SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) September 29, 1998
The Money Store Home Improvement Trust 1998-I and the Originators as
listed below under a Pooling and Servicing Agreement dated as of
August 31, 1998, providing for the issuance of The Money Store Home
Improvment Loan Backed Certificates, Series 1998-I.
The Money Store Home Improvement Trust 1998-I
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.
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(Exact name of registrant as specified in its charter)
* 333-60771 *
- ---------------------------- ----------- -------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) ID Number)
707 Third Street, West Sacramento, California 95605
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (916) 617-1000
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N/A
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(Former name or former address, if changed since last report)
* See Schedule A attached hereto.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
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Information and Exhibits.
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(c) Exhibits
Exhibit No.
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1.1 Underwriting Agreement, dated September 24, 1998, among The Money Store
Inc., the Originators and the various Underwriters named therein.
1.2 Pricing Agreement, dated September 24, 1998, among The Money Store
Inc., the Originators and the various Underwriters named therein.
4.1 Pooling and Servicing Agreement, dated as of August 31, 1998, among The
Money Store Inc., the Originators and Norwest Bank Minnesota, National
Association, as 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/ WILLIAM S. TEMPLETON
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Name: William S. Templeton
Title: President
Dated: October 15, 1998
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibits
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1.1 Underwriting Agreement, dated September 24, 1998,
among The Money Store Inc., the Originators and the
various Underwriters named therein.
1.2 Pricing Agreement, dated September 24, 1998, among
The Money Store Inc., the Originators and the
various Underwriters named therein.
4.1 Pooling and Servicing Agreement, dated as of August
31, 1998, among The Money Store Inc., the
Originators and Norwest Bank Minnesota, National
Association as Trustee.
Exhibit 1.1
$200,000,000
THE MONEY STORE INC.
The Money Store Home Improvement Loan Backed Certificates
Series 1998-I
UNDERWRITING AGREEMENT
September 24, 1998
First Union Capital Markets, a division
of Wheat First Securities, Inc.
as Representative of the
Underwriters named herein
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 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 Home Improvement Loan
Backed Certificates, Series 1998-I, Class AH, Class MH-1, Class MH-2 and Class
BH (collectively, the "Offered Certificates") to be issued pursuant to a Pooling
and Servicing Agreement, to be dated as of August 31, 1998, (the "Pooling and
Servicing Agreement"), among the Company, as Representative, Servicer and Claims
Administrator, the Originators and Norwest Bank Minnesota, National Association
("Norwest") as Trustee. The initial principal amount of each Class of Offered
Certificates will be as set forth on Annex B hereto. The Offered Certificates
represent beneficial interests in a trust fund (the "Trust Fund") that will
consist at the Closing Time (as defined in Section 2 hereof) primarily of fixed
rate, single family residential first, second and more junior home improvement
mortgage loans (the "Loans"), certain of which loans (the "FHA Loans") are
partially insured by the Federal Housing Administration (the "FHA") of the
United States Department of Housing and Urban Development under Title I of the
National Housing Act of 1934. 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 Home Improvement Loan Backed
Certificates, Series 1998-I, Class R-1 and Class R-2" (the "Class R
Certificates"), and "The Money Store Home Improvement Loan Backed Certificates,
Series 1998-I, 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.
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. 333-60771) 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 (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, and the Pooling and Servicing Agreement
(this Agreement, the Pricing Agreement, and the Pooling and Servicing
Agreement being herein referred to, collectively, as the "Basic
Documents").
(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 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,
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) The Pooling and Servicing Agreement has 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 conforms in all material respects to the
statements relating thereto contained in the Prospectus.
(viii) 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.
(ix) 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, nor the execution and delivery by the
Company and the Originators of the Basic Documents, nor the fulfillment
of the terms of the Certificates or each Basic Document 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 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 will result in such a breach, violation or default
which would have such a material adverse effect.
(x) 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 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 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.
(xi) 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.
(xii) 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.
(xiii) At the time of execution and delivery of the Pooling
and Servicing Agreement by the Company, the Originators and the Trustee,
the Trustee will have acquired good title on behalf of the Trust Fund to
the Loans, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity, and, upon delivery to the
Underwriters of the Offered Certificates which they purchase, the
Underwriters will have good and marketable title to such Offered
Certificates free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(xiv) 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.
(xv) 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.
(xvi) Any taxes, fees and other governmental charges that are
assessed and due in connection with the execution, delivery and issuance
of the Basic Documents, 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.
(xvii) 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 September 29, 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 99.750% 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; (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 Trustee and its
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 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), 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 and the Pooling and Servicing
Agreement, 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 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 and
the Pricing 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 Pooling and Servicing
Agreement and the Pricing 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 Pricing 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 Trustee for the benefit of the Certificateholders
all right, title and interest of the applicable Originator in and to
each such Loan including, without limitation, the right to enforce each
such Loan in accordance with its terms to the extent enforceable by the
related Originator at the time of such delivery. With respect to the
transfer of the Loans by the Originators, such counsel shall express no
opinion as to (i) whether the laws of the State of New York would apply
to the transfer of the related Mortgages or (ii) the effectiveness of
the transfer of the Mortgages under the laws of the jurisdictions in
which such Originators are located (other than Mortgages relating to
Mortgaged Properties situated in California or New York) or in which
the Mortgaged Properties are situated (other than Mortgaged Properties
situated in California or New York) or the right of the Trustee to
enforce such Mortgages.
(J) The Certificates, assuming due execution by the
Company, due authorization by the Trustee and delivery and payment
therefore pursuant to the Underwriting Agreement, will be validly
issued and outstanding and entitled to the benefits of the Pooling and
Servicing Agreement.
(K) Assuming compliance with all provisions of the
Pooling and Servicing Agreement, for federal income tax purposes, each
of REMIC I and REMIC II will qualify as a REMIC, the Offered
Certificates and the Class X Certificates will constitute "regular
interests" in REMIC I and the Class R-1 Certificates and the Class R-2
Certificates will each constitute a single class of "residual
interests" in REMIC I and REMIC II, respectively, within the meaning of
the REMIC Provisions. Assuming compliance with all provisions of the
Pooling and Servicing Agreement, for New York State and City tax
purposes, each of REMIC I and REMIC II will be classified as a REMIC
and not as a corporation, partnership or trust, in conformity with the
federal income tax treatment of such assets. Accordingly, each of REMIC
I and REMIC II will be exempt from all New York State and City taxation
imposed upon its income, franchise or capital stock. Additionally, each
of REMIC I and REMIC II will be exempt from all State of California
taxation imposed upon its income, franchise or capital stock, other
than the application of the annual minimum tax under Section 23153 of
the California Revenue and Taxation Code.
(L) An Offered Certificate owned by a "domestic building
and loan association" within the meaning of Section 7701(a)(19) of the
Code will be considered in its entirety to represent an interest in
qualified assets within the meaning of Section 7701(a)(19)(C)(xi) of
the Code so long as at least 95% of the REMIC I's assets consist of
assets described in Section 7701(a)(19)(C)(i) through (x) of the Code.
If less than 95% of the REMIC I's assets consist of such items, an
Offered Certificate will be considered qualified assets in the same
proportion as the REMIC I's assets which are such items. An Offered
Certificate owned by a real estate investment trust will be considered
in its entirety an interest in "real estate assets" within the meaning
of Section 856(c)(5)(A) of the Code and interest thereon will be
considered in its entirety "interest on obligations secured by
mortgages on real property" within the meaning of Section 856(c)(3)(B)
of the Code in both cases so long as at least 95% of the REMIC I's
assets are "real estate assets" as defined in Section 856(c)(3)(B) of
the Code. If less than 95% of the REMIC I's assets are "real estate
assets," an Offered Certificate will be considered "real estate assets"
and the interest thereon will be considered "interest on obligations
secured by mortgages on real property" in the same proportion as the
REMIC I's assets which are "real estate assets." An Offered Certificate
will not be considered "residential loans" for purposes of the
residential loan requirement of Section 593(g)(4)(B) of the Code. An
Offered Certificate held by another REMIC will be a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code,
assuming it is transferred to the REMIC on its startup day in exchange
for regular or residual interests in such REMIC.
(M) The Pooling and Servicing Agreement is not required
to be qualified under the Trust Indenture Act of 1939, as amended. The
Trust Fund created by the Pooling and Servicing Agreement is not
required to be registered under the Investment Company Act of 1940, as
amended.
In rendering such opinion, Stroock & Stroock & Lavan LLP may rely on
certificates of responsible officers of the Company, the Trustee 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 and, in the case of the Company, the
Pricing Agreement and the Certificates, and has all requisite power,
authority and legal right to execute and deliver this Agreement, the
Pooling and Servicing Agreement, and, in the case of the Company, the
Pricing 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 Pricing Agreement and the Certificates each have been duly
authorized, executed and delivered by the Company and this Agreement
and the Pooling and Servicing 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, or in the case of the Company, the Pricing 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, or, in the case of the Company,
the Pricing 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 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 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, or the Pooling and Servicing Agreement,
or in the case of the Company, the Pricing Agreement or the Certificates.
(iv) 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.
(v) The favorable opinion, dated as of the Closing Time, of
counsel for First Union National Bank, Trust Department as the Custodian,
in form and substance satisfactory to counsel for the Underwriters.
(vi) 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 Loans.
(vii) The favorable opinion, dated as of the Closing Time, of
Kilpatrick Stockton LLP, counsel for the Underwriters.
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 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 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 the Trustee, 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 Trustee 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 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 Loan Pool" and in the Prospectus under the captions
"The Representative and the Originators" and "The Single Family Loan
Lending Program" 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 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, or (d) 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.
(h) At Closing Time, each Class of the Offered Certificates shall
have been rated as follows by Standard & Poor's and Fitch:
Rating
------
Class S&P Fitch
----- --- -----
AH AAA AAA
MH-1 AA AA
MH-2 A A
BH BBB BBB
(i) 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.
(j) 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 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
second 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 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 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; (iii) if any banking moratorium has been declared by
Federal or New York authorities; or (iv) 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 either of the
Underwriters shall fail at Closing Time to purchase the Offered Certificates
which it is obligated to purchase hereunder (the "Defaulted Certificates"), the
other Underwriter (the "Non-Defaulting Underwriter") 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 Underwriter 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 Underwriter.
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 Underwriter 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
either 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/ WILLIAM TEMPLETON
-----------------------------
Name: William Templeton
Title: Executive Vice President
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By: /s/ WILLIAM TEMPLETON
------------------------------
Name: William Templeton
Title: Executive 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/ WILLIAM INGRAM
-------------------------------
Name: William Ingram
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 Wheat First Lehman
Securities, Inc. Brothers Inc. Total
- ----------------------------------------------------------------------------------------------------------
Certificates
- ------------
<S> <C> <C> <C>
Class AH $77,625,000 $77,625,000 $155,250,000
Class MH-1 8,375,000 8,375,000 16,750,000
Class MH-2 7,625,000 7,625,000 15,250,000
Class BH 6,375,000 6,375,000 12,750,000
===============================================================================
Total $100,000,000 $100,000,000 $200,000,000
</TABLE>
<PAGE>
EXHIBIT A
$200,000,000
THE MONEY STORE INC.
The Money Store Home Improvement Loan Backed Certificates,
Series 1998-I
PRICING AGREEMENT
September 24, 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 September 24, 1998
(the "Underwriting Agreement"), relating to $200,000,000 aggregate principal
amount of The Money Store Home Improvement Loan Backed Certificates, Series
1998-I, Class AH, Class MH-1, Class MH-2, and Class BH (collectively, 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:
Initial Class Pass-
Certificate Through
Class Balance Rate(1)
----- ------------- -------
Class AH $155,250,000 (2)
Class MH-1 16,750,000 (2)
Class MH-2 15,250,000 (2)
Class BH 12,750,000 (2)
------------
Total $200,000,000
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 September
29, 1998 for each Class of Certificates.
(2) The Pass-Through Rate for each Class of Certificates will adjust based
on one-month LIBOR, as described in the Prospectus Supplement. See
"Description of the Certificates--Distributions on the Certificates."
<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:
Title:
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By:____________________________
Name: William Templeton
Title: Executive 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.
Exhibit 1.2
$200,000,000
THE MONEY STORE INC.
The Money Store Home Improvement Loan Backed Certificates,
Series 1998-I
PRICING AGREEMENT
September 24, 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 September 24, 1998
(the "Underwriting Agreement"), relating to $200,000,000 aggregate principal
amount of The Money Store Home Improvement Loan Backed Certificates, Series
1998-I, Class AH, Class MH-1, Class MH-2, and Class BH (collectively, 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:
Initial Class Pass-
Certificate Through
Class Balance Rate(1)
----- ------------- -------
Class AH $155,250,000 (2)
Class MH-1 16,750,000 (2)
Class MH-2 15,250,000 (2)
Class BH 12,750,000 (2)
------------
Total $200,000,000
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 September
29, 1998 for each Class of Certificates.
(2) The Pass-Through Rate for each Class of Certificates will adjust based
on one-month LIBOR, as described in the Prospectus Supplement. See
"Description of the Certificates--Distributions on the Certificates."
<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/ WILLIAM TEMPLETON
-----------------------
Name: William Templeton
Title: Executive Vice President
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By: /s/ WILLIAM TEMPLETON
-------------------------
Name: William Templeton
Title: Executive 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/ WILLIAM INGRAM
----------------------
Name: William Ingram
Title: Managing Director
Acting on behalf of themselves
and as the representative of
the Underwriters of the Offered
Certificates.
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Dated as of August 31, 1998
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
and
THE MONEY STORE INC.
(Representative, Servicer and Claims Administrator)
and
THE ORIGINATORS LISTED HEREIN
The Money Store Home Improvement Loan Backed Certificates,
Series 1998-I
<PAGE>
TABLE OF CONTENTS
--------------------
Section Page
ARTICLE I DEFINITIONS........................................................1
ARTICLE II SALE AND CONVEYANCE OF THE TRUST FUND............................35
Section 2.01 Sale and Conveyance of Trust Fund; Priority
and Subordination of Ownership Interests.............35
Section 2.02 Possession of Mortgage Files.........................36
Section 2.03 Books and Records....................................36
Section 2.04 Delivery of Mortgage Loan Documents..................36
Section 2.05 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by the Trustee..........38
Section 2.06 Designations under REMIC Provisions; Designation of
Startup Day..........................................40
Section 2.07 Authentication of Certificates.......................41
Section 2.08 Fees and Expenses of the Trustee, Trustee, FHA
Custodian and Trust Administrator....................41
Section 2.09 [Reserved]...........................................41
Section 2.10 Optional Repurchase of Defaulted Mortgage Loans......42
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................43
Section 3.01 Representations of Representative, Servicer, Claims
Administrator and Originators........................43
Section 3.02 Individual Mortgage Loans............................50
Section 3.03 Purchase and Substitution............................58
ARTICLE IV THE CERTIFICATES.................................................60
Section 4.01 The Certificates.....................................60
Section 4.02 Registration of Transfer and Exchange of
Certificates.........................................62
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates....67
Section 4.04 Persons Deemed Owners................................67
ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE LOANS....................68
Section 5.01 Duties of the Servicer68
Section 5.02 Liquidation of Mortgage Loans72
Section 5.03 Establishment of Principal and Interest Account;
Deposits in Principal and Interest Account...........72
Section 5.04 Permitted Withdrawals From the Principal and
Interest Account.....................................74
Section 5.05 Payment of Taxes, Insurance and Other Charges........76
Section 5.06 Transfer of Principal and Interest Account...........77
Section 5.07 Maintenance of Hazard Insurance......................77
Section 5.08 Maintenance of Mortgage Impairment Insurance
Policy...............................................77
Section 5.09 Fidelity Bond........................................78
Section 5.10 Title, Management and Disposition of REO Property....78
Section 5.11 Certain Tax Information..............................79
Section 5.12 Collection of Certain Mortgage Loan Payments.........80
Section 5.13 Access to Certain Documentation and Information
Regarding the Mortgage Loans.........................80
Section 5.14 Superior Liens.......................................80
Section 5.15 Duties of the Claims Administrator...................81
ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS.83
Section 6.01 Establishment of Certificate Account; Depositsin
Certificate Account; Permitted Withdrawals from
Certificate Account..................................83
Section 6.02 Establishment of Spread Account......................85
Section 6.03 Establishment of Expense Account; Deposits in
Expense Account; Permitted Withdrawals from
Expense Account......................................86
Section 6.04 [Reserved]...........................................87
Section 6.05 [Reserved]...........................................87
Section 6.06 Establishment of FHA Premium Account; Deposits in
FHA Premium Account; Permitted Withdrawals from
FHA Premium Account..................................87
Section 6.07 Investment of Accounts...............................88
Section 6.08 Priority and Subordination of Distributions..........89
Section 6.09 Allocation of Realized Losses........................93
Section 6.10 Statements...........................................94
Section 6.11 Advances by the Servicer.............................99
Section 6.12 Compensating Interest...............................100
Section 6.13 Reports of Foreclosure and Abandonment of
Mortgaged Property..................................100
Section 6.14 Supplemental Trust..................................101
Section 6.15 Establishment of Servicing Account; Collection of
Taxes, Assessments and Similar Items................101
ARTICLE VII GENERAL SERVICING PROCEDURE....................................103
Section 7.01 Assumption Agreements...............................103
Section 7.02 Satisfaction of Mortgages and Release of Mortgage
Files...............................................103
Section 7.03 Servicing Compensation and Contingency Fee..........105
Section 7.04 Annual Statement as to Compliance...................106
Section 7.05 Annual Independent Public Accountants' Servicing
Report..............................................106
Section 7.06 Trustee's Right to Examine Servicer Records and
Audit Operations....................................106
Section 7.07 Reports to the Trustee; Principal and Interest
Account Statements..................................106
ARTICLE VIII REPORTS TO BE PROVIDED BY SERVICER............................108
Section 8.01 Financial Statements................................108
ARTICLE IX THE SERVICER....................................................109
Section 9.01 Indemnification; Third Party Claims.................109
Section 9.02 Merger or Consolidation of the Representative, the
Servicer and the Claims Administrator...............110
Section 9.03 Limitation on Liability of the Servicer and Others..110
Section 9.04 Servicer and Claims Administrator Not to Resign.....110
Section 9.05 Appointment of Assistant Claims Administrator.......111
Section 9.06 Right of Majority Certificateholders to Replace
Servicer and Claims Administrator...................111
Section 9.07 Appointment of Trust Administrator..................111
ARTICLE X DEFAULT..........................................................112
Section 10.01 Events of Default...................................112
Section 10.02 Trustee to Act; Appointment of Successor............114
Section 10.03 Waiver of Defaults..................................116
Section 10.04 [Reserved]..........................................116
Section 10.05 Control by Majority Certificateholders..............116
ARTICLE XI TERMINATION.....................................................117
Section 11.01 Termination.........................................117
Section 11.02 Termination Upon Loss of REMIC Status...............118
Section 11.03 Additional Termination Requirements.................119
Section 11.05 Accounting Upon Termination of Servicer and Claims
Administrator.......................................120
ARTICLE XII THE TRUSTEE....................................................121
Section 12.01 Duties of the Trustee...............................121
Section 12.02 Certain Matters Affecting the Trustee...............122
Section 12.03 Trustee Not Liable for Certificates or Mortgage
Loans...............................................124
Section 12.04 Trustee May Own Certificates........................124
Section 12.05 Representative to Pay Trustee's, Trust Adminis-
trator's and FHA Custodian's Fees and Expenses......124
Section 12.06 Eligibility Requirements for Trustee................125
Section 12.07 Resignation and Removal of the Trustee..............125
Section 12.08 Successor Trustee...................................126
Section 12.09 Merger or Consolidation of the Trustee..............127
Section 12.10 Appointment of Co-Trustee or Separate Trustee.......127
Section 12.11 Authenticating Agent................................128
Section 12.12 Tax Returns and Reports.............................129
Section 12.13 Appointment of Custodians...........................130
Section 12.14 Protection of Trust Fund............................130
Section 12.15 Calculation of LIBOR................................131
ARTICLE XIII MISCELLANEOUS PROVISIONS......................................133
Section 13.01 Acts of Certificateholders..........................133
Section 13.02 Amendment...........................................133
Section 13.03 Recordation of Agreement............................134
Section 13.04 Duration of Agreement...............................134
Section 13.05 Governing Law.......................................134
Section 13.06 Notices.............................................134
Section 13.07 Severability of Provisions..........................135
Section 13.08 No Partnership......................................135
Section 13.09 Counterparts........................................135
Section 13.10 Successors and Assigns..............................136
Section 13.11 Headings............................................136
Section 13.12 Supplemental Trustee................................136
Section 13.13 Paying Agent........................................136
Section 13.14 Notification to Rating Agencies.....................137
Section 13.15 Third Party Rights..................................137
SCHEDULE I Description of Certain Litigation
SCHEDULE II Schedule of Notional Amounts
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 FUNB Initial Certification
EXHIBIT F-1 Form of FUNB Interim Certification
EXHIBIT F-2 Form of FUNB Final Certification
EXHIBIT G Form of Trustee's Receipt of Documents
EXHIBIT H 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 [Omitted]
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
<PAGE>
Agreement dated as of August 31, 1998, among, Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"), the entities listed on Exhibit
I hereto (collectively, the "Originators") and The Money Store Inc., as
Representative (the "Representative"), Servicer (the "Servicer") and Claims
Administrator (the "Claims Administrator"):
PRELIMINARY STATEMENT
In order to facilitate the servicing of certain Mortgage Loans by the
Servicer, the Representative, the Servicer, the Originators and the Claims
Administrator are entering into this Agreement with the Trustee. The Originators
are selling the Mortgage Loans to the Trustee (or, with respect to the FHA
Loans, to the FHA Custodian, who is transferring such FHA Loans to the 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 Home Improvement Loan Backed Certificates, Series 1998-I, Class AH,
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 Mortgage Loans have an aggregate outstanding
principal balance of $200,000,003.17 as of August 31, 1998 (or the date of
origination of such Mortgage Loan if later) (the "Cut-Off Date"), after
application of payments received by the Originators on or before such date. Each
Mortgage Loan has a Mortgage Interest Rate in excess of the Class Adjusted
Mortgage Loan Remittance Rate of each Class of Certificates. 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 Home Improvement Loan
Backed Certificates, Series 1998-I, Class AH, 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 Account, Expense Account, Spread Account or
Servicing Account (including any sub-accounts of any of the foregoing),
established and held in trust by the Trustee for the Certificateholders, the FHA
Premium Account, established and held in trust by the Trustee for the benefit of
the Certificateholders of the Certificates, to reimburse the Servicer for
payments with respect to FHA Insurance Premiums or to make payments with respect
to FHA Insurance Premiums, and the Supplemental Account, established and held by
the Supplemental Trustee for the benefit of the Certificateholders. The
obligation to establish and maintain the Accounts is not delegable.
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) 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,
(iii) the Servicing Fee and (iv) the Contingency Fee.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of (i)
0.02% per annum and (ii) the aggregate Class Principal Balances of the Class A,
Class M and Class B Certificates which is computed and payable on a monthly
basis and represents the estimated annual Trustee Fee, Trust Administrator Fee,
FHA Custodian Fee, and the expenses of the Trust Fund.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of
transfer or equivalent instrument sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect of record the sale
of the Mortgage to the Trustee for the benefit of the Certificateholders.
AUTHENTICATING AGENT: Initially, 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, Maryland,
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. When
used with respect to the Rate Agreement, "Business Day" shall mean a day on
which banks are open for dealing in foreign currency and exchange in London and
New York City.
CERTIFICATE: Class AH, 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 Trustee or the Authenticating Agent substantially in the forms annexed
hereto in Exhibit B.
CERTIFICATE ACCOUNT: As described in Section 6.01.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, 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 of Certificates, a Certificateholder or Holder of such Class of
Certificates, as the case may be.
CERTIFICATEHOLDERS' INTEREST CARRYOVER AMOUNTS: For any Remittance
Date on which the Remittance Rate for a Class or Classes of Certificates is
based upon the Net Funds Cap, the excess of (i) the amount of interest such
Class or Classes of Certificates would be entitled to receive on such Remittance
Date had interest been calculated at a rate equal to the applicable Remittance
Rate (but in no event exceeding 14.00% per annum), over (ii) the amount of
interest such Class or Classes of Certificates will receive on such Remittance
Date at the Net Funds Cap (excluding application of amounts transferred from the
Supplemental Account and the Spread Account), together with the unpaid portion
of any such excess from prior Remittance Dates (and interest thereon at the then
applicable Remittance Rate for such Class or Class of Certificates, 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
any Class of Certificates after the Class Principal Balance of such Class is
reduced to zero.
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 AH
Certificate.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A POOL PRINCIPAL BALANCE: The Class Principal Balance of the
Class AH Certificates.
CLASS ADJUSTED MORTGAGE LOAN REMITTANCE RATE: With respect to each
Mortgage Loan, a percentage per annum, being the sum of (i) the then current
Class AH, Class MH-1, Class MH-2 or Class BH Remittance Rate, as the case may
be, (ii) the Annual Expense Escrow Amount, and (iii) with respect to FHA Loans
for which the FHA Insurance Premium is paid by the related Mortgagor, the
applicable Insurance Rate.
CLASS AH CERTIFICATE: A Certificate denominated as a Class AH
Certificate.
CLASS AH REMITTANCE RATE: The annual rate of interest payable to the
Class AH Certificateholders, which shall be equal to 5.65672% for the first
Remittance Date. Thereafter, the Class AH Remittance Rate shall be equal to the
lesser of (i) LIBOR plus 0.27% (or plus 0.54% 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 A PERCENTAGE: The percentage that the aggregate Class Principal
Balance of the Class A Certificates represents of Class Principal Balances of
all Classes of Certificates. Initially the Class A Percentage is 77.625%.
CLASS B CERTIFICATE: A Certificate denominated as a Class BH
Certificate.
CLASS B CERTIFICATEHOLDER: A Holder of a Class B Certificate.
CLASS B PERCENTAGE: The percentage that the Class Principal
Balance of the Class B Certificates represents of Class Principal Balances of
all Classes of Certificates. Initially the Class B Percentage is 6.375%.
CLASS B POOL APPLIED REALIZED LOSS AMOUNT: As of any Remittance Date
and the Class B Certificates, the lesser of (x) the Class Principal Balance of
the 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 Applied Pool 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: As of any Remittance Date and the
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
amount on deposit in the first sub-account of the Certificate Account 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 is in effect and the 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 Class A
Certificates after giving effect to the payment of the 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 89.70% of the outstanding Principal
Balance of the Loans as of the last day of the related Due Period and (B) the
outstanding Principal Balance of the Loans as of the last day of the related Due
Period minus 0.50% of the Original Collateral Amount.
CLASS BH REMITTANCE RATE: The annual rate of interest payable to the
Class BH Certificateholders, which shall be equal to 7.23672% for the first
Remittance Date. Thereafter, the Class BH Remittance Rate shall be equal to the
lesser of (i) LIBOR plus 1.85% (or plus 2.775% for each Remittance Date
occurring after the Optional Servicer Termination Date) and (ii) the Net Funds
Cap, but in no event exceeding 14.0% per annum.
CLASS CURRENT INTEREST REQUIREMENT: For each Class of Class A, Class M
and Class B Certificates and with respect to each Remittance Date, the amount
equal to interest on 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, as limited to the 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 October 1998 Remittance Date,
interest on the Certificates shall accrue at the applicable Class Remittance
Rate from and including September 29, 1998 to but not including the October 1998
Remittance Date. The Current Interest Requirement for any Class of 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 CERTIFICATE: A Certificate denominated as a Class MH-1
Certificate.
CLASS MH-1 PERCENTAGE: The percentage that the Class Principal Balance
of the Class MH-1 Certificates represents of Class Principal Balances of all
Classes of Certificates. Initially the Class MH-1 Percentage is 8.375%.
CLASS MH-1 POOL APPLIED REALIZED LOSS AMOUNT: 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 Pool Applied Realized Loss Amount, if any, on such
Remittance Date) and (y) the excess of (i) the Pool Applied Realized Loss Amount
for such Remittance Date over (ii) the sum of the Class MH-2 Pool Applied
Realized Loss Amount and the Class B Pool Applied Realized Amount, in each case
for such Remittance Date.
CLASS MH-1 POOL REALIZED LOSS AMOUNT: 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 amount on deposit in the
first sub-account of the Certificate Account for such Remittance Date remaining
after application of amounts set forth in Section 6.08(d)(Z)(i) through (xi),
inclusive.
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 is in effect and the 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
Class A Certificates after giving effect to the payment of the 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) 61.70% of the outstanding principal balance of the Loans
as of the last day of the related Due Period and (B) the outstanding principal
balance of the Loans as of the last day of the related Due Period minus 0.50% of
the Original Collateral Amount.
CLASS MH-1 REMITTANCE RATE: The annual rate of interest payable to the
Class MH-1 Certificateholders, which shall be equal to 5.93672% for the first
Remittance Date. Thereafter, the Class AH Remittance Rate shall be equal to the
lesser of (i) LIBOR plus 0.55% (or plus 0.825% 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 MH-2 CERTIFICATE: A Certificate denominated as a Class MH-2
Certificate.
CLASS MH-2 PERCENTAGE: The percentage that the Class Principal Balance
of the Class MH-2 Certificates represents of Class Principal Balances of all
Classes of Certificates. Initially the Class MH-2 Percentage is 7.625%.
CLASS MH-2 POOL APPLIED REALIZED LOSS AMOUNT: 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 Pool Applied Realized Loss Amount, if any, on such
Remittance Date) and (y) the excess of (i) the Pool Applied Realized Loss Amount
for the Certificates for such Remittance Date over (ii) the Class B Pool Applied
Realized Loss Amount for such Remittance Date.
CLASS MH-2 POOL REALIZED LOSS AMOUNT: 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 amount on deposit in the
first sub-account of the Certificate Account for such Remittance Date remaining
after application of amounts set forth in Section 6.08(d)(Z)(i) through (xiii),
inclusive.
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 is in effect and the 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 Class A Certificates after giving effect to the
payment of the 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) 76.95% of the outstanding Principal Balance of the Loans as of the last day
of the related Due Period and (B) the outstanding Principal Balance of the Loans
as of the last day of the related Due Period minus 0.50% of the Pool Original
Collateral Amount.
CLASS MH-2 REMITTANCE RATE: The annual rate of interest payable to the
Class MH-2 Certificateholders, which shall be equal to 6.13672% for the first
Remittance Date. Thereafter, the Class MH-2 Remittance Rate shall be equal to
the lesser of (i) LIBOR plus 0.75% (or plus 1.125% 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 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 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. 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 Loss Amounts, 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, 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 Section
6.08(d)(Z)(xx).
CLOSING DATE: September 29, 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: Mortgage Loans that are not FHA
Loans.
CROSS-OVER DATE: The date on which the Pool Available Maximum
Subordinated Amount has been reduced to zero.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the
aggregate amount of Realized Losses with respect to the 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.
CUT-OFF DATE: August 31, 1998 (or the date of origination of a
Mortgage Loan if later).
DEALER LOANS: Mortgage Loans in which a dealer-contractor participates
in the financing.
DEFAULTED MORTGAGE LOAN: Any Mortgage Loan as to which the related
Mortgagor has failed to pay in full three or more consecutive Monthly Payments.
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 "A" or better by Fitch (if Fitch rates such debt obligations),
or one of the two highest short-term ratings by S&P and the highest short term
rating by Fitch, 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.
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 Certificates with respect to a 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 the Pool of
Mortgage Loans, an amount equal to the excess of (A) the product of (i) the
aggregate Principal Balances of the 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 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 Certificates for such Remittance Date, (ii) amounts
to be deposited into the Expense Account on such Remittance Date pursuant to
Section 6.03(a)(i), (iii) the Servicing Fee and Contingency Fee for the Mortgage
Loans with respect to such Remittance Date and (iv) with respect to those FHA
Loans 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 the Pool of Mortgage Loans
and any Remittance Date, the excess, if any, of (x) the Pool Subordinated Amount
that would apply on such Remittance Date (except for any distributions of
Subordination Reduction Amounts on such Remittance Date) over (y) the Pool
Specified Subordinated Amount for such Remittance Date.
EXPENSE ACCOUNT: The expense account established and maintained by the
Trustee in accordance with Section 6.03 hereof.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHA: The Federal Housing Administration, and its successors in
interest.
FHA CUSTODIAN: First Union Trust Company, National Association, a
national banking association headquartered in Wilmington, Delaware.
FHA CUSTODIAN FEE: As to each 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 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
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.
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.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Certificate.
INSURANCE PROCEEDS: With respect to any Mortgage Loan, proceeds (other
than FHA Payments) paid (i) to the Trustee or the Servicer by any 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.
INTEREST DETERMINATION DATE: The second LIBOR Determination Date prior
to any Interest Period (other than the first Interest Period for which the LIBOR
Determination Date shall be two Business Days prior to the Closing Date).
INTEREST PERIOD: Initially, the period commencing September 29, 1998
and ending on the day immediately preceding the Remittance Date in October 1998,
and thereafter, the period commencing on a Remittance Date and ending on the day
immediately preceding the next Remittance Date.
INTEREST SHORTFALL CARRYFORWARD AMOUNT: As of any Remittance Date and
with respect to any Class of Certificates, 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 with
respect to interest and (ii) one month's interest on the amount determined
pursuant to clause (i)(b) at the applicable Class Remittance Rate.
LIBOR: The London Interbank Offered Rate for one-month U.S. dollar
deposits, determined on each Interest Determination Date as provided in Section
12.15 hereof.
LIBOR DETERMINATION DATE: A date which is both a Business Day and a
London Banking Day prior to the commencement of each related Interest Period.
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 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.
LOAN: A Mortgage Loan.
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-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 (i) the Class AH Certificates, the rate per
annum of 0.27%, (ii) the Class MH-1 Certificates, the rate per annum of 0.55%,
(iii) the Class MH-2 Certificates, the rate per annum of 0.75%, and (iv) the
Class BH Certificates, the rate per annum of 1.85% (or for each Remittance Date
occurring after the Optional Servicer Termination Date, the rate per annum
listed in (i) above times two with respect to the Class AH Certificates and the
rate per annum listed in (ii) to (iv) above, with respect to the Class MH-1,
Class MH-2 and Class B Certificates, respectively, times 1.5) that is added to
LIBOR to determine the Remittance Rate for each Class of Certificates 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 the 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
and (ii) the then 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.
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 rate of interest borne by a Mortgage
Note, as shown on the Mortgage Loan Schedule.
MORTGAGE LOAN: An individual mortgage loan which is transferred
pursuant to this Agreement to the 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
Mortgage Loan Schedule delivered to the Trustee, and attached hereto as Exhibit
H. 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 Exhibit H), 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 schedule of Mortgage Loans
delivered to the Trustee, and attached hereto as Exhibit H, such schedule
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)
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 (xi) whether the
Mortgage Loan is an FHA Loan or a Conventional Home Improvement Loan.
MORTGAGE NOTE: The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan,
consisting of a fee simple estate in a single contiguous parcel of land improved
by a Residential Dwelling.
MORTGAGED PROPERTY STATES: Any one of the 50 states and the District
of Columbia and Puerto Rico, where the Mortgaged Properties are located.
MORTGAGOR: The obligor on a Mortgage Note.
MULTIFAMILY LOANS: Mortgage Loans secured by Multifamily Properties.
MULTIFAMILY PROPERTY: A residential or mixed-use property, such as
rental apartment buildings or projects containing five or more units.
NET FUNDS CAP: As to any Remittance Date, a percentage equal to the
difference between (A) the weighted average Mortgage Interest Rate on the
Mortgage Loans, and (B) the sum of the percentages used in determining the
Servicing Fee, the Contingency Fee, the Trustee Fee, the FHA Custodian Fee and
the Trust Administrator Fee.
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.
NOTIONAL AMOUNT: With respect to any Remittance Date through and
including the Remittance Date in September 2008, the amounts shown for such
Remittance Date on Schedule II attached hereto.
1933 ACT: The Securities Act of 1933, as amended.
90 DAY DELINQUENT FHA LOAN: A 90 Day Delinquent Loan that is an FHA
Loan.
90 DAY DELINQUENT LOAN: With respect to any Remittance Date, a
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.
NONRECOVERABLE ADVANCES: With respect to any Loan, (i) any Monthly
Advance previously made and not reimbursed pursuant to Section 5.04 or 6.11, or
(ii) a Servicing Advance or Monthly Advance proposed to be made in respect of a
Loan or REO Property which, in the good faith business judgment of the Servicer,
will not or, in the case of a proposed advance, would not be ultimately
recoverable pursuant to Sections 5.04 or 6.11.
NOTIONAL AMOUNT: With respect to any Remittance Date through and
including the Remittance Date in September 2008, the amount shown on Schedule II
attached hereto.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee, signed
by the Chairman of the Board, the President, a Vice President or Assistant Vice
President, the Treasurer, the Secretary, or one of the Assistant Secretaries of
the Representative, an Originator, the Servicer or the Claims Administrator, as
required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Representative, the Servicer or the Claims
Administrator, reasonably acceptable to the Trustee and 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 AH PRINCIPAL BALANCE: $155,250,000.
ORIGINAL CLASS BH PRINCIPAL BALANCE: $16,750,000.
ORIGINAL CLASS MH-1 PRINCIPAL BALANCE: $15,250,000.
ORIGINAL CLASS MH-2 PRINCIPAL BALANCE: $12,750,000.
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 AH through Original Class MH-2 Principal Balances
above.
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 Trustee, or any other Person that meets
the eligibility standards for the Paying Agent specified in Section 13.13 hereof
and is authorized by the Trustee to make payments on the Certificates on behalf
of the Trustee.
PERCENTAGE INTEREST: With respect to a Certificate other than a Class
X or Class R Certificate, the portion of the respective Class evidenced by such
Certificate, expressed as a percentage, the numerator of which is the
denomination represented by such Certificate and the denominator of which is the
Original Principal Balance of such Class. With respect to the Class X
Certificates, the portion of the Class evidenced thereby, expressed as a
percentage, which shall equal 100%. With respect to the Class R Certificates,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate, which shall be 100%. The 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 Certificate of each Class may be issued in a different
denomination.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments
shall include the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or 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;
(b) 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 "A-1" or better by Fitch;
(c) 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 "BBB" or better by Fitch;
(d) commercial paper (having original maturities of not more than
365 days) rated "A-1" or better by S&P and "A-1" or better by Fitch;
(e) debt obligations rated "AAA" by S&P and "AAA" by Fitch (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);
(f) investments in money market funds (including those funds
managed or advised by the Trustee or an affiliate thereof) rated "AAA" or
better by S&P or "AAA" or better by Fitch the assets of which are invested
solely in instruments described in clauses (a)-(e) above;
(g) guaranteed investment contracts or surety bonds issued by or
reasonably acceptable to the Rating Agencies 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:
(i) 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 Fitch; and
(ii) provide that the Trustee may exercise all of the rights of
the Representative under such contract or surety bond without the
necessity of the taking of any action by the Representative;
(h) A repurchase agreement that satisfies the following criteria:
(i) Must be between the Trustee and a dealer bank or securities
firm described in A. or B. below:
A. Primary dealers on the Federal Reserve reporting dealer
list which are rated "A" or better by S&P and Fitch, or
B. Banks rated "A" or above by S&P and Fitch,
(ii) The written repurchase agreement must include the following:
Securities which are acceptable for the transfer are:
1. Direct U.S. governments, or
2. Federal Agencies backed by the full faith and credit
of the U.S. government (and FNMA & FHLMC)
a. the term of the repurchase agreement may be up
to 60 days
b. the collateral must be delivered to the
Trustee or third party custodian acting as agent for
the Trustee by appropriate book entries and
confirmation statements must have been delivered before
or simultaneous with payment (perfection by possession
of certificated securities)
Valuation of collateral: The securities must be valued
weekly, marked-to-market at current market price plus
accrued interest. The value of the collateral must be
equal to at least 104% of the amount of cash
transferred by the Trustee or custodian for the Trustee
to the dealer bank or security firm under the
repurchase agreement plus accrued interest. If the
value of securities held as collateral slips below 104%
of the value of the cash transferred by the Trustee
plus accrued interest, then additional cash and/or
acceptable securities must be transferred. If, however,
the securities used as collateral are FNMA or FHLMC,
then the value of collateral must equal at least 105%.
(i) any other investment acceptable to the Rating Agencies.
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 of Mortgage Loans
sold to and included in the Trust Fund.
POOL ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance
Date, the lesser of (i) the positive difference, if any, of (x) the Monthly
Excess Spread for such Remittance Date minus (y) the unpaid Interest Shortfall
Carryforward Amount for the Class A Certificates for such Remittance Date and
(ii) the Subordinated Deficiency Amount for such Remittance Date, calculated for
this purpose without giving effect to payment of the Pool Accelerated Principal
Distribution Amount and prior to taking into account the Pool Applied Realized
Loss Amount for such Remittance Date.
POOL APPLIED REALIZED LOSS AMOUNT: For any Remittance Date, an amount
equal to the excess, if any, of (i) the aggregate Class Principal Balances of
the Class A, Class M and Class B Certificates, as applicable (after taking into
account the distribution of principal (including the Pool Accelerated Principal
Distribution Amount), with respect to the Certificates on such Remittance Date)
over (ii) the aggregate Principal Balance of the Mortgage Loans as of the end of
the prior Due Period (after taking into account all Realized Losses relating to
the Mortgage Loans experienced during such Due Period).
POOL AVAILABLE MAXIMUM SUBORDINATED AMOUNT: With respect to any
Remittance Date, the Pool Maximum Subordinated Amount less all distributions
made on the Certificates with respect to Shortfall Amounts on prior Remittance
Dates and when determining if the Pool Available Maximum Subordinated Amount has
been reduced to zero, all distributions on the Certificates 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 Remittance Date,
(i) the sum of all amounts relating to the Mortgage Loans 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 Supplemental Payments, any amounts withdrawn by
the Servicer with respect to the Mortgage Loans 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 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 Certificate Account as of the Determination Date,
plus (ii) the amount of any Monthly Advances and Compensating Interest payments
relating to the Mortgage Loans, remitted by the Servicer for such Remittance
Date, less (iii) those amounts withdrawable from the Certificate Account
pursuant to Section 6.01(b)(vi). The "Pool Available Remittance Amount" does not
include (i) funds in the Principal and Interest Account and available to be
withdrawn pursuant to Section 5.04(d)(ii), (ii) funds in the Certificate Account
and available to be withdrawn pursuant to Section 6.01(b)(vi), (iii) funds in
the Certificate Account that cannot be distributed by the Trustee on such
Remittance Date as a result of a proceeding initiated under the United States
Bankruptcy Code, as amended from time to time (11 U.S.C.), (iv) any amounts on
deposit in the Supplemental Account and (v) any amounts on deposit in the Spread
Account.
POOL 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 is in effect, the lesser of (i) 100% of
the Pool Principal Distribution Amount and (ii) the Class Principal Balance of
the Class A Certificates and (b) on or after the Stepdown Date on which the
Trigger Event is not in effect, the excess, if any, of (i) the Class Principal
Balance of the Class A Certificates immediately prior to such Remittance Date
over (ii) the lesser of (A) 44.95% of the outstanding Principal Balance of the
Mortgage Loans as of the last day of the related Due Period and (B) the
outstanding Principal Balance of the Mortgage Loans as of the last day of the
related Due Period minus 0.50% of the Pool Original Collateral Amount.
POOL CURRENT INTEREST REQUIREMENT: The sum of the Class Current
Interest Requirements of all Classes of the Certificates.
POOL INITIAL SPECIFIED SUBORDINATED AMOUNT: $10,300,000
POOL MAXIMUM COLLATERAL AMOUNT: The aggregate Principal Balances as of
the Cut-Off Date of all the Mortgage Loans.
POOL MAXIMUM SUBORDINATED AMOUNT: $10,365,776.
POOL ORIGINAL COLLATERAL AMOUNT: The aggregate Principal Balances of
the Mortgage Loans as of the Cut-Off Date, which is equal to $200,000,003.17.
POOL PRINCIPAL BALANCE: The sum of the Class Principal Balances of all
Classes of the Certificates.
POOL PRINCIPAL DISTRIBUTION AMOUNT: 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,
(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,
(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 and 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) which represents principal and any Substitution
Adjustments deposited in the Principal and Interest Account with
respect to such Mortgage Loans and transferred to the Certificate
Account as of the related Determination Date,
(v) any proceeds representing principal on the Mortgage Loans
received by the Trustee in connection with the liquidation of the
Mortgage Loans or the termination of the Trust,
(vi) [Reserved],
(vii) [Reserved],
(viii) [Reserved],
(ix) the Pool Accelerated Principal Distribution Amount for such
Remittance Date, OVER
(Y) the amount of any Subordination Reduction Amount for such
Remittance Date.
POOL REMAINING AMOUNT AVAILABLE: As of any Remittance Date, the
greater of (x) zero dollars and (y) the amounts on deposit in the first
sub-account of the Certificate Account minus the sum of payments made with
respect thereto pursuant to Section 6.08(Z)(i) through (xviii).
POOL SENIOR ENHANCEMENT PERCENTAGE: For any Remittance Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Class Principal
Balance of the Class M Certificates and the Class B Certificates and (ii) the
Spread Amount, in each case after giving effect to the distribution of the Pool
Principal Distribution Amount on such Remittance Date by (y) the aggregate
Principal Balance of Mortgage Loans as of the last day of the related Due
Period.
POOL SENIOR SPECIFIED ENHANCEMENT PERCENTAGE: 55.05%.
POOL SPECIFIED SUBORDINATED AMOUNT: Means (a) prior to the Pool Spread
Amount Stepdown Date, 5.15% of the Pool Original Collateral Amount and (b) on
and after the Pool Spread Amount Stepdown Date, the greater of (i) 10.30% of the
then aggregate Principal Balance of the Mortgage Loans as of the last day of the
related Due Period and (ii) 0.50% of the Pool Original Collateral Amount;
provided that upon the occurrence and during the continuance of a Trigger Event,
the Pool Specified Subordinated Amount will equal the Pool Specified
Subordinated Amount as of the immediately preceding Remittance Date and in any
event, the Pool Specified Subordinated Amount shall never exceed the then Class
Principal Balances of the Certificates.
POOL SPREAD AMOUNT STEPDOWN DATE: 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 as of the last
day of the related Due Period is less than 50% of the Pool Original Collateral
Amount.
POOL SUBORDINATED AMOUNT: As of any Remittance Date, the excess, if
any, of (x) the sum of the aggregate Principal Balances of the Mortgage Loans as
of the close of business on the last day of the Due Period relating to such
Remittance, over (y) the Pool Principal Balance as of such Remittance Date.
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 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 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).
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 of not less than (and
not more than two percentage points more than) the Mortgage Interest Rate 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) 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.
RATE AGREEMENT: That certain cap transaction dated September 23, 1998,
between the Rate Agreement Provider and the Representative, pursuant to which
the right to receive the Supplemental Payments thereunder from the Rate
Agreement Provider have been subsequently assigned to the Supplemental Trustee,
as trustee for the Supplemental Trust, for the benefit of the
Certificateholders, for each Remittance Date through and including the
Remittance Date occurring in September 2008. (The term "Rate Agreement" shall
include any replacement or substitute Rate Agreement; provided, that no
replacement Rate Agreement may be substituted for the initial Rate Agreement
unless (a) the Rating Agencies shall have confirmed in writing that such
substitution would not result in the reduction of any rating issued in respect
of the Certificates, and (b) the Trustee shall have received 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.)
RATE AGREEMENT PAYMENT: Any payment received by the Supplemental
Trustee from the Rate Agreement Provider on any Rate Agreement Payment Date, in
the amount and pursuant to the terms of the Rate Agreement.
RATE AGREEMENT PAYMENT DATE: The 15th day of each month or, if such
day is not a Business Day, the next succeeding Business Day, through and
including the Rate Agreement Payment Date in September 2008.
RATE AGREEMENT PROVIDER: Rabobank Nederland, New York Branch, and its
permitted successors and assigns, or any other counterparty under a replacement
Rate Agreement.
RATING AGENCIES: 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
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.
333-60771) filed by the Representative with the Securities and Exchange
Commission in connection with the issuance and sale of the Certificates,
including the Prospectus dated September 28, 1998 and the Prospectus Supplement
dated September 28, 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 Excess Spread over the 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. 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
October 1998; provided, however, that in no event shall the Remittance Date
occur less than three Business Days following the Determination Date.
REMITTANCE RATE: The collective reference to the Class AH, Class MH-1,
Class MH-2 and Class BH Remittance Rates.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure. The proceeds of any REO Disposition constitute part of the
definition of Liquidation Proceeds.
REO PROPERTY: As described in Section 5.10.
REPRESENTATION LETTER: The Letter of Representations executed by the
Representative, the Trustee and the Depository with respect to the Class A,
Class M and Class B Certificates.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and
its successors and assigns as Representative hereunder.
RESERVE AMOUNT: As of any date of determination, the maximum amount of
FHA insurance available with respect to all FHA Loans. The Reserve Amount
initially will equal at least 10% of the aggregate Principal Balance of the FHA
Loans as of the Cut-Off Date and will decline as set forth in 24 C.F.R. ss.
201.32(b).
RESIDENTIAL DWELLING: Any one or more of the following, (i) Single
Family Detached House, (ii) Row House, (iii) Two-Family House, (iv) Low-Rise
Condominium, (v) PUD and De Minimis PUD, (vi) Three- or Four-Family House, (vii)
High-Rise Condominium, (viii) Mixed Use Building or (ix) manufactured home (as
defined in FNMA/FHLMC Seller-Servicers' Guide) to the extent that it constitutes
real property in the state in which it is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee, (a) any
officer assigned to the Corporate Trust Department, including any Vice
President, Assistant Vice President, any Assistant Secretary, any trust officer
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and 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.
SERIES: 1998-I.
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 Certificates,
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 the Remittance Date in September 2002,
if the Total Expected Losses (as defined below) of the Mortgage Loans, exceeds
5.0% of the aggregate Principal Balances of the Mortgage Loans as of the Cut-Off
Date, or (ii) after the Remittance Date in September 2002, but on or prior to
the Remittance Date in September 2003, if the Total Expected Losses of the
Mortgage Loans exceed 7.0% of the aggregate Principal Balances of the Mortgage
Loans as of the Cut-Off Date, or (iii) after the Remittance Date in September
2003, but on or prior to the Remittance Date in September 2005, if the Total
Expected Losses of the Mortgage Loans exceed 9.0% of the aggregate Principal
Balances of the Mortgage Loans as of the Cut-Off Date, or (iv) after the
Remittance Date in September 2005, if the Total Expected Losses of the Mortgage
Loans exceed 13.0% of the aggregate Principal Balances of the Mortgage Loans as
of the Cut-Off Date.
For purposes of the foregoing definition, the "Total Expected Losses"
of the Mortgage Loans on any date of determination shall equal the sum of (i)
the cumulative Realized Losses on the 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 Mortgage Loans 30-59 days
delinquent multiplied by 25.00%;
(ii) the Principal Balance of all Mortgage Loans 60-89 days
delinquent multiplied by 50.00%; and
(iii) the Principal Balance of all Mortgage Loans 90 days or more
delinquent multiplied by 100.00%.
SERVICING FEE: As to each Mortgage Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly only from the amounts
received in respect of interest on such Mortgage Loan, shall accrue at the rate
of .25% per annum and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on a
Mortgage Loan is computed. The Servicing Fee is payable solely from the interest
portion of related (i) Monthly Payments, (ii) Liquidation Proceeds or (iii)
Released Mortgaged Property Proceeds collected by the Servicer, or as otherwise
provided in Section 5.04. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer or Claims Administrator
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and signature appears on a list of servicing officers
furnished to the Trustee by the Servicer or Claims Administrator, as such list
may from time to time be amended.
SHORTFALL AMOUNTS: As of any Remittance Date, 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 B
Pool 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: 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 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 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.
SPREAD ACCOUNT: The spread account established and maintained by the
Trustee in accordance with Section 6.02 hereof.
SPREAD AMOUNT: For any Remittance Date the excess, if any, of (i) the
aggregate Principal Balances of the Mortgage Loans as of the last day of the
immediately preceding Due Period over (ii) the aggregate Class Principal
Balances of the 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 October 2001 and (y) the first Remittance Date on which
the Pool Senior Enhancement Percentage (after taking into account distributions
of principal on such Remittance Date) is greater than or equal to the Pool
Senior Specified Enhancement Percentage and (ii) the Remittance Date on which
the Class Principal Balance of the Class A Certificates has been reduced to
zero.
SUBORDINATED DEFICIENCY AMOUNT: With respect to any Remittance Date,
the excess, if any, of (i) the Pool Specified Subordinated Amount for such
Remittance Date over (ii) the then current Spread Amount after giving effect to
all payments previously made on such Remittance Date.
SUBORDINATED INTEREST AMOUNT: With respect to each Supplemental
Payment, the amount equal to the product of (i) the positive difference, if any,
between LIBOR and 6.0%, (ii) the lesser of (x) the aggregate Class Principal
Balances of the Certificates immediately prior to such Remittance Date and (y)
the Notional Amount applicable to such Remittance Date and (iii) a fraction the
numerator of which is the number of days elapsed since the last Remittance Date
(or the Closing Date in the case of the October 1998 Remittance Date) and the
denominator of which is 360 days.
SUBORDINATION REDUCTION AMOUNT: With respect to any Remittance Date,
an amount equal to the lesser of (x) the Excess Subordinated Amount for such
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 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 Trustee.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, 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.
SUPPLEMENTAL ACCOUNT: The Supplemental Account established in
accordance with Section 6.14 hereof and maintained by the Supplemental Trustee.
SUPPLEMENTAL INTEREST AMOUNT: For any Class of Certificates, and any
Remittance Date, the excess, if any, of (i) the amount of interest accrued on
each Class of Certificates for such Remittance Date at the applicable Remittance
Rate, without giving effect to the Net Funds Cap, but in no event exceeding
14.0% per annum, over (ii) the amount of interest accrued on each Class of
Certificates for such Remittance Date at the applicable Remittance Rate, after
giving effect to, and limited by, the applicable Net Funds Cap for such Class of
Certificates on such Remittance Date but in no event exceeding 14.0% per annum.
SUPPLEMENTAL TRUST: The Money Store Home Improvement Loan Supplemental
Trust, 1998-I, established pursuant to Section 6.14 and maintained by the
Supplemental Trustee.
SUPPLEMENTAL TRUSTEE: Norwest Bank Minnesota, National Association, or
its successor in interest (or any successor trustee appointed as herein provided
who shall also become the successor Supplemental Trustee), as trustee for
Certificateholders with respect to the Supplemental Trust.
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.
TRIGGER EVENT: Will be in effect on a Remittance Date if (i) the
Sixty-Day Delinquency Ratio with respect to the Mortgage Loans as of such
Remittance Date exceeds 50% of the Pool Senior Enhancement Percentage; or (ii)
both (a) the Weighted Average Five-Month Sixty-Day Delinquency Ratio with
respect to the Mortgage Loans as of such Remittance Date exceeds 10% and (b) the
Cumulative Realized Losses for the Mortgage Loans as of such Remittance Date
exceed 4.5% of the aggregate original Principal Balances of the Mortgage Loans
as of the Cut-Off Date; or (iii) the Weighted Average Five-Month Sixty-Day
Delinquency Ratio with respect to the Mortgage Loans as of such Remittance Date
exceeds 15%; or (iv) (w) on or prior to the Remittance Date in September 2002,
if Cumulative Realized Losses exceeds 5.0% of the aggregate Principal Balances
of the Mortgage Loans as of the Cut-Off Date, or (x) after the Remittance Date
in September 2002, but on or prior to the Remittance Date in September 2003, if
Cumulative Realized Losses exceed 7.0% of the aggregate Principal Balances of
the Mortgage Loans as of the Cut-Off Date, or (y) after the Remittance Date in
September 2003, but on or prior to the Remittance Date in September 2005, if
Cumulative Realized Losses exceed 9.0% of the aggregate Principal Balances of
the Mortgage Loans as of the Cut-Off Date, or (z) after the Remittance Date in
September 2005, Cumulative Realized Losses exceed 13.0% of the aggregate
Principal Balances of the Mortgage Loans as of the Cut-Off Date.
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 .0145% 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 Mortgage Loan is computed.
TRUST ADMINISTRATOR'S CERTIFICATE: The certificate as defined in
Section 6.10.
TRUSTEE FEE: As to each Mortgage Loan, the annual fee payable to the
Trustee. Such fee shall be calculated and payable monthly and shall accrue at
the rate of .005% 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 Mortgage Loan is computed.
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 Account, Principal and Interest Account, Expense Account, the first
sub-account of the Certificate Account, and FHA Premium Account, (iii) the
rights of the 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) Liquidation Proceeds and (v) Released Mortgaged
Property Proceeds, including all earnings thereon and proceeds thereof.
TRUSTEE: Norwest Bank Minnesota, National Association, or its
successor in interest, or any successor appointed as herein provided.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the Trustee
pursuant to Section 2.04.
TWO FAMILY HOUSE: Two dwelling units under one roof.
UNPAID REALIZED LOSS AMOUNT: With respect to any Class of the Class M
or Class B Certificates as of any Remittance Date, the excess of (x) the
aggregate cumulative amount of Pool Applied Realized Loss Amounts with respect
to such Class for all prior Remittance Dates over (y) the aggregate, cumulative
amount of Pool Realized Loss Amounts with respect to such Class for all prior
Remittance Dates.
UNSUBORDINATED INTEREST AMOUNT: For each Remittance Date, the positive
difference, if any, between the amount of the Rate Agreement Payment with
respect to such Remittance Date and the Subordinated Interest Amount with
respect to such Remittance Date.
WEIGHTED AVERAGE FIVE-MONTH SIXTY-DAY DELINQUENCY RATIO: 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
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 Trustee, the Mortgage Loans (other than the FHA Loans) and
(ii) to the FHA Custodian, the FHA Loans (including the related Reserve Amount),
in each case without recourse and for the benefit of the Certificateholders,
subject to the terms of this Agreement, all of the right, title and interest of
the Originators in and to the Mortgage Loans, all rights under the Reserve
Amount and all other assets included or to be included in the Trust Fund. 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
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 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 Certificateholders and Class X
Certificateholders, to receive payments in respect of the Certificates and Class
X Certificates, respectively, and the ownership interests of the
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.
(c) The Representative hereby sells, transfers, assigns, sets-over and
conveys to the Supplemental Trustee, for the benefit of the Certificateholders,
all payment rights to receive Rate Agreement Payments under the Rate Agreement,
subject to the terms of this Agreement and the Rate Agreement, without recourse,
to be included in the Supplemental Trust.
Section 2.02 Possession of Mortgage Files.
(a) Upon the issuance of the Certificates, the ownership of each
Mortgage Note, the Mortgage and the contents of the related Mortgage File
relating to the Mortgage Loans (other than the Reserve Amount) is vested in the
Trustee, for the benefit of the Certificateholders. Further, the Reserve Amount
relating to the FHA Loans shall be transferred by the Originators to the FHA
Custodian for the benefit of the Certificateholders.
(b) Pursuant to Section 2.04, the Originators have delivered or caused
to be delivered each Trustee's Mortgage File relating to the Mortgage Loans to
the 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 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 to the Trustee, the following documents
relating to the 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 "Norwest Bank Minnesota, National Association, as
Trustee under the Pooling and Servicing Agreement dated as of August 31, 1998,
Series 1998-I" 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 such
Person furnishes to the 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 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);
(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 FUNB (who shall deliver or cause to be delivered to the
Trustee): (a) the original recorded Mortgage in those instances where a copy
thereof certified by a Responsible Officer of the Originator was delivered to
the Trustee: (b) if required pursuant to Section 2.04(c), the original recorded
Assignment of Mortgage to the Trustee, which, together with any intervening
assignments of Mortgage, evidences a complete chain of title from the originator
to the Trustee in those instances where copies thereof certified by a
Responsible Officer of the Originator were delivered to the Trustee; (c) any
intervening assignments of Mortgage in those instances where copies thereof
certified by a Responsible Officer of the Originator were delivered to the
Trustee; and (d) 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 FUNB (who
shall forward such documents to the Trustee), 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 FUNB (who shall
forward such documents to Trustee) additional original documents evidencing an
assumption or modification of a Mortgage Loan. All Mortgage Loan documents held
by the Trustee 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 the Trustee.
(a) FUNB, on behalf of the Trustee, agrees to execute and deliver 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. The Trustee
declares that it will hold such documents and any amendments, replacements or
supplements thereto, as well as any other assets included in the definition of
the Trust Fund and delivered to the Trustee, in trust upon and subject to the
conditions set forth herein for the benefit of the Certificateholders. FUNB
agrees, for the benefit of the Certificateholders, to review each Trustee's
Mortgage File relating to the 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 the Trustee, a certification in the form
attached hereto as Exhibit F-1 to the effect that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or any Mortgage Loan specifically identified in such certification as not
covered by such certification), with such exceptions, if any, as identified
therein (i) all documents required to be delivered pursuant to this Agreement
have been delivered to the 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 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. 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, FUNB shall deliver to the Servicer, the Representative, the Trustee and
any Certificateholder who requests a copy a final certification in the form
attached hereto as Exhibit F-2 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 the Trustee have any liability or responsibility
for reviewing any of the Trustee's Mortgage Files or any of the documents
contained therein or for FUNB's failure to perform any of its respective
obligations hereunder to conduct any such review. On or before the Closing Date,
the Trustee will execute and deliver the Trustee's Receipt substantially in the
form of Exhibit G attached hereto.
(b) If FUNB 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, FUNB shall promptly so notify the Servicer,
the Representative and Trustee. In performing any such review 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
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, 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 interest on the actual number of days during the
related interest period for the Certificates on such Principal Balance, computed
at the weighted average Class Adjusted Mortgage Loan Remittance Rates for the
Certificates as of the next succeeding Determination Date, plus any accrued
unpaid Servicing Fees, Contingency 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.
(c) Upon receipt by the 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 Principal and Interest Account (which
certification shall be in the form of Exhibit J hereto), the 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 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 or the Servicer on the
Remittance Date in June of each year, commencing 1999, FUNB shall deliver to the
Representative and the Servicer and the Trustee a certification detailing all
transactions with respect to the Mortgage Loans for which the Trustee holds a
Trustee's Mortgage File pursuant to this Agreement during the prior calendar
year. Such certification shall list all Trustee's Mortgage Files which were
released by or returned to the 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 October 15, 2024.
(c) The latest possible maturity dates of the Class A, Class M, Class
B Certificates and the Class X Certificates are as follows:
Latest Possible
Class Maturity
AH October 15, 2024
MH-1 October 15, 2024
MH-2 October 15, 2024
BH October 15, 2024
X October 15, 2024
(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 Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to the Trustee (as set forth in the acknowledgment of the
Trustee, in the form of Exhibit G attached hereto, delivered on the Closing
Date) of the Trustee's Mortgage Files relating to the Mortgage Loans and,
concurrently with such delivery, the 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 Mortgage Loans, the Trustee's
Mortgage Files and the other assets included in the definition of the Trust Fund
relating to the Mortgage Loans (other than the Reserve Amount), the Certificates
duly authenticated by the Trustee in authorized denominations.
Section 2.08 Fees and Expenses of the Trustee, FHA Custodian and Trust
Administrator .
The Trustee Fee, the FHA Custodian Fee and the Trust Administrator Fee
and expenses shall be paid from the Expense Account 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
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 Amount of the Pool.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of Representative,
Servicer, Claims Administrator and Originators.
(a) The Representative, the Servicer and the Claims Administrator (for
the purposes of this Section 3.01(a), "The Money Store Inc.") hereby represent
and warrant to the Trustee and the Certificateholders as of the Closing Date:
(i) The Money Store Inc. is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good
standing in each Mortgaged Property State if the laws of such state
require licensing or qualification in order to conduct business of the
type conducted by The Money Store Inc. and perform its obligations
hereunder; The Money Store Inc. has corporate power and authority to
execute and deliver this Agreement and each Subservicing Agreement and
to perform in accordance herewith and therewith; the execution,
delivery and performance of this Agreement and each Subservicing
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement and each Subservicing Agreement) by The
Money Store Inc. and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all
necessary corporate action; this Agreement and each Subservicing
Agreement evidences the valid, binding and enforceable obligation of
The Money Store Inc.; The Money Store Inc. is a Permitted Transferee;
and all requisite corporate action has been taken by The Money Store
Inc. to make this Agreement and each Subservicing Agreement valid,
binding and enforceable upon The Money Store Inc. in accordance with
the respective terms of each, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity,
none of which will affect the ownership of the Mortgage Loans by the
Trustee, as trustee;
(ii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc., under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which The Money Store Inc. makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by The Money
Store Inc. of the documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and
effect on the date hereof, are not subject to any pending proceedings
or appeals (administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review thereof may
be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and each Subservicing
Agreement and the other documents on the part of The Money Store Inc.
and the performance by The Money Store Inc. of its obligations under
this Agreement and each Subservicing Agreement and such of the other
documents to which it is a party;
(iii) The consummation of the transactions contemplated by this
Agreement and each Subservicing Agreement will not result in the
breach of any terms or provisions of the certificate of incorporation
or by-laws of The Money Store Inc. or result in the breach of any term
or provision of, or conflict with or constitute a default under or
result in the acceleration of any obligation under, any material
agreement, indenture or loan or credit agreement or other material
instrument to which The Money Store Inc. or its property is subject,
or result in the violation of any law, rule, regulation, order,
judgment or decree to which The Money Store Inc. or its property is
subject;
(iv) Neither this Agreement or any Subservicing Agreement nor any
statement, report or other document furnished or to be furnished
pursuant to this Agreement and each Subservicing Agreement or in
connection with the transactions contemplated hereby and thereby
contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading;
(v) The Money Store Inc. does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vi) Except as set forth on Schedule I, there is no action, suit,
proceeding or investigation pending or, to the best of The Money Store
Inc.'s knowledge, threatened against The Money Store Inc. which,
either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial
condition, properties or assets of The Money Store Inc. or in any
material impairment of the right or ability of The Money Store Inc. to
carry on its business substantially as now conducted, or in any
material liability on the part of The Money Store Inc. or which would
draw into question the validity of this Agreement and each
Subservicing Agreement or the Mortgage Loans or of any action taken or
to be taken in connection with the obligations of The Money Store Inc.
contemplated herein, or which would be likely to impair materially the
ability of The Money Store Inc. to perform under the terms of this
Agreement and each Subservicing Agreement;
(vii) The Trust Fund will not constitute an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(viii) The Money Store Inc. is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of The Money Store Inc.
or its properties or might have consequences that would materially and
adversely affect its performance hereunder or under any Subservicing
Agreement;
(ix) The statements contained in the Registration Statement which
describe The Money Store Inc. or matters or activities for which The
Money Store Inc. is responsible in accordance with the Registration
Statement, this Agreement and all documents referred to therein or
delivered in connection therewith, or which are attributable to The
Money Store Inc. therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to The Money Store Inc. and
does not omit to state a material fact necessary to make the
statements contained therein with respect to The Money Store Inc. not
misleading. The Money Store Inc. is not aware that the Registration
Statement contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements contained
therein not misleading. There is no fact peculiar to The Money Store
Inc. or the Mortgage Loans and known to The Money Store Inc. that
materially adversely affects or in the future may (so far as The Money
Store Inc. can now reasonably foresee) materially adversely affect The
Money Store Inc. or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set forth in
the Registration Statement;
(x) Each Originator received fair consideration and reasonably
equivalent value in exchange for the sale of the interest in the
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 Trustee as of the Closing Date:
(i) Such Originator is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation and, except as set forth below, has all licenses
necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each Mortgaged Property
State if the laws of such state require licensing or qualification in
order to conduct business of the type conducted by such Originator and
perform its obligations hereunder; such Originator has corporate power
and authority to execute and deliver this Agreement and the
Subservicing Agreement to which it is a party and to perform in
accordance herewith and therewith; the execution, delivery and
performance of this Agreement and the Subservicing Agreement to which
it is a party (including all instruments of transfer to be delivered
pursuant to this Agreement and the Subservicing Agreement to which it
is a party) by such Originator and the consummation of the
transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action; this Agreement
and the Subservicing Agreement to which it is a party evidences the
valid, binding and enforceable obligation of such Originator; such
Originator is a Permitted Transferee; and all requisite corporate
action has been taken by such Originator to make this Agreement and
the Subservicing Agreement to which it is a party valid, binding and
enforceable upon such Originator in accordance with the respective
terms of each such agreement, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity,
none of which will affect the ownership of the Mortgage Loans by the
Trustee, as trustee.
(ii) No approval of the transactions contemplated by this
Agreement and the Subservicing Agreement to which it is a party from
any state or federal regulatory authority having jurisdiction over
such Originator is required or, if required, such approval has been or
will, prior to the Closing Date, be obtained;
(iii) The consummation of the transactions contemplated by this
Agreement and the Subservicing Agreement to which it is a party will
not result in the breach of any terms or provisions of the certificate
of incorporation or by-laws of such Originator or result in the breach
of any term or provision of, or conflict with or constitute a default
under or result in the acceleration of any obligation under, any
material agreement, indenture or loan or credit agreement or other
material instrument to which such Originator or its property is
subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which such Originator or its property is
subject;
(iv) Such Originator is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of such Originator or its
properties or might have consequences that would materially and
adversely affect its performance hereunder or under the Subservicing
Agreement to which it is a party;
(v) Except as set forth on Schedule I, there is no action, suit,
proceeding or investigation pending or, to the best of such
Originator's knowledge, threatened against such Originator which,
either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, condition
(financial or other), properties or assets of such Originator or in
any material impairment of the right or properties or assets of such
Originator to carry on its business substantially as now conducted, or
in any material liability on the part of such Originator or which
would draw into question the validity of this Agreement or the
Subservicing Agreement to which it is a party or the Mortgage Loans or
of any action taken or to be taken in connection with the obligations
of such Originator contemplated herein, or which would be likely to
impair materially the ability of such Originator to perform under the
terms of this Agreement or the Subservicing Agreement to which it is a
party;
(vi) Neither this Agreement or the Subservicing Agreement to
which it is a party nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or the
Subservicing Agreement to which it is a party or in connection with
the transactions contemplated hereby or thereby contains any untrue
statement of a material fact or omits to state any material fact
necessary to make the statements contained herein or therein not
misleading;
(vii) The statements contained in the Registration Statement
which describe such Originator or matters or activities for which such
Originator is responsible in accordance with the Registration
Statement, this Agreement and all documents referred to therein or
delivered in connection therewith, or which are attributable to such
Originator therein are true and correct in all material respects, and
the Registration Statement does not contain any untrue statement of a
material fact with respect to such Originator or the Mortgage Loans
and does not omit to state a material fact necessary to make the
statements contained therein with respect to such Originator or the
Mortgage Loans not misleading. Such Originator is not aware that the
Registration Statement contains any untrue statement of a material
fact or omits to state any material fact necessary to make the
statements contained therein not misleading. There is no fact peculiar
to such Originator or the Mortgage Loans and known to such Originator
that materially and adversely affects or in the future may (so far as
such Originator can now reasonably foresee) materially and adversely
affect such Originator or the Mortgage Loans or the ownership
interests therein represented by the Certificates that has not been
set forth in the Registration Statement;
(viii) Upon the receipt of each Trustee's Mortgage File by the
Trustee under this Agreement, the Trustee will have good and
marketable title on behalf of the Trust Fund to each Mortgage Loan and
such other items comprising the corpus of the 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 Trustee 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 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.
(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 bears a fixed Mortgage Interest Rate, which rate
shall at least equal the sum of (i) the Class Adjusted Mortgage Loan Remittance
Rate for the Class BH Certificates, (ii) the rate used in calculating the
Servicing Fee and (iii) the rate used in calculating the Contingency Fee;
provided, however, that 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) Each Mortgage Note 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 4.51% of the Mortgage
Loans (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 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 1.44%
of the Mortgage Loans 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 3.57% 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) [Reserved]
(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) [Reserved]
(p) The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage representing coverage described in
Sections 5.07 and 5.08;
(q) If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 5.07 and 5.08;
(r) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), none of which will
prevent the ultimate realization of the security provided by the Mortgage, and
all parties to each Mortgage Loan had full legal capacity to execute all
Mortgage Loan documents and convey the estate therein purported to be conveyed;
(s) The Servicer, at the direction of the related Originator, has
caused and will cause to be performed any and all acts required to be performed
to preserve the rights and remedies of the Trustee and the 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 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 0.54%, of the Principal Balances of the
Mortgage Loans 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 20.20% and 79.80% of the 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 Mortgage Loans are Single-Family Loans (provided,
however, that 2.84% of the Mortgage Loans, measured by Principal Balance as of
the Cut-Off date, may be Multifamily Loans). None of the 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 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 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) [Reserved]
(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) [Reserved]
(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) [Reserved]
(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 Principal and Interest Account and
are, as of the Closing Date with respect to the Mortgage Loans, in the Principal
and Interest Account;
(ccc) [Reserved]
(ddd) At the applicable dates of origination of the Mortgage Loans,
each Mortgage Loan, after giving effect to all improvements to be made on the
related Mortgaged Property with the proceeds of such Mortgage Loan, and based
upon representations of the related Mortgagor, the value of the related
Mortgaged Property will at least be equal to the outstanding principal balance
of such Mortgage Loan and the outstanding principal balances of all other loans
secured by Prior Liens on such Mortgaged Property;
(eee) [Reserved]
(fff) At the applicable dates of origination, each Mortgage Loan had
an original term to maturity of no greater than 25 years, respectively;
(ggg) [Reserved];
(hhh) [Reserved];
(iii) [Reserved]
(jjj) [Reserved]
(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 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 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 Mortgage Loan, was the only security for
such Mortgage Loan;
(ppp) [Reserved];
(qqq) A portion of the 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
Mortgage Loan have been completed in accordance with the terms of such 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 Mortgage Loans after the Closing Date. All improvements and other goods and
services provided under each 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 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 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 Mortgage Loan, and no other agreement defines, modifies or expands the
obligations of the seller or subcontractor under the 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 or the Trustee 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 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 Principal and Interest Account, on the next succeeding
Determination Date, an amount in the manner specified in Section 2.05(b), or (c)
remove such Mortgage Loan from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans, provided such substitution is effected not later than the date which is
two years after the Startup Day, or at such later date if the Trustee 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 FUNB, who shall deliver to the 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 Principal and Interest Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loans on or before the date of
substitution will be retained by the Representative on behalf of the related
Originator. The Trust Fund will own all payments received on the Deleted
Mortgage Loan on or before the date of substitution, and the Representative on
behalf of the Originators shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Servicer
shall give written notice to the Trustee and the Representative that such
substitution has taken place and shall amend the 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 Principal and
Interest Account an amount equal to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in
Section 2.05 and this Section 3.03, the Representative shall indemnify and hold
harmless the Trust Fund, the Trustee, the FHA Custodian, the Trust Administrator
and the Certificateholders against any loss, damages, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments and other costs
and expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Representative's or any
Originator's representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of the Representative or any
Originator set forth in Sections 2.05 and 3.03 to cure, purchase or substitute
for a defective Mortgage Loan and to indemnify the Certificateholders, the
Trustee, the Trust Administrator and the FHA Custodian, as provided in Sections
2.05 and 3.03 constitute the sole remedies of the Trustee, the FHA Custodian,
the Trust Administrator and the Certificateholders respecting a breach of the
foregoing representations and warranties.
Any cause of action against any Originator, the Servicer or the
Representative relating to or arising out of the breach of any representations
and warranties made in Sections 2.05, 3.01 or 3.02 shall accrue as to any
Mortgage Loan upon (i) discovery of such breach by any party and notice thereof
to the Representative or notice thereof by the Representative to the Trustee,
(ii) failure by the Representative to cure such breach or purchase or substitute
such Mortgage Loan as specified above, and (iii) demand upon the Representative
by the Trustee for all amounts payable in respect of such Mortgage Loan.
For as long as the Trust Fund shall exist, the Servicer and the
Trustee shall act in accordance herewith to assure continuing treatment of each
of REMIC I and REMIC II as a REMIC. In particular, the Trustee 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 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) accept
any contribution to the Trust Fund after the Startup Day without an Opinion of
Counsel that such contribution is included within the exceptions provided in
Section 860G(d)(2) of the Code and therefore will not be subject to the tax
imposed by Section 860G(d)(1) of the Code.
<PAGE>
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates.
(a) The Certificates shall be substantially in the forms annexed
hereto as Exhibit B and shall, upon original issue, be executed and delivered by
the Servicer to the Trustee for authentication and redelivery to or upon the
written order of the Representative, on behalf of the Originators, upon receipt
by the Trustee of the documents specified in Section 2.04. All Certificates
shall be executed by manual or facsimile signature on behalf of the Servicer by
its President, one of its Executive Vice Presidents or Vice Presidents, or by
its Treasurer, in the denominations specified in the definition of Percentage
Interest, and shall be authenticated by manual signature on behalf of the
Trustee by one of its authorized signatories. Certificates bearing the
signatures of individuals who were at the time of the execution or
authentication of the Certificates the proper officers of the Servicer or an
authorized signatory of the Trustee, as the case may be, shall bind the Servicer
or the Trustee, as the case may be, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the delivery of such
Certificates or did not hold such offices at the date of such Certificates. All
Certificates issued hereunder shall be dated the date of their authentication.
(b) The Trustee shall elect that each of REMIC I and REMIC II shall be
treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of this Agreement shall
be resolved in a manner that preserves the validity of such REMIC elections. (c)
[Reserved]
(d) REMIC II will be evidenced by (x) the Class II-AH, Class II-MH-1,
Class II-MH-2, Class II-BH, Class II-QQQ and Class II-MMM Certificates (the
"REMIC II Regular Certificates"), which will be uncertificated and
non-transferable and are hereby designated as the "regular interests" in REMIC
II and (y) the Class R-2 Certificates, which are hereby designated as the single
"residual interest" in REMIC II (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 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 Class II-AH, 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>
II-QQQ $196,000,000 (1) (6) (3),(4)
II-MMM $2,000,000 (1) (6) (3),(4)
II-AH $1,552,500 (1) (2) (3),(4)
II-MH-1 $167,500 (1) (2) (3),(4)
II-MH-2 $152,500 (1) (2) (3),(4)
II-BH $127,500 (1) (2) (3),(4)
R-2 $0 N/A 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 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 AH, Class MH-1, Class MH-2, Class BH, and Class X are
hereby designated as "regular interests" with respect to REMIC I and the Class
R-1 Certificate is hereby designated as the single "residual interest" with
respect to 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 Trustee shall cause to be kept at its office, or at the office
of its designated agent, a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, it shall provide for the
registration of 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. Norwest
Bank Minnesota, National Association, is initially appointed Certificate
Registrar for the purpose of registering the Certificates and transfer and
exchanges of the Certificates, as herein provided (each, a "Certificate
Registrar").
(b) It is intended that the Class A, Class M and Class B Certificates
be registered so as to participate in a global book-entry system with the
Depository, as set forth herein. Each Class of Class A, Class M and Class B
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 Class A, Class M
and Class B Certificates shall have an aggregate denomination equal to the
following:
CLASS DENOMINATION
Class AH $155,250,000
Class MH-1 $16,750,000
Class MH-2 $15,250,000
Class BH $12,750,000
Upon initial issuance, the ownership of such Classes of Certificates shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
The Representative and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
(c) With respect to Class A, Class M or Class B Certificates
registered in the Certificate Register in the name of Cede & Co., as nominee of
the Depository, the Representative and the Trustee shall have no responsibility
or obligation to Direct or Indirect Participants or beneficial owners for which
the Depository holds Class A, Class M or Class B Certificates from time to time
as a Depository. Without limiting the immediately preceding sentence, the
Representative and the Trustee shall have no responsibility or obligation with
respect to (a) the accuracy of the records of the Depository, Cede & Co., or any
Direct or Indirect Participant with respect to the ownership interest in the
Class A, Class M or Class B Certificates, (b) the delivery to any Direct or
Indirect Participant or any other Person, other than a registered Holder of a
Class A, Class M or Class B Certificate or (c) the payment to any Direct or
Indirect Participant or any other Person, other than a registered Holder of a
Class A, Class M or Class B Certificate as shown in the Certificate Register, of
any amount with respect to any distribution of principal or interest on the
Class A, Class M or Class B Certificates. No Person other than a registered
Holder of a Class A, Class M or Class B Certificate as shown in the Certificate
Register shall receive a certificate evidencing such Class A, Class M or Class B
Certificate.
(d) Upon delivery by the Depository to the Trustee of written notice
to the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of distributions by the mailing of checks or drafts to the registered
Holders of Class A, Class M or Class B Certificates appearing as registered
Owners in the Certificate Register on a Record Date, the name "Cede & Co." in
this Agreement shall refer to such new nominee of the Depository.
(e) In the event that (i) the Depository or the Representative advises
the Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Class A, Class M or Class B 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 Class A,
Class M or Class B 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 Class A, Class M or Class B 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 Class A, Class M or Class B
Certificates may be registered in whatever name or names registered Holders of
Class A, Class M or Class B Certificates transferring Class A, Class M or Class
B Certificates shall designate, in accordance with the provisions hereof.
(f) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A, Class M or Class B Certificates are registered
in the name of Cede & Co., as nominee of the Depository, all distributions of
principal and interest on such Class A, Class M or Class B Certificates and all
notices with respect to such Class A, Class M or Class B Certificates shall be
made and given, respectively, in the manner provided in the Representation
Letter.
(g) The Class R and Class X Certificates shall be issued without
principal balances in minimum Percentage Interests as provided in the definition
of Percentage Interest. The Class R Certificates and Class X Certificates have
not been registered or qualified under the 1933 Act, or any state securities
law. No transfer, sale, pledge or other disposition of any Class R or Class X
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the 1933 Act and effective registration
or qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. In the
event that a transfer is to be made in reliance upon an exemption from the 1933
Act, the Trustee or the Certificate Registrar may require, in order to assure
compliance with the 1933 Act, that the Class R or Class X Certificateholder
desiring to effect such disposition and such Class R or Class X
Certificateholder's prospective transferee each certify to the Trustee or the
Certificate Registrar in writing the facts surrounding such disposition. Unless
the Trustee requests otherwise, such certification shall be substantially in the
form of Exhibit D hereto. In the event that such certification of facts does not
on its face establish the availability of an exemption under Rule 144A of the
1933 Act or under Section 4(2) or a comparable provision of the 1933 Act, the
Trustee shall require an Opinion of Counsel satisfactory to it that such
transfer may be made pursuant to an exemption from the 1933 Act, which Opinion
of Counsel shall not be an expense of the Trustee or of the Trust Fund. The
Representative is not obligated under this Agreement to register the Class R
Certificates under the 1933 Act or any other securities law or to take any
action not otherwise required under this Agreement to permit the transfer of
Class R or Class X Certificates without such registration or qualification.
(h) Each Person who has or who acquires any Percentage Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Percentage Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Representative or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Percentage Interest in a Class R Certificate are expressly subject
to the following provisions:
(i) Each Person holding or acquiring any Percentage Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Representative of any change or impending change in its
status as a Permitted Transferee.
(ii) No Percentage Interest in a Class R Certificate may be
transferred (including the sale to the initial holder) and the Trustee
shall not register the transfer of a Class R Certificate unless the
Trustee and the Representative shall have been furnished with (A) an
affidavit (a "Transfer Affidavit") of the proposed transferee in the
form attached as Exhibit K (and if required by the Transfer Affidavit,
the opinion of counsel, as therein referenced) and (B) a certificate
(a "Transfer Certificate") of the transferor to the effect that such
transferor has no actual knowledge that the proposed transferee is not
a Permitted Transferee.
(iii) Each Person holding or acquiring any Percentage Interest in
a Class R Certificate shall agree (A) to require a Transfer Affidavit
from any other Person to whom such Person attempts to transfer its
Percentage Interest in a Class R Certificate, (B) to require a
Transfer Affidavit from any Person for whom such Person is acting as
nominee, trustee or agent in connection with any transfer of a Class R
Certificate, (C) to deliver a Transfer Certificate to the Trustee and
the Representative in connection with any such attempted transfer and
(D) not to transfer its Percentage Interest in a Class R Certificate
or to cause the transfer of a Percentage Interest in a Class R
Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee.
(iv) Any attempted or purported transfer of any Percentage
Interest in a Class R Certificate in violation of the provisions of
this Section 4.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall
become a Holder of a Class R Certificate in violation of the
provisions of this Section 4.02, then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R
Certificate. The Trustee shall notify the Representative upon
knowledge of a Responsible Officer that the registration of transfer
of a Class R Certificate was not in fact permitted by this Section
4.02. The Trustee shall be under no liability to any Person for any
registration of transfer of a Class R Certificate that is in fact not
permitted by this Section 4.02 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the transfer was registered after receipt of the related Transfer
Affidavit and Transfer Certificate. The Trustee shall be entitled but
not obligated to recover from any Holder of a Class R Certificate that
was in fact not a Permitted Transferee at the time it became a Holder
or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class R Certificate at and after
either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Holder of
such Certificate.
(v) If any purported transferee shall become a Holder of a Class
R Certificate in violation of the restrictions in this Section 4.02,
then the Representative or its designee shall, without notice to the
Holder or any prior Holder of such Class R Certificate, as the case
may be, sell such Class R Certificate to a purchaser selected by the
Representative or its designee on such reasonable terms as the
Representative or its designee may choose. Such purchaser may be the
Representative itself or any affiliate of the Representative. The
proceeds of such sale, net of commissions, expenses and taxes due, if
any, will be remitted by the Representative to the last preceding
purported transferee of such Class R Certificate, except that in the
event that the Representative determines that the Holder or any prior
Holder of such Class R Certificate may be liable for any amount due
under this Section 4.02 or any other provision of this Agreement, the
Representative may withhold a corresponding amount from such
remittance as security for such claim. The terms and conditions of any
sale under this clause (v) shall be determined in the sole discretion
of the Representative or its designee, and it shall not be liable to
any Person having a Percentage Interest in a Class R Certificate, as
applicable, as a result of its exercise of such discretion.
No Class 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 Trustee nor the Certificate Registrar
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 the Trustee nor the Certificate
Registrar shall have any liability for transfers of Book-Entry Certificate made
through the book-entry facilities of the Depository 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 Trustee. The Certificate Registrar shall notify the Representative and the
Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations of a like
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Servicer shall execute, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(i) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be marked canceled by the Trustee.
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar and the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Servicer, the Trustee and the
Certificate Registrar such security or indemnity (which may include a letter of
indemnity delivered by an insurance company) as may be required by each of them
to save each of them harmless, then, in the absence of notice to the Servicer,
the Trustee and the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Servicer shall execute and deliver, and
the Trustee shall authenticate, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest, but bearing a number not contemporaneously
outstanding. Upon the issuance of any new Certificate under this Section 4.03,
the Servicer and the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith. Any duplicate Certificate
issued pursuant to this Section 4.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the mutilated, destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Representative, the Trustee and the Certificate
Registrar may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving remittances pursuant
to Section 6.08 and for all other purposes whatsoever, and the Representative,
the Servicer, the Trustee and the 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 the Trustee, the Certificateholders and to the
Internal Revenue Service and any other relevant governmental taxing authority
all information returns or reports as and when required to be provided to them
in accordance with the REMIC Provisions and any other provision of federal,
state or local income tax laws; (iv) to the extent that the affairs of REMIC I
or REMIC II are within its control, conduct such affairs at all times that any
Certificates are outstanding so as to maintain the status of each of REMIC I and
REMIC II as a REMIC under the REMIC Provisions and any other applicable federal,
state and local laws; (v) not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status of
either REMIC I or REMIC II or that would cause the imposition of a prohibited
transaction tax or a tax on contributions to REMIC I or REMIC II; (vi) pay the
amount of any and all federal, state, and local taxes, including, without
limitation, prohibited transaction taxes as defined in Section 860F of the Code
imposed on each of REMIC I and REMIC II when and as the same shall be due and
payable (but such obligation shall not prevent the 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. The
Trustee will cooperate with the Servicer and the Trust Administrator in the
foregoing matters and will sign, as Trustee, any and all Tax Returns required to
be filed by REMIC I and REMIC II. The Servicer shall indemnify the Trustee and
REMIC I or REMIC II, as applicable, for any liability they may incur in
connection with this Section 5.01(a); provided, however, that the Servicer shall
not indemnify the Trustee for its negligence or willful misconduct.
With respect to any Mortgage Note relating to a Mortgage Loan released
by the 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 Trustee under the Pooling and Servicing Agreement dated as of
August 31, 1998, 1998-I" 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 August 31, 1998, 1998-I" with respect to those Mortgage
Notes relating to 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 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
Trustee and the Certificateholders for the servicing and administering of the
Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Mortgage Loans. For purposes
of this Agreement, the Servicer shall be deemed to have received payments on
Mortgage Loans when any Subservicer has received such payments. The Servicer
shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), 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 the Mortgage Loans, unless the Trustee is
then permitted and elects to terminate any Subservicing Agreement in accordance
with its terms. The Trustee, its designee or the successor servicer for the
Trustee shall be deemed to have assumed all of the Servicer's interest therein
and to have replaced the Servicer as a party to each Subservicing Agreement to
the same extent as if the Subservicing Agreements had been assigned to the
assuming party, except that the Servicer shall not thereby be relieved of any
liability or obligations under the Subservicing Agreements. The Servicer at its
expense and without right of reimbursement therefor, shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Class A, Class M and Class B Certificateholders, 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 (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, the Servicer shall continue, and is hereby
authorized and empowered, to execute and deliver on behalf of the Trustee and
each Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer, the Trustee 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 Certificateholders' reliance on the
Servicer.
(g) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 9.04, after
receipt of the Opinion of Counsel required pursuant to Section 9.04, the Trustee
or its designee shall assume all of the rights and obligations of the Servicer,
subject to Section 10.02 hereof. The Servicer shall, upon request of the Trustee
but at the expense of the Servicer, deliver to the Trustee 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 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.
(j) The Servicer shall act as agent for the Supplemental Trustee to
enforce the interests of the Supplemental Trust with respect to the Rate
Agreement and shall take whatever action it deems necessary and prudent, in its
sole discretion, to protect the interests of the Supplemental Trust in and to
the Rate Agreement, in the event that the Rate Agreement Provider defaults on
any obligations under the Rate Agreement.
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 Certificateholders. The Servicer shall foreclose
upon or otherwise comparably effect the ownership in the name of the Trustee
(subject to the provisions of Section 12.10) for the benefit of the
Certificateholders 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 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 Trustee 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 Account; Deposits
in Principal and Interest Account.
(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 Home
Improvement Loan Backed Certificates, Series 1998-I 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 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, 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,
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 Trustee,
and, upon request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without
duplication (within 24 hours of receipt thereof) in the Principal and Interest
Account and retain therein:
(i) all payments received after the Cut-Off Date on account of
principal on the 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 Mortgage Loans;
(iii) all Net Liquidation Proceeds received with respect to the
Mortgage Loans;
(iv) all Insurance Proceeds received with respect to the Mortgage
Loans (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 Mortgage Loans;
(vi) any amounts paid in connection with the purchase of any
Mortgage Loan and the amount of any Substitution Adjustment received
with respect to the Mortgage Loans paid pursuant to Sections 2.05 and
3.03;
(vii) any amount required to be deposited in the 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 September 1, 1998, the Servicer shall
deposit in the 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 Principal and Interest Account
by the Servicer immediately following its monthly remittance of the Pool
Available Remittance Amounts to the Trustee. Any reference herein to amounts on
deposit in the Principal and Interest Account shall refer to amounts net of such
investment earnings.
Section 5.04 Permitted Withdrawals From the Principal and Interest
Account.
The Servicer shall withdraw funds from the Principal and Interest
Account for the following purposes:
(a) to effect the remittance to the Trustee on each Determination Date
as follows: the portion of the Excess Spread relating to the Mortgage Loans and
the portion of the Pool Available Remittance Amount, that are net of
Compensating Interest and Monthly Advances for the related Remittance Date to
the Trustee for deposit in the Certificate Account. For the purposes of this
Section 5.04(a), the calculation of the Pool Available Remittance Amount shall
be made without reference to the actual deposit of funds in the Certificate
Account;
(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 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 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;
(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 Principal and Interest Account;
(e) to withdraw any funds deposited in the Principal and Interest
Account that were not required to be deposited therein or were deposited therein
in error;
(f) (i) to pay itself servicing compensation pursuant to Section 7.03
hereof or interest as permitted under the definition of Excess Proceeds or (ii)
to pay the Remainder Excess Spread Amount with respect to any Remittance Date to
itself and/or the Representative for any Reimbursable Amounts and the remainder
to the Trustee for remittance to the Class X Certificateholders, as the case may
be;
(g) to withdraw amounts required to be deposited into the Servicing
Account pursuant to Section 6.15(a).
(h) to clear and terminate each Principal and Interest Account upon
the termination of the 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 account
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 Home Improvement Loan
Backed Certificates, Series 1998-I." 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
Principal and Interest Account in Permitted Instruments shall be deposited in
the 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 Principal and Interest Account .
The Servicer may, upon written prior notice to the Trustee, 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 Principal and Interest Account, subject to
withdrawal pursuant to Section 5.04. It is understood and agreed that no
earthquake or other additional insurance need be required by the Servicer of any
Mortgagor or maintained on REO Property, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with losses payable to the Servicer.
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against fire and hazards of extended coverage on all of the
Mortgage Loans, then, to the extent such policy names the Trustee 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 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 Trustee, the Servicer shall cause to be
delivered to the Trustee a certified true copy of such policy. The current
issuer of such policy is Lloyds of London.
Section 5.09 Fidelity Bond.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000, and a maximum deductible of $100,000,
if commercially available, with coverage on all employees acting in any capacity
requiring them to handle funds, money, documents or papers relating to the
Mortgage Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee and its respective officers, and employees, against losses resulting
from forgery, theft, embezzlement or fraud, by such Servicer Employees. The
errors and omissions policy shall insure against losses resulting from the
errors, omissions and negligent acts of such Servicer Employees. No provision of
this Section 5.09 requiring such fidelity bond and errors and omissions
insurance shall relieve the Servicer from its duties as set forth in this
Agreement. Upon the request of the Trustee, the Servicer shall cause to be
delivered to the Trustee 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
Trustee for the benefit of the Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders 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 Certificateholders.
The Servicer shall cause to be deposited in the 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 Certificateholders. 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 Certificateholders, 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 Trustee 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 Class A, Class M, Class B 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 Trustee and shall report monthly to the Trustee as to the progress
being made in selling such REO Property.
Section 5.11 Certain Tax Information.
The Servicer shall furnish (a) any information which may be required
under the Code including the computation of the present value of the "excess
inclusions" (as defined in Section 860E of the Code) with respect to any
transfer of a Class R Certificate, and, upon request, shall provide such
information to any Holder of a Class R Certificate and to the Internal Revenue
Service within 60 days of such request for a reasonable fee and (b) the
information required to be furnished pursuant to Sections 1.860F-4 and 1.6049-7
of the Regulations.
Section 5.12 Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement, comply with
the terms and provisions of any applicable hazard insurance policy. Consistent
with the foregoing, the Servicer may in its discretion waive or permit to be
waived any late payment charge, prepayment charge, assumption fee or any penalty
interest in connection with the prepayment of a Mortgage Loan or any other fee
or charge which the Servicer would be entitled to retain hereunder as servicing
compensation and extend the due date for payments due on a Mortgage Note for a
period (with respect to each payment as to which the due date is extended) not
greater than 125 days after the initially scheduled due date for such payment
provided that the Servicer determines such extension would not be considered a
new mortgage loan for federal income tax purposes. In the event the Servicer
shall consent to the deferment of the due dates for payments due on a Mortgage
Note, the Servicer shall nonetheless make payment of any required Monthly
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 5.04(b) hereof.
Section 5.13 Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Servicer shall provide to the Trustee, the Certificateholders, the
FDIC, the Office of Thrift Supervision and the supervisory agents and examiners
of each of the foregoing access to the documentation regarding the Mortgage
Loans required by applicable local, state and federal regulations, such access
being afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer designated by it.
Section 5.14 Superior Liens.
The Servicer shall file of record a request for notice of any action
by a superior lienholder under a Prior Lien for the protection of the Trustee's
interest, 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 Certificateholders and/or to preserve the security of the
related Mortgage Loan, subject to the application of the REMIC Provisions. The
Servicer shall immediately notify the Trustee 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
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 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 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 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 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 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 Account; Deposits in
Certificate Account; Permitted Withdrawals from
Certificate Account.
(a) No later than the Closing Date, the Trustee will establish and
maintain with itself in its trust department a separate trust account with four
sub-accounts, which shall not be interest bearing, titled "TMS Certificate
Account, HIL Series 1998-I" (the "Certificate Account").
(I) The Trustee shall, upon direction of the Trust Administrator,
promptly upon receipt, deposit into the first sub-account of the Certificate
Account and retain therein:
(i) the Pool Available Remittance Amount (net of the amount of
Monthly Advances and Compensating Interest deposited pursuant to
subclause (ii) below);
(ii) the Compensating Interest and the portion of the Monthly
Advance based on the Class Adjusted Mortgage Loan Remittance Rates for
the Certificates remitted to the Trustee by the Servicer;
(iii) [Reserved]; 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 Certificate Account; and
(II) The Trustee shall, upon direction of the Trust Administrator,
promptly upon receipt, deposit into the second sub-account of the Certificate
Account and retain therein, (i) amounts, if any, transferred from the
Supplemental Account pursuant to Section 6.14(c)(ii)(x) and (ii) amounts, if
any, transferred from the Spread Account pursuant to Section 6.02(c)(i).
(III) The Trustee shall, upon direction of the Trust Administrator,
promptly upon receipt, deposit into the third sub-account of the Certificate
Account and retain therein, amounts, if any, transferred from the Supplemental
Account pursuant to Section 6.14(c)(ii)(y).
(IV) On each Remittance Date, The Trustee shall, upon the direction of
the Trust Administrator, deposit into the fourth sub-account of the Certificate
Account, amounts, if any, transferred from the first sub-account of the
Certificate Account, pursuant to Section 6.08(d)(Z)(xvii).
Neither the second sub-account, the third sub-account or the fourth
sub-account of the Certificate Account nor any amounts deposited in the second
sub-account, the third sub-account or the fourth sub-account of the Certificate
Account, as the case may be, shall constitute part of the Trust Fund or assets
of REMIC I or REMIC II. The owners of the second sub-account, the third
sub-account and the fourth sub-account of the Certificate Account are the Class
X Certificateholders and for Federal tax purposes, amounts, if any, transferred
by the Trust Fund to the second sub-account, the third sub-account or the fourth
sub-account of the Certificate Account are treated as distributed by the Trust
Fund to the Class X Certificateholders.
(b) (I) Amounts on deposit in the first sub-account of the Certificate
Account shall be withdrawn on each Remittance Date by the following parties in
the following order of priority:
(i) [Reserved]; and
(ii) by the Trustee, to make deposits in the FHA Premium Account
pursuant to Section 6.06(a)(i);
(iii) [Reserved]; and
(iv) by the Trustee, or the Paying Agent on its behalf, to effect
the applicable distributions described in Section 6.08(d);
(II) Amounts on deposit in the second sub-account of the Certificate
Account shall be withdrawn on each Remittance Date by the Trustee, or the Paying
Agent on its behalf, to effect the applicable distributions described in
Sections 6.08(e)(i) and (ii), in that order; and
(III) Amounts on deposit in the third sub-account of the Certificate
Account shall be withdrawn on each Remittance Date by the Trustee, or the Paying
Agent on its behalf, to effect the applicable distributions described in Section
6.08(e)(iii).
(IV) Amounts on deposit in the fourth sub-account of the Certificate
Account shall be withdrawn on each Remittance Date by the Trustee, or the Paying
Agent on its behalf, to effect the applicable distributions described in Section
6.08(e)(iv).
(V) Amounts on deposit in each sub-account of the Certificate Account
shall be withdrawn, in no particular order of priority:
(i) by the Trustee, to invest amounts on deposit in the
Certificate Account in Permitted Instruments pursuant to Section 6.07;
(ii) by the Trustee, to pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings realized
on Permitted Instruments;
(iii) by the Trustee, to withdraw any amount not required to be
deposited in the Certificate Account or deposited therein in error;
and
(iv) by the Trustee, to clear and terminate the Certificate
Account upon the termination of the Trust Fund in accordance with the
terms of Section 11.01 hereof.
Section 6.02 Establishment of Spread Account.
(a) No later than the Closing Date, the Trustee will establish and
maintain with itself in its trust department a separate trust account, which
shall not be interest bearing, titled "TMS Spread Account, HIL Series 1998-I"
(the "Spread Account"). Neither the Spread Account nor any amounts deposited in
the Spread Account shall constitute part of the Trust Fund or assets of REMIC I
or REMIC II. The owners of the Spread Account are the Class X Certificateholders
and, for Federal income tax purposes, amounts, if any, transferred by the Trust
Fund to the Spread Account are treated as distributed by the Trust Fund to the
Class X Certificateholders.
(b) The Trustee shall, promptly upon receipt, deposit into the Spread
Account and retain therein, all amounts transferred from the second sub-account
of the Certificate Account pursuant to Section 6.08(e)(i).
(c) The Trustee may invest amounts on deposit in the Spread Account in
Permitted Instruments pursuant to Section 6.07 hereof, and the Trustee, at the
direction of the Trust Administrator, shall withdraw amounts on deposit in the
Spread Account to:
(i) on each Remittance Date, deposit in the second sub-account
of the Certificate Account, the lesser of (x) the amount
then on deposit in the Spread Account and (y) the sum of (A)
the amounts set forth in Section 6.08(d)(z)(ix), (xi),
(xiii), (xv) and (xvii) for such Remittance Date that remain
unpaid after allocating amounts credited to the first
sub-account of the Certificate Account and amounts credited
to the second sub-account of the Certificate Account
pursuant to Section 6.14(c)(ii)(x) and (B) the Pool Applied
Realized Loss Amount that would exist for such Remittance
Date but for the distribution be made pursuant to Section
[6.08(e)(iii)];
(ii) withdraw any amount not required to be deposited in the
Spread Account or deposited therein in error; and
(iii) clear and terminate the Spread Account upon the termination
of this Agreement in accordance with the terms of Section
11.01.
Section 6.03 Establishment of Expense Account; Deposits in Expense
Account; Permitted Withdrawals from Expense Account.
(a) No later than the Closing Date, the 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, HIL Series 1998-I"
(the "Expense Account"). The Trustee shall deposit into the Expense Account:
(i) on each Remittance Date from the amounts on deposit in the
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 Mortgage Loans, 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 Expense Account.
If, at any time the aggregate amount then on deposit in the Expense Account
shall be insufficient to pay in full the Trustee Fee, the FHA Custodian Fee and
the Trust Administrator Fee (each as calculated by the Servicer) and expenses
then due with respect to the Trust Fund, the 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 Trustee for deposit in the Expense Account. Thereafter, the
Servicer shall be entitled to reimbursement from the 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 Expense
Account for payment to the Trustee, the FHA Custodian or the Trust
Administrator, as the case may be, pursuant to Section 6.08(d)(Z)(i) to the
extent of available funds in the Certificate Account.
(b) The Trustee may invest amounts on deposit in the Expense Account
in Permitted Instruments pursuant to Section 6.07 hereof, and the Trustee shall
withdraw amounts on deposit in the Expense Account to:
(i) pay the Trustee Fee, the FHA Custodian Fee and the Trust
Administrator Fee 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
Expense Account or deposited therein in error; and
(iv) to clear and terminate the Expense Account upon the
termination of the Trust Fund in accordance with Section 11.01 hereof.
(c) On the twelfth Remittance Date following the Closing Date, and on
each twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the Expense Account, the
Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Representative, for
reimbursable advances made pursuant to Section 9.01;
(ii) reimburse the Servicer for advances made by it pursuant to
the last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing compensation
any amounts remaining in any Expense Account after payments made
pursuant to subclauses (b)(i), (b)(ii), (b)(iii), (c)(i) and (c)(ii),
above.
Section 6.04 [Reserved]
Section 6.05 [Reserved]
Section 6.06 Establishment of FHA Premium Account; Deposits in
FHA Premium Account; Permitted Withdrawals from
FHA Premium Account.
(a) No later than the Closing Date, the Trustee will establish
with itself in its trust department a trust account, which shall not be interest
bearing, titled "TMS FHA Premium Account, HIL Series 1998-I" (the "FHA Premium
Account"). The FHA Premium Account shall not be available for payment of
Certificates. The Trustee shall, upon direction of the Trust Administrator,
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
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 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 Trustee may invest amounts on deposit in the FHA Premium
Account in Permitted Instruments pursuant to Section 6.07, and the Trustee shall
withdraw amounts on deposit in the FHA Premium Account to:
(i) remit, upon certification 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 the Trustee or the Supplemental Trustee, as
applicable, shall be invested and reinvested by the Trustee or the Supplemental
Trustee, as applicable, 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 Account shall mature later than the Business Day immediately
preceding the next Remittance Date and no such investment in the Expense
Account, Spread Account, Supplemental Account or FHA Premium 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 Certificate
Account, as the case may be; provided, however, the Trustee or the Supplemental
Trustee, as applicable, or any affiliate thereof may be the obligor on any
investment which otherwise qualifies as a Permitted Instrument and any
investment on which the Trustee or the Supplemental Trustee, as applicable, is
the obligor may mature on such Remittance Date or date when needed, as the case
may be.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee or the Supplemental Trustee, as applicable, and sufficient
uninvested funds are not available to make such disbursement, the Trustee or the
Supplemental Trustee , as applicable, shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. The
Trustee or the Supplemental Trustee, as applicable, shall not be liable for any
investment loss or other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, the Trustee or the Supplemental
Trustee, as applicable, shall not in any way be held liable by reason of any
insufficiency in any Account held by the Trustee or the Supplemental Trustee, as
applicable, resulting from any investment loss on any Permitted Instrument
included therein (except to the extent that the Trustee or the Supplemental
Trustee, as the case may be, is the obligor thereon).
(d) The Trustee or the Supplemental Trustee, as applicable, shall
invest and reinvest funds in the Accounts held by it to the fullest extent
practicable, in such manner as the Servicer shall from time to time direct in
writing, but only in one or more Permitted Instruments.
(e) All income or other gain from investments in any Account held by
the Trustee or the Supplemental Trustee, as applicable, shall be deposited in
such Account, immediately on receipt, and the Trustee or the Supplemental
Trustee, as applicable, shall notify the Servicer of any loss resulting from
such investments. The Servicer shall remit the amount of any such loss from its
own funds, without reimbursement therefor, to the Trustee or the Supplemental
Trustee, as applicable, 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
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) [Reserved]
(d) (X) [Reserved]
(Y) [Reserved]
(Z) On each Remittance Date the Trustee shall withdraw from the first
sub-account of the Certificate Account the amount deposited pursuant to Section
6.01(a)(I), 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, an amount equal to one-twelfth of the
Annual Expense Escrow Amount with respect to the Mortgage Loans, plus
any amount required to be paid to the 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 to the Holders of
the Class A Certificates;
(iii) after payment of the amounts specified in clauses (i) and
(ii) above, to pay the Class Current Interest Requirement for the
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 Class B Certificates to the Holders of the Class BH
Certificates;
(v) after payment of the amounts specified in clauses (i) through
(iv) above, to pay the Class A Pool Principal Distribution Amount to
the Class AH Certificateholders, but in no event will such Class of
Class A Certificates be paid more than is necessary to reduce the
Class Principal Balance of such Class to zero;
(vi) after payment of the amounts specified in clauses (i)
through (v) above, to pay the Class 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
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 Class A Certificates to the Holders of the
Class A Certificates in accordance with their Interest Shortfall
Carryforward Amount;
(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 Pool 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 Pool 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 to
the Holders of the Class BH Certificates;
(xvii) after payment of the amounts specified in clauses (i)
through (xvi) above, to the fourth sub-account of the Certificate
Account in amount equal to any Certificateholders' Interest Carryover
Amounts for any Class of Certificates owing for such Remittance Date
and all prior Remittance Dates;
(xviii) after payment of the amounts specified in clauses (i)
through (xvii) above, to the Servicer and/or the Representative, an
amount, if any, equal to the Reimbursable Amounts to the extent the
Servicer has not previously netted such amounts from Monthly Payments;
(xix) after payment of the amounts specified in clauses (i)
through (xviii) above, to the Class X Certificateholders, the lesser
of (i) the Pool Remaining Amount Available 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
(xx) after payment of the amounts specified in clauses (i)
through (xix) above, to the Class R-2 Certificateholders, any
remainder.
(e) (i) On each Remittance Date, and after application of funds
pursuant to Section 6.08(d)(Z) above, the Trustee, at the direction of the Trust
Administrator, shall withdraw from the second sub-account of the Certificate
Account, the amount, if any, received pursuant to Section 6.14(c)(ii)(x) and the
Trustee shall pay to the related Certificateholders of each Class of
Certificates, the amount, if any, required to reduce the Supplemental Interest
Amount, if any, for the Class AH, Class MH-1, Class MH-2 and Class BH
Certificates, in that order, to zero. Any remaining amounts received pursuant to
Section 6.14(c)(ii)(x) shall be deposited into the Spread Account.
(ii) On each Remittance Date, after the application of Section
6.08(e)(i), and after application of funds pursuant to Section 6.08(d)(Z) above,
the Trustee, at the direction of the Trust Administrator, shall withdraw from
the Second sub-account of the Certificate Account the amount, if any, received
pursuant to Section 6.02(c)(i) and the Trustee shall pay to the related
Certificateholders of each Class of Certificates, the amount, if any, required
to: (a) reduce any existing Class Interest Carryforward Amount for the Class AH,
Class MH-1, Class MH-2 and Class BH Certificates, in that order, to zero; and
(b) reduce any Class MH-1, Class MH-2 and Class B Applied Realized Loss Amounts,
in that order, to zero that would otherwise exist on such Remittance Date.
(iii) On each Remittance Date, after the application of Sections
6.08(e)(i) and (ii), and after application of funds pursuant to Section
6.08(d)(Z) above, the Trustee, at the direction of the Trust Administrator,
shall withdraw from the third sub-account of the Certificate Account the amount,
if any, received pursuant to Section 6.14(c)(ii)(y) and the Trustee shall pay to
the related Certificateholders of each Class of Certificates, the amount, if
any, required to reduce the remaining Supplemental Interest Amount, if any, for
the Class AH, Class MH-1, Class MH-2 and Class BH Certificates, in that order,
to zero. Any remaining Unsubordinated Interest Amounts shall be paid on such
Remittance Date to the Class X Certificateholders as additional payments of
interest.
(iv) On each Remittance Date, the Trustee, at the direction of
the Trust Administrator, shall withdraw from the fourth sub-account of the
Certificate Account the amount, if any, received pursuant to Section
6.08(d)(z)(xvii) and the Trustee shall pay to the related Certificateholders of
each Class of Certificates, the amount, if any, required to reduce the
Certificateholders' Interest Carryover, if any, for the Class AH, Class MH-1,
Class MH-2 and Class BH Certificates, in that order, owing for such Remittance
Date and all prior Remittance Dates, to zero.
Any Supplemental Interest Amounts for any Class of Certificate
remaining unpaid on such Remittance Date after application of this Section
6.08(e) shall be Certificateholders' Interest Carryover Amount for each such
Class of Certificates.
(f) 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) [Reserved]
(b) On and after the Remittance Date on which the Pool Available
Maximum Subordinated Amount has been reduced to zero, (i) no further Interest
Shortfall Carryforward Amounts or Unpaid Realized Loss Amounts for the 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 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 Pool Accelerated Principal
Distribution Amount), but excluding distributions pursuant to Section 6.08(e),
with respect to the Certificates on such Remittance Date, the aggregate Class
Principal Balance of the Certificates exceeds the aggregate Principal Balance of
the Mortgage Loans, as of the end of the related Due Period, then the Class
Principal Balance of the 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 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. However, if a payment is made pursuant to
Section 6.08(e)(ii)(b), the Pool Applied Realized Loss Amount that would
otherwise reduce the Class Principal Balance of the related Class of
Certificates will be offset by the amount of such payment. 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 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 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 Trustee, 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 the related
Remittance Date;
(ii) the Class Principal Balances for each Class of Certificates
as reported in the prior Trust Administrator's Certificate pursuant to
subclause (xv) below, or, in the case of the first Determination Date,
the Original Principal Balance for each Class of Class A, Class M and
Class B Certificates;
(iii) the Pool Principal Distribution Amounts for the related
Remittance Date, in the aggregate and listed separately for the
portions relating to each Class of Certificates;
(iv) the amounts on deposit in the Spread Account and the
Supplemental Account, if any, both before and after all distributions
are made therefrom on the related Remittance Date;
(v) the Pool Subordinated Amount and Pool Specified Subordinated
Amount for the related Remittance Date, and the Pool Available Maximum
Subordinated Amount;
(vi) the number and Principal Balances of all Mortgage Loans
which were the subject of Principal Prepayments during the Due Period;
(vii) the amount of all Curtailments which were received during
the Due Period;
(viii) the aggregate amount of all Excess Payments and the
amounts of Monthly Payments in respect of principal received during
the Due Period;
(ix) the amount of interest received on the Mortgage Loans;
(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 Account pursuant to Section 6.01(a)(ii),
and the Compensating Interest payment to be made on the Determination
Date;
(xi) the delinquency and foreclosure information set forth in the
form attached hereto as Exhibit O;
(xii) the amount of any Realized Losses incurred during the
related Due Period;
(xiii) the Class Current Interest Requirement and the Pool
Principal Distribution Amount for the Remittance Date, in the
aggregate and by component and listed separately for the portions
relating to each Class of Certificates, and any Interest Shortfall
Carryforward Amount relating to each Class of Certificates;
(xiv) the Reimbursable Amounts and the Class X Remittance Amount
payable pursuant to Section 6.08(d)(Z)(xix) with respect to the
Remittance Date;
(xv) the Class Principal Balance for each Class of Certificates
and the Pool Principal Balance 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;
(xvii) the Cumulative Realized Losses with respect to the
Remittance Date;
(xviii) the weighted average maturity and weighted average
Interest Rate;
(xix) the Servicing Fees, the Contingency Fees, and amounts to be
deposited to the Expense Account and the FHA Premium Account;
(xx) the amount of all payments and reimbursements to the
Servicer pursuant to Section 5.04(b), (c), (d)(ii), (e) and (f)(i);
(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 and the weighted average
Class Adjusted Loan Remittance Rates, in each case for the related
Remittance Date, and the weighted average Mortgage Interest Rate for
the prior three month period;
(xxiii) the Remittance Rate for each Class of Certificates with
respect to the Remittance Date and if the Remittance Rate for any
Class of Certificates was based on the 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 Certificates with respect to the
Remittance Date;
(xxvi) if the Remittance Rate for any Class of Certificates for
such Remittance Date is based on the Net Funds Cap, the amount of any
Supplemental Payment to each such Class and any remaining
Certificateholders' Interest Carryover for such Class or Classes after
such Supplemental Payment is made 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 is in effect;
(xxix) the Class A Percentage, the Class MH-1 Percentage, the
Class MH-2 Percentage and the Class B 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
Certificates as of the close of such Remittance Date;
(xxxi) the Accelerated Principal Distribution Amount 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;
(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;
(xxxix) the number and Principal Balance of all Defaulted
Mortgage Loans purchased during the Due Period;
(xl) the amount, if any, of a Rate Agreement Payment received by
the Supplemental Trust on such Remittance Date; and
(xli) such other information as the Trustee may reasonably
require.
The Trustee shall forward such report to the Certificateholders on the
Remittance Date, together, if requested by a Certificateholder, with a separate
report indicating the amount of funds deposited in the first sub-account of the
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) and 6.08(d)(Z) (all reports prepared by the
Trustee of such withdrawals and deposits will be based in whole or in part upon
the information provided to the Trustee by the Servicer, 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 Trustee
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). The Trust
Administrator may rely fully upon and shall have no liability with respect to
any information provided to it by the Servicer. The Trust Administrator shall
not be obligated to verify, recompute, reconcile or confirm any information
contained in the Servicer's Monthly Computer Tape or otherwise provided by the
Servicer.
In making any payments or distributions required to be made by them
pursuant to any of the provisions hereof, the Trustee shall make such payments
and distributions based solely upon the information contained in the Trust
Administrator's Certificate or, if such information is not included in the Trust
Administrator's Certificate, upon written instructions of the Servicer or the
Trust Administrator. The Trustee may rely fully upon and shall have no liability
with respect to any such information provided to it by the Servicer or the Trust
Administrator. The Trustee shall not 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 Trustee for distribution to
each Person who at any time during the calendar year was a Certificateholder the
amount of interest and principal distributed with respect to each Class of
Certificates plus such other customary information as the 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 Trustee shall forward to the Class X
and Class R Certificateholders a copy of the report forwarded to the Class A,
Class M and Class B Certificateholders 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 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, 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 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 may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder for the Servicer's actual
expenses incurred in providing such reports if such reports are not producible
in the ordinary course of the Servicer's business.
Section 6.11 Advances by the Servicer.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the 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 interest on the actual number of days since the last Remittance Date or, in
the case of the October 1998 Remittance Date, from September 29, 1998 at the
weighted average Class Adjusted Mortgage Loan Remittance Rates for the
Certificates on the Pool Principal Balance immediately prior to the related
Remittance Date plus (ii) the Monthly Excess Spread relating to the Mortgage
Loans 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. The sum of such excess is defined herein as the "Monthly
Advance." The Servicer may reimburse itself for Monthly Advances made pursuant
to Section 5.04.
Notwithstanding anything herein to the contrary, no Monthly Advance
shall be required to be made if the Servicer determines that such Monthly
Advance would, if made, constitute a Nonrecoverable Advance.
Section 6.12 Compensating Interest.
The Certificateholders shall be entitled to a full month's interest
for each Mortgage Loan for any month during which a Principal Prepayment or
Curtailment is received on such Mortgage Loan. Not later than the close of
business on each Determination Date, with respect to each Mortgage Loan for
which a Principal Prepayment or Curtailment was received during the related Due
Period, the Servicer shall remit to the Trustee for deposit in the Certificate
Account from amounts otherwise payable to it as servicing compensation, an
amount (such amount required to be delivered to the Trustee is referred to
herein as "Compensating Interest") (as indicated in the Servicer's Certificate
prepared pursuant to Section 6.10) equal to the difference between (a) interest
on the actual number of days since the last Remittance Date to but not including
the upcoming Remittance Date or, with respect to the October 1998 Remittance
Date, from September 29, 1998 at the then weighted average Class Adjusted
Mortgage Loan Remittance Rates on the Principal Balance of each such Mortgage
Loan and (b) the amount of interest actually received on each such Mortgage Loan
for such Due Period as of the beginning of the Due Period applicable to the
Remittance Date on which such amount will be distributed.
Section 6.13 Reports of Foreclosure and Abandonment of
Mortgaged Property.
Each year the Trustee shall execute and return to the Servicer for
filing the reports of foreclosures and abandonments of any Mortgaged Property
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 Trustee reports relating to each instance
occurring during the previous calendar year in which the Servicer (i) on behalf
of the Trust Fund acquires an interest in a Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of
the Mortgage Loan, or (ii) knows or has reason to know that a Mortgaged Property
has been abandoned. The reports from the Servicer shall be in form and substance
sufficient to enable the Trustee to meet the reporting requirements imposed by
such Section 6050J.
Section 6.14 Supplemental Trust .
(a) The parties hereto do hereby create and establish a trust: "The
Money Store Home Improvement Loan Supplemental Trust, 1998-I" (the "Supplemental
Trust"). The Supplemental Trust shall hold a trust account, the "Supplemental
Account" to be held by the Trustee in its name on behalf of the Supplemental
Trust. Norwest Bank Minnesota, National Association, so long as it is the
Trustee, shall serve as the Supplemental Trustee. The Supplemental Trustee shall
receive, as attorney-in-fact of each Holder of the Certificates, any
Supplemental Payments and disburse the same to each Holder of Certificates in
accordance with the provisions of this Section 6.14.
Neither the Rate Agreement, the Supplemental Account nor any amounts
deposited in the Supplemental Account shall constitute part of the Trust Fund or
assets of REMIC I or REMIC II. The owners of the Supplemental Account are the
Certificateholders.
(b) On the Closing Date the Representative shall cause the Rate
Agreement to be delivered to the Supplemental Trustee.
(c) (i) On the Closing Date, the Supplemental Trustee shall receive
payment in the amount of $10,000 from the Representative and shall deposit such
payment into the Supplemental Account. On each Rate Agreement Payment Date, the
Supplemental Trustee shall receive the Rate Agreement Payment, if any, from the
Rate Agreement Provider and deposit such payment in the Supplemental Account.
(ii) On each Remittance Date, the Trustee, at the direction of
the Trust Administrator, shall withdraw from the Supplemental Account and
deposit, in the following order of priority, (x) into the second sub-account of
the Certificate Account, the lesser of the amount then on deposit in the
Supplemental Account and the Supplemental Interest Amount, if any, for such
Remittance Date, and (y) into the third sub-account of the Certificate Account,
the lesser of the amount then on deposit in the Supplemental Account after
giving effect to subclause (x) and the Unsubordinated Interest Amount, if any,
for such Remittance Date.
(d) On the earlier to occur of (i) the date of the termination of the
Rate Agreement and the subsequent distribution of all Rate Agreement Payments,
and (ii) the final Remittance Date with respect to the Certificates, all
amounts, if any, remaining in the Supplemental Account, after making all
allocations and distributions pursuant to clauses (a) through (c) above, if any,
shall be distributed to the Holders of the Class X Certificates. Thereafter, the
Supplemental Account shall be closed and the Supplemental Trust shall terminate.
Section 6.15 Establishment of Servicing Account; 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 "Servicing
Account"). 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 Account 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 Account 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
Account, to pay the related Servicer or Subservicer the remainder of any income
on balances in the Servicing Account or to clear and terminate the Servicing
Account 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.
The Servicer shall notify the Trustee and the FHA Custodian, that any such
substitution or assumption agreement has been completed by forwarding to FUNB
(who shall forward it to the Trustee) the original of such substitution or
assumption agreement, which original shall be added by the Pool 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 Trustee,
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 Principal and Interest Account pursuant to Section 5.03 have
been or will be so deposited) of a Servicing Officer and shall request delivery
to it of the Trustee's Mortgage File. Upon receipt of such certification and
request, the Trustee 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 Account.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any primary
mortgage guaranty insurance policy, the Trustee shall, upon request of the
Servicer and delivery to the 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 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 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 Principal and Interest Account and remitted to the Trustee for
deposit in the 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 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 Trustee to the Servicer.
The Trustee upon the request of the Servicer and receipt of the
applicable documents by the Trustee shall execute and deliver to the Servicer
any court pleadings, requests for trustee's sale or other documents necessary to
the foreclosure or trustee's sale in respect of a Mortgaged Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Together with such documents or pleadings, the
Servicer shall deliver to the Trustee a certificate of a Servicing Officer
requesting that such pleadings or documents be executed by the Trustee and
certifying as to the reason such documents or pleadings are required and that
the execution and delivery thereof by the Trustee will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale. The Trustee shall,
upon receipt of a written request from a Servicing Officer, execute any document
provided to the Trustee by the Servicer or take any other action requested in
such request, that is, in the opinion of the Servicer as evidenced by such
request, required by any state or other jurisdiction to discharge the lien of a
Mortgage upon the satisfaction thereof and the Trustee will sign and post, but
will not guarantee receipt of, any such documents to the Servicer, or such other
party as the Servicer may direct, within five Business Days of the Trustee's
receipt of such certificate or documents. Such certificate or documents shall
establish to the 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 Principal and Interest Account.
Notwithstanding anything in this Agreement to the contrary, 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 Trustee, and all releases of Trustee's
Mortgage Files shall be made by delivery of such files by the Trustee to FUNB,
which shall be responsible for delivering such files to the Servicer or its
designee. The Trustee shall not be liable for FUNB's failure or delay in
forwarding a request for release to the 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 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 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 Section 6.03(c)(iii) and late payment
charges shall be retained by or remitted to the Servicer to the extent not
required to be remitted to the Trustee for deposit in the 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 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 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 Trustee 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
allits 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 Trustee to furnish a letter or letters to the Trustee and the
Rating Agencies to the effect that such firm has with respect to the Servicer's
overall servicing operations examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
Section 7.06 Trustee's Right to Examine Servicer Records and
Audit Operations.
The Trustee 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. No amounts payable in respect
of the foregoing shall be paid from the Trust Fund.
Section 7.07 Reports to the Trustee; Principal and Interest
Account Statements.
Not later than 20 days after each Record Date, the Servicer shall
forward to the Trustee a statement, certified by a Servicing Officer, setting
forth the status of each Principal and Interest Account as of the close of
business on the preceding Record Date and showing, for the period covered by
such statement, the aggregate of deposits into each Principal and Interest
Account for each category of deposit specified in Section 5.03, the aggregate of
withdrawals from each Principal and Interest Account for each category of
withdrawal specified in Section 5.04, the aggregate amount of permitted
withdrawals not made in the related Due Period, and the amount of any Monthly
Advances or payments of Compensating Interest, in each case, for the related Due
Period.
<PAGE>
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.
The Servicer understands that, in connection with the transfer of the
Certificates, Certificateholders may request that the Servicer make available to
prospective Certificateholders annual audited financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are available, which request shall not be unreasonably
denied.
<PAGE>
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims.
(a) The Servicer agrees to indemnify and hold the Trustee, the FHA
Custodian, FUNB and each Certificateholder harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Trustee, the FHA Custodian, FUNB
and any Certificateholder may sustain in any way related to the failure of the
Servicer and the Claims Administrator to perform its duties and service the
Mortgage Loans in compliance with the terms of this Agreement. The Servicer
shall immediately notify the Trustee, the FHA Custodian, FUNB 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 Trustee, the FHA Custodian, FUNB and/or
Certificateholder in respect of such claim. The Trustee shall reimburse the
Servicer from the 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 for all amounts advanced
by it pursuant to the preceding sentence with respect to the Trust Fund except
when the claim relates directly to the failure of the Servicer or the Claims
Administrator to service and administer the Mortgages in compliance with the
terms of this Agreement.
(b) The Representative agrees to indemnify and hold the Trustee, the
FHA Custodian, FUNB and each Certificateholder harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the FHA
Custodian, FUNB 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 Certificateholders. The
Representative shall immediately notify the Trustee, the FHA Custodian, FUNB 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 Trustee, FUNB, the FHA Custodian
and/or Certificateholder in respect of such claim. The Trustee shall reimburse
the Representative from the 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 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 Certificateholders.
Section 9.02 Merger or Consolidation of the Representative, the
Servicer and the Claims Administrator.
The Servicer, the Representative and the Claims Administrator will
each keep in full effect its existence, rights and franchises as a corporation,
and will obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer, the Representative may be merged
or consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer, the Representative or the Claims
Administrator shall be a party, or any Person succeeding to the business of the
Servicer, the Representative or the Claims Administrator, shall be an
established mortgage loan servicing institution that has a net worth of at least
$15,000,000 and a valid Contract of Insurance and shall be the successor of the
Servicer, the Representative or the Claims Administrator, as applicable,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Servicer, the Representative or the Claims Administrator
shall send notice of any such merger or consolidation to the Trustee.
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 Trustee and the
Majority Certificateholders, or upon the determination that the Servicer's or
Claims Administrator's duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer or the Claims
Administrator. Any such determination permitting the resignation of the Servicer
and the Claims Administrator shall be evidenced by a written Opinion of Counsel
(who may be counsel for the Servicer and the Claims Administrator) to such
effect delivered to the Trustee and to each Certificateholder, which Opinion of
Counsel shall be in form and substance acceptable to the Trustee. 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 Trustee, the FHA Custodian and the Certificateholders in
accordance with the provisions of this Agreement.
Section 9.06 Right of Majority Certificateholders to Replace Servicer
and Claims Administrator.
From and after the occurrence of a Servicing Delinquency Trigger, the
Majority Certificateholders taken together may, upon written notice to the
Trustee and the Rating Agencies, 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) the failure by the Servicer to make any required
Servicing Advance, to the extent such failure materially and adversely
affects the interests of the Certificateholders; (B) the failure by
the Servicer to make any required Monthly Advance; (C) the failure by
the Servicer to remit any Compensating Interest; (D) the failure by
the Servicer to pay the FHA Insurance Premium relating to any FHA Loan
or (E) any failure by the Servicer or the Claims Administrator to
remit to Certificateholders, or to the Trustee for the benefit of the
Certificateholders, any payment required to be made under the terms of
this Agreement which, except with respect to FHA Payments to which no
grace period shall apply, continues unremedied after the date upon
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee or to
the Servicer and the Trustee by any Certificateholder; or
(ii) failure by the Servicer, the Claims Administrator or the
Representative duly to observe or perform, in any material respect,
any other covenants, obligations or agreements of the Servicer, the
Claims Administrator or the Representative as set forth in this
Agreement, which failure continues unremedied for a period of 60 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer, the Claims
Administrator or the Representative, as the case may be, by the
Trustee or to the Servicer, the Claims Administrator or the
Representative, as the case may be, and the Trustee by any
Certificateholder; or
(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
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 Trustee (e.g., a wire reference number communicated
by the sending bank) that such funds have been sent, by 12:00 Noon New York time
on the following Business Day, the Trustee 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 Majority Certificateholders, by notice in
writing to the Servicer and the Claims Administrator, may, in addition to
whatever rights such Certificateholders 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
Majority Certificateholders stating that they or it intend to terminate the
Servicer and the Claims Administrator as a result of such Event of Default, all
authority and power of the Servicer and the Claims Administrator under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall,
subject to Section 10.02, pass to and be vested in the Trustee or its designee
and the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Servicer and the Claims Administrator, as attorney-in-fact or
otherwise, any and all documents and other instruments and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Mortgage Loans and related documents. The
Servicer and the Claims Administrator agree to cooperate with the Trustee in
effecting the termination of the Servicer's and the Claims Administrator's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee or its designee for administration by it of all amounts
which shall at the time be credited by the Servicer to each Principal and
Interest Account or thereafter received with respect to the Mortgage Loans.
Section 10.02 Trustee to Act; Appointment of Successor.
On and after the time the Servicer or the Claims Administrator
receives a notice of termination pursuant to Section 10.01 or the Trustee
receives the resignation of the Servicer and the Claims Administrator evidenced
by an Opinion of Counsel pursuant to Section 9.04 or the Servicer and the Claims
Administrator are removed as servicer and claims administrator pursuant to this
Article X, the Trustee shall be the successor in all respects to the Servicer in
its capacity as servicer and the Claims Administrator in its capacity as claims
administrator under this Agreement and the transactions set forth or provided
for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer and the Claims Administrator
by the terms and provisions hereof, provided, however, that the Trustee shall
not be liable for any actions of any servicer or claims administrator prior to
it, and that the Trustee shall not be obligated to make advances or payments
pursuant to Sections 6.03, 6.11, 6.12, 5.05, 5.10 or 5.14 but only to the extent
the 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 Trustee. As
compensation therefor, the 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, the Trustee may, if it shall be unwilling
to so act, or shall, if it is unable to so act or if the Majority
Certificateholders so request in writing to the Trustee, appoint, or petition a
court of competent jurisdiction to appoint, any established mortgage loan
servicing institution reasonably acceptable to the Rating Agencies (as confirmed
by a letter from each Rating Agency stating that no reduction of any rating
issued in respect of the Certificates will occur as a result of such
appointment), that has a net worth of not less than $15,000,000 and which is
approved as a servicer by FNMA and FHLMC (and, in the case of FHA Loans, is a
Title I approved lender pursuant to FHA Regulations) as the successor to the
Servicer and the Claims Administrator hereunder in the assumption of all or any
part of the responsibilities, duties or liabilities of the Servicer and the
Claims Administrator hereunder. Any collections received by the Servicer and the
Claims Administrator after removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor servicer. The compensation of any successor servicer
and claims administrator (including, without limitation, the Trustee) so
appointed shall be the aggregate Servicing Fees, together with the Contingency
Fee and other servicing compensation in the form of assumption fees, late
payment charges or otherwise. In the event the Trustee is required to solicit
bids as provided herein, the Trustee shall solicit, by public announcement, bids
from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer and claims administrator
shall be entitled to, with respect to the Mortgage Loans each would be
servicing, the full amount of the aggregate Servicing Fees and Contingency Fee
relating to such Mortgage Loans as servicing compensation, together with the
other servicing compensation in the form of assumption fees, late payment
charges or otherwise. Within thirty days after any such public announcement, the
Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest qualifying bid. The Trustee shall deduct from any sum
received by the Trustee from the successor to the Servicer and Claims
Administrator in respect of such sale, transfer and assignment all costs and
expenses of any public announcement and of any sale, transfer and assignment of
the servicing rights and responsibilities hereunder and the amount of any
unreimbursed Servicing Advances and Monthly Advances. After such deductions, the
remainder of such sum shall be paid by the Trustee to the Servicer and Claims
Administrator at the time of such sale, transfer and assignment to the
Servicer's and Claims Administrator's successor. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. The Servicer and Claims Administrator agree to
cooperate with the Trustee and any successor servicer and claims administrator
in effecting the termination of the Servicer's and Claims Administrator's
servicing responsibilities and rights hereunder and shall promptly provide the
Trustee or such successor servicer, as applicable, all documents and records
reasonably requested by it to enable it to assume the Servicer's and Claims
Administrator's functions hereunder and shall promptly also transfer to the
Trustee or 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 by the Servicer and Claims Administrator or which are
thereafter received with respect to the Mortgage Loans. Neither the Trustee nor
any other successor servicer or claims administrator shall be held liable by
reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Servicer and
Claims Administrator to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer and Claims Administrator hereunder. No
appointment of a successor to the Servicer and Claims Administrator hereunder
shall be effective until written notice of such proposed appointment shall have
been provided by the Trustee to each Certificateholder and the Rating Agencies
shall have consented thereto (as confirmed by a letter from each Rating Agency
stating that no reduction of any rating issued in respect of the Certificates
will occur as a result of such appointment). The Trustee shall not resign as
servicer until a successor servicer reasonably acceptable to the Rating Agencies
has been appointed (as confirmed by a letter from each Rating Agency stating
that no reduction of any rating issued in respect of the Certificates will occur
as a result of such appointment).
Pending appointment of a successor to the Servicer and the Claims
Administrator hereunder, the Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Servicer and Claims
Administrator pursuant to Section 7.03 or otherwise as provided in this
Agreement. The Servicer, the Claims Administrator, the Trustee, 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 Majority Certificateholders may, on behalf of all
Certificateholders, 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 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 Majority Certificateholders may direct the time, method and place
of conducting any proceeding relating to the Trust Fund or the Certificates or
for any remedy available to the Trustee with respect to the Certificates or
exercising any trust or power conferred on the Trustee with respect to the
Certificates or the Trust Fund provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; provided,
however, that the Trustee need not take any action which it determines
might involve it in liability or may be unjustly prejudicial to the
Holders not so directing.
<PAGE>
ARTICLE XI
TERMINATION
Section 11.01 Termination.
Subject to Section 11.03, this Agreement shall terminate upon notice
to the Trustee of either: (a) the latter of the final payment or other
liquidation of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due thereunder, or (b) mutual consent of the
Servicer 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, 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 Remittance Rates (the
"Termination Price").
Notice of any termination, specifying the Remittance Date upon which
the Trust Fund will terminate and the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to the
Certificateholders mailed during the month of such final distribution before the
Determination Date in such month, specifying (i) the Remittance Date upon which
final payment of the Certificates will be made upon presentation and surrender
of such Certificates at the office of the Trustee therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Remittance Date is not applicable, payments being made only
upon presentation and surrender of such Certificates at the office of the
Trustee therein specified. The Servicer shall give such notice to the Trustee.
The Servicer shall give such notice to the Trustee at the time such notice is
given to Certificateholders. Any obligation of the Servicer to pay amounts due
to the Trustee, 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 Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Class R Certificateholders shall be entitled
to all unclaimed funds and other assets which remain subject hereto and the
Trustee upon transfer of such funds 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, the Majority Certificateholders may direct
the Trustee on behalf of REMIC I and REMIC II to adopt a "plan of complete
liquidation" (within the meaning of Section 860F(a)(4) of the Code). Upon
receipt of such direction by the Majority Certificateholders, the Trustee shall
notify the Class R-2 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-2 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 in
the event that the Majority Certificateholders have given the Trustee the
direction described in clause (a) above, the Trustee shall sell the Mortgage
Loans and distribute the proceeds of the liquidation of REMIC II in accordance
with the plan of complete liquidation, such that, if so directed, the
liquidation of REMIC II, the distribution of the proceeds of the liquidation and
the termination of this Agreement occur no later than the close of the 60th day,
or such later day as the Class A, Class M and Class B Certificateholders shall
permit or direct in writing, after the expiration of the Purchase Option Period.
In connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(c) Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R Certificates then outstanding may, at their
option and upon delivery to the Trustee 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 to the effect that the effect of the Final Determination is
to increase substantially the probability that the gross income of REMIC II will
be subject to federal taxation, purchase from REMIC II all Mortgage Loans and
all property theretofore acquired by foreclosure, deed in lieu of foreclosure,
or otherwise in respect of any Mortgage Loan then remaining in REMIC II at a
purchase price equal to the Termination Price for REMIC II. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the 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 exercises its purchase option as
provided in Section 11.01 or 11.02, each of REMIC I and REMIC II shall be
terminated in accordance with the following additional requirements, unless the
Trustee has been furnished with an Opinion of Counsel to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 11.03
will not (i) result in the imposition of taxes on "prohibited transactions" on
REMIC I or REMIC II as defined in Section 860F of the Code, or (ii) cause REMIC
I or REMIC II to fail to qualify as a REMIC at any time that any Certificates
are outstanding:
(i) Within 90 days prior to the final Remittance Date, the
holders of the Class R-1 and Class R-2 Certificates shall adopt a plan
of complete liquidation of REMIC I and REMIC II, respectively, meeting
the requirements of a "Qualified Liquidation" under Section 860F of
the Code and any regulations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Remittance Date, the Trustee
shall sell for cash all of the assets of REMIC I and REMIC II to the
Servicer; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall (x) deposit into and withdraw from the
Certificate Account 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 interest on the actual number of days since the last Remittance
Date up to but not including the upcoming Remittance Date at the
related Remittance Rate for each Class, 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 Trustee, 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 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 Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of 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 TRUSTEE
Section 12.01 Duties of the Trustee.
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Representative, the Claims Administrator or any
Originator hereunder. If any such instrument is found not to conform to the
requirements of this Agreement in a material manner, the Trustee shall take
action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the Certificateholders.
The Trustee represents and warrants that the 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 Trustee can perform such duties
and obligations in accordance with the terms of this Agreement and (2) the
Trustee can operate its business in the same manner as it is operating on the
date hereof.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Class A, Class M and Class B
Certificateholders, relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement;
(iv) In the absence of actual knowledge of a Responsible Officer
of the Trustee of an Event of Default, the Trustee shall not be
required to take notice or be deemed to have notice or knowledge of
any default or Event of Default unless a Responsible Officer of the
Trustee shall be specifically notified in writing by the Servicer or
any of the Certificateholders. In the absence of actual knowledge or
receipt of such notice, the Trustee may conclusively assume that there
is no default or Event of Default; and
(v) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability for the performance of
any of its duties hereunder or the exercise of any of its rights or
powers if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 12.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel 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) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant
to the provisions of this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event of
Default (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of
care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own
affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the
Holders of Class A, Class M and Class B Certificates evidencing
Percentage Interests aggregating not less than 25% of the Class
Principal Balances of all Class A, Class M and Class B Certificates;
provided, however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition
to taking any such action. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee,
shall be repaid by the Servicer upon demand from the Servicer's own
funds;
(vi) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(vii) The Trustee shall not be required to give any bond or
surety in respect of the execution of the trust created hereby or the
powers granted hereunder; and
(viii) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
(ix) The Trustee shall have no liability or responsibility in
connection with or arising out of the appointment of the FHA Custodian
or any acts or omissions on the part of the FHA Custodian.
(b) Following the Startup Day, the Trustee shall not knowingly accept
any contribution of assets to the Trust Fund unless the Trustee shall have
received an Opinion of Counsel to the effect that the inclusion of such assets
in the Trust Fund will not cause the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding or subject the Trust Fund to any
tax under the REMIC Provisions or other applicable provisions of federal, New
York State or New York City law or ordinances.
Section 12.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assume no responsibility for their
correctness. The 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 Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not the Trustee, and may otherwise deal with the parties hereto.
Section 12.05 Representative to Pay Trustee's, Trust Administrator's
and FHA Custodian's Fees and Expenses.
The Representative covenants and agrees to pay to the Trustee, the
Trust Administrator and the FHA 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
Trustee, the Trust Administrator and the FHA 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
Trustee, the Trust Administrator and the FHA Custodian shall have no lien on the
Trust Fund, other than the Expense Account, for the payment of its fees and
expenses. To the extent that actual fees and expenses of the Trustee, the Trust
Administrator or the FHA Custodian exceed the amount available for payment
thereof on deposit in the Expense Account 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 Trustee, the Trust Administrator and the FHA
Custodian and any director, officer, employee or agent of the Trustee, 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 covenants and agreements of the Representative to pay the
Trustee's compensation and to reimburse the Trustee for expenses, disbursements
and advances as well as the Servicer's indemnification of the Trustee contained
in this Section 12.05 shall also apply to: Norwest Bank Minnesota, National
Association, in its capacity as Supplemental Trustee for the Supplemental Trust
(including any duties and obligations related to the Rate Agreement), in the
same manner and to the same extent as such covenants, agreements and
indemnification apply to the Trustee in accordance with this Section 12.05. 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 Trustee from time to time compensation for its services
as custodian of the Trustee's Mortgage Files in accordance with a separate
agreement or fee schedule.
Section 12.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a banking association
organized and doing business under the laws of any state or the United States of
America, (i) authorized under such laws to exercise corporate trust powers, (ii)
having a combined capital and surplus of at least $30,000,000, (iii) except in
the case of the initial Trustee, whose unsecured and unguaranteed long-term
debt obligations shall be rated at least "A" by S&P and (iv) subject to
supervision or examination by federal or state authority. If such banking
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section its combined capital and surplus shall be
deemed to be as set forth in its most recent report of condition so published.
In case at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Trustee shall resign, upon the request of
the Majority Certificateholders, in the manner and with the effect specified in
Section 12.07.
Section 12.07 Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the Trust
Administrator and to all Certificateholders. Upon receiving such notice of
resignation, the Trust Administrator shall promptly appoint a successor trustee
by written instrument, in duplicate, which instrument shall be delivered 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 Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 12.06 and shall fail to resign after written
request therefor by the Trust Administrator, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Trust Administrator may remove the Trustee and appoint 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 may at any time remove the Trustee and
appoint a successor trustee by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Trust Administrator, one
complete set to the Trustee so removed and one complete set to the successor
trustee so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.08. If the Trustee resigns or is removed pursuant to any provision of
this Section, the Trustee shall also be deemed to have resigned or been removed,
as the case may be, as the Supplemental Trustee.
Section 12.08 Successor Trustee.
Any successor trustee appointed as provided in Section 12.07 shall
execute, acknowledge and deliver to the Trust Administrator and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Trust Administrator shall mail notice of the succession of
such successor 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 trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Trust Administrator.
Any successor trustee hereunder shall automatically, without any
further action on its part, become the successor Supplemental Trustee under the
Supplemental Trust.
Section 12.09 Merger or Consolidation of the Trustee.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 12.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee, pursuant to the procedure set forth below, to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust Fund, and to vest in such Person or Persons, in
such capacity, such title to the Trust Fund, or any part thereof, and, subject
to the other provisions of this Section 12.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. If the Servicer shall not have joined in such appointment within 15
days after the receipt by it of a request so to do, or in case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 12.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 12.08 hereof. Any co-trustee with respect to the FHA Loans must at all
times have a valid FHA Contract of Insurance.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 12.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as trustee hereunder or as
successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 12.11 Authenticating Agent.
Upon the request of the Trust Administrator, the Trustee shall appoint
an Authenticating Agent, with power to act on the Trustee's behalf and subject
to its direction in the authentication and delivery of the Certificates in
connection with transfers and exchanges under Section 4.02, as fully to all
intents and purposes as though the Authenticating Agent had been expressly
authorized by that Section to authenticate and deliver Certificates. For all
purposes of this Agreement, the authentication and delivery of Certificates by
the Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Certificates by the Trustee. Such Authenticating
Agent shall at all times be a Person meeting the requirements for the Trustee
set forth in Section 12.06, other than Section 12.06(iv).
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Trust Administrator. The 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 Trustee shall promptly appoint a successor Authenticating Agent and
shall give written notice of such appointment to all Certificateholders as their
names and addresses appear on the Certificate Register. The Servicer agrees to
pay to the Authenticating Agent from time to time reasonable compensation for
its services. The provisions of Sections 4.04 and 12.03 shall be applicable to
any Authenticating Agent.
Section 12.12 Tax Returns and Reports.
The Trustee, upon request, will furnish the Trust Administrator with
all such information within the 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 the Trustee is required to sign pursuant to applicable federal,
state or local tax laws, and (ii) cause such Tax Return to have been returned to
the 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 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 the 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), the 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 Trustee shall provide upon request such information as required in
Section 860D(a)(6)(B) of the Code to the Internal Revenue Service and any Person
purporting to transfer a Class R Certificate.
Section 12.13 Appointment of Custodians.
The Trustee may, with the consent of the Trust Administrator, appoint
one or more Custodians to hold all or a portion of the Trustee's Mortgage Files
as agent for the Trustee by entering into a Custodial Agreement substantially in
the form of Exhibit M attached hereto. Subject to this Article XII, the 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. Each Custodian 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.
Section 12.14. Protection of Trust Fund.
(a) The Trustee will hold the Trust Fund in trust for the benefit of
the Holders and, at the request of the Representative, will from time to time
execute and deliver all such supplements and amendments hereto pursuant to
Section 13.02 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request as it deems
reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any portion of the
Trust Fund;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Fund and the rights
of the Trustee, and the ownership interests of the Owners represented
thereby, in the Trust Fund against the claims of all Persons and
parties.
The Trustee shall send copies of any request received from the
Representative to take any action pursuant to this Section 12.14 to the others.
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement by action, suit or proceeding at law or equity, and shall also have
the power to enjoin, by action or suit in equity, any acts or occurrences which
may be unlawful or in violation of the rights of the Holders; provided, however,
that nothing in this Section 12.14 shall require any action by the Trustee
unless the Trustee shall first (i) have been furnished indemnity satisfactory to
it and (ii) when required by this Agreement, have been requested to take such
action by the Majority Certificateholders or the Trust Administrator in
accordance with the terms of this Agreement.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties.
Section 12.15. Calculation of LIBOR.
(a) On each Interest Determination Date, the 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 each 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 Trustee shall have any
liability or responsibility to any Person for the selection of any Reference
Bank for the purpose of determining LIBOR. In determining LIBOR and the
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 nor the Trustee 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 Remittance Rates 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 Trustee by written agreement, 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 or any
Custodial Agreement; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Trustee, adversely affect the
interests of any Certificateholder in any material respect or any other party
and further provided that no such amendment shall reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, or change the rights or obligations of any other party
hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the
Originators, the Representative, the Servicer and the Trustee, with the prior
written consent of the Majority Certificateholders and the Holders of the
majority of the Percentage Interest in each of the Class X, Class R-1 and Class
R-2 Certificates for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders; provided, however, that no such amendment
shall be made unless the Trustee 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 and/or FUNB if such proposed
amendment affects any of their respective rights, duties or obligations
hereunder.
(e) Any Opinion of Counsel delivered to the Trustee 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 Trustee and the
Supplemental Trustee, Norwest Bank Minnesota, National Association, 11000 Broken
Land Parkway, Columbia, Maryland 21044, Attention: Trust Department, The Money
Store HIL Series 1998-I, (iii) in the case of the Certificateholders, as set
forth in the Certificate Register, (iv) in the case of S&P, to Standard &
Poor's, 25 Broadway, 20th Floor, New York, New York 10004, Attention:
Residential Mortgages, (v) in the case of Fitch, to Fitch IBCA, Inc., One State
Street Plaza, New York, New York 10004, Attention: Residential Mortgage Loan
Structured Finance, (vi) 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 or (vii) in
the case of the Trust Administrator, First Union National Bank, 230 South Tryon
Street, 9th Floor, Charlotte, NC 28288, Attention: The Money Store HIL Series
1998-I 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 Trustee and the
Certificateholders and their respective successors and assigns.
Section 13.11 Headings.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 13.12 Supplemental Trustee.
In taking, or refraining from taking, any action hereunder, the
Supplemental Trustee shall be entitled to the same protection, defenses and
indemnities as provided to the Trustee in connection with the Trustee taking, or
refraining from taking, any action hereunder.
Section 13.13 Paying Agent.
The Trustee may, subject to the eligibility requirements for the
Trustee set forth in Section 12.06 hereof, other than Section 12.06(iv),
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 Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of Section 6.06, that such Paying Agent
will:
(i) allocate all sums received for distribution to the Holders of
Certificates of each Class for which it is acting as Paying Agent
on each Remittance Date among such Holders in the proportion
specified by the Trustee; and
(ii) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such
Holders or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify 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, (3) any change of the Trustee or the Servicer (4) any Event of
Default, and (5) the final payment of all the Certificates. The Servicer shall
promptly deliver to the Rating Agencies a copy of each of the Servicer's
Certificates.
Section 13.15 Third Party Rights.
The Trustee, the Representative, the Servicer and each of the
Originators listed herein agree that each of the FHA Custodian, the Trust
Administrator and FUNB shall be deemed a third-party beneficiary of this
Agreement entitled to all the rights and benefits set forth herein as fully as
if it were a party hereto.
<PAGE>
IN WITNESS WHEREOF, the Representative, the Servicer, the Claims
Administrator, the Trustee and each Originator have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
THE MONEY STORE INC., as
Representative, Servicer
and Claims Administrator
By: /s/ WILLIAM TEMPLETON
------------------------
Name: William Templeton
Title: Executive Vice President
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/ WILLIAM TEMPLETON
-------------------------
Name: William Templeton
Title: President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Trustee
By: /s/ AMY WAHL
-------------------
Name: Amy Wahl
Title: Assistant 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/ WILLIAM TEMPLETON
-------------------------
Name: William Templeton
Title: 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 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/ DANIEL J. OBER
------------------------
Name: Daniel J. 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/ DANIEL J. OBER
----------------------
Name: Daniel J. Ober
Title: Vice President
<PAGE>
Acceptance of Supplemental Trustee
Norwest Bank Minnesota, National Association, a national banking
corporation, hereby accepts its appointment pursuant to Section 6.14 of the
within instrument to serve as the Supplemental Trustee. In connection therewith,
Norwest Bank Minnesota, National Association agrees to be bound by all
applicable provisions of such instrument.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Supplemental Trustee
By: /s/ AMY WAHL
--------------------
Name: Amy Wahl
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 29th day of September 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/ STEVE LEVITAN
-----------------
Notary Public
My Commission expires Feb 16, 2000
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF YOLO )
On the 25th day of September 1998 before me, a Notary Public in and
for the State of California, personally appeared Bill Templeton 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/ SHANNON E. KREBS
---------------------
Notary Public
My Commission expires Feb 6, 2002
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF YOLO )
On the 25th day of September 1998 before me, a Notary Public in and
for the State of California, personally appeared Bill Templeton known to me to
be the 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/ SHANNON E. KREBS
------------------
Notary Public
My Commission expires Feb 6, 2002
<PAGE>
SCHEDULE I
DESCRIPTION OF CERTAIN LITIGATION
None.
<PAGE>
SCHEDULE II
Schedule of Notional Amounts
----------------------------
REMITTANCE NOTIONAL
DATE AMOUNT
September 29, 1998 $200,000,000.00
October 15, 1998 $199,236,124.99
November 15, 1998 $198,253,526.79
December 15, 1998 $197,052,533.08
January 15, 1999 $195,634,179.35
February 15, 1999 $194,000,218.54
March 15, 1999 $192,153,127.18
April 15,1999 $190,096,107.80
May 15, 1999 $187,833,087.61
June 15, 1999 $185,392,069.41
July 15, 1999 $182,978,855.67
August 15, 1999 $180,593,131.99
September 15, 1999 $178,234,587.53
October 15, 1999 $175,902,914.95
November 15, 1999 $173,597,810.40
December 15, 1999 $171,318,973.44
January 15, 2000 $169,066,107.04
February 15, 2000 $166,838,917.54
March 15, 2000 $164,637,114.58
April 15, 2000 $162,460,411.08
May 15, 2000 $160,308,523.22
June 15, 2000 $158,181,170.38
July 15, 2000 $156,078,075.10
August 15, 2000 $153,998,963.08
September 15, 2000 $151,943,563.11
October 15, 2000 $149,911,607.03
November 15, 2000 $147,902,829.73
December 15, 2000 $145,916,969.09
January 15, 2001 $143,953,765.95
February 15, 2001 $142,012,964.09
March 15, 2001 $140,094,310.16
April 15, 2001 $138,197,553.71
May 15, 2001 $136,322,447.09
June 15, 2001 $134,468,745.46
July 15, 2001 $132,636,206.76
August 15, 2001 $130,824,591.64
September 15, 2001 $129,033,663.47
October 15, 2001 $127,263,188.29
November 15, 2001 $125,512,934.80
December 15, 2001 $123,782,674.29
January 15, 2002 $122,072,180.66
February 15, 2002 $120,381,230.33
March 15, 2002 $118,709,602.29
April 15, 2002 $117,057,077.99
May 15, 2002 $115,423,441.38
June 15, 2002 $113,808,478.84
July 15, 2002 $112,211,979.15
August 15, 2002 $110,633,733.49
September 15, 2002 $109,073,535.42
October 15, 2002 $107,531,180.79
November 15, 2002 $106,006,467.80
December 15, 2002 $104,499,196.90
January 15, 2003 $103,009,170.82
February 15, 2003 $101,536,194.49
March 15, 2003 $100,080,075.07
April 15, 2003 $98,640,621.90
May 15, 2003 $97,217,646.45
June 15, 2003 $95,854,232.81
July 15, 2003 $94,506,404.67
August 15, 2003 $93,173,985.73
September 15, 2003 $91,856,801.72
October 15, 2003 $90,554,680.33
November 15, 2003 $89,267,451.19
December 15, 2003 $87,994,945.86
January 15, 2004 $86,736,997.81
February 15, 2004 $85,493,442.38
March 15, 2004 $84,264,116.79
April 15, 2004 $83,048,860.07
May 15, 2004 $81,847,513.09
June 15, 2004 $80,659,918.53
July 15, 2004 $79,485,920.81
August 15, 2004 $78,325,366.16
September 15, 2004 $77,178,102.50
October 15, 2004 $76,043,979.49
November 15, 2004 $74,922,848.49
December 15, 2004 $73,814,562.54
January 15, 2005 $72,718,976.34
February 15, 2005 $71,635,946.23
March 15, 2005 $70,565,330.17
April 15, 2005 $69,506,987.74
May 15, 2005 $68,484,308.32
June 15, 2005 $67,473,346.58
July 15, 2005 $66,473,969.97
August 15, 2005 $65,486,047.44
September 15, 2005 $64,509,449.40
October 15, 2005 $63,544,047.76
November 15, 2005 $62,589,715.86
December 15, 2005 $61,646,328.46
January 15, 2006 $60,713,761.76
February 15, 2006 $59,791,893.34
March 15, 2006 $58,880,602.18
April 15, 2006 $57,979,768.60
May 15, 2006 $57,089,274.31
June 15, 2006 $56,209,002.33
July 15, 2006 $55,338,837.01
August 15, 2006 $54,478,664.01
September 15, 2006 $53,628,370.27
October 15, 2006 $52,787,844.03
November 15, 2006 $51,956,974.78
December 15, 2006 $51,135,653.25
January 15, 2007 $50,323,771.42
February 15, 2007 $49,521,222.49
March 15, 2007 $48,727,900.85
April 15, 2007 $47,943,702.12
May 15, 2007 $47,168,523.05
June 15, 2007 $46,402,261.60
July 15, 2007 $45,644,816.86
August 15, 2007 $44,896,089.07
September 15, 2007 $44,155,979.59
October 15, 2007 $43,424,390.91
November 15, 2007 $42,701,226.60
December 15, 2007 $41,986,391.33
January 15, 2008 $41,279,790.86
February 15, 2008 $40,581,332.01
March 15, 2008 $39,890,922.62
April 15, 2008 $39,208,471.63
May 15, 2008 $38,533,888.96
June 15, 2008 $37,867,085.57
July 15, 2008 $37,282,485.27
August 15, 2008 $36,704,588.06
September 15, 2008 $36,133,318.11
<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 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 Mortgage Loans (other
than the FHA Loans), to "Norwest Bank Minnesota, National Association,
as Trustee of the Mortgage Loans, under the Pooling and Servicing
Agreement, dated as of August 31, 1998, Loan Backed Certificates
Series 1998-I" 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 August 31, 1998, Series 1998-I" 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 the 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. If applicable, 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>
THE MONEY STORE HOME IMPROVEMENT TRUST 1998-I
THE MONEY STORE TRUST HOME IMPROVEMENT LOAN 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 September 29, 1998
------------------ -----------------------
Startup Day Initial Remittance Rate
$____________ October 15, 2024
Original Principal ---------------- -------------------
Amount Final Scheduled CUSIP
Distribution
$____________
Original Class Principal
Amount
Cede & Co.
- -------------------------------------------------------------------------------
Registered Holder
<PAGE>
The registered Holder named above is the registered Holder of a
fractional interest in (i) a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of a trust, including a primarily fixed rate single
family residential first, second and more junior home improvement mortgage loans
(the "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, and (ii) in the
Supplemental Trust, whose primary asset is the right to receive payments under
and in the amounts set forth in the Rate Agreement. The Certificates are issued
pursuant to a Pooling and Servicing Agreement, dated as of August 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 Norwest Bank Minnesota, National
Association, as trustee (the "Trustee").
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 seven Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund and the Supplemental Trust, each
formed pursuant to the Pooling and Servicing 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 October 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 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 Certificate shall be as set forth on the face hereof. For each Remittance
Date thereafter, the Remittance Rate for such Class of Certificates shall adjust
based upon LIBOR plus the applicable Margin, as set forth in the Pooling and
Servicing Agreement.
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
Certificate Account and Spread Account, 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 Trustee to the Certificateholders of
each Class after the 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 the 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 Trustee.
The Holders of a majority of the Percentage Interests represented by the
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 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 the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The undersigned Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee 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:
Title:
This is one of the Class AH
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:____________________
Authorized Signatory
Date: September 29, 1998
<PAGE>
THE MONEY STORE HOME IMPROVEMENT TRUST 1998-I
THE MONEY STORE TRUST HOME IMPROVEMENT LOAN 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 September 29, 1998
------------------ -----------------------
Startup Day Initial Remittance Rate
$______________ October 15, 2024
Original Principal ---------------- --------------------
Amount Final Scheduled CUSIP
Distribution
$______________
Original Class Principal
Amount
Cede & Co.
- -------------------------------------------------------------------------------
Registered Holder
<PAGE>
The registered Holder named above is the registered Holder of a
fractional interest in (i) a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of a trust, including a pool of primarily fixed rate
single family residential first, second and more junior home improvement
mortgage loans (the "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 and (ii)
in the Supplemental Trust, whose primary asset is the right to receive payments
under and in the amounts set forth in the Rate Agreement. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of August 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 Norwest Bank Minnesota, National
Association, as trustee (the "Trustee").
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 seven Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund and the Supplemental Trust, each
formed pursuant to the Pooling and Servicing 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 October 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 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 Certificate shall be as set forth on the face hereof. For each Remittance
Date thereafter, the Remittance Rate for such Class of Certificates shall adjust
based upon LIBOR plus the applicable Margin, as set forth in the Pooling and
Servicing Agreement.
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
Certificate Account and the Spread Account, 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 Trustee to the Certificateholders of
each Class after the 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 the 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 Trustee.
The Holders of a majority of the Percentage Interests represented by the
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 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 the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The undersigned Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee 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:
Title:
This is one of the Class MH-
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:_____________________
Authorized Signatory
Date: September 29, 1998
<PAGE>
THE MONEY STORE HOME IMPROVEMENT TRUST 1998-I
THE MONEY STORE TRUST HOME IMPROVEMENT LOAN 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___ September 29, 1998 -----------------------
Startup Day Initial Remittance Rate
$_______________ October 15, 2024
Original Principal ---------------- --------------------
Amount Final Scheduled CUSIP
Distribution
$_______________
Original Class
Principal Amount
Cede & Co.
- -------------------------------------------------------------------------------
Registered Holder
<PAGE>
The registered Holder named above is the registered Holder of a
fractional interest in (i) a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of a trust, including a pool of primarily fixed rate
single family residential first, second and more junior home improvement
mortgage loans (the "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 and (ii)
in the Supplemental Trust, whose primary asset is the right to receive payments
under and in the amounts set forth in the Rate Agreement. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of August 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 Norwest Bank Minnesota, National
Association, as trustee (the "Trustee").
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 seven Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund and the Supplemental Trust, each
formed pursuant to the Pooling and Servicing 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 October 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 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.
The initial Remittance Rate for the Class of Certificates represented by
this Certificate shall be as set forth on the face hereof. For each Remittance
Date thereafter, the Remittance Rate for such Class of Certificates shall adjust
based upon LIBOR plus the applicable Margin, as set forth in 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
Certificate Account and the Spread Account, 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 Trustee to the Certificateholders of
each Class after the 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 the 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 Trustee.
The Holders of a majority of the Percentage Interests represented by the
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 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 the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The undersigned Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee 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:
Title:
This is one of the Class BH___
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
Norwest Bank Minnesota, National
Association,
as Trustee
11000 Broken Land Parkway
Columbia, Maryland 21044
By:_____________________
Authorized Signatory
Date: September 29, 1998
<PAGE>
THE MONEY STORE HOME IMPROVEMENT TRUST 1998-I
THE MONEY STORE TRUST HOME IMPROVEMENT LOAN 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 SEPTEMBER 29, 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 (SEPTEMBER 29, 1998 TO OCTOBER 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 September 29, 1998
------------------
Startup Day
100% Percentage Interest October 15, 2024
----------------
Final Scheduled
Distribution
FIRST UNION NATIONAL BANK
- -------------------------------------------------------------------------------
Registered Holder
The registered Holder named above is the registered Holder of a
fractional interest in (i) a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of a trust, including a pool of primarily fixed rate
single family residential first, second and more junior home improvement
mortgage loans (the "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 and (ii)
in the Supplemental Trust, whose primary asset is the right to receive payments
under and in the amounts set forth in the Rate Agreement. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of August 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 Norwest Bank Minnesota, National
Association, as trustee (the "Trustee").
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 seven Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund and the Supplemental Trust, each
formed pursuant to the Pooling and Servicing 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 October 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 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 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
Certificate Account and the Spread 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 Trustee to the Certificateholders of
each Class after the 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 the 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 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 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 the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The undersigned Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
Unless the certificate of authentication hereon has been executed by the
undersigned 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:
Title:
This is one of the Class X
Certificates referred
to in the within-mentioned
Pooling and Servicing Agreement
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By: _________________________
Authorized Signatory
Date: September 29, 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 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 HOME IMPROVEMENT TRUST 1998-I
THE MONEY STORE TRUST HOME IMPROVEMENT LOAN 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-
September 29, 1998
------------------
Startup Day
100% Percentage Interest October 15, 2024
----------------
Final Scheduled
Distribution
FIRST UNION NATIONAL BAN
- -------------------------------------------------------------------------------
Registered Holder
The registered Holder named above is the registered Holder of a
fractional interest in (i) a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of a trust, including a pool of primarily fixed rate
single family residential first, second and more junior home improvement
mortgage loans (the "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 and (ii)
in the Supplemental Trust, whose primary asset is the right to receive payments
under and in the amounts set forth in the Rate Agreement. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of August 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 Norwest Bank Minnesota, National
Association, as trustee (the "Trustee").
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 seven Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund and the Supplemental Trust, each
formed pursuant to the Pooling and Servicing Agreement. The Holder of this
Certif icate 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 October 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 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 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
Certificate Account and the Spred Account 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 Trustee to the Certificateholders of
each Class after the 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 the 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 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 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 the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The undersigned Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
Unless the certificate of authentication hereon has been executed by the
undersigned 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:
Title:
This is one of the Class R-1
Certificates referred
to in the within-mentioned
Pooling and Servicing Agreement
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By: ____________________________
Authorized Signatory
Date: September 29, 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 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 HOME IMPROVEMENT TRUST 1998-I
THE MONEY STORE TRUST HOME IMPROVEMENT LOAN 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- September 29, 1998
------------------
Startup Day
100% Percentage Interest October 15, 2024
----------------
Final Scheduled
Distribution
FIRST UNION NATIONAL BANK
- -------------------------------------------------------------------------------
Registered Holder
The registered Holder named above is the registered Holder of a
fractional interest in (i) a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of a trust, including a pool of primarily fixed rate
single family residential first, second and more junior home improvement
mortgage loans (the "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 and (ii)
in the Supplemental Trust, whose primary asset is the right to receive payments
under and in the amounts set forth in the Rate Agreement. The Certificates are
issued pursuant to a Pooling and Servicing Agreement, dated as of August 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 Norwest Bank Minnesota, National
Association, as trustee (the "Trustee").
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 seven Classes. The Certificates, in the aggregate, represent the
entire beneficial ownership in the Trust Fund and Supplemental Trust, each
formed pursuant to the Pooling and Servicing 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 October 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 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 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
Certificate Account and the Spread 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 Trustee to the Certificateholders of
each Class after the 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 the 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 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 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 the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The undersigned Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
Unless the certificate of authentication hereon has been executed by the
undersigned 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
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:_____________________________
Authorized Signatory
Date: September 29, 1998
<PAGE>
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
September __, 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
August 31, 1998, The Money Store Home Improvement Loan Backed Certificates,
Series 1998-I, Class AH, 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 Home Improvement Loan Backed
Certificates, Series 1998-I, Class AH, 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]
[Trustee]
[FHA Custodian]
[Certificate Registrar]
Re: Class [R-1][R-2][X] Certificate issued under the
Pooling and Servicing Agreement, The Money Store
Home Improvement Loan Backed Certificates, Series
1998-I, dated as of August 31, 1998, among Norwest
Bank Minnesota, National Association, as trustee
(the "Trustee"), 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 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 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 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.
/_/ 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 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. -------- 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>
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 INITIAL CERTIFICATION
September 29, 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
The Money Store Inc.
707 Third Street
West Sacramento, California 95605
Norwest Bank Minnesota, National
Association,
as Trustee
11000 Broken Land Parkway
Columbia, Maryland 21044
Re: Pooling and Servicing Agreement The Money Store Home
Improvement Loan Backed Certificates, Series 1998-I,
dated as of August 31, 1998 among The Money Store
Inc. as Representative, Servicer and Claims
Administrator, the Originators and Norwest Bank
Minnesota, National Association, as trustee (the
"Trustee")
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, with respect to the 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 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 Mortgage Loans identified on the Mortgage Loan Schedule,
or (ii) the collectability, insurability, effectiveness or suitability of any
such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST UNION NATIONAL BANK
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
EXHIBIT F-1
FORM OF INTERIM CERTIFICATION
_______________, 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
The Money Store Inc.
707 Third Street
West Sacramento, California 95605
Norwest Bank Minnesota, National
Association,
as Trustee
11000 Broken Land Parkway
Columbia, Maryland 21044
Re: Pooling and Servicing Agreement The Money Store Home
Improvement Loan Backed Certificates, Series 1998-I, dated as
of August 31, 1998, among The Money Store Inc. as
Representative, Servicer and Claims Administrator, the
Originators and Norwest Bank Minnesota, National Association,
as trustee (the "Trustee")
-------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-referenced Pooling and
Servicing Agreement, the undersigned, with respect to the Mortgage Loans, hereby
certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan 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
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 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 Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST UNION NATIONAL BANK
By:___________________________
Name:________________________
Title:________________________
<PAGE>
EXHIBIT F-2
FORM OF [TRUSTEE] [TRUST ADMINISTRATOR] FINAL CERTIFICATION
[date]
[Servicer]
[Certificateholders]
[Representative]
Re: Pooling and Servicing Agreement, dated as of August 31, 1998,
among The Money Store Inc. as Representative, Servicer and
Claims Administrator, the Originators and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"),
The Money Store Home Improvement Loan Backed Certificates,
Series 1998-I
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, in respect of the Mortgage Loans hereby
certifies that, except as noted on the attachment hereto, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any 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 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 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 Mortgage Loans identified on the Mortgage Loan Schedule, or (ii)
the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[FIRST UNION NATIONAL BANK]
By:__________________________________
Name: ___________________________
Title: ____________________________
<PAGE>
EXHIBIT G
FORM OF TRUSTEE'S RECEIPT
__________ ___, 199_
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
The Money Store Inc.
707 Third Street
West Sacramento, California 95605
First Union National Bank
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
Re: Pooling and Servicing Agreement The Money Store Home
Improvement Loan Backed Certificates, Series 1998-I, dated as
of August 31, 1998 among The Money Store Inc. as
Representative, Servicer and Claims Administrator, the
Originators and Norwest Bank Minnesota, National Association,
as trustee (the "Trustee")
-------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, in respect of the Mortgage Loans, hereby
acknowledges that except as noted on the attachment hereto (the "Loan Exception
Report"), it has received and has in its possession the Mortgage File relating
to each Mortgage Loan listed in the Mortgage Loan Schedule.
The undersigned makes no representation as to: (i) the content of any
mortgage file or any of the documents or instruments included therein, (ii) the
validity, legality, enforceability, recordability or genuiness of the documents
with respect to each mortgage file or (iii) the collectability, insurability,
effectiveness or suitability of any such mortgage file. The undersigned has made
no independent examination of any such documents and has relied upon the
Certification of First Union National Bank delivered to the Trustee on the date
hereof for the required review of documents pursuant to the Pooling and
Servicing Agreement. The undersigned makes no representations or warranties
regarding the Mortgage Loans or any of the documents in its possession.
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as trustee
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT H
MORTGAGE LOAN SCHEDULE
[To Be Delivered by FUNB to the 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: Norwest Bank Minnesota, National Association, as Trustee
1015 10th Avenue S.E.
Minneapolis, Minnesota 55414
Re: Pooling and Servicing Agreement, The Money Store Home
Improvement Loan Backed Certificates, Series 1998-I,
dated as of August 31, 1998
-----------------------------------------------------
In connection with the administration of the pool of Mortgage Loans held
by you as Trustee 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 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 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 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 Trustee 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 Trustee
_________________________________
Trustee
By:____________________________
Date:__________________________
<PAGE>
ALTERNATE EXHIBIT J
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, National Association, as Trustee
1015 10th Avenue S.E.
Minneapolis, Minnesota 55414
Re: Pooling and Servicing Agreement, The Money Store Home
Improvement Loan Backed Certificates, Series 1998-I,
dated as of August 31, 1998
-----------------------------------------------------
In connection with the administration of the Mortgage Loans held by you,
as 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:_____________________________
Trustee
- -------
Norwest Bank Minnesota, National Association, as Trustee
Please acknowledge the execution of the above request by your signature and date
below:
- ----------------------------- ----------------------------
Signature Date
Documents returned to 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 Home Improvement Loan
Backed Certificates, Series 1998-I, dated as of August 31, 1998
In connection with the administration of the pool of Mortgage Loans held
by you as 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 Custodian:
______________________________
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 Home Improvement Loan Backed Certificates, Series
1998-I, Class AH, Class MH-1, Class MH-2, Class BH, Class X, Class R-1 and Class
R-2, dated as of August 31, 1998 (the "Agreement"), among The Money Store Inc.,
as Representative and Servicer (the "Servicer"), the Originators and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"). 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 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
[OMITTED]
<PAGE>
EXHIBIT M
FORM OF CUSTODIAL AGREEMENT
Dated ____________________
[NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, as trustee] (the " Trustee") and
- ---------------------------------------------------------------- (the
"Custodian") agree as follows:
WHEREAS, the Trustee, the Originators, The Money Store Inc. ("The Money
Store") have entered into a Pooling and Servicing Agreement dated as of August
31, 1998 relating to The Money Store Home Improvement Loan Backed Certificates,
Series 1998-I, Class AH, 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 Trustee therein, without
recourse, all of the Originators' right, title and interest in and to the
mortgage loans identified in Exhibit H, to the Pooling Agreement (the "Mortgage
Loans"); and
WHEREAS, in connection with such transfer and assignment and pursuant to
the Pooling Agreement, the Trustee holds, directly or pursuant to a custodial
agreement, the Mortgage Files for the Mortgage Loans:
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Custodian and the Trustee agree as follows:
1. Appointment as Custodian; Acknowledgment of Receipt. Subject to the
terms and conditions herein, the Trustee hereby appoints the Custodian, and the
Custodian hereby accepts such appointment, as its Custodian to maintain custody
of the Trustee's Mortgage Files for the Mortgage Loans (the "Trustee's Mortgage
Files"). The Custodian hereby acknowledges receipt of the Mortgage Notes, the
Mortgages, the assignments and other documents relating to the 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 Trustee shall be liable for all of
the Custodian's fees under this Agreement.
2. Maintenance of Office. The Custodian agrees to maintain the 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
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 Trustee's Mortgage Files from all
other mortgages and mortgage notes and similar records in its possession, to
identify the Trustee's Mortgage Files as being held and to hold the Trustee's
Mortgage Files for and on behalf of the Trustee for the benefit of all present
and future Certificateholders, to maintain accurate records pertaining to each
Mortgage Note and Mortgage in the Trustee's Mortgage Files as will enable the
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 Trustee's Mortgage Files held by it under this
Agreement in such a manner as shall enable the Trustee and the Custodian to
verify the accuracy of such record-keeping, inventory and physical possession.
The Custodian will promptly report to the Trustee any failure on its part to
hold the 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 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
Trustee's Mortgage Files on behalf of the Trustee. In addition, the Custodian
shall assist the Trustee generally in the preparation of reports to
Certificateholders or to regulatory bodies to the extent necessitated by the
Custodian's custody of the Trustee's Mortgage Files.
4. Access to Records. The Custodian shall permit the 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 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 Trustee's Mortgage Files upon
its receipt of written instructions signed by a Responsible Officer of the
Trustee. A certified copy of a resolution of the Board of Directors of the
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
Trustee. Such instructions may be general or specific in terms.
6. Indemnification by the Custodian. The Custodian agrees to indemnify
the 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 Trustee as the result of any
act or omission in any way relating to the maintenance and custody by the
Custodian of the 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 Trustee.
7. Advice of Counsel. The Custodian and the 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 Trustee's Mortgage Files to
the Trustee at such place as the Trustee may reasonably designate. In connection
with the administration of this Agreement, the Custodian and the 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 Trustee at 1100 Broken Land Parkway, Columbia, MD 21044,
Attention: Corporate Trust Office, to the Custodian at,
- --------------------------------------- __________________________________,
Attention: __________________; or to such other address as the 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 Trustee and the Custodian and their respective successors
and assigns. Concurrently with the appointment of a successor trustee as
provided in Section 12.08 of the Pooling Agreement, the Trustee and the
Custodian shall amend this Agreement to make said successor trustee the
successor to the 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.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as 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>
<CAPTION>
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 Trustee 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 Trustee.
<PAGE>
EXHIBIT S
SUB-SERVICING AGREEMENT
THIS SUB-SERVICING AGREEMENT is made effective as of the 29th day of
September 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 Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), 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 Trustee 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 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 the 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 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 the
Trustee on notice to an Originator, at any time after the 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 the
Trustee, which agreement shall be in form and substance satisfactory to the
Trustee and its counsel, which recognizes the 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 the 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.
