B Certificate, directly or indirectly, for, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of ERISA or Section 4975 of the Code or (ii) the purchaser is an insurance
company which is purchasing such Class M or Class B Certificate with funds
contained in an "insurance company general account" as such term is defined in
Section V(e) of PTCE 95-60 and that the purchase and holding of such Class M or
Class B Certificate is covered under PTCE 95-60.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
(This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a Fractional
Undivided Interest in the Trust described herein.)
No.: MH-1 ----------- -----------------------
Startup Day Initial Remittance Rate
$----------------- --------------- -------------------
Original Principal Final Scheduled CUSIP
Amount Distribution
$-----------------------
Original Class Principal
Amount
Cede & Co.
- --------------------------------------------------------------------------------
Registered Holder
<PAGE>
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of three sub-trusts, including one pool ("Pool I") of
one- to four-family ("single family"), residential first and second mortgage
loans, substantially all having fixed rates, (the "Pool I Home Equity Loans"),
one pool ("Pool II") of single family residential first mortgage loans,
substantially all having adjustable rates, (the "Pool II Home Equity Loans"),
and one pool ("Pool III") of primarily fixed rate single family residential
first, second and more junior home improvement mortgage loans (the "Pool III
Home Improvement Loans"), certain of which loans (the "FHA Loans") are partially
insured by the Federal Housing Administration under Title I of the National
Housing Act of 1934, and certain other related assets. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1998
(the "Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative," "Servicer" and "Claims Administrator"), certain subsidiaries
of the Representative (the "Originators") and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees").
The Holder hereof is entitled to principal payments on each
Remittance Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Remittance Date of the Class of Certificates represented by
this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Remittance Date be less
than the Original Principal Amount set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
EXCEPT THE FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in twenty-two Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Service Agreement. The Holder of this Certificate by virtue of acceptance hereof
assents and is bound by such Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Remittance
Date"), commencing September 1998, the Holders of the Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which such Remittance Date occurs (the "Record Date") will
be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the applicable Co-Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the applicable Certificate Account, and payments received by the undersigned
Co-Trustee pursuant to the related MBIA Policy, if any, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect
to each Class of Certificates shall be given by the applicable Co-Trustee to the
Certificateholders of each Class after the applicable Co-Trustee determines that
a final distribution is required to be made, specifying (i) the final Remittance
Date upon which final distribution on each Class of Certificates will be made
upon presentation and surrender of the Certificates of such Class at the office
of such Co-Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the applicable Co-Trustee.
The Holders of a majority of the Percentage Interests represented
by the Pool I, Pool II and Pool III Certificates, upon compliance with the
requirements set forth in the Pooling and Servicing Agreement, have the right to
exercise any trust or power set forth in the Pooling and Servicing Agreement
with respect to the Certificates or the Trust Fund.
As provided in the Pooling and Servicing Agreement, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The undersigned Co-Trustee is required to furnish certain
information on each Remittance Date to the Holder of this Certificate, as more
fully described in the Pooling and Servicing Agreement.
The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1.00. As provided in the Pooling and Servicing Agreement,
Certificates are exchangeable for new Certificates of the same Class as this
Certificate in authorized denominations evidencing the same aggregate Percentage
Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or applicable Co-Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The undersigned Co-Trustee and any agent of such Co-Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither such Co-Trustee nor any such agent shall be
affected by notice to the contrary.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to
be duly executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________________
Name: Michael H. Benoff
Title: Executive Vice President
This is one of the Class MH-
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Co-Trustee
By:_____________________
Authorized Signatory
Date: August 20, 1998
<PAGE>
THE MONEY STORE TRUST 1998-B
% THE MONEY STORE TRUST ASSET BACKED CERTIFICATES
CLASS BH___
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS AH
CERTIFICATES, CLASS MH-1 CERTIFICATES AND CLASS MH-2 CERTIFICATES AS DESCRIBED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
The purchase of a Class M or Class B Certificate will be deemed a
representation by the purchaser that either (i) it is not purchasing such Class
M or Class B Certificate, directly or indirectly, for, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of ERISA or Section 4975 of the Code or (ii) the purchaser is an insurance
company which is purchasing such Class M or Class B Certificate with funds
contained in an "insurance company general account" as such term is defined in
Section V(e) of PTCE 95-60 and that the purchase and holding of such Class M or
Class B Certificate is covered under PTCE 95-60.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
(This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a fractional
ownership interest in the Trust described herein.)
No.: BH___ ------------- -----------------------
Startup Day Initial Remittance Rate
$------------------------ ---------------------------- ------------
Original Principal Amount Final Scheduled Distribution CUSIP
$------------------
Original Class Principal Amount
Cede & Co.
- --------------------------------------------------------------------------------
Registered Holder
<PAGE>
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of three sub-trusts, including one pool ("Pool I") of
one- to four-family ("single family"), residential first and second mortgage
loans, substantially all having fixed rates, (the "Pool I Home Equity Loans"),
one pool ("Pool II") of single family residential first mortgage loans,
substantially all having adjustable rates, (the "Pool II Home Equity Loans"),
and one pool ("Pool III") of primarily fixed rate single family residential
first, second and more junior home improvement mortgage loans (the "Pool III
Home Improvement Loans"), certain of which loans (the "FHA Loans") are partially
insured by the Federal Housing Administration under Title I of the National
Housing Act of 1934, and certain other related assets. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1998
(the "Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative," "Servicer" and "Claims Administrator"), certain subsidiaries
of the Representative (the "Originators") and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees").
The Holder hereof is entitled to principal payments on each
Remittance Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Remittance Date of the Class of Certificates represented by
this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Remittance Date be less
than the Original Principal Amount set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
EXCEPT THE FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in twenty-two Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Service Agreement. The Holder of this Certificate by virtue of acceptance hereof
assents and is bound by such Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Remittance
Date"), commencing September 1998, the Holders of the Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which such Remittance Date occurs (the "Record Date") will
be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the applicable Co-Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the applicable Certificate Account, and payments received by the undersigned
Co-Trustee pursuant to the related MBIA Policy, if any, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect
to each Class of Certificates shall be given by the applicable Co-Trustee to the
Certificateholders of each Class after the applicable Co-Trustee determines that
a final distribution is required to be made, specifying (i) the final Remittance
Date upon which final distribution on each Class of Certificates will be made
upon presentation and surrender of the Certificates of such Class at the office
of such Co-Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the applicable Co-Trustee.
The Holders of a majority of the Percentage Interests represented
by the Pool I, Pool II and Pool III Certificates, upon compliance with the
requirements set forth in the Pooling and Servicing Agreement, have the right to
exercise any trust or power set forth in the Pooling and Servicing Agreement
with respect to the Certificates or the Trust Fund.
As provided in the Pooling and Servicing Agreement, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The undersigned Co-Trustee is required to furnish certain
information on each Remittance Date to the Holder of this Certificate, as more
fully described in the Pooling and Servicing Agreement.
The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1.00. As provided in the Pooling and Servicing Agreement,
Certificates are exchangeable for new Certificates of the same Class as this
Certificate in authorized denominations evidencing the same aggregate Percentage
Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or applicable Co-Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The undersigned Co-Trustee and any agent of such Co-Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither such Co-Trustee nor any such agent shall be
affected by notice to the contrary.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to
be duly executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________________
Name: Michael H. Benoff
Title: Executive Vice President
This is one of the Class BH___
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
Norwest Bank Minnesota, National
Association,
as Pool III Co-Trustee
11000 Broken Land Parkway
Columbia, Maryland 21044
By:_____________________
Authorized Signatory
Date: August 20, 1998
<PAGE>
THE MONEY STORE TRUST 1998-B
THE MONEY STORE TRUST ASSET BACKED CERTIFICATES
CLASS X
Representing Certain Interests in a Trust
containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THE CERTIFICATE WAS ISSUED ON AUGUST 20, 1998. UNDER TREASURY
REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL PAYMENTS ON THE
CERTIFICATE MAY BE TREATED AS PART OF THE STATED REDEMPTION PRICE AT MATURITY.
IN THAT CASE, ASSUMING THAT EACH MORTGAGE LOAN UNDERLYING THIS CERTIFICATE
PREPAYS IN ACCORDANCE WITH 100% PREPAYMENT ASSUMPTION (AS DEFINED IN THE POOLING
AND SERVICING AGREEMENT, AS DEFINED BELOW) (THE "PRICING ASSUMPTION"), THE
FOLLOWING INFORMATION IS APPLICABLE UNDER TREASURY REGULATION ss. 1.6049-7(g):
(I) THE OID IS APPROXIMATELY $______ PER $________ OF THE ORIGINAL NOTIONAL
PRINCIPAL AMOUNT OF THIS CERTIFICATE; (II) THE ANNUAL YIELD TO MATURITY OF THIS
CERTIFICATE FOR PURPOSES OF COMPUTING THE ACCRUAL OF OID IS APPROXIMATELY ____%
(COMPOUNDED MONTHLY); (III) THE TOTAL AMOUNT OF OID ALLOCABLE TO THE FIRST SHORT
ACCRUAL PERIOD (AUGUST 20, 1998 TO SEPTEMBER 15, 1998) IS APPROXIMATELY $_____
PER $________ OF THE ORIGINAL NOTIONAL PRINCIPAL AMOUNT OF THIS CERTIFICATE; AND
(IV) THE METHOD USED TO CALCULATE THE ANNUAL YIELD TO MATURITY AND THE AMOUNT OF
OID ALLOCABLE TO THE FIRST SHORT ACCRUAL PERIOD IS THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PRICING ASSUMPTION OR AT ANY OTHER RATE. THE ACTUAL YIELD TO MATURITY ON
THIS CERTIFICATE MAY DIFFER FROM THAT SET FORTH ABOVE, AND THE ACCRUAL OF OID
WILL BE ADJUSTED IN ACCORDANCE WITH SECTION 1272(a)(6) OF THE CODE, TO TAKE INTO
ACCOUNT EVENTS WHICH HAVE OCCURRED DURING ANY ACCRUAL PERIOD. THE PRICING
ASSUMPTION IS INTENDED TO BE THE PREPAYMENT ASSUMPTION REFERRED TO IN SECTION
1272(a)(6) OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a fractional
ownership interest in the Trust Fund described herein.)
No.: X ----------
Startup Day
100% Percentage Interest ---------------
Final Scheduled
Distribution
FIRST UNION NATIONAL BANK
- --------------------------------------------------------------------------------
Registered Holder
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of three sub-trusts, including one pool ("Pool I") of
one- to four-family ("single family"), residential first and second mortgage
loans, substantially all having fixed rates, (the "Pool I Home Equity Loans"),
one pool ("Pool II") of single family residential first mortgage loans,
substantially all having adjustable rates, (the "Pool II Home Equity Loans"),
and one pool ("Pool III") of primarily fixed rate single family residential
first, second and more junior home improvement mortgage loans (the "Pool III
Home Improvement Loans"), certain of which loans (the "FHA Loans") are partially
insured by the Federal Housing Administration under Title I of the National
Housing Act of 1934, and certain other related assets. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1998
(the "Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative," "Servicer" and "Claims Administrator"), certain subsidiaries
of the Representative (the "Originators") and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, EXCEPT THE
FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in twenty-two Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Service Agreement. The Holder of this Certificate by virtue of acceptance hereof
assents and is bound by such Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have
the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Remittance Date"),
commencing September 1998, the Holders of the Certificates as of the close of
business on the last day of the calendar month immediately preceding the
calendar month in which such Remittance Date occurs (the "Record Date") will be
entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the applicable Co-Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Holder of record of a Class X Certificate will be entitled to
receive such Holder's Percentage Interest in the amounts due on such Remittance
Date to the Holders of the Class X Certificates. The amounts due on each
Remittance Date are limited to certain residual amounts remaining after all
amounts due to the Holders of the Pool I, Pool II and Pool III Certificates have
been paid on such Remittance Date.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
applicable Certificate Account all as more specifically set forth hereinabove
and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect to
each Class of Certificates shall be given by the applicable Co-Trustee to the
Certificateholders of each Class after the applicable Co-Trustee determines that
a final distribution is required to be made, specifying (i) the final Remittance
Date upon which final distribution on each Class of Certificates will be made
upon presentation and surrender of the Certificates of such Class at the office
of such Co-Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the applicable Co-Trustee.
As provided in the Pooling and Servicing Agreement, the transfer of
this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The undersigned Co-Trustee is required to furnish certain information
on each Remittance Date to the Holder of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement, Certificates are
exchangeable for new Certificates of the same Class as this Certificate in
authorized denominations evidencing the same aggregate Percentage Interest.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or applicable Co-Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The undersigned Co-Trustee and any agent of such Co-Trustee may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither such Co-Trustee nor any such agent shall be affected
by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the undersigned Co-Trustee or an Authenticating Agent, by manual signature,
this Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:_______________________________
Name: Michael H. Benoff
Title: Executive Vice President
This is one of the Class X
Certificates referred
to in the within-mentioned
Pooling and Servicing Agreement
THE BANK OF NEW YORK,
as Co-Trustee
By:-----------------------
Authorized Signatory
Date: August 20, 1998
<PAGE>
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST
IN THE ONLY "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G and 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R-1 CERTIFICATE IS RESTRICTED AS SET FORTH IN
THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R-1 CERTIFICATE
MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF
THE CODE. SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE
INSTRUMENTA LITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR
PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A FARMERS' COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME. NO
TRANSFER OF THIS CLASS R-1 CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE
REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DIS QUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS R-1 CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE UNDERSIGNED CO-TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R-1 CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD HOLDER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
IN ADDITION, FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1997, ALL PARTNERS
OF CERTAIN ELECTING PARTNERSHIPS HAVING 100 OR MORE PARTNERS ("ELECTING LARGE
PARTNERSHIPS") HOLDING A RESIDUAL INTEREST IN A REMIC SHALL BE TREATED AS
DISQUALIFIED ORGANIZATIONS FOR PURPOSES OF THE TAX IMPOSED ON PASS-THROUGH
ENTITIES UNDER SECTION 860E(e)(6) OF THE CODE. HOWEVER, THE ELECTING LARGE
PARTNERSHIP WOULD BE ENTITLED TO EXCLUDE EXCESS INCLUSION INCOME FROM GROSS
INCOME FOR PURPOSES OF DETERMINING THE TAXABLE INCOME OF ITS PARTNERS.
<PAGE>
THE MONEY STORE TRUST 1998-B
THE MONEY STORE TRUST ASSET BACKED CERTIFICATES
CLASS R-1
Representing Certain Interests in a Trust
containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a fractional
ownership interest in the Trust Fund described herein.)
No.: R-1-
-----------
Startup Day
100% Percentage Interest -------------
Final Scheduled
Distribution
FIRST UNION NATIONAL BANK
- --------------------------------------------------------------------------------
Registered Holder
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of three sub-trusts, including one pool ("Pool I") of
one- to four-family ("single family"), residential first and second mortgage
loans, substantially all having fixed rates, (the "Pool I Home Equity Loans"),
one pool ("Pool II") of single family residential first mortgage loans,
substantially all having adjustable rates, (the "Pool II Home Equity Loans"),
and one pool ("Pool III") of primarily fixed rate single family residential
first, second and more junior home improvement mortgage loans (the "Pool III
Home Improvement Loans"), certain of which loans (the "FHA Loans") are partially
insured by the Federal Housing Administration under Title I of the National
Housing Act of 1934, and certain other related assets. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1998
(the "Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative," "Servicer" and "Claims Administrator"), certain subsidiaries
of the Representative (the "Originators") and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, EXCEPT THE
FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in twenty-two Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Service Agreement. The Holder of this Certificate by virtue of acceptance hereof
assents and is bound by such Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have
the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Remittance Date"),
commencing September 1998, the Holders of the Certificates as of the close of
business on the last day of the calendar month immediately preceding the
calendar month in which such Remittance Date occurs (the "Record Date") will be
entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the applicable Co-Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Holder of record of a Class R-1 Certificate will be entitled to
receive such Holder's Percentage Interest in the amounts due on such Remittance
Date to the Holders of the Class R-1 Certificates. The amounts due on each
Remittance Date are limited to certain residual amounts remaining after all
amounts due to the Holders of the Pool I, Pool II and Pool III Certificates have
been paid on such Remittance Date.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
applicable Certificate Account all as more specifically set forth hereinabove
and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect to
each Class of Certificates shall be given by the applicable Co-Trustee to the
Certificateholders of each Class after the applicable Co-Trustee determines that
a final distribution is required to be made, specifying (i) the final Remittance
Date upon which final distribution on each Class of Certificates will be made
upon presentation and surrender of the Certificates of such Class at the office
of such Co-Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the applicable Co-Trustee.
As provided in the Pooling and Servicing Agreement, the transfer of
this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The undersigned Co-Trustee is required to furnish certain information
on each Remittance Date to the Holder of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement, Certificates are
exchangeable for new Certificates of the same Class as this Certificate in
authorized denominations evidencing the same aggregate Percentage Interest.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or applicable Co-Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The undersigned Co-Trustee and any agent of such Co-Trustee may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither such Co-Trustee nor any such agent shall be affected
by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the undersigned Co-Trustee or an Authenticating Agent, by manual signature,
this Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________________
Name: Michael H. Benoff
Title: Executive Vice President
This is one of the Class R-1
Certificates referred
to in the within-mentioned
Pooling and Servicing Agreement
THE BANK OF NEW YORK,
as Co-Trustee
By: ____________________________
Authorized Signatory
Date: August 20, 1998
<PAGE>
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN THE ONLY "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G and
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R-1 CERTIFICATE IS RESTRICTED AS SET FORTH IN
THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R-1 CERTIFICATE
MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF
THE CODE. SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE
INSTRUMENTA LITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR
PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A FARMERS' COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME. NO
TRANSFER OF THIS CLASS R-1 CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE
REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DIS QUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS R-1 CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE UNDERSIGNED CO-TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R-1 CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD HOLDER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
IN ADDITION, FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1997, ALL
PARTNERS OF CERTAIN ELECTING PARTNERSHIPS HAVING 100 OR MORE PARTNERS ("ELECTING
LARGE PARTNERSHIPS") HOLDING A RESIDUAL INTEREST IN A REMIC SHALL BE TREATED AS
DISQUALIFIED ORGANIZATIONS FOR PURPOSES OF THE TAX IMPOSED ON PASS-THROUGH
ENTITIES UNDER SECTION 860E(e)(6) OF THE CODE. HOWEVER, THE ELECTING LARGE
PARTNERSHIP WOULD BE ENTITLED TO EXCLUDE EXCESS INCLUSION INCOME FROM GROSS
INCOME FOR PURPOSES OF DETERMINING THE TAXABLE INCOME OF ITS PARTNERS.
<PAGE>
THE MONEY STORE TRUST 1998-B
THE MONEY STORE TRUST ASSET BACKED CERTIFICATES
CLASS R-2
Representing Certain Interests in a Trust
containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a fractional
ownership interest in the Trust Fund described herein.)
No.: R-2 --------------
Startup Day
100% Percentage Interest ------------------
Final Scheduled
Distribution
FIRST UNION NATIONAL BANK
- --------------------------------------------------------------------------------
Registered Holder
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of three sub-trusts, including one pool ("Pool I") of
one- to four-family ("single family"), residential first and second mortgage
loans, substantially all having fixed rates, (the "Pool I Home Equity Loans"),
one pool ("Pool II") of single family residential first mortgage loans,
substantially all having adjustable rates, (the "Pool II Home Equity Loans"),
and one pool ("Pool III") of primarily fixed rate single family residential
first, second and more junior home improvement mortgage loans (the "Pool III
Home Improvement Loans"), certain of which loans (the "FHA Loans") are partially
insured by the Federal Housing Administration under Title I of the National
Housing Act of 1934, and certain other related assets. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1998
(the "Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative," "Servicer" and "Claims Administrator"), certain subsidiaries
of the Representative (the "Originators") and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, EXCEPT THE
FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in twenty-two Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Service Agreement. The Holder of this Certificate by virtue of acceptance hereof
assents and is bound by such Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have
the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Remittance Date"),
commencing September 1998, the Holders of the Certificates as of the close of
business on the last day of the calendar month immediately preceding the
calendar month in which such Remittance Date occurs (the "Record Date") will be
entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the applicable Co-Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Holder of record of a Class R-2 Certificate will be entitled to
receive such Holder's Percentage Interest in the amounts due on such Remittance
Date to the Holders of the Class R-2 Certificates. The amounts due on each
Remittance Date are limited to certain residual amounts remaining after all
amounts due to the Holders of the Pool I, Pool II and Pool III Certificates have
been paid on such Remittance Date.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
applicable Certificate Account all as more specifically set forth herein and in
the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect to
each Class of Certificates shall be given by the applicable Co-Trustee to the
Certificateholders of each Class after the applicable Co-Trustee determines that
a final distribution is required to be made, specifying (i) the final Remittance
Date upon which final distribution on each Class of Certificates will be made
upon presentation and surrender of the Certificates of such Class at the office
of such Co-Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the applicable Co-Trustee.
As provided in the Pooling and Servicing Agreement, the transfer of
this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The applicable Co-Trustee is required to furnish certain information on
each Remittance Date to the Holder of this Certificate, as more fully described
in the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement, Certificates are
exchangeable for new Certificates of the same Class as this Certificate in
authorized denominations evidencing the same aggregate Percentage Interest.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or applicable Co-Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The undersigned Co-Trustee and any agent of such Co-Trustee may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither such Co-Trustee nor any such agent shall be affected
by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the undersigned Co-Trustee or an Authenticating Agent, by manual signature,
this Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:______________________________
Name: Michael H. Benoff
Title: Executive Vice President
This is one of the Class R-2
Certificates referred
to in the within-mentioned
Pooling and Servicing Agreement
THE BANK OF NEW YORK,
as Co-Trustee
By:_____________________________
Authorized Signatory
Date: August 20, 1998
<PAGE>
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
August 20, 1998
To: First Union National Bank
One First Union Center
301 S. College Street, DC-8
Charlotte, North Carolina 28288-0600 (the "Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as of
July 31, 1998, The Money Store Asset Backed Certificates, Series 1998-B, 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 AF-9, Class AV, Class AH-1, Class AH-2, Class AH-3, Class
AH-4, Class AH-5, AH-6, Class MH-1, Class MH-2, Class BH, Class X, Class R-1 and
Class R-2 (the "Agreement"), we hereby authorize and request you to establish an
account, as a Principal and Interest Account pursuant to Section 5.03 of the
Agreement, to be designated as "The Money Store Inc., in trust for the
registered holders of The Money Store Asset Backed Certificates, Series 1998-B,
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 AF-9, Class AV, Class AH-1, Class AH-2, Class AH-3,
Class AH-4, Class AH-5, AH-6, Class MH-1, Class MH-2, Class BH, Class X, Class
R-1 and Class R-2, and various Mortgagors." All deposits in the account shall be
subject to withdrawal therefrom by order signed by the Servicer. You may refuse
any deposit which would result in violation of the requirement that the account
be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
THE MONEY STORE INC.
By: _________________________
Name:
Title:
<PAGE>
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number ________________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the account
will be insured to the maximum amount provided by applicable law by the Federal
Deposit Insurance Corporation through the Bank Insurance Fund.
First Union National Bank
(Name of Depository)
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT D
RESALE CERTIFICATION
_______________, 19__
[Representative]
[Servicer]
[Co-Trustees]
[FHA Custodian]
[Certificate Insurer]
[Certificate Registrar]
Re: Class [R-1][R-2][X] Certificate issued under the Pooling and
Servicing Agreement, The Money Store Asset Backed
Certificates, Series 1998-B, dated as of July 31, 1998, among
The Bank of New York, as co-trustee, and Norwest Bank
Minnesota, National Association, as co-trustee (each a
"Co-Trustee and collectively the "Co-Trustees"), The Money
Store Inc. (the "Representative"), and certain subsidiaries of
the Representative
Ladies and Gentlemen:
___________________________________________ ("Seller") intends to
transfer the captioned Certificate to _______________ ("Purchaser"), for
registration in the name of __________________________________________________.
1. In connection with such transfer, and in accordance with Section
4.02 of the captioned Agreement, Seller hereby certifies to you the following
facts: Neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security with,
any person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Certificate under the Securities Act of 1933,
as amended (the "1933 Act"), or which would render the disposition of the
Certificate a violation of Section 5 of the 1933 Act or require registration
pursuant thereto.
2. The Purchaser warrants and represents to, and covenants with, the
Seller, the Co-Trustee and the Servicer pursuant to Section 4.02 of the Pooling
and Servicing Agreement that:
a. The Purchaser agrees to be bound, as Certificateholder, by all
of the terms, covenants and conditions of the Pooling and Servicing Agreement
and the Certificate, and from and after the date hereof, the Purchaser assumes
for the benefit of each of the Servicer and the Seller all of the Seller's
obligations as Certificateholder thereunder;
b. The Purchaser understands that the Certificate has not been
registered under the 1933 Act or the securities laws of any state;
c. The Purchaser is acquiring the Certificate for investment for
its own account or the account of another qualified institutional buyer (within
the meaning of Rule 144A) only and not for any other person;
d. The Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Certificate;
e. The Purchaser has been furnished with all information
regarding the Certificate that it has requested from the Seller, the Co-Trustee
or the Servicer; and
f. Neither the Purchaser nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Certificate,
any interest in the Certificate or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any person
(other than a qualified institutional buyer within the meaning of Rule 144A) in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action which would constitute a
distribution of the Certificate under the 1933 Act or which would render the
disposition of the Certificate a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Certificate.
[The following is to be completed if transfer is being made pursuant to
Rule 144A].
3. The Purchaser understands and agrees with the Seller that the Seller
is transferring the Certificate pursuant to the exemption from registration
under the 1933 Act provided by Rule 144A thereunder ("Rule 144A") and the
Purchaser hereby represents and warrants to the Seller, the Co-Trustee and the
Servicer that the Purchaser is a "qualified institutional buyer" as defined in
Rule 144A because (i) the Purchaser owned and/or invested on a discretionary
basis $_________1 in securities (except for the excluded securities referred to
below) as of the end of the Purchaser's most recent fiscal year (such amount
being calculated in accordance with Rule 144A) and (ii) the Purchaser satisfies
the criteria in the category marked below.
- -----------------
1. The Purchaser must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least $10,000,000
in securities.
<PAGE>
|__| CORPORATION, ETC. The Purchaser is a corporation other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in Section
501(c)(3) of the Internal Revenue Code.
|__| BANK. The Purchaser (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official
or is a foreign bank or equivalent institution, and (b) has
an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which
is attached hereto.
|__| SAVINGS AND LOAN. The Purchaser (a) is a savings and
loan association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a state or Federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
|__| BROKER-DEALER. The Purchaser is a dealer registered
pursuant to Section 15 of the Securities Exchange Act of
1934.
|__| INSURANCE COMPANY. The Purchaser is an insurance
company whose primary and predominant business activity is
the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is subject to
supervision by the insurance commissioner or a similar
official or agency of a State, territory or the District of
Columbia.
The term "SECURITIES" as used herein DOES NOT INCLUDE (i) securities of
issuers that are affiliated with the Purchaser, (ii) securities that are part of
an unsold allotment to or subscription by the Purchaser (if the Purchaser is a
dealer), (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participation, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Purchaser, the Purchaser used
the cost of such securities to the Purchaser and did not include any of the
securities referred to in the preceding paragraph.
Further, in determining such aggregate amount, the Purchaser may have
included securities owned by subsidiaries of the Purchaser, but only if such
subsidiaries are consolidated with the Purchaser in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investment of such subsidiaries are managed under the Purchaser's direction.
However, such securities were not included if the Purchaser is a majority owned,
consolidated subsidiary of another enterprise and the Purchaser is not itself a
reporting company under the Securities Exchange Act of 1934.
The Purchaser acknowledges that it is familiar with Rule 144A and
understands that you are and will continue to rely on the statements made
herein.
The Purchaser agrees to notify you of any changes in the information
and conclusions herein. Until such notice is given to you, the Purchaser's
purchase of the Certificate will constitute a reaffirmation of the foregoing
certifications and acknowledgments as of the date of such purchase.
Further, if the Purchaser is a bank or savings and loan as provided
above, the Purchaser agrees that it will furnish the Seller with updated annual
financial statements promptly after they become available.
4. The Purchaser warrants and represents to, and covenants with, the
Seller, the Servicer, the Co-Trustee and the Representative that:
a. The Purchaser agrees to be bound, as Certificateholder, by the
restrictions on transfer contained in the Pooling and Servicing Agreement; and
b. Either: (1) the Purchaser is not an employee benefit plan or
other retirement arrangement which is subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended, or Section 4975 of the
Internal Revenue Code of 1986 ("Code") (a "Plan"), and the Purchaser is not
directly or indirectly purchasing the Class X or Class R Certificates on behalf
of, as investment manager of, as named fiduciary of, as trustee of, or with
assets of a Plan; or (2) the Purchaser shall deliver a benefit opinion to the
Trustee. A benefit opinion is an opinion of counsel satisfactory to the Trustee
and Servicer to the effect that the acquisition, holding or transfer of the
Class X and Class R Certificates will not result in a non-exempt prohibited
transaction and will not create any responsibilities or obligations for the
Trustee or Servicer other than those set forth in this Agreement.
5. This Certification 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.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Resale Certification
to be executed by their duly authorized officers as of the date first above
written.
- ------------------------------, ------------------------------,
Seller Purchaser
By:____________________________ By:____________________________
Its:___________________________ Its:___________________________
Taxpayer Taxpayer
Identification No._____________ Identification No._____________
<PAGE>
EXHIBIT E
[OMITTED]
<PAGE>
EXHIBIT E-1
[OMITTED]
<PAGE>
EXHIBIT F
FORM OF POOL [ ] CUSTODIAN INITIAL CERTIFICATION
August 20, 1998
MBIA Insurance Corporation First Union Capital Markets, a
113 King Street division of Wheat First
Armonk, New York 10504 Securities, Inc.
One First Union Center
301 South College Street, DC-8
The Money Store Inc. Charlotte, North Carolina
707 Third Street 28288-0600
West Sacramento, California 95605
[Norwest Bank Minnesota,
National Association,
as Pool III Co-Trustee
11000 Broken Land Parkway
Columbia, Maryland 21044]
[The Bank of New York,
as Pool I and Pool II Co-Trustee
101 Barclay Street
New York, New York 10286]
Re: Pooling and Servicing Agreement The Money Store Asset Backed
Certificates, Series 1998-B, dated as of July 31, 1998 among The
Money Store Inc. as Representative, Servicer and Claims
Administrator, the Originators and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as
co-trustee (each a "Co-Trustee" and collectively the "Co-
TRUSTEES")
-----------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, [as Custodian for the Pool I and Pool II]
[in respect of the Pool III] Mortgage Loans, hereby certifies that, except as
noted on the attachment hereto, if any (the "Loan Exception Report"), it has
received an Assignment of Mortgage, or a certified copy thereof, and a Mortgage
Note with respect to each Pool [___] Mortgage Loan listed in the Mortgage Loan
Schedule and the documents contained therein appear to bear original signatures.
The undersigned has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The undersigned makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
such documents or any of the Pool [ ] Mortgage Loans identified on the Mortgage
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Pool [ ] Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST UNION NATIONAL BANK
[as Custodian for the Pool I and Pool II
Mortgage Loans]
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
EXHIBIT F-1
FORM OF POOL [ ] CUSTODIAN INTERIM CERTIFICATION
_______________, 1998
MBIA Insurance Corporation First Union Capital Markets, a
113 King Street division of Wheat First
Armonk, New York 10504 Securities, Inc.
One First Union Center
301 South College Street, DC-8
The Money Store Inc. Charlotte, North Carolina 28288-0600
707 Third Street
West Sacramento, California 95605 [Norwest Bank Minnesota, National
Association,
[The Bank of New York, as Pool III Co-Trustee
as Pool I and Pool II Co-Trustee 11000 Broken Land Parkway
for Pools I and II Columbia, Maryland 21044]
101 Barclay Street
New York, New York 10286]
Re: Pooling and Servicing Agreement The Money Store Asset Backed
Certificates, Series 1998-B, dated as of July 31, 1998, among The
Money Store Inc. as Representative, Servicer and Claims
Administrator, the Originators and THE BANK OF NEW YORK, AS
CO-TRUSTEE, AND NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, AS
CO-TRUSTEE (EACH A "CO-TRUSTEE" AND COLLECTIVELY THE "CO-
TRUSTEES")
----------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-referenced Pooling and
Servicing Agreement, the undersigned, [as Custodian for the Pool I and Pool
II][in respect of the Pool III] Mortgage Loans, hereby certifies that as to each
Pool [ ] Mortgage Loan listed in the Mortgage Loan Schedule (other than any Pool
[ ] paid in full or any Pool [ ] listed on the attachment hereto), it has
reviewed the documents delivered to it pursuant to Section 2.04 (other than
items listed in Section 2.04(d)(ii)) of the Pooling and Servicing Agreement and
has determined that (i) all such documents are in its possession, (ii) such
documents have been reviewed by it and have not been mutilated, damaged, torn or
otherwise physically altered and relate to such Pool [ ] Mortgage Loan, (iii)
based on its examination and only as to the foregoing documents, the information
set forth in the Mortgage Loan Schedule respecting such Pool [ ] Mortgage Loan
is correct and (iv) each Mortgage Note has been endorsed as provided in Section
2.04 of the Pooling and Servicing Agreement. The undersigned has made no
independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The
undersigned makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Pool [ ] Mortgage Loans identified on the Mortgage Loan Schedule, or (ii)
the collectability, insurability, effectiveness or suitability of any such Pool
[ ] Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST UNION NATIONAL BANK
[as Custodian for the Pool I and Pool II
Mortgage Loans]
By:___________________________
Name:________________________
Title:________________________
<PAGE>
EXHIBIT G
FORM OF [CO-TRUSTEES] [TRUST ADMINISTRATOR] FINAL CERTIFICATION
[date]
[Certificate Insurer]
[Servicer]
[Certificateholders]
[Representative]
[Co-Trustees]
Re: Pooling and Servicing Agreement, dated as of July 31, 1998, among
The Money Store Inc. as Representative, Servicer and Claims
Administrator, the Originators and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as
co-trustee (each a "Co-Trustee" and collectively the "Co-
TRUSTEES"), THE MONEY STORE ASSET BACKED CERTIFICATES, SERIES
1998-B
-----------------------------------------------------------------
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, [as Custodian of the Pool I and Pool
II][in respect of the Pool III] Mortgage Loans hereby certifies that, except as
noted on the attachment hereto, as to each Pool [ ] Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Pool [ ] Mortgage Loan paid in full or
listed on the attachment hereto) it has reviewed the documents delivered to it
pursuant to Section 2.04 (other than items listed in Section 2.04(d)(ii)) of the
Pooling and Servicing Agreement and has determined that (i) all such documents
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged, torn or otherwise physically altered and relate to such
Pool [ ] Mortgage Loan, (iii) based on its examination, and only as to the
foregoing documents, the information set forth in the Mortgage Loan Schedule
respecting such Pool [ ] Mortgage Loan is correct and (iv) each Mortgage Note
has been endorsed as provided in Section 2.04 of the Pooling and Servicing
Agreement. The undersigned has made no independent examination of such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The undersigned makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Pool [ ] Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Pool [ ] Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST UNION NATIONAL BANK
[as Custodian for the Pool I and Pool II
Mortgage Loans]
By:__________________________________
Name: ___________________________
Title: ____________________________
<PAGE>
EXHIBIT H-1
POOL I MORTGAGE LOAN SCHEDULE
[To Be Delivered to the Pool I Co-Trustee]
<PAGE>
EXHIBIT H-2
POOL II MORTGAGE LOAN SCHEDULE
[To Be Delivered to the Pool II Co-Trustee]
<PAGE>
EXHIBIT H-3
POOL III MORTGAGE LOAN SCHEDULE
[To Be Delivered to the Pool III Co-Trustee]
<PAGE>
EXHIBIT I
LIST OF 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>
EXHIBIT J
REQUEST FOR RELEASE OF DOCUMENTS
To: [ ]
Re: Pooling and Servicing Agreement, The Money Store Asset BACKED
CERTIFICATES, SERIES 1998-B, DATED AS OF JULY 31, 1998
------------------------------------------------------
In connection with the administration of the pool of Mortgage Loans
held by you as [Co-Trustee] [Custodian] for the Certificateholders, we request
the release, and acknowledge receipt, of the Trustee's Mortgage File/[specify
document]) for the Mortgage Loan described below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
[] 1. Mortgage Loan Paid in Full
(Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Principal and
Interest Account and remitted to the Co-Trustee for deposit
into the applicable Certificate Account pursuant to the
Pooling and Servicing Agreement.)
[] 2. Mortgage Loan Liquidated
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and
credited to the Principal and Interest Account and remitted to
the Co-Trustee for deposit into the applicable Certificate
Account pursuant to the Pooling and Servicing Agreement.)
[] 3. Mortgage Loan in Foreclosure
[] 4. Mortgage Loan Purchased Pursuant to Section 11.01 of the
Pooling and Servicing Agreement.
[] 5. Mortgage Loan Repurchased or Substituted Pursuant to Article
II or III of the Pooling and Servicing Agreement
(Servicer hereby certifies that the repurchase price or
Substitution Adjustment has been credited to the Principal and
Interest Account and remitted to the Co-Trustee for deposit
into the applicable Certificate Account pursuant to the
Pooling and Servicing Agreement.)
[] 6. Other (explain)______________________________________________
-------------------------------------------------------------
If box 1 or 2 above is checked, and if all or part of the Trustee's
Mortgage File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the
above documents to you as [Co-Trustee][Custodian] please acknowledge your
receipt by signing in the space indicated below, and returning this form.
THE MONEY STORE INC.
By: ____________________________________
Name: ___________________________
Title: __________________________
Documents returned to [Co-Trustee]
[Custodian]:
---------------------------------
[Co-Trustee] [Custodian]
By:____________________________
Date:__________________________
<PAGE>
ALTERNATE EXHIBIT J
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, National Association
1015 10th Avenue S.E.
Minneapolis, Minnesota 55414
Re: Pooling and Servicing Agreement, The Money Store Asset BACKED
CERTIFICATES, SERIES 1998-B, DATED AS OF JULY 31, 1998
------------------------------------------------------
In connection with the administration of the Mortgage Loans held by
you, as Pool III Co-Trustee, pursuant to the above-captioned Agreement, we
request the release, and hereby acknowledge receipt, of the Trustee's Mortgage
File for the Mortgage Loan described below, for the reason indicated.
MORTGAGE LOAN NUMBER:
- --------------------
MORTGAGOR NAME, ADDRESS & ZIP CODE:
- -----------------------------------
REASON FOR REQUESTING DOCUMENTS (check one):
- ------------------------------------------
1. Mortgage Paid in Full
2. Foreclosure
3. Substitution
4. Other Liquidation
5. Nonliquidation Reason:______________________
By:__________________________
(authorized signer)
Servicer:____________________
Address:_____________________
_____________________
_____________________
Date:_____________________________
<PAGE>
POOL III CO-TRUSTEE
- -------------------
Norwest Bank Minnesota, National Association
Please acknowledge the execution of the above request by your signature and date
below:
- -------------------------------- --------------------
Signature Date
Documents returned to Pool III Co-Trustee:
- -------------------------------- --------------------
Signature Date
<PAGE>
EXHIBIT J-1
REQUEST FOR RELEASE OF DOCUMENTS OF
90 DAY DELINQUENT FHA LOANS
To: [ ]
Re: Pooling and Servicing Agreement, The Money Store Asset-Backed
Certificates, Series 1998-B, dated as of July 31, 1998
In connection with the administration of the pool of Mortgage Loans
held by you as Pool III Custodian, as agent for the FHA Custodian, we request
the release, and acknowledge receipt, of the Trustee's Mortgage File/[specify
document]) for the 90 Day Delinquent FHA Loan described below, for the reason
indicated.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number:
Upon receipt of this request, please execute and deliver such 90 Day
Delinquent FHA Loan to us.
THE MONEY STORE INC.
By: ____________________________
Name:
Title:
Documents returned to Pool III Custodian:
---------------------------
Pool III Custodian
By:
Date:
<PAGE>
EXHIBIT K
TRANSFER AFFIDAVIT
STATE OF )
) : ss:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is a of , the proposed transferee (the "Transferee")
of a Percentage Interest in a Class R Certificate (the "Certificate") issued
pursuant to the Pooling and Servicing Agreement, The Money Store Asset Backed
Certificates, Series 1998-B, 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 AF-9, Class AV, 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 X, Class R-1 and Class R-2, dated as of July 31,
1998 (the "Agreement"), among The Money Store Inc., as Representative and
Servicer (the "Servicer"), the Originators and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees"). Capitalized terms
used, but not defined herein shall have the meanings ascribed to such terms in
the Agreement. The Transferee has authorized the undersigned to make this
affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the transfer, a Permitted Transferee. The Transferee is acquiring its
Percentage Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is a record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 4.02 of the
Agreement (incorporated herein by reference) and understands the legal
consequences of the acquisition of a Percentage Interest in the Certificate
including, without limitation, the restrictions on subsequent Transfers and the
provisions regarding voiding the Transfer and mandatory sales. The Transferee
expressly agrees to be bound by and to abide by the provisions of Section 4.02
of the Agreement and the restrictions noted on the face of the Certificate. The
Transferee understands and agrees that any breach of any of the representations
included herein shall render the transfer to the Transferee contemplated hereby
null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to transfer its Percentage Interest in
the Certificate, and in connection with any transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
transfer its Percentage Interest or cause any Percentage Interest to be
transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such transfer by the Transferee, the
Transferee agrees to deliver to the Co-Trustee a certificate (a "Transfer
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the transfer is to be made is not a Permitted Transferee.
7. The Transferee's taxpayer identification number is
___________________.
8. Section references and defined terms not defined herein have the
meanings ascribed thereto in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested,
this day of ________________, 19__.
[NAME OF TRANSFEREE]
By:_______________________________
Name:__________________________
Title:_________________________
[Corporate seal]
ATTEST:
- -------------------------
[Assistant] Secretary
<PAGE>
STATE OF )
) : ss:
COUNTY OF )
Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be the of the
Transferee, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Transferee.
Subscribed and sworn before me this day of
_________________, 19__.
----------------
NOTARY PUBLIC
My Commission expires the ____
day of __________, 19__.
<PAGE>
EXHIBIT L-1
FORM OF NOTICE UNDER CERTIFICATE GUARANTY INSURANCE POLICY
RELATING TO THE POOL I CERTIFICATES
<PAGE>
EXHIBIT L-2
FORM OF NOTICE UNDER CERTIFICATE GUARANTY INSURANCE POLICY
RELATING TO THE CLASS AV CERTIFICATES
<PAGE>
EXHIBIT M
FORM OF CUSTODIAL AGREEMENT
Dated ____________________
[THE BANK OF NEW YORK, a New York banking corporation, as co-trustee]
[NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association,
as co-trustee] (the "Co-Trustee") and
________________________________________________________________ (the
"Custodian") agree as follows:
WHEREAS, the Co-Trustee, the Originators, The Money Store Inc. ("The
Money Store") have entered into a Pooling and Servicing Agreement dated as of
July 31, 1998 relating to The Money Store Asset Backed Certificates, Series
1998-B, 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 AF-9, Class AV, 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 X, Class R-1 and Class R-2, (the "Pooling Agreement"; the terms defined
therein being used herein with the same meaning) pursuant to which the
Originators transferred, assigned, set-over and otherwise conveyed to the
Co-Trustees therein, without recourse, all of the Originators' right, title and
interest in and to the mortgage loans identified in Exhibits H, H-1, and H-2 to
the Pooling Agreement (the "Mortgage Loans"); and
WHEREAS, in connection with such transfer and assignment and pursuant
to the Pooling Agreement, the Co-Trustee holds, directly or pursuant to a
custodial agreement, the Mortgage Files for Pool [I] [II] [III]:
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Custodian and the Co-Trustee agree as follows:
1. APPOINTMENT AS CUSTODIAN; ACKNOWLEDGMENT OF RECEIPT. Subject to the
terms and conditions herein, the Co-Trustee hereby appoints the Custodian, and
the Custodian hereby accepts such appointment, as its Custodian to maintain
custody of the Co-Trustee's Mortgage Files for Pool [ ] (the "Co-Trustee's
Mortgage Files"). The Custodian hereby acknowledges receipt of the Mortgage
Notes, the Mortgages, the assignments and other documents relating to the Pool [
] Mortgage Loans referred to in Section 2.04, except for the items referred to
in Section 2.04(d)(ii), of the Pooling Agreement. The Co-Trustee shall be liable
for all of the Custodian's fees under this Agreement.
2. MAINTENANCE OF OFFICE. The Custodian agrees to maintain each
Co-Trustee's Mortgage File identified in Section 2.04 of the Pooling Agreement,
at the office of the Custodian located at ___________________________________
______________________________ or at such other office of the Custodian in
____________ as the Custodian shall designate from time to time after giving the
Co-Trustee 30 days' prior written notice.
3. DUTIES OF CUSTODIAN. As Custodian, the Custodian shall have and
perform the following powers and duties:
(a) SAFEKEEPING. To segregate the Co-Trustee's Mortgage Files
from all other mortgages and mortgage notes and similar records in its
possession, to identify the Co-Trustee's Mortgage Files as being held and to
hold the Co-Trustee's Mortgage Files for and on behalf of the Co-Trustee for the
benefit of all present and future Certificateholders, to maintain accurate
records pertaining to each Mortgage Note and Mortgage in the Co-Trustee's
Mortgage Files as will enable the Co-Trustee to comply with the terms and
conditions of the Pooling Agreement, to maintain at all times a current
inventory thereof and to conduct periodic physical inspections of the
Co-Trustee's Mortgage Files held by it under this Agreement in such a manner as
shall enable the Co-Trustee and the Custodian to verify the accuracy of such
record-keeping, inventory and physical possession. The Custodian will promptly
report to the Co-Trustee any failure on its part to hold the Co-Trustee's
Mortgage Files as herein provided and promptly take appropriate action to remedy
any such failure.
(b) RELEASE OF DOCUMENTS. To release any Mortgage Note and
Mortgage in the Co-Trustee's Mortgage Files as provided in the Pooling
Agreement.
(c) ADMINISTRATION; REPORTS. In general, to attend to all
non-discretionary details in connection with maintaining custody of the
Co-Trustee's Mortgage Files on behalf of the Co-Trustee. In addition, the
Custodian shall assist the Co-Trustee generally in the preparation of reports to
Certificateholders or to regulatory bodies to the extent necessitated by the
Custodian's custody of the Co-Trustee's Mortgage Files.
4. ACCESS TO RECORDS. The Custodian shall permit the Co-Trustee or its
duly authorized representatives, attorneys or auditors and those persons
permitted access pursuant to Sections 5.13 and 7.06 of the Pooling Agreement to
inspect the Co-Trustee's Mortgage Files and the books and records maintained by
the Custodian pursuant hereto at such times as they may reasonably request,
subject only to compliance with the terms of the Pooling Agreement.
5. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian shall be deemed to
have received proper instructions with respect to the Co-Trustee's Mortgage
Files upon its receipt of written instructions signed by a Responsible Officer
of the Co-Trustee. A certified copy of a resolution of the Board of Directors of
the Co-Trustee may be accepted by the Custodian as conclusive evidence of the
authority of any such officer to act and may be considered as in full force and
effect until receipt of written notice to the contrary by the Custodian from the
Co-Trustee. Such instructions may be general or specific in terms.
6. INDEMNIFICATION BY THE CUSTODIAN. The Custodian agrees to indemnify
the Co-Trustee for any and all liabilities, obligations, losses, damages,
payments, costs or expenses, including attorneys' fees, of any kind whatsoever
which may be imposed on, incurred by or asserted against the Co-Trustee as the
result of any act or omission in any way relating to the maintenance and
custody by the Custodian of the Co-Trustee's Mortgage Files; provided, however,
that the Custodian shall not be liable for any portion of any such amount
resulting from the gross negligence or willful misconduct of the Co-Trustee.
7. ADVICE OF COUNSEL. The Custodian and the Co-Trustee further agree
that the Custodian shall be entitled to rely and act upon advice of counsel with
respect to its performance hereunder as Custodian and shall be without liability
for any action reasonably taken pursuant to such advice, provided that such
action is not in violation of applicable Federal or State law. This paragraph
shall not negate the Custodian's obligations under paragraph 6 above.
8. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT, AND INTERPRETIVE AND
ADDITIONAL PROVISIONS. This Agreement shall become effective as of the date
hereof and shall continue in full force and effect until terminated as
hereinafter provided, and may be amended at any time by mutual agreement of the
parties hereto. This Agreement may be terminated by either party in a writing
delivered or mailed, postage prepaid, to the other party, such termination to
take effect no sooner than sixty (60) days after the date of such delivery or
mailing. Concurrently with, or as soon as practicable after, the termination of
this Agreement, the Custodian shall redeliver the Co-Trustee's Mortgage Files
to the Co-Trustee at such place as the Co-Trustee may reasonably designate. In
connection with the administration of this Agreement, the Custodian and the Co-
Trustee may agree from time to time upon the interpretation of the provisions of
this Agreement as may in their opinion by consistent with the general tenor and
purposes of this Agreement, any such interpretation to be signed and annexed
hereto.
9. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
10. NOTICES. Notices and other writings shall be delivered or mailed,
postage prepaid, to the Co-Trustee at [101 Barclay Street, 12th Floor West, New
York, New York 10286, Attention: Corporate Trust Administration - MBS,] [1100
Broken Land Parkway, Columbia, MD 21044, Attention: Corporate Trust Office], to
the Custodian at, __________________________________________________,
Attention: __________________; or to such
other address as the Co-Trustee or the Custodian may hereafter specify in
writing. Notices or other writings shall be effective only upon actual receipt
by the parties.
11. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the Co-Trustee and the Custodian and their respective
successors and assigns. Concurrently with the appointment of a successor
co-trustee as provided in Section 12.08 of the Pooling Agreement, the Co-Trustee
and the Custodian shall amend this Agreement to make said successor co-trustee
the successor to the Co-Trustee hereunder.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
[THE BANK OF NEW YORK,
as Co-Trustee under the Pooling
Agreement referred to above]
By:_______________________________________
Name:____________________________________
Title:___________________________________
[NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Co-Trustee under the Pooling
Agreement referred to above]
By:_______________________________________
Name:____________________________________
Title:___________________________________
--------------------------------------------,
as Custodian
By:_______________________________________
Name:____________________________________
Title:___________________________________
<PAGE>
EXHIBIT N
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. Liquidation Proceeds
Principal Prepayment $ _______
Property Sale Proceeds ________
Insurance Proceeds ________
Other (Itemize) ________
Total Proceeds $________
2. Servicing Advances $ ________
Monthly Advances ________
Total Advances $_______
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the Mortgage
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
<PAGE>
<TABLE>
EXHIBIT O
FORM OF DELINQUENCY REPORT
DELINQUENCY AND FORECLOSURE INFORMATION
REO FORECLOSURES
------------------------------------------------------------------
OUTSTANDING # # OF # OF OUTSTANDING # OF OUTSTANDING
INVESTOR DOLLARS ACCT RANGES AMOUNT ACCTS. PCT ACCTS DOLLARS % ACCTS DOLLARS %
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 TO 29 DAYS
30 TO 59 DAYS
60 TO 89 DAYS
90 AND OVER
TOTALS
</TABLE>
<PAGE>
EXHIBIT P
[OMITTED]
<PAGE>
EXHIBIT Q
[OMITTED]
<PAGE>
EXHIBIT R
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Co-Trustees pursuant to
Section 6.10 shall contain the following information for each Mortgage Loan as
of the related Record Date:
1. Name of the Mortgagor, address of the Mortgaged
Property and Account Number.
2. The LTV as of the origination date of the Mortgage
Loan.
3. The Due Date.
4. The Mortgage Loan Original Principal Balance.
5. The Mortgage Interest Rate.
6. The Monthly Payment.
7. The date on which the last payment was received
and the amount of such payment segregated into the following
categories; (a) total interest received (including Servicing
Fee, Contingency Fee and Excess Spread); (b) Servicing Fee and
Contingency Fee; (c) Excess Spread; (d) The amount equal to
total interest received minus Servicing Fee, Contingency Fee
and Excess Spread; (e) principal and Excess Payments received;
(f) Curtailments received; and (g) Principal Prepayments
received.
8. The Mortgage Loan Principal Balance.
9. The Mortgage Note maturity date.
10. A "Delinquency Flag" noting that the Mortgage Loan is
current or delinquent. If delinquent, state the date on which
the last payment was received.
11. A "Foreclosure Flag" noting that the Mortgage Loan
is the subject of foreclosure proceedings.
12. An "REO Flag" noting that the Mortgage Loan is an REO
Property.
13. A "Liquidated Mortgage Loan Flag" noting that the
Mortgage Loan is a Liquidated Mortgage Loan and the Net
Liquidation Proceeds received in connection therewith.
14. Lifetime Cap.
15. Lifetime Floor.
16. Periodic Cap.
17. Net Funds Cap.
18. Any additional information reasonably requested by
the Co-Trustees.
<PAGE>
EXHIBIT S
SUB-SERVICING AGREEMENT
THIS SUB-SERVICING AGREEMENT is made effective as of the 20th day of
August 1998, by and between The Money Store Inc., a New Jersey corporation (the
"Servicer") whose principal business address is 707 Third Street, West
Sacramento, California 95605, and each of the entities listed on Schedule A
hereto (each an "Originator", and collectively the "Originators").
RECITALS
--------
1. Each Originator is a wholly-owned subsidiary of the Servicer.
2. The Servicer, the Originators and The Bank of New York, as
co-trustee, and Norwest Bank Minnesota, National Association, as co-trustee
(each a "Co-Trustee" and collectively the "Co-Trustees"), are parties to that
certain Pooling and Servicing Agreement dated and effective as of July 31, 1998
(the "Pooling and Servicing Agreement").
3. Pursuant to the terms of the Pooling and Servicing Agreement, each
Originator has transferred those certain Mortgage Loans (as defined in the
Pooling and Servicing Agreement) listed next to each Originator's name on
Schedule B hereto to the applicable Co-Trustees for the benefit of
Certificateholders (as defined in the Pooling and Servicing Agreement).
4. The Originators desire to convey to the Servicer the right to
service the Mortgage Loans. As authorized by the Pooling and Servicing
Agreement, the Servicer desires to enter into a subservicing agreement with each
Originator so that each Originator will perform subservicing functions for the
Mortgage Loans transferred by it to the applicable Co-Trustee, such subservicing
functions to be rendered in compliance with the terms of the Pooling and
Servicing Agreement.
5. Each Originator desires to undertake such subservicing and
supervision of the Mortgage Loans on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the agreements of the parties
herein and other good and valuable consideration, the receipt and sufficiency of
which each party hereby acknowledges, and in order in part to induce each
Co-Trustee to enter into the Pooling and Servicing Agreement and perform its
obligations thereunder, the parties agree as follows:
1. ASSIGNMENT OF SERVICING; SUBSERVICING AGREEMENT. Each Originator
hereby assigns, transfers, conveys and sets over to the Servicer, its successors
and assigns, all of such Originator's right, title and interest to service the
Mortgage Loans listed next to such Originator's name on the schedule furnished
by each Originator to the Servicer and dated the date hereof, to have and to
hold such rights hereby assigned, conveyed and transferred to the Servicer, for
its own use and benefit, and that of its successors and assigns, forever. In
consideration of the foregoing assignment, the Servicer hereby appoints each
Originator as subservicer with respect to the Mortgage Loans conveyed by each
such Originator to the respective Co-Trustee, each such Originator to service
and supervise such Mortgage Loans as provided for herein, such subservicing to
commence on the effective date of this Agreement and to terminate as provided
for herein. As compensation for such subservicing and supervision, each
Originator shall be entitled to an annual fee for each Mortgage Loan serviced,
such fee to be computed and paid as set forth on Schedule B hereto. Each
Originator, as contract subservicer, 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 Originator
may deem necessary or desirable; PROVIDED, HOWEVER, that each Originator shall
conduct its servicing activities (i) in compliance with and pursuant to the
servicing requirements set out in the Pooling and Servicing Agreement, as such
requirements relate to subservicing rendered thereunder, and (ii) to the extent
not inconsistent with such Originator's obligations as an authorized subservicer
under the Pooling and Servicing Agreement, (x) in accordance with the provisions
of Section 3 hereof and (y) otherwise in accordance with the standards and
requirements set forth on Schedule C hereto and subject to applicable Federal,
state and local laws and regulations. On or after the date hereof, each
Originator shall deliver such appropriately executed and authenticated
instruments of sale, assignment, transfer and conveyance to the Servicer, if
any, including limited powers of attorney, as the Servicer or its counsel
determine to be reasonable in order to accomplish the transfer to the Servicer
of such Originator's rights with respect to the servicing.
2. REPRESENTATIONS AND WARRANTIES. Each Originator represents and
warrants as follows:
2.1 Such Originator is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation. Originator is
and at all relevant times has been properly licensed and qualified to transact
business in all appropriate jurisdictions, to conduct all activities performed
with respect to origination and servicing of the Mortgage Loans and is in good
standing in each jurisdiction in which the failure to be in such good standing
would have a material, adverse effect on the consummation of the transactions
contemplated hereby.
2.2 Originator has all requisite corporate power, authority and
capacity to enter into this Agreement and to perform the obligations required of
it hereunder. The execution and delivery of this Agreement by the Originator,
and the consummation of the transactions contemplated hereby, have each been
duly and validly authorized by all necessary corporate action. This Agreement
constitutes the valid and legally binding agreement of Originator enforceable in
accordance with its terms, and no offset, counterclaim or defense exists to the
full performance of this Agreement, subject to laws respecting bankruptcy,
receivership, insolvency and other laws affecting creditors' rights generally.
2.3 The execution, delivery and performance of this Agreement by
Originator, its compliance with the terms hereof and consummation of the
transactions contemplated will not violate, conflict with, result in a breach
of, constitute a default under, be prohibited by or require any additional
approval under its certificate of incorporation, bylaws, or any instrument or
agreement to which it is a party or by which it is bound or which affects the
servicing conveyed hereunder.
2.4 Such Originator is the lawful owner of the servicing, has the sole
right and authority to transfer the servicing as contemplated hereby, and is not
contractually obligated to sell the servicing to any other party. The transfer,
assignment and delivery of the servicing in accordance with the terms and
conditions of this Agreement shall vest in the Servicer all rights as servicer
free and clear of any and all claims, charges, defenses, offsets and
encumbrances of any kind or nature whatsoever, including but not limited to
those of Originator.
2.5 With respect to each individual Mortgage Loan for which servicing
rights are assigned hereunder, such Originator makes to the Servicer those
representations and warranties that are contained in Section 3.02 of the Pooling
and Servicing Agreement.
3. ORIGINATOR'S DUTIES. Until the principal, interest and any other
amounts due on each Mortgage Loan are paid in full, each Originator shall:
A. Proceed diligently to collect all payments due under the
terms of each Mortgage Loan as they become due.
B. Keep a complete and accurate account of and properly apply
all sums collected by it from the mortgagor on account of each such
Mortgage Loan for principal and interest, and upon request, furnish
evidence acceptable to the Servicer of all expenditures for taxes,
assessments and other public charges and hazard insurance premiums. In
the event any Mortgagor fails to make a payment to an Originator
required to be made under the terms of any such Mortgage Loan, such
Originator will notify the Servicer of such fact within 20 days after
the same shall have become due and payable.
C. Deposit all funds received in respect of each Mortgage Loan
in an account in an institution the accounts of which are insured by an
agency of the United States government. Unless directed otherwise by
the Servicer such account shall be held by an Originator, which shall
maintain or shall cause to be maintained detailed records to show the
respective interest of each individual mortgagor in the account.
D. Pay into the related Principal and Interest Accounts (as
defined in the Pooling and Servicing Agreement) all amounts of
principal and interest collected under the Mortgage Loans.
E. Submit to the Servicer at least annually an accounting of
the balances in each such account, if any.
F. Perform such other customary duties, furnish such other
reports and execute such other documents in connection with its duties
hereunder as the Servicer from time to time reasonably may require.
4. ADVANCES BY ORIGINATOR. In the event an Originator, on behalf of
the Servicer, makes any advance of principal and/or interest to the holder of a
mortgage serviced hereunder before such Originator has received the applicable
mortgage payment from any mortgagor, or makes any other advance to protect the
security of a mortgage or otherwise (including but not limited to property
taxes, special assessments, and hazard insurance premiums), EXCEPT advances
related to foreclosure or real estate owned losses (which are covered by Section
8), then the Servicer, promptly upon being billed therefore, shall, at its
option, either (i) reimburse such Originator the full amount of all such
advances, (ii) credit such amount as a set-off against amounts such Originator
may then owe to the Servicer pursuant to this Agreement, (iii) use a combination
of such reimbursement and crediting to fully discharge such amount or (iv)
forego such reimbursement or crediting with respect to all or a portion of such
amount, in which case the amount not reimbursed or offset shall be deemed
currently due and payable and, until paid to such Originator, shall bear
interest on the average monthly balance thereof at the underlying Mortgage Loan
Rate.
5. ORIGINATOR'S RECORDS; MONITORING OF PROPERTY. Each Originator will
during regular business hours make all of its records and files relating to
Mortgage Loans covered by this Agreement available for inspection by the
Servicer and its authorized agents. In addition, an Originator will use ordinary
diligence to ascertain, and will forthwith notify the Servicer of any of the
following which might come to the attention of such Originator:
A. The vacating of or any change in the occupancy of any premises
securing a mortgage.
B. The sale or transfer of any such premises.
C. The death, bankruptcy, insolvency or other disability of a
mortgagor which might impair ability to repay the Mortgage Loan.
D. Any loss or damage in excess of $10,000 to any such premises,
in which event, in addition to notifying the Servicer, an Originator
shall see to it that the insurance companies concerned are promptly
notified. For losses or damages of $10,000 or less, the Servicer hereby
authorizes an Originator to endorse insurance checks or drafts on
behalf of the Servicer. For losses or damages in excess of $10,000, an
Originator shall make a report to the Servicer and the Servicer retains
the right to endorse any insurance drafts related to such loss or
damage.
E. Any lack of repair or any other deterioration or waste suffered
or committed in respect to the premises covered by any mortgage.
It is understood and agreed, however, that no notice need be given to the
Servicer of any facts other than those of which an Originator has actual notice,
or those of which an Originator would, except for its negligence, have had
actual notice.
6. NO WAIVER, RELEASE OR CONSENT BY ORIGINATOR. An Originator will not
waive, modify, release or consent to postponement on the part of the mortgagor
of any term or provision of any Mortgage Loan without the consent of the
Servicer.
7. HAZARD INSURANCE. An Originator shall cause to be maintained such
fire and hazard insurance as shall be requested by the Servicer pursuant to
Sections 5.07 and 5.08 of the Pooling and Servicing Agreement.
8. FORECLOSURE AND REAL ESTATE OWNED. An Originator will assist in the
foreclosure or other acquisition of the property securing any Mortgage Loan and
the transfer of such property, pursuant to instruction of the Servicer given
under Section 5.10 of the Pooling and Servicing Agreement.
9. TERM; TERMINATION. This Agreement shall commence on the date hereof
and shall, subject to earlier termination pursuant to the provisions of this
Section 9, terminate upon the termination of the Pooling and Servicing
Agreement. This Agreement may be canceled and terminated (i) at any time
hereunder by the Servicer on 10 days notice to an Originator, or (ii) by either
Co-Trustee on notice to an Originator, at any time after such Co-Trustee has
become the successor servicer with respect to the Mortgage Loans pursuant to
Sections 10.01 and 10.02 of the Pooling and Servicing Agreement. In addition,
this Agreement may be canceled and terminated by the Servicer, by notice to an
Originator, if:
A. An Originator fails in a material respect to perform its
obligations hereunder and (i) does not cure or rectify such failure
within 45 days or, (ii) if the character of such cure or rectification
is such that it cannot reasonably be effected within 45 days, does not
commence such cure or rectification within 45 days and complete the
same within a commercially reasonable time thereafter, given the
circumstances.
B. An Originator becomes insolvent or bankrupt or is placed under
conservatorship or receivership.
C. An Originator assigns or attempts to assign its rights and
obligations hereunder, without written consent of the Servicer,
provided that any assignment, transfer or other conveyance of an
Originator's rights and obligations hereunder that occurs as a result
of a merger, consolidation, reorganization, name change or acquisition
of or involving an Originator shall not be construed as an assignment
(or attempted assignment) under the provisions of this Section 9.C.
Upon termination of this Agreement, an Originator will account for and turn over
to the Servicer all funds collected under each Mortgage Loan for which said
termination is effective, less only the compensation, fees and reimbursements
then due an Originator, and will deliver to the Servicer or its designee all
records and documents relating to each such mortgage.
10. COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Each Originator will
comply with, and will use all reasonable efforts to cause each Mortgagor to
comply with, all applicable state and federal rules and regulations or
requirements including those requiring the giving of notices.
11. FIDELITY, ERRORS AND OMISSIONS INSURANCE, ETC. Each Originator
agrees to be responsible, at no expense to the Servicer, for seeing to it that
at all times, while this Agreement is in force, policies of fidelity, fire, and
extended coverage, theft, forgery, and errors and omissions insurance are
maintained in conformity with the Pooling and Servicing Agreement. Each
Originator will, without demand therefore, provide the Servicer annually, on a
date agreeable to the Servicer, a certificate or binder of insurance delineating
the various types of insurance carried by such Originator.
12. MISCELLANEOUS. This document contains the entire agreement between
the parties hereto and cannot be modified in any respect except by an amendment
in writing signed by each party. The invalidity of any portion of this Agreement
shall in no way affect the balance thereof. Any notice permitted or required
hereunder shall be in writing and shall be deemed given when hand delivered to
an officer or authorized agent of, or when mailed, registered or certified mail,
postage prepaid, to Servicer or an Originator at the address of the Servicer set
forth above. The captions and headings used in this Agreement are for
convenience only, and do not define or limit the terms and provisions of this
Agreement. Notwithstanding any provision in this Agreement to the contrary,
nothing contained herein shall be deemed an attempt to assign or an assignment
of any servicing rights by an Originator to the Servicer if an attempted
assignment of the same without the consent of any agency or instrumentality of
the United States or a state thereof (a "Regulatory Authority") with
jurisdiction over such assignment would constitute a breach of an applicable
regulatory requirement or agreement between an Originator and such Regulatory
Authority unless and until such consent shall have been obtained. In the event
the consent of any Regulatory Authority is required to authorize the conveyance
of any or all of the servicing to be conveyed hereunder and such consent shall
not have been granted prior to the occurrence of an Event of Default under
Section 10.01 of the Pooling and Servicing Agreement, then upon the occurrence
of an Event of Default, each Originator shall enter into an agreement with each
Co-Trustee, which agreement shall be in form and substance satisfactory to each
such Co-Trustee and its counsel, which recognizes such Co-Trustee as the
successor servicer of the Mortgage Loans as provided for by such Section 10.01,
and shall continue to subservice the Mortgage Loans or shall convey such
subservicing at the election and upon the direction of such Co-Trustee.
<PAGE>
IN WITNESS WHEREOF, each party has caused this instrument to be signed
in its corporate name on its behalf by its proper officials duly authorized as
of the day and year first above written.
SERVICER:
ATTEST: The Money Store Inc.
By: ______________________ By: ______________________________
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.
ATTEST:
By: _______________________ By: ______________________________
<PAGE>
SCHEDULE A
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>
SCHEDULE B
Each Originator shall receive 25 basis points as compensation for
servicing hereunder as well as other servicing fees as permitted.
ORIGINATORS MORTGAGE LOANS TRANSFERRED
- ----------- --------------------------
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>
SCHEDULE C
1. Make telephone contact with any Mortgagor whose account is either a first
payment default or delinquent 9-29 days.
2. Confirm telephone contacts as necessary.
3. Contact, in writing, each Mortgagor who can not be contacted.
4. Send a "default" letter to any Mortgagor who is 30 days delinquent.
5. Commence foreclosure proceedings after 60 days delinquency.
6. Obtain legal counsel where appropriate including in foreclosure matter
commenced by prior lienholders and bankruptcy matters.
7. Monitor all outside counsel and proceedings.
8. Monitor loans for continuing performance.
<PAGE>
EXHIBIT T
PRICES FOR LOW INTEREST MORTGAGE LOANS
No Low Interest Mortgage Loans
<PAGE>
