SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
NOVEMBER 30, 1998
Structured Asset Mortgage Investments Inc. (as Seller under
a Pooling and Servicing Agreement dated as of November 1,
1998 providing for the issuance by Structured Asset
Mortgage Investment Trust 1998-10 of its Mortgage
Pass-Through Certificates, Series 1998-10)
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
(Exact name of registrant as specified in charter)
DELAWARE 333-51279 13-3633241
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
245 PARK AVENUE, NEW YORK, NEW YORK 10167
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 272-2000
_________________N/A_________________
(Former name or former address, if changed since last report)
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(c) Exhibits
EXHIBIT NO.
1.1 Terms Agreement dated as of November 19, 1998 between the
Registrant and Bear, Stearns & Co. Inc.
4.1 Pooling and Servicing Agreement dated as of
November 1, 1998 among the Registrant, Liberty
Lending Services, Inc. and Bankers Trust Company
of California, N.A.
<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.
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
(Registrant)
Date: November 30, 1998 By: /S/ JOSEPH T. JURKOWSKI, JR.
------------------------
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
1.1 Terms Agreement dated as of November 19,
1998 between the Registrant and Bear,
Stearns & Co. Inc.
4.1 Pooling and Servicing Agreement dated as of
November 1, 1998 among the Registrant,
Liberty Lending Services, Inc. and Bankers
Trust Company of California, N.A.
<PAGE>
EXHIBIT 1.1
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
Mortgage Pass-Through Certificates
TERMS AGREEMENT
Dated: as of November 19, 1998
To: STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
f/k/a Bear Stearns Mortgage Securities Inc.
Re: Underwriting Agreement dated June 25, 1996
Underwriter: Bear, Stearns & Co. Inc.
Series Designation: Series 1998-10
Designation Schedule of the Certificates: Class A, Class PO, Class B-1, Class
B-2, Class B-3, and Class R Certificates
TERMS OF THE CERTIFICATES TO BE PURCHASED BY THE UNDERWRITER:
DESIGNATION INITIAL PRINCIPAL AMOUNT PASS-THROUGH RATE
Class A Certificates $ 211,895,600 6.90%
Class PO Certificates $ 90,487 (1)
Class B-1 Certificates $ 6,856,700 6.90%
Class B-2 Certificates $ 3,999,700 6.90%
Class B-3 Certificates $ 2,285,600 6.90%
Class R Certificate $ 100 6.90%
- ------------------
(1) The Class PO Certificates are principal only certificates and will not
bear interest.
<PAGE>
The original principal amount of one or more Classes of Certificates may be
increased or decreased by SAMI by up to 5%, depending upon the Mortgage Loans
actually acquired by SAMI and delivered to the Trustee. In addition, the
original principal amount of any Class of Certificates may be adjusted, as
necessary, to obtain the required ratings on the Certificates from the Rating
Agencies. Accordingly, any investor's commitments with respect to the
Certificates may be correspondingly decreased or increased.
The Certificates purchased by the Underwriter will be offered from time to time
by the Underwriter in negotiated transactions at varying prices to be determined
at the time of sale.
DEFINED TERMS: Terms not otherwise defined herein shall have the meanings given
to such terms in the Pooling and Servicing Agreement dated as of November 1,
1998, among Structured Asset Mortgage Investments Inc., as seller, Liberty
Lending Services, Inc. as master servicer, and Bankers Trust Company of
California, N.A., as trustee.
FORM OF CERTIFICATES BEING PURCHASED BY THE UNDERWRITER: Book Entry except for
the Class R Certificate which will be in certificated, fully registered form.
DISTRIBUTION DATES: The 25th day of each month or, if such 25th day is not a
business day, the next succeeding business day commencing in December, 1998.
CERTIFICATE RATING FOR THE CERTIFICATES BEING PURCHASED BY THE UNDERWRITER:
Rating
CLASS S&P Fitch
Class A AAA AAA
Class PO AAAr AAA
Class B-1 -- AA
Class B-2 -- A
Class B-3 -- BBB
Class R AAA AAA
MORTGAGE ASSETS: The Mortgage Loans to be included in the Trust Fund are as
described in Annex A hereto.
PURCHASE PRICE: The aggregate purchase price payable by the Underwriter for the
Certificates covered by this Agreement will be $224,993,829.82 (plus
$1,250,834.55 in accrued interest).
CREDIT ENHANCEMENT: None other than the subordination described in the related
Prospectus Supplement.
CLOSING DATE: November 30, 1998, 9:00 a.m., New York time.
<PAGE>
The undersigned, as the Underwriter, agrees, subject to the terms and provisions
of the above- referenced Underwriting Agreement, which is incorporated herein in
its entirety and made a part hereof, to purchase the respective principal
amounts of the Classes of the above-referenced Series of Certificates as set
forth herein.
BEAR, STEARNS & CO. INC.
By: /S/ SARA BONESTEEL
Name: Sara Bonesteel
Title: Managing Director
Accepted:
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
By: /S/ MARY HAGGERTY
Name: Mary Haggerty
Title: Vice President
<PAGE>
ANNEX A
Mortgage Loan Schedule
SEE EXHIBIT B OF THE POOLING AND SERVICING AGREEMENT
EXHIBIT 4.1
EXECUTION COPY
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
SELLER,
LIBERTY LENDING SERVICES, INC.,
MASTER SERVICER,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
TRUSTEE
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1998
--------------------------------
Structured Asset Mortgage Investments Trust 1998-10
Mortgage Pass-Through Certificates
Series 1998-10
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
ARTICLE II
Conveyance of Mortgage Loans; Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans to Trustee...................II-1
Section 2.02. Acceptance of Mortgage Loans by Trustee...................II-2
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer.................................................II-4
Section 2.03A. Representations, Warranties and Covenants of the Seller...II-6
Section 2.04. Substitution of Mortgage Loans............................II-6
Section 2.05. Representations and Warranties of the Trustee.............II-7
Section 2.06. Issuance of Certificates..................................II-9
Section 2.07. Representations and Warranties Concerning the Seller......II-9
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. Master Servicer to Assure Servicing......................III-1
Section 3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers...........................................III-2
Section 3.03. Successor Sub-Servicers..................................III-2
Section 3.04. Liability of the Master Servicer.........................III-3
Section 3.05. Assumption or Termination of Sub-Servicing Agreements by
Trustee.................................................III-3
Section 3.06. Collection of Mortgage Loan Payments.....................III-4
Section 3.07. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts......................................III-5
Section 3.08. Access to Certain Documentation and Information
Regarding the Mortgage Loans............................III-6
Section 3.09. Maintenance of Primary Mortgage Insurance Policies;
Collection Thereunder...................................III-6
Section 3.10. Maintenance of Hazard Insurance and Fidelity Coverage....III-7
Section 3.11. Due-on-Sale Clauses; Assumption Agreements...............III-8
Section 3.12. Realization Upon Defaulted Mortgage Loans................III-9
Section 3.13. Trustee to Cooperate; Release of Mortgage Files..........III-10
Section 3.14. Servicing and Master Servicing Compensation..............III-12
Section 3.15. Annual Statement of Compliance...........................III-12
Section 3.16. Annual Independent Public Accountants' Servicing Report..III-13
Section 3.17. REMIC-Related Covenants..................................III-13
Section 3.18. Additional Information...................................III-13
Section 3.19. Optional Purchase of Defaulted Mortgage Loans............III-14
Section 3.20. Periodic Filings with the Securities and Exchange
Commission; Additional Information......................III-14
ARTICLE IV
Accounts
Section 4.01. Protected Accounts.......................................IV-1
Section 4.02. Certificate Account......................................IV-2
Section 4.03. Permitted Withdrawals and Transfers from the
Certificate Account.....................................IV-4
ARTICLE V
Certificates
Section 5.01. Certificates..............................................V-1
Section 5.02. Registration of Transfer and Exchange of Certificates.....V-4
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.........V-9
Section 5.04. Persons Deemed Owners.....................................V-9
Section 5.05. Transfer Restrictions on Residual Certificates............V-9
Section 5.06. Restrictions on Transferability of Private Certificates...V-11
Section 5.07. ERISA Restrictions........................................V-11
Section 5.08. Rule 144A Information.....................................V-12
ARTICLE VI
Payments to Certificateholders
Section 6.01. Distributions on the Certificates.........................VI-1
Section 6.02. [Reserved]................................................VI-3
Section 6.03. Allocation of Losses......................................VI-3
Section 6.04. [Reserved]................................................VI-4
Section 6.05. Payments..................................................VI-4
Section 6.06. Statements to Certificateholders..........................VI-5
Section 6.07. Reports to the Trustee and the Master Servicer............VI-7
Section 6.08. Monthly Advances..........................................VI-9
Section 6.09. Compensating Interest Payments............................VI-10
Section 6.10. Reports of Foreclosures and Abandonment of Mortgaged
Property.................................................VI-10
ARTICLE VII
The Master Servicer
Section 7.01. Liabilities of the Master Servicer........................VII-1
Section 7.02. Merger or Consolidation of the Master Servicer............VII-1
Section 7.03. Indemnification of the Trustee............................VII-1
Section 7.04. Limitation on Liability of the Master Servicer and Others.VII-1
Section 7.05. Master Servicer Not to Resign.............................VII-2
Section 7.06. [Reserved]................................................VII-3
Section 7.07. Sale and Assignment of Master Servicing...................VII-3
ARTICLE VIII
Default
Section 8.01. Events of Default.......................................VIII-1
Section 8.02. Trustee to Act; Appointment of Successor................VIII-2
Section 8.03. Notification to Certificateholders......................VIII-3
Section 8.04. Waiver of Defaults......................................VIII-3
Section 8.05. List of Certificateholders..............................VIII-4
ARTICLE IX
Concerning the Trustee
Section 9.01. Duties of Trustee.........................................IX-1
Section 9.02. Certain Matters Affecting the Trustee.....................IX-2
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.....IX-5
Section 9.04. Trustee May Own Certificates..............................IX-6
Section 9.05. Trustee's Fees and Expenses...............................IX-6
Section 9.06. Eligibility Requirements for Trustee......................IX-6
Section 9.07. Insurance.................................................IX-7
Section 9.08. Resignation and Removal of the Trustee....................IX-7
Section 9.09. Successor Trustee.........................................IX-8
Section 9.10. Merger or Consolidation of Trustee........................IX-8
Section 9.11. Appointment of Co-Trustee or Separate Trustee.............IX-8
Section 9.12. Master Servicer Shall Provide Information as Reasonably
Required.................................................IX-10
Section 9.13. Federal Information Returns and Reports to
Certificateholders.......................................IX-10
ARTICLE X
Termination
Section 10.01. Termination Upon Repurchase by the Seller or its
Designee or Liquidation of All Mortgage Loans.............X-1
Section 10.02. Additional Termination Requirements........................X-3
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Intent of Parties.........................................XI-1
Section 11.02. Amendment.................................................XI-1
Section 11.03. Recordation of Agreement..................................XI-2
Section 11.04. Limitation on Rights of Certificateholders................XI-2
Section 11.05. Acts of Certificateholders................................XI-3
Section 11.06. [Reserved]................................................XI-4
Section 11.07. Governing Law.............................................XI-4
Section 11.08. Notices...................................................XI-4
Section 11.09. Severability of Provisions................................XI-4
Section 11.10. Successors and Assigns....................................XI-5
Section 11.11. Article and Section Headings..............................XI-5
Section 11.12. Counterparts..............................................XI-5
Section 11.13. Notice to Rating Agencies.................................XI-5
EXHIBITS
Exhibit A-1 - Form of Face of Certificates
Exhibit A-2 - Form of Reverse of Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - Representations and Warranties of the Seller
Concerning the Mortgage Loans
Exhibit D - Form of Request for Release
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Trustee's Initial Certification
Exhibit H - Form of Trustee's Final Certification
Exhibit I - Form of ERISA Letter for Class X Certificates
<PAGE>
POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement dated as of November 1, 1998, among
Structured Asset Mortgage Investments Inc., a Delaware corporation, as the
seller (the "Seller"), Liberty Lending Services, Inc., an Ohio corporation
("LLSI"), as master servicer (the "Master Servicer"), and Bankers Trust Company
of California, N.A., a national banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Seller has acquired the Mortgage
Loans from Liberty Savings Bank, FSB, in its individual capacity and in its
capacity as trustee ("Liberty"). On the Closing Date, the Seller will sell the
Mortgage Loans and certain other property to the Trust Fund and receive in
consideration therefor Certificates evidencing the entire beneficial ownership
interest in the Trust Fund. LLSI will be the Master Servicer for the Mortgage
Loans.
The Trustee shall make an election for the assets included in the
Trust Fund to be treated for federal income tax purposes as a REMIC. On November
30, 1998 (the "Startup Day"), all the Classes of Certificates except for the
Class R Certificate will be designated "regular interests" in such REMIC. The
Class R Certificates will be designated the "residual interest" in such REMIC.
The Mortgage Loans will have an Outstanding Principal Balance as of
the Cut-off Date, after deducting all Scheduled Principal due on or before the
Cut-off Date, of $228,556,601.79. The initial principal amount of the
Certificates will not exceed such Outstanding Principal Balance.
In consideration of the mutual agreements herein contained, the
Seller, the Master Servicer and the Trustee agree as follows:
<PAGE>
ARTICLE I
Definitions
Whenever used in this Agreement, the following words and phrases,
unless otherwise expressly provided or unless the context otherwise requires,
shall have the meanings specified in this Article.
ACCOUNT: The Certificate Account, the Protected Accounts or the
Servicing Accounts as the context may require.
ACCRUED CERTIFICATE INTEREST: For any Certificate (other than a Class
PO Certificate) for any Distribution Date, the interest accrued during the
related Interest Accrual Period at the applicable Pass-Through Rate on the
Current Principal Amount (or, in the case of a Class X Certificate, the Notional
Amount) of such Certificate immediately prior to such Distribution Date,
calculated on the basis of a 360-day year consisting of twelve 30-day months,
less (i) in the case of an interest-bearing Senior Certificate, such
Certificate's share of any Net Interest Shortfall and, after the Cross-Over
Date, the interest portion of any Realized Losses and (ii) in the case of a
Subordinate Certificate, such Certificate's share of any Net Interest Shortfall
and the interest portion of any Realized Losses.
ADVANCING DATE: The Business Day preceding the related Distribution
Date.
AFFILIATE: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
ALLOCABLE SHARE: With respect to each Class of Subordinate
Certificates:
(a) as to any Distribution Date and amounts distributable
pursuant to clauses (i) and (iii) of the Subordinate Optimal Principal
Amount, the fraction, expressed as a percentage, the numerator of
which is the Current Principal Amount of such Class and the
denominator of which is the aggregate Current Principal Amount of all
Classes of Subordinate Certificates; and
(b) as to any Distribution Date and amounts distributable
pursuant to clause (ii), (iv) and (v) of the Subordinate Optimal
Principal Amount, and as to each Class of Subordinate Certificates
(other than the Class of Subordinate Certificates having the lowest
numerical designation as to which the Class Prepayment Distribution
Trigger shall not be applicable) for which (x) the related Class
Prepayment Distribution Trigger has been satisfied on such
Distribution Date, the fraction, expressed as a percentage, the
numerator of which is the Current Principal Amount of such Class and
the denominator of which is the aggregate Current Principal Amount of
all Classes of Subordinate Certificates and (y) the related Prepayment
Distribution Trigger has not been satisfied on such Distribution Date,
0%; provided that if on a Distribution Date, the Current Principal
Amount of any Class of Subordinate Certificates for which the related
Class Prepayment Distribution Trigger was satisfied on such
Distribution Date is reduced to zero, any amounts distributed pursuant
to this clause (b), to the extent of such Class's remaining Allocable
Share, shall be distributed to the remaining Classes of Subordinate
Certificates which satisfy the Class Prepayment Distribution Trigger
and to the Subordinate Class having the lowest numerical designation
in reduction of their respective Current Principal Amounts in the
order of their numerical Class designations.
APPLICABLE CREDIT RATING: A credit rating of Aaa, in the case of S&P
or a credit rating of AAA, in the case of Fitch, for any long-term deposit or
security or a rating of A-1+, in the case of S&P, or F-1 in the case of Fitch,
for any short-term deposit or security.
APPLICABLE STATE LAW: For purposes of Section 9.13(d), the Applicable
State Law shall be (a) the law of the State of New York; and (b) the law of the
State of California, and (c) such other state law whose applicability shall have
been brought to the attention of the Trustee by either (i) an Opinion of Counsel
delivered to it, or (ii) written notice from the appropriate taxing authority as
to the applicability of such state law.
APPRAISED VALUE: For any Mortgaged Property, the amount set forth as
the appraised value of such Mortgaged Property in an appraisal made for the
mortgage originator in connection with its origination of the related Mortgage
Loan.
ASSUMED FINAL DISTRIBUTION DATE: With respect to the Certificates,
July 25, 2028.
AVAILABLE FUNDS: With respect to any Distribution Date, an amount
equal to the aggregate of the following amounts with respect to the Mortgage
Loans: (a) all previously undistributed payments on account of principal
(including the principal portion of Scheduled Payments, Principal Prepayments
and the principal portion of Net Liquidation Proceeds) and all previously
undistributed payments on account of interest received on or after the Cut-off
Date and on or prior to the related Determination Date, (b) any Monthly Advances
(including Certificate Account Advances) and Compensating Interest Payments by
the Master Servicer with respect to such Distribution Date and (c) any amount
reimbursed by the Trustee pursuant to Subsection 4.02(d) in connection with
losses on Permitted Investments, except:
(i) all payments that were due on or before the Cut-off Date;
(ii) all Principal Prepayments and Liquidation Proceeds received
after the applicable Prepayment Period;
(iii) all payments, other than Principal Prepayments, that
represent early receipt of Scheduled Payments due on a date or dates
subsequent to the related Due Date;
(iv) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which, and to the extent
that, there are any unreimbursed Monthly Advances (including Certificate
Account Advances);
(v) amounts of Monthly Advances (including Certificate Account
Advances) determined to be Nonrecoverable Advances;
(vi) amounts permitted to be withdrawn from the Certificate
Account pursuant to Subsection 4.03(a); and
(vii) amounts withdrawn by the Trustee pursuant to Subsection
4.03(b) to pay the Trustee's Fee and expenses.
BALLOON MORTGAGE LOAN: A Mortgage Loan that provided on the Cut-off
Date for amortization on the basis of an amortization schedule extending beyond
its stated maturity by more than twelve months with a disproportionate Scheduled
Payment due on its stated maturity date equal to the remaining principal balance
of such Mortgage Loan.
BALLOON PAYMENTS: With respect to a Balloon Mortgage Loan, the
principal portion of the Scheduled Payment due on its stated maturity equal to
the remaining principal balance of the Balloon Mortgage Loan.
BANKRUPTCY CODE: The United States Bankruptcy Code, as amended as
codified in 11 U.S.C. ss.ss.101-1330.
BOOK-ENTRY CERTIFICATES: Initially, all Classes of Certificates other
than the Class X, Class R, Class B-4, Class B-5 and Class B-6 Certificates.
BSMCC: Bear Stearns Mortgage Capital Corporation.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which the New York Stock Exchange is closed or on which banking
institutions in New York City, in California, Ohio or any other jurisdiction in
which the Corporate Trust Office or the principal place of business of the
Master Servicer is located are authorized or obligated by law or executive order
to be closed.
CERTIFICATE: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in the Trust Fund signed and countersigned by the
Trustee in substantially the forms annexed hereto as Exhibit A-1 and A-2, with
the blanks therein appropriately completed.
CERTIFICATE ACCOUNT: The account or accounts created and maintained
pursuant to Section 4.02, which shall be denominated "Bankers Trust Company of
California, N.A. as Trustee f/b/o holders of Structured Asset Mortgage
Investments Trust 1998-10, Mortgage Pass- Through Certificates, Series 1998-10 -
Certificate Account."
CERTIFICATE ACCOUNT ADVANCE: As of any Determination Date, the amount
on deposit in a Protected Account which is not required to be transferred to the
Certificate Account for distribution during the calendar month in which such
Determination Date occurs but which is deposited in the Certificate Account and
used to make a distribution to Certificateholders during such calendar month on
account of Scheduled Payments on the Mortgage Loans due on the Due Date for such
month not being paid on or before such Determination Date except insofar as such
unpaid amounts are the result of application of the Relief Act.
CERTIFICATE OWNER: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.
CERTIFICATE REGISTER: The register maintained pursuant to Section
5.02.
CERTIFICATEHOLDER: A Holder of a Certificate.
CLASS: With respect to the Certificates, A, PO, X, B-1, B-2, B-3, B-4,
B-5, B-6 and R.
CLASS PO CASH SHORTFALL: As defined in Section 6.01 (a)(C).
CLASS PO DEFERRED AMOUNT: With respect to each Distribution Date
through the Cross-Over Date, the aggregate of all amounts allocable on such
Distribution Date to the Class PO Certificates in respect of the principal
portion of any Realized Losses on Discount Mortgage Loans and Class PO Cash
Shortfall, and all amounts previously allocated in respect of such losses and
such shortfall to the Class PO Certificates and not distributed on prior
Distribution Dates. No interest shall accrue on any Class PO Deferred Amount.
CLASS PO DEFERRED PAYMENT WRITEDOWN AMOUNT: With respect to any
Distribution Date, the amount if any, distributed on such date in respect of the
Class PO Deferred Amount pursuant to Section 6.01(a)(A) FOURTH.
CLASS PO PRINCIPAL DISTRIBUTION AMOUNT: On each Distribution Date, an
amount, without duplication, equal to the sum of:
(i) the PO Percentage of all scheduled payments of principal due on
each Discount Mortgage Loan on the related Due Date as specified in the
amortization schedule at the time applicable thereto (after adjustments for
previous principal prepayments, but before any adjustment to such
amortization schedule by reason of any bankruptcy or similar proceeding or
any moratorium or similar waiver or grace period);
(ii) the PO Percentage of the Scheduled Principal Balance of each
Discount Mortgage Loan which was the subject of a Voluntary Principal
Prepayment in full received by the Master Servicer during the applicable
Prepayment Period;
(iii) the PO Percentage of all Voluntary Principal Prepayments in part
for each Discount Mortgage Loan received during the applicable Prepayment
Period;
(iv) the lesser of (a) the PO Percentage of the sum of (A) all Net
Liquidation Proceeds allocable to principal on each Discount Mortgage Loan
which became a Liquidated Mortgage Loan during the related Prepayment
Period (other than a Discount Mortgage Loan described in the immediately
following clause (B)) and (B) the Scheduled Principal Balance of each
Discount Mortgage Loan purchased by an Insurer from the Trustee during the
related Prepayment Period pursuant to the related Primary Mortgage
Insurance Policy, if any, or otherwise; and (b) the PO Percentage of the
sum of (A) the Scheduled Principal Balance of each Discount Mortgage Loan
which became a Liquidated Mortgage Loan during the related Prepayment
Period (other than a Discount Mortgage Loan described in the immediately
following clause (B)) and (B) the Scheduled Principal Balance of each such
Mortgage Loan that was purchased by an Insurer from the Trustee during the
related Prepayment Period pursuant to the related Primary Mortgage
Insurance Policy, if any, or otherwise; and
(v) the PO Percentage of the sum of (a) the Scheduled Principal
Balance of each Discount Mortgage Loan or REO Property which was
repurchased by the Seller or a prior transferor of such Mortgage Loan on
such Distribution Date pursuant to Section 2.02 or 2.03(A)(b) or which was
purchased pursuant to Section 3.19 and (b) the excess, if any, of the
Scheduled Principal Balance of a Discount Mortgage Loan that has been
replaced by the Seller or a prior transferor of such Mortgage Loan with a
Substitute Mortgage Loan pursuant to Section 2.04 on such Distribution Date
over the Scheduled Principal Balance of such Substitute Mortgage Loan.
CLASS PREPAYMENT DISTRIBUTION TRIGGER: For each Class of Subordinate
Certificates for any Distribution Date, the Class Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which is the Scheduled Principal Balances of all of the Mortgage Loans as of the
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date.
CLOSING DATE: November 30, 1998.
CODE: The Internal Revenue Code of 1986, as amended.
COMPENSATING INTEREST PAYMENTS: As defined in Section 6.09.
CORPORATE TRUST OFFICE: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at 3 Park Plaza, 16th
Floor, Irvine, California, 92614, Attention: Corporate Trust Department, ref:
Bear Stearns/Liberty 1998-10.
CROSS-OVER DATE: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).
CURRENT PRINCIPAL AMOUNT: With respect to any Certificate (other than
a Class X Certificate) as of any Distribution Date, the initial principal amount
of such Certificate as reduced by (A) the sum of (i) all amounts distributed on
previous Distribution Dates on such Certificate with respect to principal, (ii)
the principal portion of all Realized Losses allocated prior to such
Distribution Date to such Certificate, and (iii) in the case of a Subordinate
Certificate, such Certificate's PRO RATA share, if any, of the Subordinate
Certificate Writedown Amount for previous Distribution Dates. With respect to
any Class of Certificates (other than the Class X Certificates), the Current
Principal Amount thereof will equal the sum of the Current Principal Amounts of
all Certificates in such Class. Notwithstanding the foregoing, solely for
purposes of giving consents, directions, waivers, approvals, requests and
notices, the Class R Certificate after the Distribution Date on which it
receives the distribution of the last dollar of its original principal amount
shall be deemed to have a Current Principal Amount equal to its Current
Principal Amount on the day immediately preceding such Distribution Date.
CUT-OFF DATE: November 1, 1998.
CUT-OFF DATE BALANCE: $228,556,601.79
DEBT SERVICE REDUCTION: Any reduction of the Scheduled Payments which
a Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of
any proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.
DEBTOR RELIEF LAWS: Any applicable liquidation, conservatorship,
receivership, bankruptcy, insolvency, rearrangement, moratorium, reorganization,
or similar debtor relief laws affecting the rights of creditors generally from
time to time in effect.
DEFAULTED MORTGAGE LOAN: Any Mortgage Loan as to which the Mortgagor
has failed to make unexcused payment in full of three or more consecutive
Scheduled Payments.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of
the Mortgaged Property by a court of competent jurisdiction in an amount less
than the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.
DEPOSITORY: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.
DEPOSITORY AGREEMENT: The meaning specified in Subsection 5.01(a)
hereof.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DESIGNATED DEPOSITORY INSTITUTION: A depository institution
(commercial bank, mutual savings bank or savings and loan association) or trust
company (which may include the Trustee), the deposits of which are insured by
the FDIC or Bank Insurance Fund to the extent provided by law or the Federal
Home Loan Bank of Cincinnati.
DETERMINATION DATE: The 18th day of the month of the Distribution
Date, or if such day is not a Business Day, the preceding Business Day.
DISCOUNT MORTGAGE LOAN: Any Mortgage Loan with a Net Rate less than
6.90% per annum.
DISTRIBUTION DATE: The 25th day of any month, beginning in the month
immediately following the month of the Closing Date, or, if such 25th day is not
a Business Day, the Business Day immediately following.
DTC CUSTODIAN: Bankers Trust of California, N.A., or its successors in
interest as custodian for the Depository.
DUE DATE: With respect to each Mortgage Loan, the date in each month
on which its Scheduled Payment is due if such due date is the first day of a
month and otherwise is deemed to be the first day of the following month.
DUE PERIOD: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which the
Distribution Date occurs and ending at the close of business on the first day of
the month in which the Distribution Date occurs.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
EVENT OF DEFAULT: An event described in Section 8.01.
EXCESS LIQUIDATION PROCEEDS: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.
FANNIE MAE: Fannie Mae (formerly the Federal National Mortgage
Association) or any successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FITCH: Fitch IBCA, Inc.
FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of
Certificates (other than the Class X Certificates), the fractional undivided
interest evidenced by any Certificate of such Class, the numerator of which is
the Current Principal Amount of such Certificate and the denominator of which is
the Current Principal Amount of such Class. With respect to the Class X
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class the numerator of which is the Notional Amount applicable to such
Certificate and the denominator of which is the Notional Amount of the
applicable Class. With respect to the Certificates in the aggregate, the
fractional undivided interest evidenced by each of the Class X and Class R
Certificates will be deemed to equal 1% multiplied by a fraction the numerator
of which is the Current Principal Amount or Notional Amount of each such
Certificate and the denominator of which is the aggregate Current Principal
Amount or Notional Amount of each such Class and (ii) a Certificate of any other
Class will be deemed to equal 98% multiplied by a fraction, the numerator of
which is the Current Principal Amount of such Certificate and the denominator of
which is the Current Principal Amount of all the Certificates.
FREDDIE MAC: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.
FUNDS TRANSFER DATE: The Business Day prior to the related
Distribution Date in any month.
GLOBAL CERTIFICATE: Any Private Certificate registered in the name of
the Depository or its nominee, beneficial interests in which are reflected on
the books of the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such Depository). As of the Closing Date there will be no Global
Certificates.
HOLDER: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsections 11.02(b) and 11.05(e),
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Seller, the Master Servicer, a
Sub-Servicer, if any, or the Trustee, or any Affiliate thereof shall be deemed
not to be outstanding and the Fractional Undivided Interest evidenced thereby
shall not be taken into account in determining whether the requisite percentage
of Fractional Undivided Interests necessary to effect any such consent has been
obtained.
INDEMNIFIED PERSONS: The Trustee, its officers, directors, agents and
employees and any separate or co-trustee and its officers, directors, agents and
employees.
INDEPENDENT: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Seller or the Master
Servicer and of any Affiliate of the Seller or the Master Servicer, (b) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer, or any Affiliate of the Seller or the
Master Servicer, and (c) is not connected with the Seller or the Master
Servicer, or any Affiliate as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
INDIVIDUAL CERTIFICATE: Any Private Certificate registered in the name
of the Holder other than the Depository or its nominee.
INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the requirements
of Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act or
any entity all the equity holders in which come within such paragraphs.
INSURANCE POLICY: With respect to any Mortgage Loan, any Primary
Mortgage Insurance Policy, standard hazard insurance policy, flood insurance
policy or title insurance policy.
INSURANCE PROCEEDS: Amounts paid by the insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse Insured Expenses.
INSURED EXPENSES: Expenses covered by any Insurance Policy.
INSURER: Any issuer of an Insurance Policy.
INTEREST ACCRUAL PERIOD: With respect to each Distribution Date, for
each Class of interest bearing Certificates, the calendar month preceding the
month in which the Distribution Date occurs, commencing in November, 1998.
INTEREST SHORTFALL: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Voluntary Principal Prepayment, or constitutes a Relief Act Mortgage Loan, an
amount determined as follows:
(a) partial principal prepayments: The difference between (i) one
month's interest at the applicable Net Rate on the amount of such
prepayment and (ii) the amount of interest for the calendar month of such
prepayment (adjusted to the applicable Net Rate) received at the time of
such prepayment;
(b) principal prepayments in full received during the relevant
Prepayment Period: The difference between (i) one month's interest at the
applicable Net Rate on the Scheduled Principal Balance of such Mortgage
Loan immediately prior to such prepayment and (ii) the amount of interest
for the calendar month of such prepayment (adjusted to the applicable Net
Rate) received at the time of such prepayment; and
(c) Relief Act Mortgage Loans: As to any Relief Act Mortgage Loan, the
excess of (i) 30 days' interest (or, in the case of a principal prepayment
in full, interest to the date of prepayment) on the Scheduled Principal
Balance thereof (or, in the case of a principal prepayment in part, on the
amount so prepaid) at the related Net Rate over (ii) 30 days' interest (or,
in the case of a principal prepayment in full, interest to the date of
prepayment) on such Scheduled Principal Balance (or, in the case of a
Principal Prepayment in part, on the amount so prepaid) at the Net Rate
required to be paid by the Mortgagor as limited by application of the
Relief Act.
INVESTMENT LETTER: The letter to be furnished by each Institutional
Accredited Investor which purchases any Class of Private Certificates in
connection with such purchase, substantially in the form set forth as Exhibit
F-1 hereto.
LIBERTY: Liberty Savings Bank, FSB, in its individual capacity and in
its capacity as trustee.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
Master Servicer has determined that all amounts it expects to recover from or on
account of such Mortgage Loan have been recovered.
LIQUIDATION DATE: With respect to any Liquidated Mortgage Loan, the
date on which the Master Servicer has certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.
LIQUIDATION EXPENSES: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer and not recovered by the Master Servicer under any Primary Mortgage
Insurance Policy for reasons other than the Master Servicer's failure to ensure
the maintenance of or compliance with a Primary Mortgage Insurance Policy, such
expenses including (a) property protection expenses, (b) property sales
expenses, (c) foreclosure and sale costs, including court costs and reasonable
attorneys' fees, and (d) similar expenses reasonably paid or incurred in
connection with liquidation.
LIQUIDATION PROCEEDS: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise.
LLSI: Liberty Lending Services, Inc.
LOAN SUMMARY AND REMITTANCE REPORT: The report to be submitted by the
Master Servicer to the Trustee pursuant to Subsection 6.07(b).
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Original Value of the related Mortgaged
Property.
LOSS ALLOCATION LIMITATION: The meaning specified in Section
6.03(b)(B) hereof.
MASTER SERVICER: With respect to the Mortgage Loans, LLSI, or its
successor in interest, or any successor master servicer with respect to the
Mortgage Loans appointed as herein provided.
MASTER SERVICING FEE: As to any Mortgage Loan and Distribution Date,
an amount equal to the product of (i) the Scheduled Principal Balance of such
Mortgage Loan as of the Due Date in the preceding calendar month and (ii) the
Master Servicing Fee Rate. Any Master Servicing Fee in excess of 0.375% per
annum will be set aside by the Master Servicer to pay for lender funded mortgage
insurance and will not be treated as servicing compensation to the Master
Servicer and will not be available to make Compensating Interest Payments.
MASTER SERVICING FEE RATE: With respect to each Mortgage Loan, the per
annum rate set forth on the Mortgage Loan Schedule which shall be between 0.375%
and 1.257% per annum.
MONTHLY ADVANCE: The advance (including a Certificate Account Advance)
required to be made by the Master Servicer on the related Advancing Date
pursuant to Section 6.08.
MORTGAGE FILE: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
MORTGAGE INTEREST RATE: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate as of the Cut-off Date is equal to the "Mortgage Interest Rate" set forth
with respect thereto on the Mortgage Loan Schedule.
MORTGAGE LOAN: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.
MORTGAGE LOAN SCHEDULE: The schedule, attached hereto as Exhibit B
with respect to the Mortgage Loans and as amended from time to time to reflect
the repurchase or substitution of Mortgage Loans pursuant to this Agreement.
MORTGAGE NOTE: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.
MORTGAGED PROPERTY: Land and improvements securing the indebtedness of
a Mortgagor under the related Mortgage Loan or, in the case of REO Property,
such REO Property.
MORTGAGOR: The obligor on a Mortgage Note.
NET INTEREST SHORTFALL: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
to the Master Servicer in accordance with this Agreement and (ii) unreimbursed
advances by the Master Servicer or a Sub- Servicer and Monthly Advances
including Certificate Account Advances.
NET RATE: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the sum of the Master Servicing Fee and
the Trustee's Fee (each such fee being expressed as a per annum rate).
NON-DISCOUNT MORTGAGE LOAN: Any Mortgage Loan with a Net Rate equal to
or greater than 6.90% per annum.
NON-PO PERCENTAGE: With respect to any Discount Mortgage Loan, the Net
Rate thereof divided by 6.90%.
NONRECOVERABLE ADVANCE: Any advance (i) which was previously made or
is proposed to be made by the Master Servicer and (ii) which, in the good faith
judgment of the Master Servicer, as evidenced by an Officer's Certificate, will
not or, in the case of a proposed advance, would not, be ultimately recoverable
by the Master Servicer from Liquidation Proceeds, Insurance Proceeds or future
payments on the Mortgage Loan for which such advance was made.
NOTIONAL AMOUNT: On any Distribution Date, with respect to the Class X
Certificates an amount equal to the aggregate of the Scheduled Principal
Balances of the Non- Discount Mortgage Loans as of the related Due Date.
OFFERED CERTIFICATE: Any Class A, Class PO, Class X, Class B-1, Class
B-2, Class B-3 and Class R Certificate.
OFFERED SUBORDINATE CERTIFICATES: The Class B-1, Class B-2 and Class
B-3 Certificates.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President or other authorized officer of the Master Servicer and
delivered to the Trustee, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for the Master
Servicer.
ORIGINAL SUBORDINATE PRINCIPAL BALANCE: The sum of the aggregate
Current Principal Amounts of each Class of Subordinate Certificates as of the
Cut-off Date.
ORIGINAL VALUE: The lesser of (i) the Appraised Value or (ii) sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except that in instances where either (i) or (ii) is unavailable, the other may
be used to determine Original Value, or if both (i) and (ii) are unavailable,
Original Value may be determined from other sources reasonably acceptable to the
Trustee.
OUTSTANDING MORTGAGE LOAN: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased pursuant to Sections 2.02, 2.03A or 3.19 or replaced pursuant to
Section 2.04.
OUTSTANDING PRINCIPAL BALANCE: As of the time of any determination,
the principal balance of a Mortgage Loan remaining to be paid by the Mortgagor,
or, in the case of an REO Property, the principal balance of the related
Mortgage Loan remaining to be paid by the Mortgagor at the time such property
was acquired by the Trust Fund less any Net Insurance Proceeds with respect
thereto to the extent applied to principal.
PASS-THROUGH RATE: As to each Class of Certificates, other than the
Class PO Certificates, the rate of interest set forth, or determined as provided
with respect thereto, in Section 5.01. Any monthly calculation of interest at a
stated rate shall be based upon annual interest at such rate divided by twelve.
PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:
(i) direct obligations of, and obligations the timely payment of
which are fully guaranteed by the United States of America or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof (including the Trustee acting in its commercial banking
capacity) and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or
the short-term debt rating and/or the long-term unsecured debt
obligations or deposits of such depository institution or trust
company at the time of such investment or contractual commitment
providing for such investment have the Applicable Credit Rating or
better from each Rating Agency and (b) any other demand or time
deposit or certificate of deposit that is fully insured by the Federal
Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, the obligations of which are backed by the full faith and
credit of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (ii)(a) above where the Trustee holds the security
therefor;
(iv) securities bearing interest or sold at a discount issued by
any corporation (including the Trustee) incorporated under the laws of
the United States of America or any state thereof that have the
Applicable Credit Rating or better from each Rating Agency at the time
of such investment or contractual commitment providing for such
investment; PROVIDED, HOWEVER, that securities issued by any
particular corporation will not be Permitted Investments to the extent
that investments therein will cause the then outstanding principal
amount of securities issued by such corporation and held as part of
the Trust to exceed 10% of the aggregate Outstanding Principal
Balances and amounts of all the Mortgage Loans and Permitted
Investments held as part of the Trust;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on
demand or on a specified date not more than one year after the date of
issuance thereof) having the Applicable Credit Rating or better from
each Rating Agency at the time of such investment;
(vi) a Reinvestment Agreement issued by any bank, insurance
company or other corporation or entity;
(vii) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency as
evidenced in writing by each Rating Agency to the Trustee; and
(viii) any money market funds (including, without limitation, BT
Institutional Treasury Money Fund) the collateral of which consists of
obligations fully guaranteed by the United States of America or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America (which may include repurchase obligations
secured by collateral described in clause (i) and having the
Applicable Credit Rating or better from each Rating Agency;
PROVIDED, HOWEVER, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par or if such
instrument or security is purchased at a price greater than par.
PERSON: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PHYSICAL CERTIFICATES: Initially, the Class X Certificates, the
Private Certificates and the Residual Certificate.
PLAN: As defined in Section 5.07(a).
PO PERCENTAGE: With respect to any Discount Mortgage Loan, the
fraction, expressed as a percentage, equal to 6.90% minus the Net Rate thereof
divided by 6.90%; and with respect to any Non-Discount Mortgage Loan, 0%.
PREPAYMENT PERIOD: With respect to any Mortgage Loan and any
Distribution Date, the calendar month preceding the month of such Distribution
Date.
PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to a Mortgage Note holder in the event of default by the obligor
under such Mortgage Note or the related Security Instrument, or any replacement
policy therefor.
PRINCIPAL PREPAYMENT: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and the purchase price in connection with any purchase of a Mortgage Loan, any
cash deposit in connection with the substitution of a Mortgage Loan, and the
principal portion of Net Liquidation Proceeds.
PRIVATE CERTIFICATE: Any Class B-4, Class B-5 or Class B-6
Certificate.
PROTECTED ACCOUNT: A segregated account established and maintained by
the Master Servicer or any Sub-Servicer with respect to the Mortgage Loans and
with respect to REO Property in a Designated Depository Institution for receipt
of principal and interest and other amounts as described in Section 4.01.
QIB: A Qualified Institutional Buyer as defined in Rule 144A
promulgated under the Securities Act.
QUALIFIED INSURER: Any insurance company duly qualified as such under
the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.
RATING AGENCIES: S&P and Fitch.
RATING AGENCY ELIGIBLE ACCOUNT: An account, including one maintained
with the Trustee, which either (i) is a trust account maintained with the
corporate trust department of a depository institution or trust company
(including, without limitation, the Trustee) organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia which is not affiliated with the Master Servicer, any Sub-Servicer or
any other master servicer other than the Trustee, (ii) is maintained with an
entity which is an institution whose deposits are insured by the FDIC or the
Bank Insurance Fund, the unsecured and uncollateralized long-term debt
obligations of which shall be rated "A" or higher by S&P and "A" or higher by
Fitch, or one of the two highest short-term ratings by each Rating Agency, and
which is either (a) a federal savings association duly organized, validly
existing and in good standing under the federal banking laws, (b) an institution
duly organized, validly existing and in good standing under the applicable
banking laws of any state, (c) a national banking association under the federal
banking laws, (d) a principal subsidiary of a bank holding company, or (e) the
Federal Home Loan Bank of Cincinnati or (iii) otherwise meets the requirements
of each Rating Agency for the maintenance of the ratings on the Certificates.
REALIZED LOSS: Any (i) Deficient Valuation or (ii) as to any
Liquidated Mortgage Loan, the positive amount, if any, of (x) the Outstanding
Principal Balance of such Liquidated Mortgage Loan plus accrued and unpaid
interest thereon at the Mortgage Interest Rate through the last day of the month
of such liquidation LESS (y) the related Net Liquidation Proceeds with respect
to such Mortgage Loan.
RECORD DATE: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.
REINVESTMENT AGREEMENTS: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
RELIEF ACT MORTGAGE LOAN: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.
REMIC: A real estate mortgage investment conduit, as defined in the
Code.
REMIC ASSETS: That group of assets contained in the Trust Fund
designated as a REMIC consisting of (i) the Mortgage Loans, (ii) the Certificate
Account, (iii) any REO Property and (iv) any proceeds of the foregoing.
REMIC OPINION: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause the REMIC Assets to fail to qualify as a REMIC while any regular interest
in such REMIC is outstanding, (ii) result in a tax on prohibited transactions or
(iii) constitute a taxable contribution after the Startup Day.
REMIC PROVISIONS: The provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and regulations promulgated thereunder, as the foregoing may
be in effect from time to time.
REO PROPERTY: A Mortgaged Property acquired in the name of the
Trustee, for the benefit of Certificateholders, by foreclosure or deed-in-lieu
of foreclosure in connection with a defaulted Mortgage Loan.
REPURCHASE PRICE: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased pursuant to Section
2.02 or 2.03A an amount equal to the sum of (i) 100% of the Outstanding
Principal Balance of such Mortgage Loan as of the date of repurchase (or if the
related Mortgaged Property was acquired with respect thereto, 100% of the
Outstanding Principal Balance at the date of the acquisition) plus (ii) accrued
but unpaid interest on the Outstanding Principal Balance at the related Mortgage
Interest Rate, through and including the last day of the month of repurchase
reduced by (ii) any portion of the Master Servicing Fee or advances payable to
the purchaser of the Mortgage Loan.
REQUEST FOR RELEASE: A request for release in the form attached hereto
as Exhibit D.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.
RESIDUAL CERTIFICATE: The Class R Certificate.
RESPONSIBLE OFFICER: Any officer assigned to the corporate trust
department or similar department of the Trustee (or any successor division or
department thereto), 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.
RULE 144A CERTIFICATE: The certificate to be furnished by each
purchaser of a Private Certificate which is a Qualified Institutional Buyer as
defined under Rule 144A promulgated under the Securities Act, substantially in
the form set forth as Exhibit F-2 hereto.
SAMI: Structured Asset Mortgage Investments Inc.
"S&P": Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., or its successors in interest.
SCHEDULED PAYMENT: With respect to any Mortgage Loan and any month,
the scheduled payment or payments of principal and interest due during such
month on such Mortgage Loan which either is payable by a Mortgagor in such month
under the related Mortgage Note or, in the case of REO Property, would otherwise
have been payable under the related Mortgage Note.
SCHEDULED PRINCIPAL: The principal portion of any Scheduled Payment.
SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan on any
Distribution Date, (i) the unpaid principal balance of such Mortgage Loan as of
the close of business on the related Due Date (i.e., taking account of the
principal payment to be made on such Due Date and irrespective of any
delinquency in its payment), as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization schedule by
reason of any bankruptcy or similar proceeding occurring after the Cut-off Date
(other than a Deficient Valuation) or any moratorium or similar waiver or grace
period) less (ii) any Principal Prepayments (including the principal portion of
Net Liquidation Proceeds) received during or prior to the related Prepayment
Period; provided that the Scheduled Principal Balance of a Liquidated Mortgage
Loan is zero.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES LEGEND: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3)
IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT
OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO
(A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN
THE AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY
OTHER APPLICABLE JURISDICTION.
SECURITY INSTRUMENT: A written instrument creating a valid first lien
on a Mortgaged Property securing a Mortgage Note, which may be any applicable
form of mortgage, deed of trust, deed to secure debt or security deed, including
any riders or addenda thereto.
SELLER: Structured Asset Mortgage Investments Inc. (formerly known as
Bear Stearns Mortgage Securities, Inc.), a Delaware corporation, or its
successors in interest.
SENIOR CERTIFICATES: The Class A, Class PO, Class X and Class R
Certificates.
SENIOR P&I CERTIFICATES: The Senior Certificates other than the Class
PO Certificates.
SENIOR P&I OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum, without duplication, of the following (but in no event
greater than the aggregate Current Principal Amounts of the Senior P&I
Certificates immediately prior to such Distribution Date):
(i) the Senior Percentage of the Non-PO Percentage of all
scheduled payments of principal allocated to the Scheduled Principal
Balance due on each Outstanding Mortgage Loan on the related Due Date
as specified in the amortization schedule at the time thereto (after
adjustments for previous Principal Prepayments but before any
adjustment to such amortization schedule by reason of any bankruptcy
or similar proceeding or any moratorium or similar waiver or grace
period);
(ii) the Senior Prepayment Percentage of the Non-PO Percentage of
all Voluntary Principal Prepayments in part received during the
related Prepayment Period with respect to each Mortgage Loan, together
with the Senior Prepayment Percentage of the Non-PO Percentage of the
Scheduled Principal Balance of each Mortgage Loan which was the
subject of a Voluntary Principal Prepayment in full during the related
Prepayment Period;
(iii) the lesser of (a) the Senior Prepayment Percentage of the
Non-PO Percentage of the sum of (A) all Net Liquidation Proceeds
allocable to principal received in respect of each Mortgage Loan which
became a Liquidated Mortgage Loan during the related Prepayment Period
(other than Mortgage Loans described in the immediately following
clause (B)) and (B) the Scheduled Principal Balance of each such
Mortgage Loan purchased by an Insurer from the Trustee during the
related Prepayment Period, pursuant to the related Primary Mortgage
Insurance Policy, if any, or otherwise; and (b) the Senior Percentage
of the Non-PO Percentage of the sum of (A) the Scheduled Principal
Balance of each Mortgage Loan which became a Liquidated Mortgage Loan
during the related Prepayment Period (other than the Mortgage Loans
described in the immediately following clause (B)) and (B) the
Scheduled Principal Balance of each such Mortgage Loan that was
purchased by an Insurer from the Trustee during the related Prepayment
Period pursuant to the related Primary Mortgage Insurance Policy, if
any, or otherwise,
(iv) the Senior Prepayment Percentage of the Non-PO Percentage of
the Scheduled Principal Balance of each Mortgage Loan or REO Property
which was purchased by the Seller or a prior transferor of such
Mortgage Loan on such Distribution Date pursuant to Section 2.02 or
2.03A(b) or which was purchased pursuant to Section 3.19; and
(v) the Senior Prepayment Percentage of the Non-PO Percentage of
the excess, if any, of the Scheduled Principal Balance of a Mortgage
Loan that has been replaced by the Seller or a prior transferor of
such Mortgage Loan with a Substitute Mortgage Loan pursuant to Section
2.04 on such Distribution Date over the Scheduled Principal Balance of
such Substitute Mortgage Loan.
SENIOR PERCENTAGE: Initially 92.75%. On any Distribution Date, the
lesser of (i) 100% and (ii) the percentage (carried to six places rounded up)
obtained by dividing the aggregate Current Principal Amounts of all the Senior
P&I Certificates immediately preceding such Distribution Date by the aggregate
Scheduled Principal Balance of the Mortgage Loans (other than the PO Percentage
thereof) as of the beginning of the related Due Period.
SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date occurring
during the periods set forth below, as follows:
Period (dates inclusive) Senior Prepayment Percentage
December 25, 1998 - November 25, 2003 100%
December 25, 2003 - November 25, 2004 Senior Percentage plus 70% of the
Subordinate Percentage
December 25, 2004 - November 25, 2005 Senior Percentage plus 60% of the
Subordinate Percentage
December 25, 2005 - November 25, 2006 Senior Percentage plus 40% of the
Subordinate Percentage
December 25, 2006 - November 25, 2007 Senior Percentage plus 20% of the
Subordinate Percentage
December 25, 2007 and thereafter Senior Percentage.
Notwithstanding the foregoing, if on any Distribution Date the Senior Percentage
exceeds the Senior Percentage as of the Cut-Off Date, the Senior Prepayment
Percentage for such Distribution Date will equal 100%. On the Distribution Date
on which the Current Principal Amounts of the Senior Certificates are reduced to
zero, the Senior Prepayment Percentage shall be the minimum percentage
sufficient to effect such reduction and thereafter shall be zero.
In addition, no reduction of the Senior Prepayment Percentage shall occur on any
Distribution Date unless, as of the last day of the month preceding such
Distribution Date, either (A) (i)(x) the aggregate Scheduled Principal Balance
of Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and such Mortgage Loans with respect to which
the related Mortgaged Property has been acquired by the Trust), averaged over
the last six months, as a percentage of the sum of the aggregate Current
Principal Amount of the Subordinate Certificates does not exceed 50% or (y) the
aggregate Scheduled Principal Balance of Mortgage Loans delinquent 60 days or
more (including for this purpose any such Mortgage loans in foreclosure and
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust), averaged over the last six months, as a percentage of
the aggregate Scheduled Principal Balances of the Mortgage Loans averaged over
the last six months, does not exceed 2.0%; and (ii) cumulative Realized Losses
on such Mortgage Loans do not exceed (a) 30% of the Original Subordinate
Principal Balance if such Distribution Date occurs between and including
December 2003 and November 2004, (b) 35% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including December 2004 and
November 2005, (c) 40% of the Original Subordinate Principal Balance if such
Distribution Date occurs between and including December 2005 and November 2006,
(d) 45% of the Original Subordinate Principal Balance for such Certificate Group
if such Distribution Date occurs between and including December 2006 and
November 2007, and (e) 50% of the Original Subordinate Principal Balance for
such Certificate Group if such Distribution Date occurs during or after December
2007; or (B) (i) the aggregate Scheduled Principal Balance of Mortgage Loans
delinquent 60 days or more (including for this purpose any such Mortgage Loans
in foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust), averaged over the last six months,
does not exceed 4.0%; and (ii) cumulative Realized Losses on such Mortgage Loans
do not exceed (a) 10% of the aggregate Current Principal Amounts of the Original
Subordinate Principal Balance if such Distribution Date occurs between and
including December 2003 and November 2004, (b) 15% of the Original Subordinate
Principal Balance if such Distribution Date occurs between and including
December 2004 and November 2005, (c) 20% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including December 2005 and
November 2006, (d) 25% of the Original Subordinate Principal Balance if such
Distribution Date occurs between and including December 2006 and November 2007,
and (e) 30% of the Original Subordinate Principal Balance if such Distribution
Date occurs during or after December 2007.
SERVICING ACCOUNT: The separate account(s) created and maintained by
the Master Servicer or each Sub-Servicer with respect to the Mortgage Loans or
with respect to REO Property in a Designated Depository Institution for
collection of taxes, assessments, insurance premiums and comparable items as
described in Section 3.07.
SERVICING ADVANCES: All reasonable and customary "out of pocket" costs
and expenses incurred in the performance by the Master Servicer or any
Sub-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, including reasonable
fees paid to any independent contractor in connection therewith, (iv) compliance
with the obligations under Section 3.07 or 3.10, and (v) in connection with the
liquidation of a Mortgage Loan, expenditures relating to the purchase or
maintenance of the first lien on the Mortgaged Property pursuant to Section
3.12, all of which reasonable and customary out-of-pocket costs and expenses are
reimbursable to the Master Servicer or any Sub-Servicer to the extent provided
in Sections 4.02(b) and 4.03(b).
SERVICING OFFICER: Any officer of the Master Servicer or of an agent
or independent contractor through which all or part of the Master Servicer's
master servicing responsibilities are carried out, involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Trustee by the Master Servicer as such list may from time to time be amended in
accordance with the foregoing.
STARTUP DAY: November 30, 1998.
SUBORDINATE CERTIFICATES: The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates.
SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any Distribution Date,
the amount by which (a) the sum of the Current Principal Amounts of all of the
Certificates (after giving effect to the distribution of principal and the
allocation of applicable Realized Losses and any applicable Class PO Deferred
Payment Writedown Amount in reduction of the Current Principal Amounts of such
Certificates on such Distribution Date) exceeds (b) the aggregate Scheduled
Principal Balances of the Mortgage Loans on the Due Date related to such
Distribution Date.
SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum, without duplication, of the following (but in no event
greater than the aggregate Current Principal Amounts of the Subordinate
Certificates immediately prior to such Distribution Date):
(i) the Subordinate Percentage of the Non-PO Percentage of the
principal portion of all Monthly Payments due on each Outstanding
Mortgage Loan on the related Due Date, as specified in the
amortization schedule at the time applicable thereto (after adjustment
for previous Principal Prepayments but before any adjustment to such
amortization schedule by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period);
(ii) the Subordinate Prepayment Percentage of the Non-PO
Percentage of each Voluntary Principal Payment in part during the
related Prepayment Period with respect to each Mortgage Loan and the
Subordinate Prepayment Percentage of the Non-PO Percentage of the
Scheduled Principal Balance of each Mortgage Loan that was the subject
of a Voluntary Principal Prepayment in full during the related
Prepayment Period;
(iii) the excess, if any, of the Non-PO Percentage of (A) all Net
Liquidation Proceeds allocable to principal received during the
related Prepayment Period over (B) the sum of the amounts
distributable pursuant to clause (iii) of the definition of Senior P&I
Optimal Principal Amount and clause (iv) of the definition of the
Class PO Distribution Amount on such Distribution Date;
(iv) the Subordinate Prepayment Percentage of the Non-PO
Percentage of the sum of (a) the Scheduled Principal Balance of each
Mortgage Loan which was purchased by the Seller or a prior transferor
of such Mortgage Loan on such Distribution Date pursuant to Section
2.02 or 2.03A(b) or which was purchased pursuant to Section 3.19 and
(b) the difference, if any, between the Scheduled Principal Balance of
a Mortgage Loan that has been replaced by the Seller or a prior
transferor of such Mortgage Loan with a substitute Mortgage Loan
pursuant to Section 2.04 on such Distribution Date over the Scheduled
Principal Balance of such substitute Mortgage Loan; and
(v) on the Distribution Date on which the Current Principal
Amounts of the Senior P&I Certificates have all been reduced to zero,
100% of any Senior P&I Optimal Principal Amount.
After the aggregate current Principal Amounts of the Subordinate Certificates
have been reduced to zero, the Subordinate Optimal Principal Amount shall be
zero.
SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus the
Senior Percentage, initially 7.25%.
SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date, 100%
minus the Senior Prepayment Percentage, except that on any Distribution Date
after the Current Principal Amounts of the Senior Certificates have each been
reduced to zero, the Subordinate Prepayment Percentage will equal 100%.
SUB-SERVICER: Any Person with which the Master Servicer has entered
into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
SUB-SERVICING AGREEMENT: The written contract between the Master
Servicer and a Sub-Servicer and any successor Sub-Servicer relating to servicing
and administration of certain Mortgage Loans as provided in Section 3.02
SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee
pursuant to Section 2.04, in each case, in the opinion of the Master Servicer,
(i) which has an Outstanding Principal Balance not materially greater nor
materially less than the Mortgage Loan for which it is to be substituted; (ii)
which has a fixed Mortgage Interest Rate and Net Rate not less than, and not
materially greater than, such Mortgage Loan; (iii) which has a maturity date not
materially earlier or later than such Mortgage Loan and not later than the
latest maturity date of any Mortgage Loan; (iv) which is of the same property
type and occupancy type as such Mortgage Loan; (v) which has a Loan-to-Value
Ratio not greater than the Loan-to-Value Ratio of such Mortgage Loan; (vi) which
is current in payment of principal and interest as of the date of substitution;
and (vii) as to which the payment terms do not vary in any material respect from
the payment terms of the Mortgage Loan for which it is to be substituted.
TAX MATTERS PERSON: The Holder of the Class R Certificate as more
particularly set forth in Section 9.13 hereof.
TRUST FUND or TRUST: The trust created by this Agreement, consisting
of the Mortgage Loans and the other assets described in Section 2.01(a).
TRUSTEE: Bankers Trust Company of California, N.A. or its successor in
interest, or any successor trustee appointed as herein provided.
TRUSTEE'S FEES: With respect to each Distribution Date, the amount to
be paid to the Trustee calculated monthly on a Mortgage Loan by Mortgage Loan
basis, equal to, with respect to all Mortgage Loans, the product of (x) the
Scheduled Principal Balance of the Mortgage Loans on the Due Date in the month
prior to the month of such Distribution Date and (y) one-twelfth of 0.0125%.
UNINSURED CAUSE: Any cause of damage to a Mortgaged Property or REO
Property such that the complete restoration of such Mortgaged Property or REO
Property is not fully reimbursable by the hazard insurance policies required to
be maintained pursuant to Section 3.10, without regard to whether or not such
policy is maintained.
VOLUNTARY PRINCIPAL PREPAYMENT: With respect to any Distribution Date,
any Principal Prepayment received from the related Mortgagor on a Mortgage Loan.
<PAGE>
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. CONVEYANCE OF MORTGAGE LOANS TO Trustee. (a) The Seller
concurrently with the execution and delivery of this Agreement, sells, transfers
and assigns to the Trust without recourse all its right, title and interest in
and to (i) the Mortgage Loans identified in the Mortgage Loan Schedule,
including all interest and principal due with respect to the Mortgage Loans
after the Cut-off Date, but excluding any payments of principal and interest due
on or prior to the Cut-off Date; (ii) such assets as shall from time to time be
credited or are required by the terms of this Agreement to be credited to the
Certificate Account (excluding any income to the Master Servicer from Permitted
Investments under Subsection 4.02(d)), (iii) such assets relating to the
Mortgage Loans as from time to time may be held by the Master Servicer or a
Sub-Servicer in Protected Accounts (excluding any income to the Master Servicer
or any Sub- Servicer from Permitted Investments under Subsection 4.01(a)), (iv)
any Servicing Accounts (to the extent the mortgagee has a claim thereto and
excluding any income to the Master Servicer or Sub-Servicer or interest payable
to Mortgagors pursuant to applicable law), (v) any REO Property, (vi) the
Required Insurance Policies and any amounts paid or payable by the insurer under
any Insurance Policy (to the extent the mortgagee has a claim thereto), (vii)
[Reserved] and (viii) any proceeds of the foregoing. Although it is the intent
of the parties to this Agreement that the conveyance of the Seller's right,
title and interest in and to the Mortgage Loans and other assets in the Trust
Fund pursuant to this Agreement shall constitute a purchase and sale and not a
loan, in the event that such conveyance is deemed to be a loan, it is the intent
of the parties to this Agreement that the Seller shall be deemed to have granted
to the Trustee a first priority perfected security interest in all of the
Seller's right, title and interest in, to and under the Mortgage Loans and other
assets in the Trust Fund, and that this Agreement shall constitute a security
agreement under applicable law.
(b) In connection with the above transfer and assignment, the Seller
hereby deposits with the Trustee, with respect to each Mortgage Loan, (i) the
original Mortgage Note, endorsed without recourse to the order of the Trustee
and showing an unbroken chain of endorsements from the original payee thereof to
the Person endorsing it to the Trustee, (ii) the original Security Instrument,
which shall have been recorded, with evidence of such recording indicated
thereon, (iii) the assignment (which may be in the form of a blanket assignment
if permitted in the jurisdiction in which the Mortgaged Property is located) to
the Trustee of the Security Instrument, with evidence of recording with respect
to each Mortgage Loan in the name of the Trustee thereon (or, if clause (x) in
the provision below applies, shall be in recordable form), (iv) all intervening
assignments of the Security Instrument, if applicable and only to the extent
available to the Seller with evidence of recording thereon, (v) [Reserved] (vi)
the original policy of title insurance or mortgagee's certificate of title
insurance or commitment or binder for title insurance and (vii) originals of all
modification agreements, if applicable and available; PROVIDED, HOWEVER, that in
lieu of the foregoing, the Seller may deliver the following documents, under the
circumstances set forth below: (x) in lieu of the original Security Instrument,
assignments to the Trustee or intervening assignments thereof which have been
delivered are being delivered or will, upon receipt of recording information
relating to the Security Instrument required to be included thereon, be
delivered to recording offices for recording and have not been returned to the
Seller in time to permit their delivery as specified above, the Seller may
deliver a true copy thereof with a certification by the Seller, a prior
transferor or an officer of the title insurer on the face of such copy,
substantially as follows: "Certified to be a true and correct copy of the
original, which has been transmitted for recording"; and (y) in lieu of the
Security Instrument, assignment to the Trustee, or intervening assignments
thereof if the applicable jurisdiction retains the originals of such documents
(as evidenced by a certification from the Seller, a prior transferor or an
officer of the title insurer to such effect) the Seller may deliver photocopies
of such documents containing an original certification by the judicial or other
governmental authority of the jurisdiction where such documents were recorded;
and PROVIDED, FURTHER, HOWEVER, that in the case of Mortgage Loans which have
been prepaid in full after the Cut-off Date and prior to the Closing Date, the
Seller, in lieu of delivering the above documents, may deliver to the Trustee a
certification of a Servicing Officer to such effect and shall deposit all
amounts paid in respect of such Mortgage Loans in the Certificate Account on the
Closing Date. The Seller shall deliver such original documents (including any
original documents as to which certified copies had previously been delivered)
to the Trustee promptly after they are received. The Seller shall cause, at its
expense, the Security Instrument and intervening assignments, if any, and the
assignment of the Security Instrument to the Trustee to be recorded not later
than 180 days after the Closing Date.
Section 2.02. ACCEPTANCE OF MORTGAGE LOANS BY Trustee. (a) The Trustee
acknowledges receipt of, subject to its further review and the exceptions which
may be noted pursuant to the procedures described below, the documents (or
certified copies thereof) delivered to it pursuant to Section 2.01 and declares
that it holds and will continue to hold those documents and any amendments,
replacements or supplements thereto and all other assets of the Trust Fund
delivered to it as Trustee in trust for the use and benefit of all present and
future Holders of the Certificates. No later than 45 days after the Closing Date
(or, with respect to any Substitute Mortgage Loan, within 5 Business Days after
the receipt by the Trustee thereof), the Trustee agrees, for the benefit of the
Certificateholders, to review each Mortgage File delivered to it and to execute
and deliver, or cause to be executed and delivered, to the Seller and the Master
Servicer an Initial Certification substantially in the form annexed hereto as
Exhibit G. In conducting such review, the Trustee will ascertain whether all
required documents have been executed and received and whether those documents
relate, determined on the basis of the Mortgagor name, original principal
balance and loan number, to the Mortgage Loans it has received, as identified in
Exhibit B to this Agreement, as supplemented (PROVIDED, HOWEVER, that with
respect to those documents described in subclause (b)(iv), (v) and (vi) of
Section 2.01, the Trustee's obligations shall extend only to documents actually
delivered pursuant to such subsections. In performing any such review, the
Trustee may conclusively rely on the purported due execution and genuineness of
any such document and on the purported genuineness of any signature thereon. If
the Trustee finds any document constituting part of the Mortgage File not to
have been executed or received, or to be unrelated to the Mortgage Loans
identified in Exhibit B or to appear to be defective on its face, the Trustee
shall promptly notify the Seller. The Seller shall correct or cure (or shall
cause a prior transferor of the Mortgage Loan to correct or cure) any such
defect within 90 days from the date of notice from the Trustee of the defect and
if such defect is not corrected or cured within such period, and such defect
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan, the Seller will, subject to Section 2.04, within 90 days
from the Trustee's notification purchase (or cause a prior transferor of such
Mortgage Loan to purchase) such Mortgage Loan at the Repurchase Price; PROVIDED,
HOWEVER, that if such defect relates solely to the inability of the Seller to
deliver the original Security Instrument or intervening assignments thereof, or
a certified copy because the originals of such documents, or a certified copy
have not been returned by the applicable jurisdiction, the Seller shall not be
required to purchase such Mortgage Loan if the Seller delivers such original
documents or certified copy promptly upon receipt, but in no event later than
360 days after the Closing Date. The foregoing repurchase obligation shall not
apply in the event that the Seller cannot deliver such original or copy of any
document submitted for recording to the appropriate recording office in the
applicable jurisdiction because such document has not been returned by such
office; provided that the Seller shall instead deliver (or cause a prior
transferor of the Mortgage Loan to deliver) a recording receipt of such
recording office or, if such receipt is not available, a certificate of a
Servicing Officer confirming that such documents have been accepted for
recording, and delivery to the Trustee shall be effected by the Seller (or a
prior transferor of the Mortgage Loan) within thirty days of receipt of the
original recorded document.
(b) No later than 180 days after the Closing Date, the Trustee will
review, for the benefit of the Certificateholders, the Mortgage Files delivered
to it and will execute and deliver or cause to be executed and delivered to the
Seller and the Master Servicer, a Final Certification substantially in the form
annexed hereto as Exhibit H. In conducting such review, the Trustee will
ascertain whether an original of each document required to be recorded has been
returned from the recording office with evidence of recording thereon or a
certified copy has been obtained from the recording office. If the Trustee finds
any document constituting part of the Mortgage File has not been received, or to
be unrelated, determined on the basis of the Mortgagor name, original principal
balance and loan number, to the Mortgage Loans identified in Exhibit B or to
appear defective on its face, the Trustee shall promptly notify the Seller
(PROVIDED, HOWEVER, that (i) with respect to those documents described in
subclause (b)(iv), (v) and (vi) of Section 2.01, the Trustee's obligations shall
extend only to documents actually delivered pursuant to such subsections. The
Seller shall correct or cure (or shall cause a prior transferor of the Mortgage
Loan to correct or cure) any such defect or shall deliver to the Trustee an
Opinion of Counsel to the effect that such defect does not materially or
adversely affect the interests of Certificateholders in such Mortgage Loan
within 90 days from the date of notice from the Trustee of the defect and if
such defect is not corrected or cured within such period, and if such defect
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan, the Seller will, subject to Section 2.04, within 90 days
from the Trustee's notification purchase (or cause a prior transferor of the
Mortgage Loan to Purchase) such Mortgage Loan at the Repurchase Price; PROVIDED,
HOWEVER, that if such defect relates solely to the inability of the Seller to
deliver the original Security Instrument or intervening assignments thereof, or
a certified copy, because the originals of such documents, or a certified copy,
have not been returned by the applicable jurisdiction, the Seller shall not be
required to purchase such Mortgage Loan, if the Seller delivers such original
documents or certified copy promptly upon receipt, but in no event later than
360 days after the Closing Date. The foregoing repurchase obligation shall not
apply in the event that the Seller cannot deliver such original or copy of any
document submitted for recording to the appropriate recording office in the
applicable jurisdiction because such document has not been returned by such
office; provided that the Seller shall instead deliver (or cause a prior
transferor of the Mortgage Loan to deliver) a recording receipt of such
recording office or, if such receipt is not available, a certificate of a
Servicing Officer confirming that such documents have been accepted for
recording, and delivery to the Trustee shall be effected by the Seller (or a
prior transferor of the Mortgage Loan) within thirty days of receipt of the
original recorded document.
(c) In the event that a Mortgage Loan is purchased in accordance with
Subsections 2.02(a) or (b) above, the Seller shall provide or cause to be
provided the Repurchase Price to the Trustee for deposit in the Certificate
Account and shall provide or cause to be provided to the Trustee written
notification detailing the components of the Repurchase Price, on or prior to
the related Determination Date. Upon deposit of the Repurchase Price in the
Certificate Account, the Trustee shall release to the purchaser the related
Mortgage File and shall execute and deliver all instruments of transfer or
assignment, without recourse, furnished to it by the purchaser as are necessary
to vest in the purchaser title to and rights under the Mortgage Loan. Such
purchase shall be deemed to have occurred on the date on which the Repurchase
Price in available funds is received by the Trustee. The Trustee shall amend the
Mortgage Loan Schedule to reflect such repurchase and shall promptly notify the
Master Servicer and the Rating Agencies of such amendment. The obligation of the
Seller to repurchase (or cause the repurchase of) any Mortgage Loan as to which
such a defect in a constituent document exists shall be the sole remedy
respecting such defect available to the Certificateholders or to the Trustee on
their behalf.
Section 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER. (a) LLSI hereby represents and warrants to the Trustee as of the
Closing Date that:
(i) It is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and is
in good standing as a foreign corporation in each jurisdiction where
such qualification is necessary and throughout the term of this
Agreement will remain a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation
or any state of reincorporation and in good standing as a foreign
corporation in each jurisdiction where such qualification is necessary
(except, in the case of foreign corporation qualification both on the
date hereof and in the future, where the failure so to qualify would
not reasonably be expected to have a material adverse effect on the
Master Servicer's ability to enter into this Agreement or to perform
its obligations hereunder), and has the corporate power and authority
to perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement have been duly
authorized by all requisite corporate action;
(iii) This Agreement, assuming due authorization, execution, and
delivery by the other parties hereto, will constitute its legal, valid
and binding obligation, enforceable in accordance with its terms,
except only as such enforcement may be limited by applicable Debtor
Relief Laws and that certain equitable remedies may not be available
regardless of whether enforcement is sought in equity or at law;
(iv) Its execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will not
(A) violate its certificate of incorporation or bylaws (B) to its
knowledge, violate any law or regulation, or any administrative or
judicial decree or order to which it is subject or (C) constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which it is a
party or which may be applicable to it or any of its assets;
(v) To its best knowledge, after reasonable investigation, it 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 would reasonably be expected to
have consequences that would materially and adversely affect its
financial condition or operations or its performance hereunder;
(vi) It 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 to be performed by it;
(vii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of its business;
(viii) No litigation is pending or, to its best knowledge,
threatened against it, which could be reasonably expected to
materially and adversely affect its entering into this Agreement or
performing its obligations under this Agreement or which would have a
material adverse effect on its financial condition; and
(ix) Its computer programs, systems and applications used in
servicing the Mortgage Loans will be replaced or modified and
maintained to operate in such manner that at all times, including on
and after January 1, 2000, it can service the Mortgage Loans in
accordance with the terms of this Agreement.
Section 2.03A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER. (a) The Seller hereby makes the representations and warranties to the
Trustee set forth in Exhibit C hereto regarding the Mortgage Loans.
(b) If the Seller, the Master Servicer or the Trustee discovers a
breach of any of the representations and warranties set forth in Exhibit C, and
such breach existed on the date the representation and warranty was made, which
breach materially and adversely affects the value of the interests of
Certificateholders or the Trustee in the related Mortgage Loan, the party
discovering the breach shall give prompt written notice of the breach to the
other parties. The Seller within 90 days of its discovery or receipt of notice
that such breach has occurred (whichever occurs earlier), shall (or shall cause
a prior transferor of the Mortgage Loan to) cure the breach in all material
respects or, subject to Section 2.04, purchase the Mortgage Loan or any property
acquired with respect thereto from the Trustee; PROVIDED, HOWEVER, that if there
is a breach of any representation set forth in Exhibit C and the Mortgage Loan
or the related property acquired with respect thereto has been sold, then the
purchaser shall pay, in lieu of the Repurchase Price, any excess of the
Repurchase Price over the Net Liquidation Proceeds received upon such sale. (If
the Net Liquidation Proceeds exceed the Repurchase Price, any excess shall be
paid to the purchaser to the extent not required by law to be paid to the
borrower.) Any such purchase shall be made by the purchaser providing (or
causing to be provided) to the Trustee an amount equal to the Repurchase Price
for deposit in the Certificate Account and the Trustee, upon receipt of the
Repurchase Price and of written notification, on or prior to the related
Determination Date, which notification shall detail the components of such
Repurchase Price, shall release to the purchaser the related Mortgage File and
shall execute and deliver all instruments of transfer or assignment furnished to
it by the purchaser, without recourse, as are necessary to vest in the purchaser
title to and rights under the Mortgage Loan or any property acquired with
respect thereto. Such purchase shall be deemed to have occurred on the date on
which the Repurchase Price in available funds is received by the Trustee. The
Trustee shall amend the Mortgage Loan Schedule to reflect such repurchase and
shall promptly notify the Master Servicer and the Rating Agencies of such
amendment. Enforcement of the obligation of the Seller to purchase or substitute
a Substitute Mortgage Loan for (or to cause the purchase or substitution for)
any Mortgage Loan or any property acquired with respect thereto (or pay (or
cause the payment of) the Repurchase Price as set forth in the above proviso) as
to which a breach has occurred and is continuing shall constitute the sole
remedy respecting such breach available to the Certificateholders or the Trustee
on their behalf.
Section 2.04. SUBSTITUTION OF MORTGAGE LOANS. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to Sections 2.02 or 2.03A, the Seller may, no later than the date by
which such purchase would otherwise be required, tender (or cause the tender) to
the Trustee a Substitute Mortgage Loan accompanied by an Officer's Certificate
of the Seller that such Substitute Mortgage Loan conforms to the requirements
set forth in the definition of "Substitute Mortgage Loan"; PROVIDED, HOWEVER,
that substitution pursuant to this Section 2.04 in lieu of purchase shall not be
permitted after the termination of the two-year period beginning on the Startup
Day. The Trustee shall examine the Mortgage File for any Substitute Mortgage
Loan in the manner set forth in Section 2.02(a) and shall notify the Master
Servicer and the Seller in writing, within five Business Days after receipt,
whether or not the documents relating to the Substitute Mortgage Loan satisfy
the requirements of the third sentence of Subsection 2.02(a). Within two
Business Days after such notification, the Seller shall provide (or cause to be
provided) to the Trustee for deposit in the Certificate Account the amount, if
any, by which the Outstanding Principal Balance as of the next preceding Due
Date of the Mortgage Loan for which substitution is being made, after giving
effect to Scheduled Principal due on such date, exceeds the Outstanding
Principal Balance as of such date of the Substitute Mortgage Loan, after giving
effect to Scheduled Principal due on such date, which amount shall be treated
for the purposes of this Agreement as if it were the payment of a portion of the
Repurchase Price for the purchase of a Mortgage Loan. After such notification,
and, if any such excess exists, upon receipt of such deposit, the Trustee shall
accept such Substitute Mortgage Loan. In the event of such a substitution,
accrued interest on the Substitute Mortgage Loan for the month in which the
substitution occurs and any Principal Prepayments made thereon during such month
shall be the property of the Trust Fund and accrued interest for such month on
the Mortgage Loan for which the substitution is made and any Principal
Prepayments made thereon during such month shall be the property of the Seller
(or other transferor). The Scheduled Principal on a Substitute Mortgage Loan due
on the Due Date in the month of substitution shall be the property of the Seller
(or other transferor) and the Scheduled Principal on the Mortgage Loan for which
the substitution is made due on such Due Date shall be the property of the Trust
Fund. Upon acceptance of the Substitute Mortgage Loan, the Trustee shall release
to the Seller (or other transferor) the Mortgage File related to any Mortgage
Loan released pursuant to this Section 2.04 and shall execute and deliver all
instruments of transfer or assignment, without recourse, in form as provided to
it as are necessary to vest in the Seller (or other transferor) title to and
rights under any Mortgage Loan released pursuant to this Section 2.04. The
Seller (or other transferor) shall deliver the documents related to the
Substitute Mortgage Loan in accordance with the provisions of Subsections
2.01(b) and 2.02(b), with the date of acceptance of the Substitute Mortgage Loan
deemed to be the Closing Date for purposes of the time periods set forth in
those Subsections. The representations and warranties set forth in Exhibit C
shall be deemed to have been made by the Seller with respect to each Substitute
Mortgage Loan as of the date of acceptance of such Mortgage Loan by the Trustee.
The Trustee shall amend the Mortgage Loan Schedule to reflect such substitution
and shall provide a copy of such amended Mortgage Loan Schedule to the Master
Servicer and the Rating Agencies.
Section 2.05. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants to the Seller and the Master Servicer, as
of the Closing Date (and in the case of paragraphs (iv) and (v) below throughout
the term of the Agreement), that:
(i) The Trustee is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States with a principal place of business in Irvine, California;
(ii) Subject to the right of the Trustee to appoint a co-trustee
or separate trustee under Section 9.11 hereof in order to meet the
legal requirements of a particular jurisdiction, the Trustee has full
power, authority and legal right to execute and deliver this Agreement
and to perform its obligations under this Agreement and has taken all
necessary action to authorize the execution, delivery and performance
by it of this Agreement and the Certificates;
(iii) To the best of the Trustee's knowledge, after reasonable
investigation, the execution and delivery by the Trustee of this
Agreement and the Certificates and the performance by the Trustee of
its obligations under this Agreement and the Certificates will not
violate any provision of the Trustee's Articles of Association or
By-Laws or any law or regulation governing the Trustee or any order,
writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Trustee or any of its assets. To
the best of the Trustee's knowledge, after reasonable investigation,
such execution, delivery and performance will not require the
authorization, consent or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action with
respect to, any governmental authority or agency regulating the
activities of a national association located in California. To the
best of the Trustee's knowledge, after reasonable investigation, such
execution, delivery and performance will not conflict with, or result
in a breach or violation of, any material indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Trustee is
a party or by which it or its properties is bound;
(iv) This Agreement has been duly executed and delivered by the
Trustee. This Agreement, when executed and delivered, will constitute
the valid, legal and binding obligation of the Trustee, enforceable
against the Trustee in accordance with its terms, except as the
enforcement thereof may be limited by applicable Debtor Relief Laws
and that certain equitable remedies may not be available regardless of
whether enforcement is sought in equity or at law;
(v) All funds received by the Trustee and required to be
deposited in the Certificate Account pursuant to this Agreement will
be promptly so deposited; and
(vi) The Trustee shall modify and/or maintain its internal
computer systems and its other internal systems used in performing its
duties and obligations under this Agreement to assure that the Trustee
can perform its duties and obligations in accordance with the terms of
this Agreement, including, without limitation, on and after January 1,
2000; provided, however, that neither this covenant or any other term
or condition of this Agreement shall be deemed to render the Trustee
directly or indirectly liable for: (a) any failure by the Master
Servicer or any other third party (including any failure to deliver
timely and accurate information to the Trustee at all times) or the
inability of the Trustee to perform any of its duties hereunder by
reason of any such failure, (b) any other act or omission by the
Master Servicer or any other third party relating to the Master
Servicer's or other third party's maintenance or modification of its
systems required to perform any of its duties under or relating to
this Agreement, (c) any incompatibility of the Trustee's internal
systems with the Master Servicer's or any third party's systems, and
(d) the inability of the Trustee to perform any of its duties
hereunder by reason of any failure or disruption of
telecommunications, electrical or other utility services furnished to
the Trustee by third parties, it being expressly understood and agreed
that the Trustee shall be responsible only for its own internal
systems and shall not be required to monitor, review or audit any
third party's systems, plans, or preparations in order to ascertain
whether such third party is capable of performing its duties under or
relating to this Agreement.
Section 2.06. ISSUANCE OF CERTIFICATES. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the other assets comprising the Trust
Fund and, concurrently therewith, has signed, and countersigned and delivered to
the Seller, in exchange therefor, Certificates in such authorized denominations
representing such Fractional Undivided Interests as the Seller has requested.
The Trustee agrees that it will hold the Mortgage Loans and such other assets
segregated on the books of the Trustee in trust for the benefit of the
Certificateholders.
Section 2.07. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER.
The Seller hereby represents and warrants to the Trustee and the Master Servicer
as follows:
(i) the Seller (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (b) is qualified and in good standing as a foreign corporation to
do business in each jurisdiction where such qualification is
necessary, except where the failure so to qualify would not reasonably
be expected to have a material adverse effect on the Seller's business
as presently conducted or on the Seller's ability to enter into this
Agreement and to consummate the transactions contemplated hereby;
(ii) the Seller has full corporate power to own its property, to
carry on its business as presently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution and delivery by the Seller of this Agreement
have been duly authorized by all necessary corporate action on the
part of the Seller; and neither the execution and delivery of this
Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on the Seller or its properties or the
articles of incorporation or by- laws of the Seller, except those
conflicts, breaches or defaults which would not reasonably be expected
to have a material adverse effect on the Seller's ability to enter
into this Agreement and to consummate the transactions contemplated
hereby;
(iv) the execution, delivery and performance by the Seller of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in
respect of, any state, federal or other governmental authority or
agency, except those consents, approvals, notices, registrations or
other actions as have already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by the
Seller and, assuming due authorization, execution and delivery by the
other parties hereto, constitutes a valid and binding obligation of
the Seller enforceable against it in accordance with its terms
(subject to applicable bankruptcy and insolvency laws and other
similar laws affecting the enforcement of the rights of creditors
generally); and
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Seller, threatened against the Seller, before or
by any court, administrative agency, arbitrator or governmental body
(i) with respect to any of the transactions contemplated by this
Agreement or (ii) with respect to any other matter which in the
judgment of the Seller will be determined adversely to the Seller and
will if determined adversely to the Seller materially and adversely
affect the Seller's ability to enter into this Agreement or perform
its obligations under this Agreement; and the Seller is not in default
with respect to any order of any court, administrative agency,
arbitrator or governmental body so as to materially and adversely
affect the transactions contemplated by this Agreement.
<PAGE>
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. MASTER SERVICER TO ASSURE SERVICING. (a) The Master
Servicer shall supervise, or take such actions as are necessary to ensure, the
servicing and administration of the Mortgage Loans and any REO Property in
accordance with this Agreement and its normal servicing practices (including
making any Servicing Advances), which generally conform to the standards of an
institution prudently servicing mortgage loans for its own account and shall
have full authority to do anything it reasonably deems appropriate or desirable
in connection with such servicing and administration. The Master Servicer may
perform its responsibilities relating to servicing through other agents or
independent contractors, but shall not thereby be released from any of its
responsibilities as hereinafter set forth. The authority of the Master Servicer,
in its capacity as master servicer, shall include, without limitation, the power
to (i) consult with and advise any Sub-Servicer regarding administration of a
related Mortgage Loan, (ii) approve any recommendation by a Sub-Servicer to
foreclose on a related Mortgage Loan, (iii) supervise the filing and collection
of insurance claims and take or cause to be taken such actions on behalf of the
insured person thereunder as shall be reasonably necessary to prevent the denial
of coverage thereunder, and (iv) effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing a related Mortgage Loan,
including the employment of attorneys, the institution of legal proceedings, the
collection of deficiency judgments, the acceptance of compromise proposals, the
filing of claims under any Primary Mortgage Insurance Policy and any other
matter pertaining to a delinquent Mortgage Loan. The authority of the Master
Servicer shall include, in addition, the power on behalf of the
Certificateholders, the Trustee or any of them to (i) execute and deliver
customary consents or waivers and other instruments and documents, (ii) consent
to transfers of any related Mortgaged Property and assumptions of the related
Mortgage Notes and Security Instruments (in the manner provided in this
Agreement) and (iii) collect any Insurance Proceeds and Liquidation Proceeds.
Without limiting the generality of the foregoing, the Master Servicer may, and
is hereby authorized, and empowered by the Trustee to, execute and deliver, on
behalf of itself, the Certificateholders, the Trustee, or any of them, any
instruments of satisfaction, cancellation, partial or full release, discharge
and all other comparable instruments, with respect to the related Mortgage
Loans, the Insurance Policies and the accounts related thereto, and the
Mortgaged Properties. The Master Servicer may exercise this power in its own
name or in the name of a Sub-Servicer.
(b) Notwithstanding the provisions of Subsection 3.01(a), the Master
Servicer shall not take any action inconsistent with the interest of the Trustee
or the Certificateholders in the Mortgage Loans or with the rights and interests
of the Trustee or the Certificateholders under this Agreement.
(c) The Trustee shall furnish the Master Servicer with any powers of
attorney and other documents in form as provided to it necessary or appropriate
to enable the Master Servicer to service and administer the related Mortgage
Loans and REO Property.
Section 3.02. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUB- SERVICERS. (a) The Master Servicer may enter into Sub-Servicing Agreements
with Sub- Servicers for the servicing and administration of the Mortgage Loans
and for the performance of any and all other activities of the Master Service
hereunder, subject to the prior approval of such Sub-Servicers by the Rating
Agencies. Each Sub-Servicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement, and in either case shall be a
Freddie Mac or Fannie Mae approved mortgage servicer. Any Sub-Servicing
Agreement entered into by the Master Servicer shall include the provision that
such Agreement may be immediately terminated (x) with cause and without any
termination fee by any Master Servicer hereunder other than LLSI or (y) without
cause in which case the Master Servicer shall be responsible for any termination
fee or penalty resulting therefrom. In addition, any Sub-Servicing Agreement
shall provide for servicing of the Mortgage Loans consistent with the terms of
this Agreement. With the consent of the Trustee, which consent shall not be
unreasonably withheld, the Master Servicer and the Sub-Servicers may enter into
Sub-Servicing Agreements and make amendments to the Sub- Servicing Agreements or
enter into different forms of Sub-Servicing Agreements; provided, however, that
any such amendments or different forms shall be consistent with and not violate
the provisions of this Agreement, and that no such amendment or different form
shall be made or entered into which could be reasonably expected to be
materially adverse to the interests of the Certificateholders, without the
consent of the Holders of Certificates entitled to at least 51% of the
Fractional Undivided Interests of all the Certificates in the aggregate.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub- Servicer under the related Sub-Servicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
Section 3.03. SUCCESSOR SUB-SERVICERS. The Master Servicer shall be
entitled to terminate any Sub-Servicing Agreement that may exist in accordance
with the terms and conditions of such Sub-Servicing Agreement and without any
limitation by virtue of this Agreement; PROVIDED, HOWEVER, that upon
termination, the Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into an appropriate contract with a successor Sub-
Servicer pursuant to which such successor Sub-Servicer will be bound by all
relevant terms of the related Sub-Servicing Agreement pertaining to the
servicing of such Mortgage Loan.
Section 3.04. LIABILITY OF THE MASTER SERVICER. (a) Notwithstanding
any Sub- Servicing Agreement, any of the provisions of this Agreement relating
to agreements or arrangements between the Master Servicer and a Sub-Servicer or
reference to actions taken through a Sub-Servicer or otherwise, the Master
Servicer shall under all circumstances remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans and any REO Property in accordance with this Agreement. The
obligations and liability of the Master Servicer shall not be diminished by
virtue of Sub- Servicing Agreements or by virtue of indemnification of the
Master Servicer by any Sub- Servicer, or any other Person. The obligations and
liability of the Master Servicer shall remain of the same nature and under the
same terms and conditions as if the Master Servicer alone were servicing and
administering the related Mortgage Loans. The Master Servicer shall, however, be
entitled to enter into indemnification agreements with any Sub-Servicer or other
Person and nothing in this Agreement shall be deemed to limit or modify such
indemnification. For the purposes of this Agreement, the Master Servicer shall
be deemed to have received any payment on a Mortgage Loan on the date the
Sub-Servicer received such payment; PROVIDED, HOWEVER, that this sentence shall
not apply to the Trustee acting as the Master Servicer; PROVIDED, FURTHER,
HOWEVER, that the foregoing provision shall not affect the obligation of the
Master Servicer if it is also the Trustee to advance amounts which are not
Nonrecoverable Advances.
(b) Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Sub-Servicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.05.
Section 3.05. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS BY
TRUSTEE. (a) If the Trustee or its designee shall assume the master servicing
obligations of the Master Servicer in accordance with Section 8.02, the Trustee,
to the extent necessary to permit the Trustee to carry out the provisions of
Section 8.02 with respect to the Mortgage Loans, shall succeed to all of the
rights and obligations of the Master Servicer under each of the Sub- Servicing
Agreements. In such event, the Trustee or its designee as the successor master
servicer shall be deemed to have assumed all of the Master Servicer's rights and
obligations therein and to have replaced the Master Servicer as a party to such
Sub-Servicing Agreements to the same extent as if such Sub-Servicing Agreements
had been assigned to the Trustee or its designee as a successor master servicer,
except that the Trustee or its designee as a successor master servicer shall not
be deemed to have assumed any obligations or liabilities of the Master Servicer
arising prior to such assumption and the Master Servicer shall not thereby be
relieved of any liability or obligations under such Sub-Servicing Agreements.
(b) In the event that the Trustee or its designee as successor master
servicer for the Trustee assumes the servicing obligations of the Master
Servicer under Section 8.02, upon the reasonable request of the Trustee or such
designee as successor master servicer, the Master Servicer shall at its own
expense deliver to the Trustee, or at its written request to such designee,
photocopies of all documents and records, electronic or otherwise, relating to
the Sub-Servicing Agreements and the related Mortgage Loans or REO Property then
being serviced and an accounting of amounts collected and held by it, if any,
and will otherwise cooperate and use its reasonable best efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements, or
responsibilities hereunder to the Trustee, or at its written request to such
designee as successor master servicer.
(c) Upon assuming the role of Master Servicer the Trustee may elect to
terminate any Sub-Servicing Agreements entered into by the preceding Master
Servicer, in which case any termination fee or penalty shall be paid by such
preceding Master Servicer.
Section 3.06. COLLECTION OF MORTGAGE LOAN PAYMENTS. (a) The Master
Servicer will make remittances itself or will coordinate and monitor remittances
by Sub-Servicers to the Trustee with respect to the Mortgage Loans in accordance
with this Agreement.
(b) The Master Servicer shall make its reasonable best efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best efforts to
cause Sub-Servicers to follow, collection procedures comparable to the
collection procedures of prudent mortgage lenders servicing mortgage loans for
their own account to the extent such procedures shall be consistent with this
Agreement. Consistent with the foregoing, the Master Servicer may in its
discretion (i) 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 and (ii) suspend or temporarily reduce or permit
to be suspended or temporarily reduced regular monthly payments for a period of
up to six months, or arrange or permit an arrangement with a Mortgagor for a
scheduled liquidation of delinquencies. In the event the Master Servicer shall
consent to the deferment of the due dates for payments due on a Mortgage Note,
the Master Servicer shall nonetheless make a Monthly Advance or shall cause the
related Sub-Servicer to make an advance to the same extent as if such
installment were due, owing and delinquent and had not been deferred through
liquidation of the Mortgaged Property; PROVIDED, HOWEVER, that the obligation of
the Master Servicer to make a Monthly Advance shall apply only to the extent
that the Master Servicer believes, in good faith, that such advances are not
Nonrecoverable Advances.
(c) Notwithstanding anything in this Agreement to the contrary, the
Master Servicer may not make any advances of amounts coming due in the future
with respect to a Mortgage Loan and the Master Servicer shall not (unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Master Servicer, reasonably foreseeable) permit (i) any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan or (ii) any modification, waiver or amendment of any term
of any Mortgage Loan that would both (A) effect an exchange or reissuance of
such Mortgage Loan under Section 1001 of the Code (or final, temporary or
proposed Treasury regulations promulgated thereunder) and (B) cause the Trust
Fund to fail to qualify as a REMIC under the Code or the imposition of any tax
on "prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions. Any extension of the final maturity date of any Mortgage Loan
shall be calculated such that the Mortgage Loan will be paid in full on the
reset final maturity date if the related Mortgagor continues to make its
then-current Scheduled Payments on a timely basis.
(d) As soon as the Master Servicer has determined that all amounts
which it expects to recover from or on account of a Mortgage Loan have been
recovered and that no further Liquidation Proceeds will be received in
connection therewith, the Master Servicer shall provide to the Trustee, along
with the next Loan Summary and Remittance Report provided under Section 6.07(b),
a certificate of a Servicing Officer that such Mortgage Loan became a Liquidated
Mortgage Loan.
Section 3.07. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
SERVICING ACCOUNTS. (a) The Master Servicer shall establish and maintain or
cause the Sub-Servicers to establish and maintain, in addition to the Protected
Accounts, one or more Servicing Accounts. The Master Servicer or a Sub-Servicer
will deposit and retain therein all otherwise unapplied collections from the
Mortgagors, including amounts collected for the payment of taxes, assessments,
insurance premiums, or comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a
Designated Depository Institution in an account designated as a "Mortgage Loan
Servicing Account," held in trust by the Master Servicer or a Sub-Servicer as
Trustee of Taxes and Insurance Custodial Account for borrowers and for the
Seller (and its successors and assigns) acting on its own behalf and for the
Seller as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it; and agent for various mortgagors, as
their interests may appear or under such other designation as may be permitted
by a Sub-Servicing Agreement. The amount at any time credited to a Servicing
Account must be fully insured by the 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 Master Servicer or a Sub- Servicer as described above and maturing,
or be subject to redemption or withdrawal, no later than the date on which such
funds are required to be withdrawn, and in no event later than 45 days after the
date of investment. The Master Servicer may, or may permit a Sub-Servicer to,
establish Servicing Accounts not conforming to the foregoing requirements to the
extent that such Servicing Accounts are Rating Agency Eligible Accounts.
Withdrawals of amounts from the Servicing Accounts may be made only to effect
timely payment of taxes, assessments, insurance premiums, or comparable items,
to transfer previously unapplied collections to a Protected Account, to
reimburse the Master Servicer or a Sub-Servicer for any advances made with
respect to such items, to refund to any Mortgagors any sums as may be determined
to be overages, to pay interest, if required, to Mortgagors on balances in the
Servicing Accounts or to clear and terminate the Servicing Accounts at or any
time after the termination of this Agreement in accordance with Section 10.01.
Section 3.08. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS. The Master Servicer shall provide, and shall cause
any Sub-Servicer to provide, to the Trustee and the Seller access to the records
and documentation regarding the related Mortgage Loans and REO Property and the
servicing thereof and to the Certificateholders, the FDIC, and the supervisory
agents and examiners of the FDIC (to which the Trustee shall also provide)
access to the documentation regarding the related Mortgage Loans required by
applicable regulations, such access being afforded without charge but only upon
reasonable prior written request and during normal business hours at the offices
of the Master Servicer, the Sub-Servicers or the Trustee that are designated by
these entities; PROVIDED, HOWEVER, that, unless otherwise required by law, the
Trustee, the Master Servicer or the Sub- Servicer shall not be required to
provide access to such records and documentation if the provision thereof would
violate the legal right to privacy of any Mortgagor PROVIDED, FURTHER, HOWEVER,
that the Trustee and the Seller shall coordinate their requests for such access
so as not to impose an unreasonable burden on, or cause an interruption of, the
business of the Master Servicer or any Sub-Servicer. The Master Servicer, the
Sub-Servicers and the Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers their own actual out-of-pocket costs.
Section 3.09. MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES;
COLLECTION THEREUNDER. The Master Servicer shall, or shall cause the related
Sub-Servicer to, in accordance with applicable law, exercise its best reasonable
efforts to maintain and keep in full force and effect each Primary Mortgage
Insurance Policy by a Qualified Insurer, or other insurer satisfactory to the
Rating Agencies, with respect to each conventional Mortgage Loan as to which as
of the Cut-off Date such a Primary Mortgage Insurance Policy was in effect (or,
in the case of a Substitute Mortgage Loan, the date of substitution) and the
original principal amount of the related Mortgage Note exceeded 80% of the
Original Value in an amount at least equal to the excess of such original
principal amount over 75% of such Original Value until the principal amount of
any such Mortgage Loan is reduced below 80% of the Original Value or, based upon
a new appraisal, the principal amount of such Mortgage Loan represents less than
80% of the new appraised value. The Master Servicer shall, or shall cause the
related Sub-Servicer to, effect the timely payment of the premium on each
Primary Mortgage Insurance Policy. The Master Servicer and the related
Sub-Servicer shall have the power to substitute for any Primary Mortgage
Insurance Policy another substantially equivalent policy issued by another
Qualified Insurer; PROVIDED THAT such substitution is subject to the condition,
to be evidenced by a writing from each Rating Agency, that it would not cause
the ratings on the Certificates to be downgraded or withdrawn.
Section 3.10. MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE.
(a) The Master Servicer shall maintain and keep, or cause each Sub-Servicer to
maintain and keep, with respect to each Mortgage Loan and each REO Property, in
full force and effect hazard insurance (fire insurance with extended coverage)
equal to at least the lesser of the Outstanding Principal Balance of the
Mortgage Loan or the current replacement cost of the Mortgaged Property, and
containing a standard mortgagee clause; PROVIDED, HOWEVER, that the amount of
hazard insurance may not be less than the amount necessary to prevent loss due
to the application of any co-insurance provision of the related policy. Unless
applicable state law requires a higher deductible, the deductible on such hazard
insurance policy may be no more than $1000 or 1% of the applicable amount of
coverage, whichever is less. In the case of a condominium unit, the required
hazard insurance shall take the form of a multiperil policy covering the entire
condominium project, in an amount equal to at least 100% of the insurable value
based on replacement cost.
(b) Any amounts collected by the Master Servicer or a Sub-Servicer
under any such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgaged Property or amounts released to the
Mortgagor in accordance with the Master Servicer's or a Sub-Servicer's normal
servicing procedures, the terms of the Mortgage Note, the Security Instrument or
applicable law) shall be deposited initially in a Protected Account, for
transmittal to the Certificate Account, subject to withdrawal pursuant to
Section 4.03.
(c) Any cost incurred by a Master Servicer or a Sub-Servicer in
maintaining any such hazard insurance policy shall not be added to the amount
owing under the Mortgage Loan for the purpose of calculating monthly
distributions to Certificateholders, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the Master Servicer
or a Sub-Servicer out of related late payments by the Mortgagor or out of
Insurance Proceeds or Liquidation Proceeds or by the Master Servicer from the
Repurchase Price, to the extent permitted by Section 4.03.
(d) No earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. The Master
Servicer shall cause an ongoing review to be performed of the Mortgage Loans to
determine which, if any, of the Mortgaged Properties are located in a federally
designated special flood hazard area and for each Mortgaged Property found to be
located in a federally designated special flood hazard area, the Master Servicer
shall use its best reasonable efforts to cause with respect to the Mortgage
Loans and each REO Property, flood insurance (to the extent available and in
accordance with mortgage servicing industry practice) to be maintained. Such
flood insurance shall cover the Mortgaged Property, including all items taken
into account in arriving at the Appraised Value on which the Mortgage Loan was
based, and shall be in an amount equal to the lesser of (i) the Outstanding
Principal Balance of the related Mortgage Loan and (ii) the minimum amount
required under the terms of coverage to compensate for any damage or loss on a
replacement cost basis, but not more than the maximum amount of such insurance
available for the related Mortgaged Property under either the regular or
emergency programs of the National Flood Insurance Program (assuming that the
area in which such Mortgaged Property is located is participating in such
program). Unless applicable state law requires a higher deductible, the
deductible on such flood insurance may not exceed $1,000 or 1% of the applicable
amount of coverage, whichever is less.
(e) If insurance has not been maintained complying with Subsections
3.10(a) and (d) and there shall have been a loss which would have been covered
by such insurance had it been maintained, the Master Servicer shall pay, or
cause the related Sub-Servicer to pay, for any necessary repairs.
(f) The Master Servicer shall present, or cause the related
Sub-Servicer to present, if it is a permitted claimant, claims under the related
hazard insurance or flood insurance policy.
(g) The Master Servicer shall obtain and maintain at its own expense
and for the duration of this Agreement a blanket fidelity bond and an errors and
omissions insurance policy and shall cause each Sub-Servicer to obtain and
maintain an errors and omissions insurance policy covering such Sub-Servicer's
officers, employees and other persons acting on its behalf in connection with
its activities under this Agreement. The amount of coverage shall be at least
equal to the coverage maintained by the Master Servicer acceptable to Fannie Mae
or Freddie Mac to service loans for it or otherwise in an amount as is
commercially available at a cost that is generally not regarded as excessive by
industry standards. The Master Servicer shall promptly notify the Trustee of any
material change in the terms of such bond or policy. The Master Servicer shall
provide annually to the Trustee a certificate of insurance that such bond and
policy are in effect. If any such bond or policy ceases to be in effect, the
Master Servicer shall, to the extent possible, give the Trustee ten days' notice
prior to any such cessation and shall use its best efforts to obtain a
comparable replacement bond or policy, as the case may be. Any amounts relating
to the Mortgage Loans collected under such bond or policy shall be remitted to
the Certificate Account to the extent that such amounts have not previously been
paid to such account.
Section 3.11. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. (a) In any
case in which the Master Servicer is notified by any Mortgagor or Sub-Servicer
that a Mortgaged Property relating to a Mortgage Loan has been or is about to be
conveyed by the Mortgagor, the Master Servicer shall enforce, or shall instruct
such Sub-Servicer to enforce, any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law unless the Master Servicer reasonably
believes such enforcement is likely to result in legal action by the Mortgagor.
If the Master Servicer reasonably believes that such due-on-sale clause cannot
be enforced under applicable law or if the Mortgage Loan does not contain a
due-on-sale clause, the Master Servicer is authorized, and may authorize any
Sub-Servicer, to consent to a conveyance subject to the lien of the Mortgage,
and to take or enter into an assumption agreement from or with the Person to
whom such property has been or is about to be conveyed, pursuant to which such
Person becomes liable under the related Mortgage Note and unless prohibited by
applicable state law, such Mortgagor remains liable thereon, on condition,
however, that the related Mortgage Loan shall continue to be covered (if so
covered before the Master Servicer or the related Sub-Servicer enters into such
agreement) by any applicable Primary Mortgage Insurance Policy. The Master
Servicer shall notify the Trustee, whenever possible, before the completion of
such assumption agreement, and shall forward to the Trustee the original copy of
such assumption agreement, which copy shall be added by the Trustee to the
related Mortgage File and which shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption agreement,
the interest rate on the related Mortgage Loan shall not be changed and no other
material alterations in the Mortgage Loan shall be made unless such material
alteration would not cause the REMIC to fail to qualify as a REMIC for federal
income tax purposes, as evidenced by a REMIC Opinion. If the interest rate on an
assumed Mortgage Loan is increased due to both (i) permitted increases upon
assumption under the terms of such Mortgage Loan and (ii) all applicable
restrictions hereunder being satisfied, the Master Servicer shall, as part of
the report to the Trustee and the Seller pursuant to Section 6.07(b) hereof,
provide therefor on a revised Mortgage Loan Schedule. In any event, the Master
Servicer shall advise the Trustee in writing of the entry into of any material
modification of a Mortgage Loan in connection with an assumption and shall
provide the Trustee with a copy of such REMIC Opinion. Any fee or additional
interest collected by the Master Servicer or Sub- Servicer for consenting to any
such conveyance or entering into any such assumption agreement may be retained
by the Master Servicer or the related Sub-Servicer as additional servicing
compensation.
(b) Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master 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 conveyance by the Mortgagor of the
related Mortgaged Property or assumption of a Mortgage Loan which the Master
Servicer reasonably believes, based on prudent servicing standards, it may be
restricted by law from preventing, for any reason whatsoever or if the exercise
of such right would impair or threaten to impair any recovery under any
applicable Insurance Policy, or, in the Master Servicer's judgment, be
reasonably, likely to result in legal action by the Mortgagor or would otherwise
adversely affect the Certificateholders.
Section 3.12. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The
Master Servicer shall, or shall direct the related Sub-Servicer to, foreclose
upon or otherwise comparably convert the ownership of properties securing any
Mortgage Loans that come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.06 except that the Master Servicer shall not, and shall
not direct the related Sub-Servicer, if any, to, foreclose upon or otherwise
comparably convert a Mortgaged Property if there is evidence of environmental
hazards or toxic waste thereon and the Master Servicer determines it would be
imprudent to do so or not in accordance with appropriate servicing standards.
The Master Servicer can conclusively rely on results of third party inspections
from parties it reasonably believes are qualified to conduct such inspections.
In connection with such foreclosure or other conversion, the Master Servicer in
conjunction with the related Sub-Servicer, if any, shall use its best reasonable
efforts to preserve REO Property and to realize upon defaulted Mortgage Loans in
such manner as to maximize the receipt of principal and interest by the
Certificateholders, taking into account, among other things, the timing of
foreclosure and the considerations set forth in Subsection 3.12(b). The
foregoing is subject to the proviso that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or towards
the restoration of any property unless it determines in good faith (i) that such
restoration or foreclosure will increase the proceeds of liquidation of the
Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
reimbursements from the Certificate Account pursuant to Section 4.03) or through
Insurance Proceeds (respecting which it shall have similar priority). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; PROVIDED, HOWEVER, that it shall be entitled to
reimbursement thereof (as well as its normal servicing compensation), and in
respect of the Master Servicer only, to receive Excess Liquidation Proceeds as
additional servicing compensation to the extent that transfers or withdrawals
from the Certificate Account with respect thereto are permitted under Section
4.03. Any income from or other funds (net of any income taxes) generated by REO
Property shall be deemed for purposes of this Agreement to be Insurance
Proceeds. Any REO Property acquired shall be acquired in the name of the
Trustee, as trustee for the benefit of the Certificateholders.
(b) The Trust Fund shall not acquire any real property (or any
personal property incident to such real property) except in connection with a
default or reasonably forseeable default of a Mortgage Loan. In the event that
the Trust Fund acquires any real property (or personal property incident to such
real property) in connection with a default or reasonably forseeable default of
a Mortgage Loan, such property shall be disposed of by the Trust Fund before the
close of the third taxable year following the taxable year in which the Trust
Fund acquired such property ("grace period") unless the Trustee shall have
received a REMIC Opinion with respect to such longer retention or the Master
Servicer applies for and receives an extension of the grace period under Section
856(e)(3) of the Code, in which case such three year period will be extended by
the grace period set forth in such REMIC Opinion or approved application, as the
case may be. The Trustee shall have no obligation to pay for such REMIC Opinion.
Section 3.13. TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES. (a)
Upon payment in full of any Mortgage Loan or the receipt by the Master Servicer
of a notification that payment in full will be escrowed in a manner customary
for such purposes, the Master Servicer will immediately notify the Trustee by a
certification signed by a Servicing Officer in the Form of Exhibit D (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 Certificate Account have been or will be so deposited therein)
and shall request delivery to the Master Servicer or a Sub-Servicer, as the case
may be, of the Mortgage File. Upon receipt of such certification and request,
the Trustee shall promptly release the related Mortgage File to the Master
Servicer or a Sub-Servicer and execute and deliver to the Master Servicer,
without recourse, the request for reconveyance, deed of reconveyance or release
or satisfaction of mortgage or such instrument releasing the lien of the
Security Instrument (furnished by the Master Servicer), together with the
Mortgage Note with written evidence of cancellation thereon. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan or collection under a Required Insurance
Policy, the Master Servicer shall deliver to the Trustee a Request for Release
signed by a Servicing Officer on behalf of the Master Servicer in substantially
the form attached as Exhibit D hereto. Upon receipt of the Request for Release,
the Trustee shall deliver the Mortgage File or any document therein to the
Master Servicer or Sub-Servicer, as the case may be.
(c) The Master Servicer shall cause each Mortgage File or any document
therein released pursuant to Subsection 3.13(b) to be returned to the Trustee
when the need therefor no longer exists, unless the Mortgage Loan has become a
Liquidated Mortgage Loan and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Certificate Account or such Mortgage File is
being used to pursue foreclosure or other legal proceedings. Prior to return of
a Mortgage File or any document to the Trustee, the Master Servicer, the related
Insurer or Sub-Servicer to whom such file or document was delivered shall retain
such file or document in its respective control unless the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, to initiate or pursue legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Master 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 Mortgage File or such document was delivered and the
purpose or purposes of such delivery. If a Mortgage Loan becomes a Liquidated
Mortgage Loan, the Master Servicer shall deliver the Request for Release with
respect thereto to the Trustee upon deposit of the related Liquidation Proceeds
in the Certificate Account.
(d) The Trustee shall execute and deliver to the Master Servicer any
court pleadings, requests for trustee's sale or other documents necessary or
desirable to (i) the foreclosure or trustee's sale with respect to a Mortgaged
Property; (ii) any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Security Instrument; (iii) obtain a deficiency judgment
against the Mortgagor; or (iv) enforce any other rights or remedies provided by
the Mortgage Note or Security Instrument or otherwise available at law or
equity. Together with such documents or pleadings the Master Servicer shall
deliver to the Trustee a certificate of a Servicing Officer in which it requests
the Trustee to execute the pleadings or documents. The certificate shall certify
and explain the reasons for which the pleadings or documents are required. It
shall further certify that the Trustee's execution and delivery of the pleadings
or documents will not invalidate any insurance coverage under the Required
Insurance Policies or invalidate or otherwise affect the lien of the Security
Instrument, except for the termination of such a lien upon completion of the
foreclosure or trustee's sale.
Section 3.14. SERVICING AND MASTER SERVICING COMPENSATION. (a) As
compensation for its activities hereunder, the Master Servicer shall be entitled
to receive the Master Servicing Fee from full payments of accrued interest on
each Mortgage Loan.
(b) The Master Servicer may retain additional servicing compensation
in the form of prepayment charges, if any, assumption fees, tax service fees,
fees for statement of account or payoff, late payment charges, interest on
amounts deposited in any Accounts or Permitted Investments of such amounts, or
otherwise. The Master Servicer is also entitled to receive Excess Liquidation
Proceeds as additional servicing compensation. The Master Servicer shall be
required to pay all expenses it incurs in connection with servicing activities
under this Agreement, including fees and expenses to Sub-Servicers, and shall
not be entitled to reimbursement except as provided in this Agreement. Expenses
to be paid by the Master Servicer under this Subsection 3.14(b) shall include
payment of the expenses of the accountants retained pursuant to Section 3.16.
Section 3.15. ANNUAL STATEMENT OF COMPLIANCE. Within 120 days after
the last day of each fiscal year of the Master Servicer, currently June 30,
commencing in 1999, the Master Servicer at its own expense, shall deliver to the
Trustee, with a copy to the Rating Agencies, an Officer's Certificate stating,
as to the signer thereof, that (i) a review of the activities of the Master
Servicer during the preceding fiscal year or applicable portion thereof and of
performance under this Agreement has been made under such officer's supervision,
(ii) to the best of such officer's knowledge, based on such review, the Master
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof including the steps being taken by the Master Servicer to remedy such
default; (iii) a review of the activities of each Sub-Servicer, if any, during
the Sub-Servicer's most recently ended fiscal year on or prior to such December
31st and its performance under its Sub-Servicing Agreement has been made under
such Officer's supervision; and (iv) to the best of the Servicing Officer's
knowledge, based on his review and the certification of an officer of the
Sub-Servicer (unless the Servicing Officer has reason to believe that reliance
on such certification is not justified), either each Sub-Servicer has performed
and fulfilled its duties, responsibilities and obligations under this Agreement
and its Sub-Servicing Agreement in all material respects throughout the year,
or, if there has been a default in performance or fulfillment of any such
duties, responsibilities or obligations, specifying the nature and status of
each such default known to the Servicing Officer. Copies of such statements
shall be provided by the Master Servicer to the Certificateholders upon request
or by the Trustee at the expense of the Master Servicer should the Master
Servicer fail to provide such copies.
Section 3.16. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
(a) Within 120 days after the last day of each fiscal year of the Master
Servicer, currently June 30, commencing in 1999, the Master Servicer, at its
expense, shall cause a firm of Independent public accountants who are members of
the American Institute of Certified Public Accountants to furnish a letter to
the Master Servicer, which will be provided to the Trustee and the Rating
Agencies providing the results of such firm's examination of the Master
Servicer's overall servicing activities for such fiscal year conducted in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers. In connection with the engagement to deliver any such report
(or other accountants' report or certificate hereunder) the Trustee is
authorized and directed to enter into such agreed-upon-procedures or engagement
letter as such accountants may request and shall be indemnified by the Trust
hereunder in so doing.
(b) Within 120 days after the last day of the fiscal year of each
Sub-Servicer or a Master Servicer other than LLSI or the Trustee, commencing in
1999, the Master Servicer, at its expense, shall furnish to the Trustee the most
recently available letter or letters from one or more firms of Independent
certified public accountants who are members of the American Institute of
Certified Public Accountants reporting the results of such firm's examination of
the servicing procedures of any Sub-Servicer and any Master Servicer (other than
LLSI or the Trustee) in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers, or such other program as may be
certified as being comparable by such accountants.
Section 3.17. REMIC-RELATED COVENANTS. For as long as the REMIC Assets
shall exist, the Master Servicer and the Trustee shall act in accordance
herewith to assure continuing treatment of the REMIC Assets as a REMIC, and the
Trustee shall comply with any directions of the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any Permitted
Investment unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to Section 2.04, accept any contribution to the REMIC
Assets after the Startup Day without receipt of a REMIC Opinion.
Section 3.18. ADDITIONAL INFORMATION. The Master Servicer agrees to
furnish the Seller from time to time upon reasonable request, such further
information, reports and financial statements as the Seller deems appropriate to
prepare and file all necessary reports with the Securities and Exchange
Commission.
Section 3.19. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS . The
Master Servicer shall have the right, but not the obligation, to purchase any
Defaulted Mortgage Loan for a price equal to the Repurchase Price therefor. Any
such purchase shall be accomplished as provided in Subsection 2.02(c) hereof.
Section 3.20. PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION; ADDITIONAL INFORMATION. The Trustee agrees to cooperate with the
Seller in connection with the filing by the Seller with the Securities and
Exchange Commission of any and all reports, statements and information
respecting the Trust Fund and/or the Certificates required to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
<PAGE>
ARTICLE IV
Accounts
Section 4.01. PROTECTED ACCOUNTS. (a) The Master Servicer shall
establish and maintain if it is servicing the Mortgage Loans and shall require
each Sub-Servicer to establish and maintain a Protected Account complying with
the requirements set forth in this Section 4.01, with records to be kept with
respect thereto on a Mortgage Loan by Mortgage Loan basis, into which accounts
shall be deposited within 2 Business Days of receipt all collections of
principal and interest on any Mortgage Loan and with respect to any REO Property
received by the Master Servicer, or a Sub-Servicer, including Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds, and advances made from
the Sub-Servicer's own funds (less servicing compensation as permitted by
Subsection 3.14(a)) and all other amounts to be deposited in the Protected
Accounts. The Master Servicer is hereby authorized to make withdrawals from and
deposits to the related Protected Accounts for purposes required or permitted by
this Agreement. All Protected Accounts shall be held in a Designated Depository
Institution and segregated on the books of such institution. The amount at any
time credited to a Protected Account shall be fully insured by the FDIC or, to
the extent that such balance exceeds the lesser of $100,000 or the limits of
such insurance, such excess must be transferred to the Certificate Account or
invested in Permitted Investments or may be deposited in a Rating Agency
Eligible Account, including an account at the Federal home Loan Bank of
Cincinnati, in the name of the Trustee for the benefit of Certificateholders and
not commingled with any other funds. The Master Servicer may, and the Master
Servicer may permit a Sub-Servicer to, transfer funds to other accounts (which
shall for purposes hereof be deemed to be Protected Accounts), commingle
accounts, or to establish Protected Accounts not conforming to the foregoing
requirements, to the extent that such other accounts or Protected Accounts are
Rating Agency Eligible Accounts.
Amounts on deposit in a Protected Account may be invested in Permitted
Investments in the name of the Trustee for the benefit of Certificateholders
and, except as provided in the preceding paragraph, not commingled with any
other funds, such Permitted Investments to mature, or to be subject to
redemption or withdrawal, no later than the date on which such funds are
required to be withdrawn for deposit in the Certificate Account, and shall be
held until required for such deposit. The income earned from Permitted
Investments made pursuant to this Section 4.01 shall be paid to the Master
Servicer or the related Sub-Servicer as additional compensation for its
obligations under this Agreement, and the risk of loss of moneys required to be
distributed to the Certificateholders resulting from such investments shall be
borne by and be the risk of the Master Servicer or the related Sub-Servicer. The
Master Servicer shall itself, or shall cause the related Sub-Servicer to,
deposit the amount of any such loss in the related Protected Account within two
Business Days of receipt of notification of such loss but not later than the
second Business Day prior to the Distribution Date on which the moneys so
invested are required to be distributed to the Certificateholders.
(b) On or before each Funds Transfer Date, the Master Servicer shall
withdraw or shall cause to be withdrawn from the Protected Accounts and shall
immediately deposit or cause to be deposited in the Certificate Account amounts
representing the following collections and payments (other than with respect to
principal of or interest on the Mortgage Loans due on or before the Cut-off
Date):
(i) Scheduled Payments on the Mortgage Loans received or any
portion thereof advanced by the Master Servicer or Sub-Servicers which
were due on or before the related Due Date, net of the amount thereof
comprising the Master Servicing Fee due the Master Servicer;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the Master Servicer or Sub-Servicers with respect to such
Mortgage Loans in the related Prepayment Period, with interest to the
date of prepayment or liquidation, net of the amount thereof
comprising the Master Servicing Fee due the Master Servicer;
(iii) Partial prepayments of principal received by the Master
Servicer or Sub-Servicers for such Mortgage Loans in the related
Prepayment Period; and
(iv) Any amount to be used as a Certificate Account Advance.
(c) Withdrawals may be made from a Protected Account only to make
remittances as provided in Subsections 4.01(b) or 4.03(c); to reimburse the
Master Servicer or a Sub-Servicer for advances of principal and interest which
have been recovered by subsequent collection from the related Mortgagor; to
remove amounts deposited in error; to remove fees, charges or other such amounts
deposited on a temporary basis; or to clear and terminate the account at the
termination of this Agreement in accordance with Section 10.01. As provided in
Section 4.02(b) certain amounts otherwise due to the Master Servicer may be
retained by it and need not be deposited in the Certificate Account.
(d) The Master Servicer shall deliver to the Trustee on or prior to
the Determination Date in each month a statement from the institution at which
each Protected Account is maintained showing deposits and withdrawals during the
prior month.
Section 4.02. CERTIFICATE ACCOUNT. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Certificate Account as a segregated Rating Agency Eligible Account or
Accounts. The Trustee will deposit in the Certificate Account as received the
following amounts:
(i) Any amounts withdrawn from a Protected Account pursuant to
Subsection 4.01(b);
(ii) Any Monthly Advance and any Compensating Interest Payments;
(iii) Any Insurance Proceeds or Liquidation Proceeds received by
the Master Servicer which were not deposited in a Protected Account;
(iv) The Repurchase Price with respect to any Mortgage Loans
purchased pursuant to Sections 2.02, 2.03A or 3.19, any amounts which
are to be treated pursuant to Section 2.04 as the payment of such a
Repurchase Price, and all proceeds of any Mortgage Loans or property
acquired with respect thereto repurchased by the Seller or its
designee pursuant to Section 10.01;
(v) Any amounts required to be deposited with respect to losses
on Permitted Investments pursuant to Subsection 4.02(d) below; and
(vi) Any other amounts received by the Master Servicer or the
Trustee and required to be deposited in the Certificate Account
pursuant to this Agreement.
(b) All amounts (other than income earned on Permitted Investments)
deposited to the Certificate Account shall be held by the Trustee in the name of
the Trustee in trust for the benefit of the Certificateholders and in accordance
with the terms and provisions of this Agreement, subject to the right of the
Master Servicer to require the Trustee to make withdrawals therefrom as provided
herein. The foregoing requirements for crediting the Certificate Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of (i) prepayment or late
payment charges or assumption, tax service, statement account or payoff,
substitution, satisfaction, release and other like fees and charges and (ii) the
items enumerated in Subsections 4.03(a)(ii), (iii), (iv), (v), (vii), (viii),
(x) and (xii) need not be credited by the Master Servicer or the related
Sub-Servicer to the Certificate Account and may be retained by the Master
Servicer or the related Sub-Servicer as servicing compensation. In the event
that the Master Servicer shall deposit or cause to be deposited to the
Certificate Account any amount not required to be credited thereto, the Trustee,
upon receipt of a written request therefor signed by a Servicing Officer of the
Master Servicer, shall promptly transfer such amount to the Master Servicer, any
provision herein to the contrary notwithstanding.
(c) The Certificate Account shall constitute a segregated Rating
Agency Eligible Account of the Trust Fund segregated on the books of the Trustee
and held by the Trustee in trust. The amount at any time credited to the
Certificate Account shall be (i) fully insured by the FDIC or the Bank Insurance
Fund to the maximum coverage provided thereby, (ii) invested, in the name of the
Trustee, or its nominee, for the benefit of the Certificateholders, in such
Permitted Investments described in clause (viii) of the definition of Permitted
Investments to be held by the Trustee as the Trustee shall determine, or (iii)
from the maturity of any Permitted Investment on the Business Day prior to a
Distribution Date through the distribution of such funds on such Distribution
Date or at such other time and in such amount as, in the judgment of the
Trustee, cannot reasonably be invested in accordance with items (i) or (ii) of
this sentence, held by the Trustee uninvested in such Certificate Account. All
Permitted Investments shall mature or be subject to redemption or withdrawal on
or before, and shall be held until, the next succeeding Distribution Date if the
obligor for such Permitted Investment is the Trustee or, if such obligor is any
other Person, the Business Day preceding such Distribution Date.
(d) The income earned from Permitted Investments made pursuant to this
Section 4.02 shall be paid to the Trustee, as additional compensation for its
obligations under this Agreement, and the risk of loss of moneys required to be
distributed to the Certificateholders resulting from such investments shall be
borne by and be the risk of the Trustee. The amount of any such loss shall be
deposited by the Trustee in the Certificate Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders.
Section 4.03. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE CERTIFICATE
ACCOUNT. (a) The Trustee will, from time to time on demand of the Master
Servicer, make or cause to be made such withdrawals or transfers from the
Certificate Account as the Master Servicer has designated for such transfer or
withdrawal as specified in a certificate signed by a Servicing Officer (upon
which the Trustee may conclusively rely) for the following purposes (limited in
the case of amounts due the Master Servicer to those not withdrawn from the
Protected Account in accordance with the terms of this Agreement):
(i) [Reserved];
(ii) to reimburse the Master Servicer or any Sub-Servicer for any
Monthly Advance or Servicing Advance of its own funds or any advance
of such Sub-Servicer's own funds, the right of the Master Servicer or
a Sub-Servicer to reimbursement pursuant to this subclause (ii) being
limited to amounts received on a particular Mortgage Loan (including,
for this purpose, the Repurchase Price therefor, Insurance Proceeds
and Liquidation Proceeds) which represent late payments or recoveries
of the principal of or interest on such Mortgage Loan respecting which
such Monthly Advance or Servicing Advance was made;
(iii) to reimburse the Master Servicer or any Sub-Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular
Mortgage Loan for amounts expended by the Master Servicer or such
Sub-Servicer pursuant to Section 3.12 in good faith in connection with
the restoration of the related Mortgaged Property which was damaged by
an Uninsured Cause or in connection with the liquidation of such
Mortgage Loan;
(iv) to reimburse the Master Servicer or any Sub-Servicer from
Insurance Proceeds relating to a particular Mortgage Loan for Insured
Expenses incurred with respect to such Mortgage Loan and to reimburse
the Master Servicer or such Sub-Servicer from Liquidation Proceeds
from a particular Mortgage Loan for Liquidation Expenses incurred with
respect to such Mortgage Loan; PROVIDED THAT the Master Servicer shall
not be entitled to reimbursement for Liquidation Expenses with respect
to a Mortgage Loan to the extent that (i) any amounts with respect to
such Mortgage Loan were paid as Excess Liquidation Proceeds pursuant
to clause (xii) of this Subsection 4.03(a) to the Master Servicer; and
(ii) such Liquidation Expenses were not included in the computation of
such Excess Liquidation Proceeds;
(v) to pay the Master Servicer or any Sub-Servicer (payment to
any Sub-Servicer to be subject to prior payment to the Master Servicer
of an amount equal to the Master Servicing Fee), as appropriate, from
Liquidation Proceeds or Insurance Proceeds received in connection with
the liquidation of any Mortgage Loan, the amount which it or such
Sub-Servicer would have been entitled to receive under subclause (x)
of this Subsection 4.03(a) as servicing compensation on account of
each defaulted scheduled payment on such Mortgage Loan if paid in a
timely manner by the related Mortgagor, but only to the extent that
the aggregate of Liquidation Proceeds and Insurance Proceeds with
respect to such Mortgage Loan, after any reimbursement to the Master
Servicer or any Sub-Servicer, pursuant to subclauses (ii), (iii), (iv)
and (vii) of this Subsection 4.03(a), exceeds the Outstanding
Principal Balance of such Mortgage Loan plus accrued and unpaid
interest thereon at the related Mortgage Interest Rate less the Master
Servicing Fee Rate to but not including the date of payment;
(vi) to pay the Master Servicer or any Sub-Servicer (payment to
any Sub-Servicer to be subject to prior payment to the Master Servicer
of the portion of the Master Servicing Fee which the Master Servicer
is entitled to retain as evidenced in writing to the Trustee by the
Master Servicer, as appropriate) from the Repurchase Price for any
Mortgage Loan, the amount which it or such Sub- Servicer would have
been entitled to receive under subclause (x) of this Subsection
4.03(a) as servicing compensation, but only to the extent that the
Repurchase Price with respect to such Mortgage Loan after any
reimbursement to the related Master Servicer and Sub-Servicer pursuant
to subclauses (ii) and (vii) of this Subsection 4.03(a) exceeds the
Outstanding Principal Balance of such Mortgage Loan plus accrued and
unpaid interest thereon at the related Mortgage Interest Rate less the
Master Servicing Fee Rate through the last day of the month of
repurchase;
(vii) to reimburse the Master Servicer or any Sub-Servicer for
Servicing Advances pursuant to Sections 3.07, 3.09 and 3.10, the right
to reimbursement pursuant to this subclause being limited to amounts
received on the related Mortgage Loan (including, for this purpose,
the Repurchase Price therefor, Insurance Proceeds and Liquidation
Proceeds) which represent late recoveries of the payments for which
such advances were made;
(viii) to pay the Master Servicer or any Sub-Servicer, as the
case may be, with respect to each Mortgage Loan that has been
purchased pursuant to Section 2.02, 2.03A, 2.04, 3.19 or 10.01, all
amounts received thereon, representing recoveries of principal that
reduce the Outstanding Principal Balance of the related Mortgage Loan
below the Outstanding Principal Balance used in calculating the
Repurchase Price or representing interest included in the calculation
of the Repurchase Price or accrued after the end of the month during
which such repurchase occurs;
(ix) to reimburse the Master Servicer or any Sub-Servicer for any
Monthly Advance or Servicing Advance, after a Realized Loss has been
allocated with respect to the related Mortgage Loan if the Monthly
Advance or Servicing Advance has not been reimbursed pursuant to
clauses (ii) and (vii);
(x) to pay the Master Servicer and any Sub-Servicer servicing
compensation as set forth in Section 3.14;
(xi) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Subsection
7.04(d);
(xii) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds;
(xiii) to clear and terminate the Certificate Account pursuant to
Section 10.01; and
(xiv) to remove amounts deposited in error.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Certificate Account pursuant to subclauses (i) through
(vii), inclusive, and (ix) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Certificate Account under Section
4.02(b).
(b) On each Distribution Date, the Trustee shall make the following
payments in the priority set forth from the funds in the Certificate Account:
(i) First, the Trustee's Fees and expenses shall be paid to the
Trustee in accordance with Section 9.05(a); and
(ii) Second, the amount distributable to the Holders of the
Certificates shall be payable in accordance with Section 6.01.
(c) Notwithstanding the provisions of this Section 4.03, the Master
Servicer may, but is not required to, allow the Sub-Servicers to deduct from
amounts received by them or from the related Protected Account, prior to deposit
in the Certificate Account, any portion to which such Sub-Servicers are entitled
as servicing compensation (including income on Permitted Investments) or
reimbursement of any reimbursable advances made by such Sub-Servicers.
(d) The Trustee shall be permitted to make withdrawals or transfers
from the Certificate Account to remove amounts deposited by the Trustee in
error.
<PAGE>
ARTICLE V
Certificates
Section 5.01. CERTIFICATES. (a) The Depository, the Seller and the
Trustee have entered into a Depository Agreement dated as of November 27, 1998
(the "Depository Agreement). Except for the Residual Certificate, the Class X
Certificates, the Individual Certificates and as provided in Subsection 5.01(b),
the Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to a successor to the
Depository; (ii) ownership and transfers of registration of such Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iii) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (iv) the Trustee shall
deal with the Depository as representative of such Certificate Owners of the
respective Class of Certificates for purposes of exercising the rights of
Certificateholders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants.
The Class X Certificates, the Class R Certificate and the Private
Certificates are initially Physical Certificates. If at any time the Holders of
all of the Certificates of one or more such Classes request that the Trustee
cause such Class to become Global Certificates, the Trustee and the Seller will
take such action as may be reasonably required to cause the Depository to accept
such Class or Classes for trading if it may legally be so traded.
All transfers by Certificate Owners of such respective Classes of
Book-Entry Certificates and any Global Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) If (i)(A) the Seller advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Seller is unable to
locate a qualified successor within 30 days or (ii) the Seller at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates to Certificate Owners requesting
the same. Upon surrender to the Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue such definitive Certificates. Neither the Seller, the
Master Servicer nor the Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions.
(c) [Reserved]
(d) The Classes of the Certificates shall have the following
designations, initial principal or notional amounts and Pass-Through Rates:
DESIGNATION INITIAL PRINCIPAL OR PASS-THROUGH RATE
NOTIONAL AMOUNT
Class A Certificates $211,895,600 6.90%
Class PO Certificates $90,487 (1)
Class X Certificates (2) (2)
Class B-1 Certificates $6,856,700 6.90%
Class B-2 Certificates $3,999,700 6.90%
Class B-3 Certificates $2,285,600 6.90%
Class B-4 Certificates $1,599,900 6.90%
Class B-5 Certificates $685,700 6.90%
Class B-6 Certificates $1,142,814 6.90%
Class R Certificate $100 6.90%
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(1) The Class PO Certificates are principal only certificates and will not bear
interest. The Current Principal Amount of the Class PO Certificates
initially will be the amount shown above and is composed of strips of
principal from the Discount Mortgage Loans.
(2) The Class X Certificates will have a Notional Amount equal to the sum of
the aggregate Scheduled Principal Balances of the Non-Discount Mortgage
Loans. They will bear interest on their Notional Amount at a variable
Pass-Through Rate equal to the weighted average of the excess of (i) the
Net Rates of the Non-Discount Mortgage Loans over (ii) 6.90% per annum. For
the Class X Certificates, the initial Notional Amount will be $222,864,136
and the Pass-Through Rate for the initial Interest Accrual Period is
0.86482% per annum.
(e) With respect to each Distribution Date, each Class of Certificates
(other than the Class PO Certificates) shall accrue interest during the related
Interest Accrual Period. With respect to each Distribution Date and each such
Class of Certificates, interest shall be calculated, on the basis of a 360-day
year comprised of twelve 30-day months, based upon the respective Pass-Through
Rate set forth, or determined as provided above, and the Current Principal
Amount or Notional Amount, as the case may be, of such Class applicable to such
Distribution Date.
(f) The Certificates shall be substantially in the forms set forth in
Exhibit A-1 and A-2. On original issuance, the Trustee shall sign, countersign
and shall deliver them at the direction of the Seller. Pending the preparation
of definitive Certificates of any Class, the Trustee may sign and countersign
temporary Certificates that are printed, lithographed or typewritten, in
authorized denominations for Certificates of such Class, substantially of the
tenor of the definitive Certificates in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers or authorized signatories executing such Certificates may
determine, as evidenced by their execution of such Certificates. If temporary
Certificates are issued, the Seller will cause definitive Certificates to be
prepared without unreasonable delay. After the preparation of definitive
Certificates, the temporary Certificates shall be exchangeable for definitive
Certificates upon surrender of the temporary Certificates at the office of the
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Certificates, the Trustee shall sign and countersign and
deliver in exchange therefor a like aggregate principal amount, in authorized
denominations for such Class, of definitive Certificates of the same Class.
Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits as definitive Certificates.
(g) Each Class of Book-Entry Certificates will be registered as a
single Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of (i) in the
case of the Senior Certificates which are Book-Entry Certificates, $1,000 and in
each case increments of $1.00 in excess thereof, and (ii) in the case of the
Offered Subordinate Certificates, $25,000 and increments of $1.00 in excess
thereof, except that one Certificate of each such Class may be issued in a
different amount so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
countersign Physical Certificates all in an aggregate principal amount that
shall equal the Current Principal Amount of such Class on the Closing Date. The
Class X Certificates will be issued in certificated fully-registered form in
minimum denominations of $1,000 and in each case increments of $1.00 in excess
thereof, except that one Certificate of such Class may be issued in a different
amount so that the sum of the denominations of all of the Outstanding
Certificates of such Class shall equal the Notional Amount of such Class on the
Closing Date. The Private Certificates will be issued in certificated
fully-registered form in minimum denominations of $50,000 and increments of
$1.00 in excess thereof, except that one Certificate of each such Class may be
issued in a different amount so that the sum of the denominations of all
outstanding Certificates of such Class shall equal the Current Principal Amount
of such Class on the Closing Date. The Class R Certificate shall be issued in
certificated fully-registered form in the denomination of $100. Each Class of
Global Certificates, if any, shall be issued in fully registered form in minimum
dollar denominations of $50,000 and integral multiples of $1.00 in excess
thereof, except that one Certificate of each Class may be in a different
denomination so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
countersign (i) in the case of each Class of Offered Certificates (other than
the Class X Certificates), the Certificate in the entire Current Principal
Amount of the respective Class and (ii) in the case of the Class X Certificates
and each Class of Private Certificates, all in an aggregate Notional Amount or
principal amount that shall equal the Notional Amount or Current Principal
Amount of each such respective Class on the Closing Date. The Certificates
referred to in clause (i) and if at any time there are to be Global
Certificates, the Global Certificates shall be delivered by the Seller to the
Depository or pursuant to the Depository's instructions, shall be delivered by
the Seller on behalf of the Depository to and deposited with the DTC Custodian.
The Trustee shall sign the Certificates by facsimile or manual signature and
countersign them by manual signature on behalf of the Trustee by one or more
authorized signatories, each of whom shall be a Responsible Officer of the
Trustee or its agent. A Certificate bearing the manual and facsimile signatures
of individuals who were the authorized signatories of the Trustee or its agent
at the time of issuance shall bind the Trustee, notwithstanding that such
individuals or any of them have ceased to hold such positions prior to the
delivery of such Certificate.
(h) No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the manually executed countersignature of the Trustee or its agent, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued thereafter shall be dated the date of their
countersignature.
(i) The Closing Date is hereby designated as the "startup" day of the
REMIC Assets within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, the REMIC Assets shall have a tax
year that is a calendar year and shall report income on an accrual basis.
(k) The Trustee shall cause the REMIC Assets to elect to be treated as
a REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in
this Agreement or in the administration of any Trust established hereby shall be
resolved in a manner that preserves the validity of such elections.
(l) The Assumed Final Distribution Date for the Certificates is July
25, 2028.
Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain at its Corporate Trust Office a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall sign, countersign and shall deliver, in the name of the designated
transferee or transferees, a new Certificate of a like Class and aggregate
Fractional Undivided Interest, but bearing a different number.
(c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Trustee shall register the transfer of an Individual
Certificate if the requested transfer is being made to a transferee
who has provided the Trustee with a Rule 144A Certificate.
(ii) The Trustee shall register the transfer of any Individual
Certificate if (x) the transferor has advised the Trustee in writing
that the Certificate is being transferred to an Institutional
Accredited Investor; and (y) prior to the transfer the transferee
furnishes to the Trustee an Investment Letter (and the Trustee shall
be fully protected in so doing), provided that, if based upon an
Opinion of Counsel to the effect that the delivery of (x) and (y)
above are not sufficient to confirm that the proposed transfer is
being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
other applicable laws, the Trustee shall as a condition of the
registration of any such transfer require the transferor to furnish
such other certifications, legal opinions or other information prior
to registering the transfer of an Individual Certificate as shall be
set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as a Global Certificate of
such Class is outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in such Global Certificate, or transfers by
holders of Individual Certificates of such Class to transferees that take
delivery in the form of beneficial interests in the Global Certificate, may be
made only in accordance with this Subsection 5.02(d) and in accordance with the
rules of the Depository:
(i) In the case of a beneficial interest in the Global
Certificate being transferred to an Institutional Accredited Investor,
such transferee shall be required to take delivery in the form of an
Individual Certificate or Certificates and the Trustee shall register
such transfer only upon compliance with the provisions of Subsection
5.02(c)(ii).
(ii) In the case of a beneficial interest in a Class of Global
Certificates being transferred to a transferee that takes delivery in
the form of an Individual Certificate or Certificates of such Class,
except as set forth in clause (i) above, the Trustee shall register
such transfer only upon compliance with the provisions of Subsection
5.02(c)(i).
(iii) In the case of an Individual Certificate of a Class being
transferred to a transferee that takes delivery in the form of a
beneficial interest in a Global Certificate of such Class, the Trustee
shall register such transfer if the transferee has provided the
Trustee with a Rule 144A Certificate.
(iv) No restrictions shall apply with respect to the transfer or
registration of transfer of a beneficial interest in the Global
Certificate of a Class to a transferee that takes delivery in the form
of a beneficial interest in the Global Certificate of such Class;
provided that each such transferee shall be deemed to have made such
representations and warranties contained in the Rule 144A Certificate
as are sufficient to establish that it is a QIB.
(e) Subject to Subsection 5.02(h), an exchange of a beneficial
interest in a Global Certificate of a Class for an Individual Certificate or
Certificates of such Class, an exchange of an Individual Certificate or
Certificates of a Class for a beneficial interest in the Global Certificate of
such Class and an exchange of an Individual Certificate or Certificates of a
Class for another Individual Certificate or Certificates of such Class (in each
case, whether or not such exchange is made in anticipation of subsequent
transfer, and, in the case of the Global Certificate of such Class, so long as
such Certificate is outstanding and is held by or on behalf of the Depository)
may be made only in accordance with this Subsection 5.02(e) and in accordance
with the rules of the Depository:
(i) A holder of a beneficial interest in a Global Certificate of
a Class may at any time exchange such beneficial interest for an
Individual Certificate or Certificates of such Class.
(ii) A holder of an Individual Certificate or Certificates of a
Class may exchange such Certificate or Certificates for a beneficial
interest in the Global Certificate of such Class if such holder
furnishes to the Trustee a Rule 144A Certificate.
(iii) A holder of an Individual Certificate of a Class may
exchange such Certificate for an equal aggregate principal amount of
Individual Certificates of such Class in different authorized
denominations without any certification.
(f) (i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global
Certificate of such Class as provided herein, the Trustee shall cancel
such Individual Certificate and shall (or shall request the Depository
to) endorse on the schedule affixed to the applicable Global
Certificate (or on a continuation of such schedule affixed to the
Global Certificate and made a part thereof) or otherwise make in its
books and records an appropriate notation evidencing the date of such
exchange or transfer and an increase in the certificate balance of the
Global Certificate equal to the certificate balance of such Individual
Certificate exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial
interest in a Global Certificate of a Class for an Individual
Certificate of such Class as provided herein, the Trustee shall (or
shall request the Depository to) endorse on the schedule affixed to
such Global Certificate (or on a continuation of such schedule affixed
to such Global Certificate and made a part thereof) or otherwise make
in its books and records an appropriate notation evidencing the date
of such exchange or transfer and a decrease in the certificate balance
of such Global Certificate equal to the certificate balance of such
Individual Certificate issued in exchange therefor or upon transfer
thereof.
(g) The Securities Legend shall be placed on any Individual
Certificate issued in exchange for or upon transfer of another Individual
Certificate or of a beneficial interest in a Global Certificate.
(h) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02 and Sections 5.06 and 5.07, the holder of any Individual
Certificate may transfer or exchange the same in whole or in part (in an initial
certificate balance equal to the minimum authorized denomination set forth in
Section 5.01(g) above or any integral multiple of $1.00 in excess thereof) by
surrendering such Certificate at the Corporate Trust Office or at such other
office as may be designated by the Trustee for this purpose, or at the office of
any transfer agent, together with an executed instrument of assignment and
transfer satisfactory in form and substance to the Trustee in the case of
transfer and a written request for exchange in the case of exchange. The holder
of a beneficial interest in a Global Certificate may, subject to the rules and
procedures of the Depository, cause the Depository (or its nominee) to notify
the Trustee in writing of a request for transfer or exchange of such beneficial
interest for an Individual Certificate or Certificates. Following a proper
request for transfer or exchange, the Trustee shall, within five Business Days
of such request made at such Corporate Trust Office, sign, countersign and
deliver at such Corporate Trust Office, to the transferee (in the case of
transfer) or holder (in the case of exchange) or send by first class mail at the
risk of the transferee (in the case of transfer) or holder (in the case of
exchange) to such address as the transferee or holder, as applicable, may
request, an Individual Certificate or Certificates, as the case may require, for
a like aggregate Fractional Undivided Interest and in such authorized
denomination or denominations as may be requested. The presentation for transfer
or exchange of any Individual Certificate shall not be valid unless made at the
Corporate Trust Office or at such other office as may be designated by the
Trustee for this purpose by the registered holder in person, or by a duly
authorized attorney-in-fact. As of the Closing Date, the Trustee designates its
office maintained at 123 Washington Street, New York, New York 10007 as the
office for accepting Certificates for transfer or surrender in accordance with
this Article V.
(i) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency; PROVIDED, HOWEVER, that no
Certificate may be exchanged for new Certificates unless the original Fractional
Undivided Interest represented by each such new Certificate (i) is at least
equal to the minimum authorized denomination, or (ii) is acceptable to the
Seller as indicated to the Trustee in writing. Whenever any Certificates are so
surrendered for exchange, the Trustee shall sign and countersign and the Trustee
shall deliver the Certificates which the Certificateholder making the exchange
is entitled to receive.
(j) If the Trustee so requires, every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer, with a signature guarantee, in
form satisfactory to the Trustee, duly executed by the holder thereof or his or
her attorney duly authorized in writing.
(k) No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
(l) The Trustee shall cancel all Certificates surrendered for transfer
or exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by the record retention
requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.
(m) The following legend shall be placed on Certificates for each
Class of Subordinate Certificates and on the Class X Certificates, whether upon
original issuance or upon issuance of any other Certificate of any such Class in
exchange therefor or upon transfer thereof and each transfer of Certificates of
such Classes shall be subject to the provisions thereof:
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, 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, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE
AND THE SERVICING, MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS:
(I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED
UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING,
BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, PTE
91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY
ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE MASTER SERVICER OR THE
TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY
CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE RESTRICTIONS SHALL NOT APPLY
TO THE CLASS X CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X
CERTIFICATES ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS BEEN GRANTED
AN EXEMPTION BY THE DEPARTMENT OF LABOR SIMILAR TO PTE 90-30, OR SUCH
ENTITY ACTS AS A SELLING AGENT FOR SUCH CLASS X CERTIFICATES OR (II) IN
SECONDARY MARKET TRANSFERS THEREAFTER.
Section 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a)
If (i) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.
(b) Upon the issuance of any new Certificate under this Section 5.03,
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 (including the fees and expenses of the Trustee) connected therewith.
Any duplicate Certificate issued pursuant to this Section 5.03 shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Master Servicer, the
Trustee and any agent of the Seller, the Master Servicer or the Trustee may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
6.01 and for all other purposes whatsoever. Neither the Seller, the Master
Servicer, the Trustee nor any agent of the Seller, the Master Servicer or the
Trustee shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer effective on any Record Date unless the
Certificate to be transferred is presented no later than the close of business
on the fifth Business Day preceding such Record Date.
Section 5.05. TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES. (a) The
Residual Certificate, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person and the Seller. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Seller and the Trustee with an affidavit that the proposed
transferee is not a Disqualified Organization (as defined in Subsection 5.05(b))
(and, unless the Tax Matters Person and the Seller consent to the transfer to a
person who is not a U.S. Person, an affidavit that it is a U.S. Person) as
provided in Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchaser thereof) delivers to the Tax Matters
Person, the Seller and the Trustee an affidavit in the form attached hereto as
Exhibit E stating, among other things, that as of the date of such transfer (i)
such transferee is not any of (A) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation all of whose activities are subject to tax
under Chapter 1 of Subtitle A of the Code and (except in the case of Freddie
Mac) a majority of whose board of directors is not selected by the United
States, or any state or political subdivision thereof), (B) any organization
that is exempt from any tax imposed by Chapter 1 of Subtitle A of the Code,
other than (x) a tax-exempt farmers' cooperative within the meaning of Section
521 of the Code or (y) an organization that is subject to the tax imposed by
Section 511 of the Code on "unrelated business taxable income" or (C) a
corporation operating on a cooperative basis that is engaged in furnishing
electric energy or providing telephone service to persons in rural areas (within
the meaning of Section 1381(a)(2)(C) of the Code) (any Person described in (A),
(B), or (C) being referred to herein as a "Disqualified Organization") and that
(ii) such transferee is not acquiring such Residual Certificate for the account
of a Disqualified Organization. Neither the Tax Matters Person nor the Seller
shall consent to a transfer of a Residual Certificate if it has actual knowledge
that any statement made in the affidavit issued pursuant to the preceding
sentence is not true. Notwithstanding any transfer, sale or other disposition of
a Residual Certificate to a Disqualified Organization, such transfer, sale or
other disposition shall be deemed to be of no legal force or effect whatsoever
and such Disqualified Organization shall not be deemed to be a Holder of a
Residual Certificate for any purpose hereunder, including, but not limited to,
the receipt of distributions thereon. If any purported transfer shall be in
violation of the provisions of this Subsection 5.05(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.05(b), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer. None of the
Trustee, the Seller or the Tax Matters Person shall be under any liability to
any Person for any registration or transfer of a Residual Certificate that is
not permitted by this Subsection 5.05(b) or for making payments due on such
Residual Certificate to the purported Holder thereof or taking any other action
with respect to such purported Holder under the provisions of this Agreement so
long as the written affidavit referred to above was received with respect to
such transfer, and the Tax Matters Person, the Seller or the Trustee, as
applicable, had no knowledge, that it was untrue. The prior Holder shall be
entitled to recover from any purported Holder of a Residual Certificate that was
in fact not a permitted transferee under this Subsection 5.05(b) at the time it
became a Holder all payments made on such Residual Certificate. Each Holder of a
Residual Certificate, by acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this Subsection 5.05(b) and to any amendment
of this Agreement deemed necessary (whether as a result of new legislation or
otherwise) by counsel of the Tax Matters Person or the Seller to ensure that the
Residual Certificate is not transferred to a Disqualified Organization and that
any transfer of such Residual Certificate will not cause the imposition of a tax
upon the Trust or cause REMIC Assets to fail to qualify as a REMIC.
(c) Unless the Tax Matters Person and the Seller shall have consented
in writing (which consent may be withheld in such person's sole discretion), the
Residual Certificate (including a beneficial interest therein) may not be
purchased by or transferred to any person who is not a "United States person,"
as such term is defined in Section 7701(a)(30) of the Code.
(d) By accepting a Residual Certificate, the purchaser thereof agrees
to be a Tax Matters Person, and appoints the Trustee to act as its agent with
respect to all matters concerning the tax obligations of the Trust, other than
those matters regarding transfer restrictions contained in this Section 5.05.
Section 5.06. RESTRICTIONS ON TRANSFERABILITY OF PRIVATE CERTIFICATES.
(a) No offer, sale, transfer or other disposition (including pledge) of a
Private Certificate shall be made by any Holder thereof unless registered under
the Securities Act, or an exemption from the registration requirements of the
Securities Act and any applicable state securities or "Blue Sky" laws is
available and the prospective transferee (other than the Seller) of such
Certificate signs and delivers to the Trustee an Investment Letter, if the
transferee is an Institutional Accredited Investor, in the form set forth as
Exhibit F-1 hereto, or a Rule 144A Certificate, if the transferee is a QIB, in
the form set forth as Exhibit F-2 hereto. Notwithstanding the provisions of the
immediately preceding sentence, no restrictions shall apply with respect to the
transfer or registration of transfer of a beneficial interest in a Physical
Certificate that is a Global Certificate of a Class to a transferee that takes
delivery in the form of a beneficial interest in the Global Certificate of such
Class provided that each such transferee shall be deemed to have made such
representations and warranties contained in the Rule 144A Certificate as are
sufficient to establish that it is a QIB. In the case of a proposed transfer of
a Private Certificate to a transferee other than a QIB, the Trustee may require
an Opinion of Counsel that such transaction is exempt from the registration
requirements of the Securities Act. The cost of such opinion shall not be an
expense of the Trustee or the Trust Fund.
(b) Each Private Certificate shall bear a Securities Legend.
Section 5.07. ERISA RESTRICTIONS. (a) Subject to the provisions of
subsection (b), no Certificates of a Class of Private Certificates or the Class
X Certificates may be acquired directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of ERISA and/or Section 4975 of the Code, unless the proposed transferee
provides a representation or certification to the Trustee substantially in the
form of Exhibit I hereto (upon which the Trustee is authorized to rely) to the
effect that the proposed transfer and/or holding of a Certificate and the
servicing, management and operation of the Trust: (i) will not result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
which is not covered under an individual or class prohibited transaction
exemption including but not limited to Department of Labor Prohibited
Transaction Exemption ("PTE") 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers), PTE 91-38
(Class Exemption for Certain Transactions Involving Bank Collective Investment
Funds), PTE 90-1 (Class Exemption for Certain Transactions Involving Insurance
Company Pooled Separate Accounts), PTE 95-60 (Class Exemption for Certain
Transactions Involving Insurance Company General Accounts) and PTCE 96-23 (Class
Exemption for Plan Asset Transactions Determined by In-House Asset Managers and
(ii) will not give rise to any additional fiduciary duties under ERISA on the
part of the Master Servicer or the Trustee. The above restrictions shall not
apply to the Class X Certificates either: (i) in the event that the Class X
Certificates are underwritten, placed by an entity which has been granted an
exemption by the Department of Labor similar to PTE 90-30, or such entity acts
as a selling agent for such Class X Certificates or (ii) in secondary market
transfers thereafter, and the Trustee receives a representation or certification
(upon which the Trustee is authorized to rely) from the holder of Class X
Certificates to such effect.
(b) Any Person acquiring an interest in a Book-Entry Certificate or a
Global Certificate which is a Subordinate Certificate or in a Class X
Certificate, by acquisition of such Certificate, shall be deemed to have
represented to the Trustee that it is either: (i) not acquiring an interest in
such Certificate directly or indirectly by, or on behalf of, an employee benefit
plan or other retirement arrangement which is subject to Title I of ERISA and/or
Section 4975 of the Code, or (ii) such Person provides a representation or
certification to the Trustee to the effect that the transfer and/or holding of
an interest in such Certificate and the servicing, management and/or operation
of the Trust and its assets: (I) will not result in any prohibited transaction
which is not covered under an individual or class prohibited transaction
exemption, including, but not limited to, PTE 84-14, PTE 91-38, PTE 90-1, PTE
95-60 or PTE 96-23 and (II) will not give rise to any additional fiduciary
duties on the part of the Master Servicer or the Trustee. The above restrictions
shall not apply to the Class X Certificates either: (i) in the event that the
Class X Certificates are underwritten, placed by an entity which has been
granted an exemption by the Department of Labor similar to PTE 90-30, or such
entity acts as a selling agent for such Class X Certificates or (ii) in
secondary market transfers thereafter.
(c) Any attempted or purported transfer of any Certificate in
violation of the provisions of Subsections (a) or (b) above shall be void AB
INITIO and such Certificate shall be considered to have been held continuously
by the prior permitted Certificateholder. Any transferor of any Certificate in
violation of such provisions, shall indemnify and hold harmless the Trustee from
and against any and all liabilities, claims, costs or expenses incurred by the
Trustee as a result of such attempted or purported transfer.
Section 5.08. RULE 144A INFORMATION. For so long as any Private
Certificates are outstanding and are "restricted securities" within the meaning
of Rule 144(a)(3) of the Securities Act, (1) the Master Servicer will provide or
cause to be provided to any Holder of such Certificates and any prospective
purchaser thereof designated by such a Holder, upon the request of such Holder
or prospective purchaser, the information required to be provided to such Holder
or prospective purchaser by Rule 144A(d)(4) under the Securities Act; and (2)
the Master Servicer shall update such information from time to time in order to
prevent such information from becoming false and misleading and will take such
other actions as are necessary to ensure that the safe harbor exemption from the
registration requirements of the Securities Act under Rule 144A is and will be
available for resales of such Certificates conducted in accordance with Rule
144A.
<PAGE>
ARTICLE VI
Payments to Certificateholders
Section 6.01. DISTRIBUTIONS ON THE CERTIFICATES. (a) Interest and
principal on the Certificates will be distributed monthly on each Distribution
Date, commencing in December 1998, in an aggregate amount equal to the Available
Funds for such Distribution Date.
(A) On each Distribution Date, the Available Funds will be distributed
in the following order of priority among the Certificates except as otherwise
noted:
FIRST, to the interest-bearing Classes of Senior Certificates, the
Accrued Certificate Interest on each such Class for such Distribution
Date. As described below, Accrued Certificate Interest on each such
Class of Certificates is subject to reduction in the event of certain
Net Interest Shortfalls allocable thereto. Any Net Interest Shortfalls
shall be allocated among the Senior Certificates as provided in
Section 6.01(c);
SECOND, to the interest-bearing Classes of Senior Certificates, any
Accrued Certificate Interest thereon remaining undistributed from
previous Distribution Dates, to the extent of remaining Available
Funds, any shortfall in available amounts being allocated among such
Classes in proportion to the amount of such Accrued Certificate
Interest remaining undistributed for each such Class for such
Distribution Date;
THIRD, to the Senior Certificates (other than the Class X Certificates
in reduction of the Current Principal Amounts thereof:
(a) the Senior P&I Optimal Principal Amount, sequentially to the
Class R Certificate and then to the Class A Certificates,
until their respective Current Principal Amounts have been
reduced to zero; and
(b) the Class PO Principal Distribution Amount for such
Distribution Date, to the Class PO Certificates, until the
Current Principal Amount of the Class PO Certificates has
been reduced to zero;
FOURTH, the Class PO Deferred Amount for such Distribution Date, to
the Class PO Certificates; provided, that (i) on any Distribution
Date, distributions pursuant to this priority FOURTH shall not exceed
the excess, if any, of (x) the Available Funds remaining after giving
effect to distributions pursuant to clauses FIRST through THIRD under
Section 6.01(a)(A) above over (y) the sum of the amount of Accrued
Certificate Interest for such Distribution Date and Accrued
Certificate Interest remaining undistributed from previous
Distribution Dates on all Classes of Subordinate Certificates then
outstanding, (ii) such distributions shall not reduce the Current
Principal Amount of the Class PO Certificates and (iii) no
distribution will be made in respect of the Class PO Deferred Amount
after the Cross-Over Date; and
FIFTH, sequentially, in the following order, to the Class B-1, Class
B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates, in
each case up to an amount equal to and in the following order: (a) the
Accrued Certificate Interest thereon for such Distribution Date, (b)
any Accrued Certificate Interest thereon remaining undistributed from
previous Distribution Dates and (c) such Class's Allocable Share for
such Distribution Date.
(B) On each Distribution Date after the Cross-Over Date, distributions
of principal on the outstanding Senior Certificates (other than Class PO
Certificates) will be made pro rata among all such Senior Certificates,
regardless of the allocation, or sequential nature, of principal payments
described in priority THIRD in Section 6.01(a)(A) above, based upon the then
Current Principal Amounts of such Senior Certificates.
(C) If, after distributions have been made pursuant to priorities
FIRST and SECOND under Section 6.01(a)(A) above on any Distribution Date, the
remaining Available Funds are less than the sum of the Senior P&I Optimal
Principal Amount and the Class PO Principal Distribution Amount for such
Distribution Date, such amounts shall be proportionately reduced, and such
remaining Available Funds will be distributed on the Senior Certificates (other
than the Class X Certificates) on the basis of such reduced amounts.
Notwithstanding any reduction in principal distributable to the Class PO
Certificates pursuant to this paragraph, the principal balance of the Class PO
Certificates shall be reduced not only by principal so distributed but also by
the difference between (i) principal distributable to the Class PO Certificates
in accordance with clause (b) of priority THIRD above and (ii) principal
actually distributed to the Class PO Certificates after giving effect to this
paragraph (such difference, the "Class PO Cash Shortfall"). The Class PO Cash
Shortfall with respect to any Distribution Date will be added to the Class PO
Deferred Amount.
(b) No Accrued Certificate Interest will be payable with respect to any Class of
Certificates after the Distribution Date on which the outstanding Current
Principal Amount or Notional Amount of such Certificate has been reduced to
zero.
(c) If on any Distribution Date the Available Funds for the Senior Certificates
is less than the Accrued Certificate Interest on the Senior Certificates for
such Distribution Date prior to reduction for Net Interest Shortfall and the
interest portion of Realized Losses, the shortfall will be allocated among the
holders of each Class of interest-bearing Senior Certificates in proportion to
the respective amounts of Accrued Certificate Interest that would have been
allocated thereto in the absence of such Net Interest Shortfall or Realized
Losses for such Distribution Date. In addition, the amount of any interest
shortfalls that are covered by subordination as provided in Section 6.03(g) will
constitute unpaid Accrued Certificate Interest and will be distributable to
Holders of the Certificates entitled to such amounts on subsequent Distribution
Dates to the extent of the Available Funds after current interest distributions
are made as required herein. Any amounts so carried forward will not bear
interest. Shortfalls in interest payments will not be offset by a reduction in
servicing compensation of the Master Servicer or otherwise, except to the extent
of Compensating Interest Payments.
Section 6.02. [Reserved]
Section 6.03. ALLOCATION OF LOSSES. (a) On or prior to each
Determination Date, the Master Servicer shall determine and report to the
Trustee the amount of any Realized Loss in respect of each Mortgage Loan that
occurred during the immediately preceding calendar month. The Trustee shall then
with respect to each Mortgage Loan allocate Realized Losses on a pro rata basis
between the PO Percentage of the Scheduled Principal Balance of a Mortgage Loan
which suffered a Realized Loss and the Non-PO Percentage of the Scheduled
Principal Balance of such Mortgage Loan.
(b) (A) With respect to any Determination Date, the principal portion
of each Realized Loss on a Mortgage Loan shall be allocated as follows:
(i) The PO Percentage of any such Realized Loss shall be
allocated to the Class PO Certificates; and
(ii) The Non-PO Percentage of any such Realized Loss shall be
allocated as follows:
first, to the Class B-6 Certificates until the Current Principal
Amount thereof has been reduced to zero;
second, to the Class B-5 Certificates until the Current Principal
Amount thereof has been reduced to zero;
third, to the Class B-4 Certificates until the Current Principal
Amount thereof has been reduced to zero;
fourth, to the Class B-3 Certificates until the Current Principal
Amount thereof has been reduced to zero;
fifth, to the Class B-2 Certificates until the Current Principal
Amount thereof has been reduced to zero;
sixth, to the Class B-1 Certificates until the Current Principal
Amount thereof has been reduced to zero;
seventh, to the Classes of Senior Certificates (other than the
Class X and Class PO Certificates), pro rata, in accordance with their
Current Principal Amounts.
(B) Notwithstanding the foregoing, no such allocation of any Realized
Loss shall be made on a Distribution Date to the extent that such allocation
would result in the reduction of the aggregate Current Principal Amounts of all
the Certificates as of such Distribution Date, after giving effect to all
distributions and prior allocations of Realized Losses on such date, to an
amount less than the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the first day of the month of such Distribution Date (such limitation, the
"Loss Allocation Limitation").
(c) Any Realized Losses allocated to a Class of Certificates pursuant
to Subsection 6.03(b) shall be allocated among the Certificates of such Class in
proportion to their respective Current Principal Amounts. Any allocation of
Realized Losses pursuant to this Subsection 6.03(c) shall be accomplished by
reducing the Current Principal Amount of the related Certificates on the related
Distribution Date in accordance with Subsection 6.03(d).
(d) Realized Losses allocated in accordance with this Section 6.03
shall be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion thereof,
after giving effect to distributions made on such Distribution Date, except that
the aggregate amount of Realized Losses to be allocated to the Class PO
Certificates on any Distribution Date through the Cross-Over Date will be taken
into account in determining distributions in respect of the Class PO Deferred
Amount for such Distribution Date.
(e) On each Distribution Date, the Trustee shall determine the
Subordinate Certificate Writedown Amount, if any. Any such Subordinate
Certificate Writedown Amount shall effect a corresponding reduction in the
Current Principal Amount of (i) if prior to the Cross-Over Date, the Current
Principal Amounts of the Subordinate Certificates in the reverse order of their
numerical Class designations and (ii) from and after the Cross-Over Date, the
Senior Certificates, pro rata based on their respective Current Principal
Amounts, which reduction shall occur on such Distribution Date after giving
effect to distributions made on such Distribution Date.
(f) On each Distribution Date, on or prior to the Cross-Over Date the
Trustee shall determine the Class PO Deferred Payment Writedown Amount. Any such
Class PO Deferred Payment Writedown Amount shall effect a corresponding
reduction in the Current Principal Amount of the Subordinate Certificates in the
reverse order of their numerical Class designations.
(g) The interest portion of any Realized Losses on Mortgage Loans
occurring on or prior to the Cross-Over Date will not be allocated among any
Certificates, but will reduce the amount of Available Funds on the related
Distribution Date. As a result of the subordination of the Subordinate
Certificates in right of distribution, such Realized Losses will be borne first
by the Subordinate Certificates in inverse order of their numerical Class
designations.
Section 6.04. [Reserved]
Section 6.05. PAYMENTS. (a) [Reserved].
(b) On each Distribution Date, other than the final Distribution Date,
the Trustee shall distribute to each Certificateholder of record on the directly
preceding Record Date the Certificateholder's PRO RATA share of its Class (based
on the aggregate Fractional Undivided Interest represented by such Holder's
Certificates) of all amounts required to be distributed on such Distribution
Date to such Class. The Trustee shall calculate such amounts based upon the
information provided the Master Servicer pursuant to Subsection 6.07(b).
(c) Payment of the above amounts to each Certificateholder shall be
made (i) by check mailed to each Certificateholder entitled thereto at the
address appearing in the Certificate Register or (ii) upon receipt by the
Trustee on or before the fifth Business Day preceding the Record Date of written
instructions from a Certificateholder holding Certificates representing an
initial aggregate Current Principal Amount and/or Notional Amount of not less
than $1,000,000 by wire transfer to a United States dollar account maintained by
the payee at any United States depository institution with appropriate
facilities for receiving such a wire transfer; PROVIDED, HOWEVER, that the final
payment in respect of each Class of Certificates will be made only upon
presentation and surrender of such respective Certificates at the office or
agency of the Trustee specified in the notice to Certificateholders of such
final payment.
Section 6.06. STATEMENTS TO CERTIFICATEHOLDERS. (a) Concurrently with
each distribution to Certificateholders, the Trustee shall forward by
first-class mail to each Certificateholder, with a copy to the Seller, the
Master Servicer and the Rating Agencies, a statement setting forth the following
information, expressed with respect to clauses (i), (ii), (iii), (iv), (v) and
(vii) in the aggregate and as a Fractional Undivided Interest representing an
initial Current Principal Amount of $1,000 or in the case of the Class X
Certificates, a Notional Amount of $1,000 or in the case of the Class R
Certificate, an initial Current Principal Amount of $100:
(i) the Current Principal Amount (or Notional Amount in the case
of the Class X Certificate) of each Class of Certificates immediately
prior to such Distribution Date;
(ii) the amount of the distribution allocable to principal on
each applicable Class of Certificates;
(iii) the aggregate amount of interest accrued at the related
Pass- Through Rate with respect to each Class of interest-bearing
Certificates during the related Interest Accrual Period;
(iv) the Net Interest Shortfall and any other adjustments to
interest at the related Pass-Through Rate necessary to account for any
difference between interest accrued and aggregate interest distributed
with respect to each Class of interest-bearing Certificates;
(v) the amount of the distribution allocable to interest on each
interest- bearing Class of Certificates;
(vi) the Pass-Through Rate for each Class of interest-bearing
Certificates with respect to such Distribution Date;
(vii) the Current Principal Amount (or Notional Amount in the
case of the Class X Certificates) of each Class of Certificates after
such Distribution Date;
(viii) the amount of any Monthly Advances, Compensating Interest
Payments and unreimbursed advances by the Master Servicer included in
such distribution;
(ix) the amount of any Realized Losses during the related
Prepayment Period and cumulatively since the Cut-off Date and the
amount and source (separately identified) of any distribution in
respect thereof included in such distribution;
(x) the amount of Scheduled Principal and Principal Prepayments,
(including but separately identifying the principal amount of
principal prepayments, Insurance Proceeds, the purchase price in
connection with the purchase of Mortgage Loans, cash deposits in
connection with substitutions of Mortgage Loans and Net Liquidation
Proceeds) and the number and principal balance of Mortgage Loans
purchased or substituted for during the relevant period and
cumulatively since the Cut-off Date;
(xi) the number of Mortgage Loans (excluding REO Property)
remaining in the Trust Fund as of the end of the related Due Period;
(xii) information regarding any Mortgage Loan delinquencies as of
the end of the related Due Period, including the aggregate number,
aggregate Outstanding Principal Balance and aggregate Scheduled
Principal Balance of Mortgage Loans delinquent one month, two months
and three months or more;
(xiii) the number of Mortgage Loans in the foreclosure process as
of the end of the related Due Period and the aggregate Outstanding
Principal Balance of such Mortgage Loans;
(xiv) the number and aggregate Outstanding Principal Balance of
all Mortgage Loans as to which the Mortgaged Property was REO Property
as of the end of the related Due Period;
(xv) the book value (the sum of (A) the Outstanding Principal
Balance of the Mortgage Loan, (B) accrued interest through the date of
foreclosure and (C) foreclosure expenses) of any REO Property;
PROVIDED THAT, in the event that such information is not available to
the Master Servicer and the Trustee on the Distribution Date, such
information shall be furnished promptly after it becomes available;
(xvi) the amount of Realized Losses allocated to each Class of
Certificates since the prior Distribution Date and in the aggregate
for all prior Distribution Dates; and
(xvii) the then applicable Senior Percentage, Senior Prepayment
Percentage, Subordinate Percentage and Subordinate Prepayment
Percentage.
The information set forth above shall be calculated, or reported, as
the case may be, by the Trustee based on data provided by the Master Servicer
pursuant to Section 6.07(b) and, with respect to prior periods, Section 6.06,
upon which the Trustee may conclusively rely. The information furnished by the
Master Servicer shall be sufficient for the Trustee to calculate any payments or
statements it is required to make.
(b) By April 30 of each year beginning in 1999, the Trustee will
furnish a report to each Holder of the Certificates of record at any time during
the prior calendar year as to the aggregate of amounts reported pursuant to
subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Master Servicer determines and advises the Trustee
to be necessary and/or to be required by the Internal Revenue Service or by a
federal or state law or rules or regulations to enable such Holders to prepare
their tax returns for such calendar year. Copies of such report shall also be
furnished to the Master Servicer. Such obligations shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to the requirements of the Code.
The Master Servicer shall supply to the Trustee in a timely manner the
information required for the statements described above which, where
appropriate, shall be the information from which the Trustee can calculate the
statements it is required to make.
Section 6.07. REPORTS TO THE TRUSTEE AND THE MASTER SERVICER. (a) Not
later than 15 days after each Distribution Date, the Trustee shall forward to
the Master Servicer a statement setting forth the status of the Certificate
Account as of the close of business on the last day of the month of the
Distribution Date and showing, for the month covered by such statement, deposits
in or withdrawals from the Certificate Account.
(b) On or before the Determination Date, the Master Servicer shall
provide to the Trustee (and with respect to the information contained in
subclause (xiv) hereof, the Seller), with respect to the Mortgage Loans and the
REO Properties, respectively, a Loan Summary and Remittance Report in such
electronic format as the Trustee may reasonably request and in such hardcopy
format as the Master Servicer and the Trustee shall agree which, if there are
Sub- Servicers, shall be based upon reports from Sub-Servicers, if any, received
by the Master Servicer on or before the seventh Business Day of such month with
respect to the Mortgage Loans and REO Properties and containing the following
information (in respect of the REO Properties, only such information which is
applicable):
(i) Aggregate deposits to and withdrawals from the Certificate
Account since the date of the prior statement, stated separately for
each category of deposit specified in Section 4.02 and each category
of withdrawal specified in Section 4.03, indicating separately the
aggregate of amounts withdrawn which are not applicable to a
particular Mortgage Loan;
(ii) Amount of Available Funds expected for the related
Distribution Date and attributable to each of the following
categories:
(A) Scheduled Principal;
(B) Principal Prepayments (stated separately for (u) partial
prepayments, (v) full prepayments, (w) Net Liquidation Proceeds,
stating Liquidation Proceeds and Liquidation Expenses
separately), (x) Insurance Proceeds, (y) the purchase price in
connection with the purchase of a Mortgage Loan, and (z) any cash
deposit in connection with the substitution of a Mortgage Loan;
(C) regularly scheduled interest on the Mortgage Loans;
(D) Monthly Advances made by the Master Servicer;
(E) Certificate Account Advances;
(F) Compensating Interest Payments; and
(G) reimbursements in connection with losses on Permitted
Investments.
(iii) Aggregate Outstanding Principal Balances of the Mortgage
Loans as of the related Due Date, without giving effect to payments
due on such date;
(iv) Realized Losses for the prior month and in the aggregate
from the Closing Date;
(v) [intentionally omitted];
(vi) [intentionally omitted];
(vii) Aggregate Scheduled Principal Balance of the Mortgage Loans
as of the related Due Date;
(viii) Book value of any collateral acquired by means of
foreclosure, grant of deed in lieu of foreclosure or otherwise in
respect of any Mortgage Loan;
(ix) Number and aggregate principal balance of Mortgage Loans
which are 30, 60, 90 and 120 or more days delinquent as calculated by
the Master Servicer, those which are in foreclosure, those with
respect to which the related Mortgagor has had an order for relief
entered in connection with bankruptcy proceeding and those which are
REO Property;
(x) Interest Shortfall with respect to the related Distribution
Date and portion thereof resulting from Voluntary Principal
Prepayments in full or the provisions of the Relief Act;
(xi) [intentionally omitted]
(xii) Amount, if any, by which the aggregate of Scheduled
Payments on the Mortgage Loans that were due on the related Due Date
and delinquent, other than as a result of the Relief Act, as of the
Determination Date exceeds the sum of the Monthly Advances to be made
by the Master Servicer and Certificate Account Advances for such
Distribution Date;
(xiii) Aggregate Master Servicing Fee for the related Due Period;
and
(xiv) Such other information regarding each Mortgage Loan,
including, but not limited to, an updated schedule of the Scheduled
Principal Balances of the Mortgage Loans as of the related Due Date,
in such electronic format, as may be reasonably requested by the
Trustee and, if requested, in such hardcopy or electronic format as
the Master Servicer and the Trustee shall agree and, with respect to
information to be provided to the Seller may be in the "Salomon 500"
format and should be sent to the attention of George Chang, 245 Park
Avenue, New York, New York 10167.
Section 6.08. MONTHLY ADVANCES. If the Scheduled Payment (together
with any advances from any Sub-Servicers) on a Mortgage Loan that was due on a
related Due Date and is delinquent other than as a result of application of the
Relief Act exceeds the amount deposited in the Certificate Account which will be
used for a Certificate Account Advance with respect to such Mortgage Loan, the
Master Servicer will deposit in the Certificate Account not later than the
Advancing Date immediately preceding the related Distribution Date an amount
equal to such deficiency net of the related Master Servicing Fee for such
Mortgage Loan except to the extent the Master Servicer determines any such
advance to be nonrecoverable from Liquidation Proceeds, Insurance Proceeds or
future payments on the Mortgage Loan for which such Monthly Advance was made.
Subject to the foregoing, the Master Servicer shall continue to make such
advances through the date that the related Mortgaged Property has, in the
judgment of the Master Servicer, been completely liquidated. Any amount used as
a Certificate Account Advance shall be replaced by the Master Servicer by
deposit in the Certificate Account on or before any future date on which and to
the extent that funds in the Certificate Account on such date are less than the
amount required to be transferred by the Master Servicer to such subaccount of
the Certificate Account. If applicable, on the fifth Business Day preceding each
Distribution Date, the Master Servicer shall present an Officer's Certificate to
the Trustee (i) stating that the Master Servicer elects not to make a Monthly
Advance in a stated amount and (ii) detailing the reason it deems the advance to
be nonrecoverable.
Section 6.09. COMPENSATING INTEREST PAYMENTS. The Master Servicer
shall deposit in the Certificate Account not later than the Advancing Date
immediately preceding the related Distribution Date an amount equal to the
lesser of (i) the aggregate amounts determined pursuant to subclauses (a) and
(b) of the definition of Interest Shortfall for the related Distribution Date
and (ii) the Master Servicing Fee for such Distribution Date (other than the
portion used to cover lender paid primary mortgage insurance premiums) (such
amount, the "Compensating Interest Payment"). The Master Servicer shall not be
entitled to any reimbursement of any Compensating Interest Payment.
Section 6.10. REPORTS OF FORECLOSURES AND ABANDONMENT OF MORTGAGED
PROPERTY. Each year the Master Servicer shall report or cause to be reported to
the Internal Revenue Service foreclosures and abandonments of any Mortgaged
Property as required by Section 6050J of the Code and shall provide a copy of
such report to the Trustee.
<PAGE>
ARTICLE VII
The Master Servicer
Section 7.01. LIABILITIES OF THE MASTER SERVICER. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein. Only the Master Servicer,
any successor Master Servicer or the Trustee acting as Master Servicer shall be
liable with respect to the servicing of the Mortgage Loans and the REO Property
for actions taken by any such Person in contravention of the Master Servicer's
duties hereunder.
Section 7.02. MERGER OR CONSOLIDATION OF THE MASTER SERVICER. (a) The
Master Servicer will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation,
and will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Certificates or any of the Mortgage Loans and to perform its duties under this
Agreement.
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 7.03. INDEMNIFICATION OF THE TRUSTEE. The Master Servicer
agrees to indemnify the Indemnified Persons for, and to hold them harmless
against, any claim, loss, liability or expense incurred on their part, arising
out of any breach by the Master Servicer of its obligations under this
Agreement, including the costs and expenses (including reasonable legal fees and
expenses) of defending themselves; provided that with respect to any such claim,
the Trustee shall have given the Master Servicer and the Seller written notice
thereof promptly after the Trustee shall have with respect to such claim
knowledge thereof. The Master Servicer shall assume the defense of any claim for
which an Indemnified Person is entitled to indemnification pursuant to this
Section 7.03, and the Master Servicer shall pay all expenses in connection
therewith, including reasonable legal fees, and shall promptly pay, discharge
and satisfy any judgment or decree which may be rendered against an Indemnified
Person in respect of such claim.
Section 7.04. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND
OTHERS. Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Seller, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; PROVIDED, HOWEVER, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) The Master Servicer and any director, officer, employee or agent
of the Master Servicer may rely in good faith on any document of any kind PRIMA
FACIE properly executed and submitted by any Person respecting any matters
arising hereunder.
(c) The Master Servicer and any director, officer, employee or agent
of the Master Servicer shall be indemnified by the Trust and held harmless
thereby against any loss, liability or expense incurred in connection with any
legal proceedings relating to this Agreement or the Certificates (including
reasonable legal fees and disbursements of counsel), other than (i) any loss,
liability or expense related to its failure to perform its duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and (ii) any loss, liability
or expense incurred by reason of such Person's willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
(d) The Master Servicer shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties
under this Agreement and that in its opinion may involve it in any expense or
liability; PROVIDED, HOWEVER, the Master Servicer may in its discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Certificate Account as provided
by Subsection 4.03(a). Nothing in this Subsection 7.04(d) shall affect the
Master Servicer's obligation to supervise, or to take such actions as are
necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.
Section 7.05. MASTER SERVICER NOT TO RESIGN. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law and such
impermissibility cannot be cured. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of
Independent Counsel to such effect delivered to the Trustee. No such resignation
by the Master Servicer shall become effective until the Trustee or a successor
to the Master Servicer reasonably satisfactory to the Trustee shall have assumed
the responsibilities and obligations of the Master Servicer in accordance with
Section 8.02 hereof. The Trustee shall notify the Rating Agencies of the
resignation of the Master Servicer.
Section 7.06. [Reserved]
Section 7.07. SALE AND ASSIGNMENT OF MASTER Servicing. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in their entirety as Master Servicer under this Agreement; PROVIDED, HOWEVER,
that: (i) the purchaser or transferee accepting such assignment and delegation
(a) shall be a Person which shall be qualified to service mortgage loans for
Fannie Mae or Freddie Mac; (b) shall have a net worth of not less than
$10,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (c) shall be reasonably satisfactory to the Trustee (as evidenced
in a writing signed by the Trustee) as having a comparable servicing ability to
that of the Master Servicer on the Closing Date; (d) shall execute and deliver
to the Trustee an agreement, in form and substance reasonably satisfactory to
the Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement and any custodial
agreement from and after the effective date of such agreement; (ii) each Rating
Agency shall be given prior written notice of the identity of the proposed
successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded, qualified or withdrawn as a result of such assignment,
sale and delegation, as evidenced by a letter to such effect delivered to the
Master Servicer and the Trustee; and (iii) the Master Servicer assigning and
selling the master servicing shall deliver to the Trustee an Officer's
Certificate and an Opinion of Independent Counsel, each stating that all
conditions precedent to such action under this Agreement have been completed and
such action is permitted by and complies with the terms of this Agreement. No
such assignment or delegation shall affect any liability of the Master Servicer
arising prior to the effective date thereof.
<PAGE>
ARTICLE VIII
Default
Section 8.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) The Master Servicer fails to cause to be deposited in the
Certificate Account any amount so required to be deposited pursuant to
this Agreement, and such failure continues unremedied for a period of
two Business Days after the date such deposit was required to be made;
or
(ii) The Master Servicer fails to observe or perform in any
material respect any other covenants and agreements set forth in the
Certificates or this Agreement to be performed by it, which covenants
and agreements materially affect the rights of Certificateholders, and
such failure continues unremedied for a period of 60 days after the
date on which written notice of such failure, properly requiring the
same to be remedied, shall have been given to the Master Servicer by
the Trustee or to the Master Servicer and the Trustee by the Holders
of Certificates evidencing Fractional Undivided Interests aggregating
not less than 25% of the Trust Fund; or
(iii) There is entered against the Master Servicer a decree or
order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for
the winding up or liquidation of its affairs, and the continuance of
any such decree or order is unstayed and in effect for a period of 60
consecutive days, or an involuntary case is commenced against the
Master Servicer under any applicable insolvency or reorganization
statute and the petition is not dismissed within 60 days after the
commencement of the case; or
(iv) The Master Servicer consents 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 Master Servicer or substantially all of its
property; or the Master Servicer admits in writing its inability to
pay its debts generally as they become due, files a petition to take
advantage of any applicable insolvency or reorganization statute,
makes an assignment for the benefit of its creditors, or voluntarily
suspends payment of its obligations; or
(v) The Master Servicer assigns or delegates its duties or rights
under this Agreement in contravention of the provisions permitting
such assignment or delegation under Sections 7.05 or 7.07.
In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee if given by such Certificateholders),
with a copy to the Rating Agencies, may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer under this
Agreement and in and to the Mortgage Loans and/or the REO Property serviced by
the Master Servicer and the proceeds thereof. Upon the receipt by the Master
Servicer of the written notice, all authority and power of the Master Servicer
under this Agreement, whether with respect to the Certificates, the Mortgage
Loans, REO Property or under any other related agreements, including the
Sub-Servicing Agreements (but only to the extent that such other agreements
relate to the Mortgage Loans or REO Property) shall, subject to Section 8.02,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; (ii) originals or copies of
all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder; and (iii) the
rights and obligations of the Master Servicer under any Sub-Servicing Agreements
with respect to the Mortgage Loans. In addition to any other amounts which are
then, or, notwithstanding the termination of its activities under this
Agreement, may become payable to the Master Servicer under this Agreement, the
Master Servicer shall be entitled to receive, out of any amount received on
account of a Mortgage Loan or REO Property, that portion of such payments which
it would have received as reimbursement pursuant to Section 3.14 if notice of
termination had not been given. The termination of the rights and obligations of
the Master Servicer shall not affect any obligations incurred by the Master
Servicer prior to such termination.
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF Successor. (a) Upon the
receipt by the Master Servicer of a notice of termination pursuant to Section
8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to the effect
that the Master Servicer is legally unable to act or to delegate its duties to a
Person which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; PROVIDED, HOWEVER, that the Trustee (i) shall be
under no obligation to purchase any Mortgage Loan pursuant to Section 10.01; and
(ii) shall have no obligation whatsoever with respect to any liability incurred
by the Master Servicer (other than to make advances deemed recoverable and not
previously made) at or prior to the time of receipt by the Master Servicer of
such notice or by the Trustee of such Opinion of Independent Counsel, including
any liabilities associated with either Master Servicer's failure to modify its
computer and any other systems in a manner such that such Master Servicer can
service the related Mortgage Loans in accordance with the terms of this
Agreement on and after January 1, 2000. As compensation therefor, the Trustee
shall be entitled to all funds relating to the Mortgage Loans which the Master
Servicer would have been entitled to retain if the Master Servicer had continued
to act hereunder, except for those amounts due the Master Servicer as
reimbursement for advances previously made or expenses previously incurred.
Notwithstanding the above, the Trustee may, if it shall be unwilling so to act,
or shall, if it is legally unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution which is a Fannie Mae or Freddie Mac-approved servicer, and with
respect to a successor to the Master Servicer only, having a net worth of not
less than $10,000,000, as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer hereunder. Pending appointment of a successor to the Master
Servicer 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
the Mortgage Loans as it and such successor shall agree; PROVIDED, HOWEVER, that
no such compensation shall be in excess of that permitted the Trustee under this
Subsection 8.02(a), and that such successor shall undertake and assume the
obligations of the Trustee to pay compensation to any third Person acting as an
agent or independent contractor in the performance of master servicing
responsibilities hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
(b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.
Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating Agencies.
Section 8.04. WAIVER OF DEFAULTS. The Trustee shall transmit by mail
to all Certificateholders, within 60 days after the occurrence of any Event of
Default known to the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust Fund may, on behalf of all Certificateholders,
waive any default by the Master Servicer in the performance of its obligations
hereunder and the consequences thereof, except a default in the making of or the
causing to be made any required distribution on the Certificates. Upon any such
waiver of a past default, such default shall be deemed to cease to exist, and
any Event of Default arising therefrom shall be deemed to have been timely
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Master Servicer shall give notice of any such
waiver to the Rating Agencies.
Section 8.05. LIST OF CERTIFICATEHOLDERS. Upon written request of
three or more Certificateholders of record, for purposes of communicating with
other Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.
<PAGE>
ARTICLE IX
Concerning the Trustee
Section 9.01. DUTIES OF TRUSTEE. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing or waiver 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 as duties of the
Trustee. 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 their exercise, as a
prudent person would exercise under the circumstances in the conduct of his own
affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee pursuant to any provision of this
Agreement, the Trustee shall examine them to determine whether they are in the
form required by 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
Master Servicer hereunder.
(c) The Trustee shall make monthly distributions and the final
distribution to the Certificateholders as provided in Sections 6.01 and 10.01
herein.
(d) 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 or waiver 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 liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the directions of the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than
25% of the Trust Fund, if such action or non-action relates to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or other power
conferred upon the Trustee, under this Agreement; and
(iv) 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's corporate trust
department shall have actual knowledge thereof. In the absence of such
notice, the Trustee may conclusively assume there is no such default
or Event of Default.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in 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, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
(e) All funds received by the Trustee and required to be deposited in
the Certificate Account pursuant to this Agreement will be promptly so deposited
by the Trustee.
Section 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 9.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting in reliance on any resolution, Officer's
Certificate, certificate of a Servicing Officer, certificate of
auditors or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection with
respect to 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, other than its
obligation to give notices pursuant to this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby. Nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee's corporate trust department has
actual knowledge (which has not been cured) to exercise such of the
rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of his own affairs;
(iv) The Trustee shall not be 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 or waiver of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in
writing to do so by Holders of Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust Fund
and provided that 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,
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 Certificateholders requesting the investigation;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or through
agents or attorneys; PROVIDED, HOWEVER, that the Trustee may not
appoint any agent to perform its custodial or paying agent functions
under this Agreement without the express written consent of the Master
Servicer, which consent will not be unreasonably withheld. The Trustee
shall not be liable or responsible for the misconduct or negligence of
any of the Trustee's agents or attorneys or a custodian or paying
agent appointed hereunder by the Trustee with due care and, when
required, with the consent of the Master Servicer;
(vii) Should the Trustee deem the nature of any action required
on its part, other than a payment or transfer under Subsection 4.02(b)
or Section 4.03, to be unclear, the Trustee may require prior to such
action that it be provided by the Master Servicer with reasonable
further instructions;
(viii) 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 accountable for other than its negligence or
willful misconduct in the performance of any such act;
(ix) The Trustee shall not be required to give any bond or surety
with respect to the execution of the trust created hereby or the
powers granted hereunder;
(x) The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Mortgage Loan by the Seller pursuant to this
Agreement or the eligibility of any Mortgage Loan for purposes of this
Agreement; and
(xi) To the extent the Trustee has not received a required
remittance from the Master Servicer on or prior to a Distribution
Date, it shall not be required to make the distribution provided for
in Section 6.01 until it has received such funds.
Section 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee shall have no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of the Certificates (other than the signature and countersignature
of the Trustee on the Certificates) or of any Mortgage Loan except as expressly
provided in Sections 2.02 and 2.05 hereof. The Trustee's signature and
countersignature (or countersignature of its agent) on the Certificates shall be
solely in its capacity as Trustee and shall not constitute the Certificates an
obligation of the Trustee in any other capacity. The Trustee shall not be
accountable for the use or application by the Seller of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Seller with respect to the Mortgage Loans. Subject to the
provisions of Section 2.05, the Trustee shall not be responsible for the
legality or validity of this Agreement or any document or instrument relating to
this Agreement, the validity of the execution of this Agreement or of any
supplement hereto or instrument of further assurance, or the validity, priority,
perfection or sufficiency of the security for the Certificates issued hereunder
or intended to be issued hereunder. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual capacity or in any capacity other than as Trustee hereunder may
become the owner or pledgee of any Certificates with the same rights it would
have if it were not Trustee, and may otherwise deal with the parties hereto.
Section 9.05. TRUSTEE'S FEES AND EXPENSES. (a) The Trustee will be
paid the Trustee's Fee each calendar month from the Certificate Account,
pursuant to Subsection 4.03(b). The Trust Fund will be liable for the Trustee's
expenses, including all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by the Trustee in the administration of the trusts
hereunder as set forth in a fee letter sent by the Trustee to the Seller
(including the reasonable compensation, expenses and disbursements of its
counsel) except any such expense, disbursement or advance as may arise from its
negligence or intentional misconduct or which is the responsibility of the
Certificateholders or the Master Servicer hereunder. Such compensation and
reimbursement obligation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust.
(b) To the extent not otherwise indemnified against by the Master
Servicer hereunder, the Trust shall indemnify the Indemnified Persons for, and
will hold them harmless against, any loss, liability or expense incurred on
their part, arising out of, or in connection with, this Agreement and the
Certificates, including the costs and expenses (including reasonable legal fees
and expenses) of defending themselves against any such claim other than (i) any
loss, liability or expense related to such Indemnified Person's failure to
perform such Indemnified Person's duties in strict compliance with this
Agreement (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and (ii) any loss, liability or expense
incurred by reason of such Indemnified Person's willful misfeasance, bad faith
or negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. This indemnity shall survive the
resignation or removal of the Trustee and the termination of this Agreement.
Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee and
any successor Trustee shall during the entire duration of this Agreement be a
state bank or trust company or a national banking association organized and
doing business under the laws of such state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus and undivided profits of at least $40,000,000 or, in the
case of a successor Trustee, $50,000,000, subject to supervision or examination
by federal or state authority and, in the case of a successor Trustee other than
pursuant to Section 9.10, rated in one of the three highest long-term debt
categories of, or otherwise acceptable to, each of the Rating Agencies. The
Trustee shall not be an Affiliate of the Master Servicer, unless the Trustee
acts as successor Master Servicer hereunder. If the Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.06 the combined capital and surplus of such corporation shall be
deemed to be its total equity capital (combined capital and surplus) as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 9.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.08.
Section 9.07. INSURANCE. The Trustee, at its own expense, shall at all
times maintain and keep in full force and effect: (i) fidelity insurance, (ii)
theft of documents insurance and (iii) forgery insurance (which may be
collectively satisfied by a "Financial Institution Bond" and/or a "Bankers'
Blanket Bond"). All such insurance shall be in amounts, with standard coverage
and subject to deductibles, as are customary for insurance typically maintained
by banks which act as custodians for investor-owned mortgage pools. A
certificate of an officer of the Trustee as to the Trustee's compliance with
this Section 9.07 shall be furnished to the Master Servicer or any
Certificateholder upon reasonable written request.
Section 9.08. RESIGNATION AND REMOVAL OF THE Trustee. (a) The Trustee
may at any time resign and be discharged from the Trust hereby created by giving
written notice thereof to the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Master Servicer shall
promptly appoint a successor Trustee by written instrument, in triplicate, one
copy of which instrument shall be delivered to each of the resigning Trustee and
the successor Trustee. If no successor Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Master Servicer or if at any time the Trustee
shall become incapable of acting, or shall be adjudged a 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
Master Servicer shall be entitled to remove the Trustee and appoint a successor
Trustee by written instrument, in triplicate, one copy of which instrument shall
be delivered to each of the Trustee so removed and the successor Trustee.
(c) The Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund 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
each of the Master Servicer, the Trustee so removed and the successor so
appointed.
(d) No resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.08 shall
become effective except upon appointment of and acceptance of such appointment
by the successor Trustee as provided in Section 9.09.
Section 9.09. SUCCESSOR TRUSTEE. (a) Any successor Trustee appointed
as provided in Section 9.08 shall execute, acknowledge and deliver to the Master
Servicer and to its predecessor Trustee an instrument accepting such appointment
hereunder. The resignation or removal of the predecessor Trustee shall then
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 like effect as if originally
named as Trustee herein. The predecessor Trustee shall after payment of its
outstanding fees and expenses promptly deliver to the successor Trustee all
assets and records of the Trust held by it hereunder, and the Master 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.
(b) No successor Trustee shall accept appointment as provided in this
Section 9.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
(c) Upon acceptance of appointment by a successor Trustee as provided
in this Section 9.09, the successor Trustee shall mail notice of the succession
of such Trustee hereunder to all Certificateholders at their addresses as shown
in the Certificate Register and to the Rating Agencies. The Master Servicer
shall pay the cost of any mailing by the successor Trustee.
Section 9.10. MERGER OR CONSOLIDATION OF TRUSTEE. Any state bank or
trust company or national banking association into which the Trustee may be
merged or converted or with which it may be consolidated or any state bank or
trust company or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any state
bank or trust company or national banking association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such state bank or trust company or
national banking association shall be eligible under the provisions of Section
9.06. Such succession shall be valid 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 9.11. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
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 or property constituting the same may at the time be located, the Master
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Master Servicer 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, and to vest in such Person or Persons, in such capacity, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 9.11, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable.
(b) If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a written request so to do, or in case
an Event of Default with respect to the Master Servicer shall have occurred and
be continuing, the Trustee shall have the power to make such appointment without
the Master Servicer.
(c) No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.06
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.
(d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-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 Master
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 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.
(e) 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 IX. 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.
(f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
(g) No trustee under this Agreement shall be personally liable by
reason of any act or omission of another trustee under this Agreement. The
Master Servicer and the Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee, except that
following the occurrence of any Event of Default which has not been cured, the
Trustee acting alone may accept the resignation of or remove any separate
trustee or co-trustee.
Section 9.12. MASTER SERVICER SHALL PROVIDE INFORMATION AS REASONABLY
REQUIRED. The Master Servicer shall furnish to the Trustee, during the term of
this Agreement, such periodic, special, or other reports or information (and in
such electronic format or other means acceptable to the Trustee) as may
reasonably be requested by the Trustee in order to fulfill its duties and
obligations under this Agreement.
Section 9.13. FEDERAL INFORMATION RETURNS AND REPORTS TO
CERTIFICATEHOLDERS. (a) For Federal income tax purposes, the taxable year of the
REMIC Assets shall be a calendar year and the Trustee shall maintain or cause
the maintenance of the books of each of the REMIC Assets on the accrual method
of accounting.
(b) The Trustee shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns with respect to each of
the REMIC Assets, the Trust Fund, if applicable, 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 Trustee shall
provide the name and address of the person who can be contacted to obtain
information required to be reported to the holders of regular interests in each
of the REMIC Assets (the "REMIC Reporting Agent") as required by IRS Form 8811.
The Trustee shall make the elections to treat each of the REMIC Assets 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 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 Seller
or the Master Servicer. The Holder of the Class R Certificate is hereby
designated as the "Tax Matters Person" (within the meaning of Treas. Reg. ss.ss.
1.860F-4(d)) for the REMIC Assets. The Trustee is hereby designated and
appointed as the agent of such Tax Matters Person. Any Holder of a Residual
Certificate will by acceptance thereof appoint the Trustee as agent and
attorney-in- fact for the purpose of acting as Tax Matters Person for the REMIC
Assets during such time as the Trustee does not own any such Residual
Certificate. In the event that the Code or applicable Treasury regulations
prohibit the Trustee from signing tax or information returns or other
statements, or the Trustee from acting as Tax Matters Person (as an agent or
otherwise), the Trustee 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
Residual Certificate to sign such returns or act as tax matters person. Each
Holder of a Residual Certificate shall be bound by this Section.
(c) The Trustee shall provide upon request such information (which
shall be provided by the Master Servicer) as required in Section 860D(a)(6)(B)
of the Code to the Internal Revenue Service, to any Person purporting to
transfer a Residual Certificate to a Person other than a transferee permitted by
Section 5.05(b), and to any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate, organization described in
Section 1381 of the Code, or nominee holding an interest in a pass-through
entity described in Section 860E(e)(6) of the Code, any record holder of which
is not a transferee permitted by Section 5.05(b) (or which is deemed by statute
to be an entity with a disqualified member).
(d) The Trustee shall prepare and file or cause to be filed any state
income tax returns required under Applicable State Law with respect to each of
the REMIC Assets or the Trust Fund.
<PAGE>
ARTICLE X
Termination
Section 10.01. TERMINATION UPON REPURCHASE BY THE SELLER OR ITS
DESIGNEE OR LIQUIDATION OF ALL MORTGAGE LOANS. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Seller, the Master Servicer
and the Trustee created hereby, other than the obligation of the Trustee or the
Master Servicer to make payments to Certificateholders as hereinafter set forth
and to the Trustee, shall terminate upon:
(i) the repurchase by or at the direction of the Seller or its
designee of all Mortgage Loans and all property remaining in the Trust
at a price equal to (a) 100% of the Outstanding Principal Balance of
each Mortgage Loan (other than a Mortgage Loan related to REO
Property) as of the date of repurchase, net of the principal portion
of any unreimbursed Monthly Advances made by the purchaser, together
with interest at the applicable Mortgage Interest Rate accrued but
unpaid through and including the last day of the month of repurchase,
plus (b) the appraised value of any REO Property less the good faith
estimate of the Seller of liquidation expenses to be incurred in
connection with its disposal thereof, (but not more than the
Outstanding Principal Balance of the related Mortgage Loan, together
with interest at the applicable Mortgage Interest Rate accrued on that
balance but unpaid through and including the last day of the month of
repurchase), such appraisal to be calculated by an appraiser mutually
agreed upon by the Seller and the Trustee at the expense of the
Seller; or
(ii) the later of the making of the final payment or other
liquidation, or any advance with respect thereto, of the last Mortgage
Loan remaining in the Trust Fund or the disposition of all property
acquired with respect to any Mortgage Loan; PROVIDED, HOWEVER, that in
the event that an advance has been made, but not yet recovered, at the
time of such termination, the Person having made such advance shall be
entitled to receive, notwithstanding such termination, any payments
received subsequent thereto with respect to which such advance was
made.
(b) In no event, however, shall the Trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date of this Agreement.
(c) [Reserved.]
(d) The right of the Seller or its designee to repurchase all Mortgage
Loans pursuant to Subsection 10.01(a)(i) above shall be exercisable only if (i)
the aggregate Scheduled Principal Balance of such Mortgage Loans at the time of
any such repurchase is less than 10% of the Cut-off Date Balance or (ii) the
Seller based upon an Opinion of Counsel delivered to the Trustee, has determined
that the REMIC status of the REMIC Assets has been lost or that a substantial
risk exists that such REMIC status will be lost for the then-current taxable
year. At any time thereafter, the Seller may elect to terminate the Trust at any
time, and upon such election, the Seller or its designee shall repurchase all
the Mortgage Loans.
(e) [Reserved].
(f) Provided that the Trustee has received timely notice, the Trustee
shall give notice of any termination to the Certificateholders, with a copy to
the Rating Agencies, upon which the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation. To the extent reasonably practical, such notice shall be given by
letter, mailed not earlier than the 15th day and not later than the 25th day of
the month next preceding the month of such final distribution, and shall specify
(i) the Distribution Date upon which final payment of the Certificates will be
made upon presentation and surrender of the 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 Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified.
(g) If the option of the Seller to repurchase or cause the repurchase
of all Mortgage Loans under Subsection 10.01(a)(i) above is exercised, the
Seller and/or its designee, as the case may be, shall deliver to the Trustee for
deposit in the Certificate Account, by the Business Day prior to the applicable
Distribution Date, an amount equal to the repurchase price for the Mortgage
Loans being purchased by it and all property acquired with respect to such
Mortgage Loans remaining in the Trust. Upon the presentation and surrender of
the Certificates, the Trustee shall distribute an amount equal to (i) the amount
otherwise distributable to the Certificateholders (other than the holder of the
Class R Certificate) on such Distribution Date but for such repurchase, (ii) the
Current Principal Amount and any accrued but unpaid interest at the Pass-Through
Rate to the Certificateholders of each Class, and (iii) the remainder to the
Class R Certificateholder. If the Available Funds are not sufficient to pay all
of the related Certificates in full, any such deficiency will be allocated to
the outstanding Class or Classes of Subordinate Certificates having the highest
numerical designation or, if after the Cross-Over Date, to the Senior
Certificates pro rata. Upon deposit of the required repurchase price and
following such final Distribution Date, the Trustee shall promptly release to
the Seller and/or its designee, as the case may be, the Mortgage Files for the
remaining Mortgage Loans, and the Accounts shall terminate, subject to the
Trustee's obligation to hold any amounts payable to Certificateholders in trust
without interest pending final distributions pursuant to Subsection 10.01(i).
(h) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the Trustee for deposit in the Certificate
Account all distributable amounts remaining in its Protected Account and shall
cause any Sub-Servicers to deliver to the Trustee for deposit in the Certificate
Account all distributable amounts remaining in their Protected Accounts. Upon
the presentation and surrender of the Certificates, the Trustee shall distribute
to the Certificateholders, in accordance with their respective interests, all
distributable amounts remaining in the Certificate Account. Upon deposit by any
Sub-Servicers of such distributable amounts and delivery to the Trustee of an
Officer's Certificate from the Master Servicer certifying that such deposit has
been made, and following such final Distribution Date, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the remaining
Mortgage Loans, and the Accounts shall terminate, subject to the Trustee's
obligation to hold any amounts payable to the Certificateholders in trust
without interest pending final distributions pursuant to Subsection 10.01(ii).
(i) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any 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 to this Agreement.
Section 10.02. ADDITIONAL TERMINATION REQUIREMENTS. (a) If the option
of the Seller to repurchase all the Mortgage Loans under Subsection 10.01(a)(i)
above is exercised, the Trust and the REMIC Assets 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 to comply with the requirements of this Section 10.02 will not (i) result
in the imposition of taxes on "prohibited transactions" as defined in Section
860F of the Code on the REMIC Assets or (ii) cause the REMIC to fail to qualify
as a REMIC at any time that any Regular Certificates are outstanding:
(i) within 90 days prior to the final Distribution Date, at the
written direction of the Seller, the Trustee, as agent for the Tax
Matters Person, shall adopt a plan of complete liquidation of the
Trust Fund and the REMIC Assets provided to it by the Seller 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 Distribution Date, the
Trustee shall sell for cash all of the assets of the Trust to or at
the direction of the Seller; and
(iii) at the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit from the
Certificate Account to the extent on deposit therein (or cause to be
distributed or credited) (i) to the Certificateholders, other than the
Holder of the Class R Certificate, the Current Principal Amount of the
Certificates plus 30 days' interest thereon at the applicable
Pass-Through Rate, and (ii) to the Class R Certificateholder, all cash
on hand from the Certificate Account (other than cash retained to meet
claims); and the Trust and the REMIC Assets shall terminate at such
time.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby (i) agree to adopt such a plan of complete liquidation upon the
written request of the Seller and to take such action in connection therewith as
may be reasonably requested by the Seller and (ii) appoint the Seller as their
attorney-in-fact, with full power of substitution, for purposes of adopting such
a plan of complete liquidation. The Trustee shall adopt such plan of liquidation
by filing the appropriate statement on the final tax return of the REMIC Assets.
<PAGE>
ARTICLE XI
Miscellaneous Provisions
Section 11.01. INTENT OF PARTIES. The parties intend that the REMIC
Assets shall be treated as a REMIC for federal income tax purposes and that the
provisions of this Agreement should be construed in furtherance of this intent.
Section 11.02. AMENDMENT. (a) This Agreement may be amended from time
to time by the Seller, the Trustee and the Master Servicer, without notice to or
the consent of any of the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions herein that may be defective or inconsistent with
any other 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;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion of
Independent Counsel, adversely affect in any material respect the interests of
any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Trustee and the Master Servicer, with the consent of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund or of the applicable Class or Classes if such amendment
affects only such Class or Classes 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 Certificateholders; PROVIDED,
HOWEVER, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all Certificates then outstanding, or (iii) cause the REMIC Assets to
fail to qualify as a REMIC for federal income tax purposes, as evidenced by an
Opinion of Independent Counsel which shall be provided to the Trustee other than
at the Trustee's expense. Notwithstanding any other provision of this Agreement,
for purposes of the giving or withholding of consents pursuant to this Section
11.02(b), Certificates registered in the name of or held for the benefit of the
Seller, the Master Servicer or a Sub-Servicer or any Affiliate thereof shall be
entitled to vote their Fractional Undivided Interests with respect to matters
affecting such Certificates.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to the Rating Agencies.
(d) In the case of an amendment under Subsection 11.02(b) above, it
shall not be necessary for the Certificateholders to approve the particular form
of such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. The manner of obtaining such consents
and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe.
Section 11.03. 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 the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Master
Servicer shall effect such recordation, at its expense upon the request in
writing of a Certificateholder, but only if such direction is accompanied by an
Opinion of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
Section 11.04. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) Except as expressly provided in this Agreement, no
Certificateholders shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement against the
Seller, the Master Servicer or any successor to any such parties unless (i) such
Certificateholder previously shall have given to the Trustee a written notice of
a continuing default, as herein provided, (ii) the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs and expenses and liabilities to be incurred therein or thereby, and (iii)
the Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding.
(d) No one or more Certificateholders shall have any right by virtue
of any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.05. ACTS OF CERTIFICATEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Seller, the Master Servicer nor any successor to any such parties
shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Seller, the Master Servicer or any successor to any such party in
reliance thereon, whether or not notation of such action is made upon such
Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Seller, the Master Servicer or any
Sub-Servicer or any Affiliate thereof shall be disregarded except as otherwise
provided in Section 11.02(b) and except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Certificates which the Trustee knows
to be so owned shall be so disregarded. Certificates which have been pledged in
good faith to the Trustee, the Seller, the Master Servicer or any Sub-Servicer
or any Affiliate thereof may be regarded as outstanding if the pledgor
establishes to the satisfaction of the Trustee the pledgor's right to act with
respect to such Certificates and that the pledgor is not an Affiliate of the
Trustee, the Seller, the Master Servicer or any Sub-Servicer, as the case may
be.
Section 11.06. [Reserved]
Section 11.07. GOVERNING LAW. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.08. NOTICES. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at or mailed by registered
mail, return receipt requested, postage prepaid, or by recognized overnight
courier, to (i) in the case of the Seller, Structured Asset Mortgage
Investments, Inc., 245 Park Avenue, New York, New York 10167, Attention: Vice
President-Servicing (but with respect to monthly reports sent pursuant to
Section 6.07(b), Attention: Lynn Lin), or to such other address as may hereafter
be furnished to the other parties hereto in writing; in the case of the Master
Servicer, Liberty Lending Services, Inc., 2251 Rombach Avenue, Wilmington, Ohio
45177 Attention: Brett L. Foster, Esq. or such other address as may hereafter be
furnished to the other parties hereto in writing; (iii) in the case of the
Trustee, at its Corporate Trust Office, or such other address as may hereafter
be furnished to the other parties hereto in writing; or (iv) in the case of the
Rating Agencies, (x) Fitch IBCA, Inc., One State Street Plaza, New York, New
York 10004 Attention: Residential Mortgage Loan Structured Finance, and (y)
Standard & Poor's, a Division of The McGraw-Hill Companies, Inc., 26 Broadway,
New York, New York, 10004, Attention: Residential Mortgage Surveillance. Any
notice delivered to the Seller, the Master Servicer or the Trustee under this
Agreement shall be effective only upon receipt. Any notice required or permitted
to be mailed to a Certificateholder, unless otherwise provided herein, shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Section 11.09. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
Section 11.10. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.
Section 11.11. ARTICLE AND SECTION HEADINGS. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.
Section 11.12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts each of which when so executed and delivered shall be an
original but all of which together shall constitute one and the same instrument.
Section 11.13. NOTICE TO RATING AGENCIES. The article and section
headings herein are for convenience of reference only, and shall not limited or
otherwise affect the meaning hereof. The Trustee shall use its best efforts to
promptly provide notice to each Rating Agency with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the
Trustee;
4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
6. Any change in the location of the Certificate Account.
In addition, in accordance with Section 6.06 and Section 3.16, the
Trustee and the Master Servicer, respectively, shall promptly furnish to each
Rating Agency copies of the following:
1. Each report to Certificateholders described in Section 6.06; and
2. Each annual independent public accountants' servicing report
received as described in Section 3.16.
<PAGE>
IN WITNESS WHEREOF, the Seller, LLSI as Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
STRUCTURED ASSET MORTGAGE
INVESTMENTS INC., as Seller
By: /S/ MARY HAGGERTY
Name: Mary Haggerty
Title: Vice President
LIBERTY LENDING SERVICES, INC.,
as Master Servicer
By: /S/ JOHN H. POWELL
Name: John H. Powell
Title: President
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By: /S/ JOANNA GIRARDIN
Name: Joanna Girardin
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of November, 1998 before me, a notary public in and
for said State, personally appeared Mary Haggerty, known to me to be a Vice
President of Structured Asset Mortgage Investments Inc., the corporation 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/ HEIDI M. KAHN
Notary Public
No. 02KA5046954
Commission Expires 7/24/1999
[Notarial Seal]
<PAGE>
STATE OF OHIO )
) ss.:
COUNTY OF CLINTON )
On the 30th day of November, 1998 before me, a notary public in and
for said State, personally appeared John H. Powell, known to me to be the
President of Liberty Lending Services, Inc., the corporation 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/ ELIZABETH F. HART
Notary Public
Commission Expires April 16, 2000
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of November, 1998 before me, a notary public in and
for said State, personally appeared Joanna Girardin, known to me to be an
Assistant Vice President of Bankers Trust Company of California, N.A., that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said trust company and acknowledged to me that such
trust company executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/S/ MARIA K. MONTGOMERY
Notary Public
No. 01M0502703
Commission Expires April 4, 2000
[Notarial Seal]
<PAGE>
EXHIBIT A-1
FORM OF FACE OF CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC. OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. A-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO. 86358H ER 6
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : A
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $200,000,000
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $211,895,600
THIS CERTIFIES THAT CEDE & CO.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC. OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. A-2 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO. 86358H ER 6
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : A
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $11,895,600
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $211,895,600
THIS CERTIFIES THAT CEDE & CO.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC. OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
THE YIELD TO THE HOLDER OF THIS CERTIFICATE WILL BE SENSITIVE TO THE RATE
OF PRINCIPAL PAYMENTS ON THE DISCOUNT MORTGAGE LOANS.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. PO-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO. 86358H ES 4
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : PO
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $90,487
SERVICES, INC.
PASS-THROUGH RATE : N/A APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $90,487
THIS CERTIFIES THAT CEDE & CO.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
The Class PO Certificates are principal only certificates and will receive
no interest. The Trustee will distribute on the 25th day of each month, or, if
such 25th day is not a Business Day, the immediately following Business Day
(each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day of the calendar month preceding
the month of such Distribution Date, an amount equal to the product of 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. The Assumed Final Distribution Date is the Distribution Date
immediately following the latest scheduled maturity date of any Mortgage Loan
and is not likely to be the date on which the Current Principal Amount or
Notional Amount, as applicable, of this Class of Certificates will be reduced to
zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC. OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE NOTIONAL AMOUNT OF THIS CERTIFICATE WILL DECREASE AS THE PRINCIPAL
BALANCES OF THE NON-DISCOUNT MORTGAGE LOANS DECREASE. ACCORDINGLY, FOLLOWING THE
INITIAL ISSUANCE OF THE CERTIFICATES, THE NOTIONAL AMOUNT OF THIS CERTIFICATE
WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS
CERTIFICATE MAY ASCERTAIN ITS THEN NOTIONAL AMOUNT BY INQUIRY OF THE TRUSTEE
NAMED HEREIN.
THE YIELD TO THE HOLDER OF THIS CERTIFICATE WILL BE EXTREMELY SENSITIVE TO
THE RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS.
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, 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, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN
ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE RESTRICTIONS SHALL NOT APPLY TO
THE CLASS X CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X CERTIFICATES
ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS BEEN GRANTED AN EXEMPTION BY THE
DEPARTMENT OF LABOR SIMILAR TO PTE 90-30, OR SUCH ENTITY ACTS AS A SELLING AGENT
FOR SUCH CLASS X CERTIFICATES OR (II) IN SECONDARY MARKET TRANSFERS THEREAFTER.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. X-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO. 86358H ET 2
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : X
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $222,864,136
SERVICES, INC.
PASS-THROUGH RATE : N/A APPROXIMATE ORIGINAL CLASS
NOTIONAL AMOUNT : $222,864,136
THIS CERTIFIES THAT LIBERTY SAVINGS BANK, F.S.B.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
This Class of Certificates will have a Notional Amount equal to the
aggregate Scheduled Principal Balance of the Mortgage Loans with Net Rates equal
to or greater than 6.90% per annum and will bear interest thereon at a variable
Pass-Through Rate equal to the weighted average of the excess (a) the Net Rate
on each such Mortgage Loan over (b) 6.90% per annum. Interest on this
Certificate will accrue during the month prior to the month in which a
Distribution Date (as hereinafter defined) occurs on the then Notional Amount
hereof at a per annum rate equal to the Pass-Through Rate. The Trustee will
distribute on the 25th day of each month, or, if such 25th day is not a Business
Day, the immediately following Business Day (each, a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the calendar month preceding the month of such Distribution
Date, an amount equal to the product of 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. The Assumed Final
Distribution Date is the Distribution Date immediately following the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Current Principal Amount or Notional Amount, as applicable, of this
Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC. OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
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 MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, 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, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN
ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE RESTRICTIONS SHALL NOT APPLY TO
THE CLASS X CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X CERTIFICATES
ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS BEEN GRANTED AN EXEMPTION BY THE
DEPARTMENT OF LABOR SIMILAR TO PTE 90-30, OR SUCH ENTITY ACTS AS A SELLING AGENT
FOR SUCH CLASS X CERTIFICATES OR (II) IN SECONDARY MARKET TRANSFERS THEREAFTER.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. B-1-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO. 86358H EU 9
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : B-1
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $6,856,700
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $6,856,700
THIS CERTIFIES THAT CEDE & CO.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC. OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
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 MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, 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, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN
ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE RESTRICTIONS SHALL NOT APPLY TO
THE CLASS X CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X CERTIFICATES
ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS BEEN GRANTED AN EXEMPTION BY THE
DEPARTMENT OF LABOR SIMILAR TO PTE 90-30, OR SUCH ENTITY ACTS AS A SELLING AGENT
FOR SUCH CLASS X CERTIFICATES OR (II) IN SECONDARY MARKET TRANSFERS THEREAFTER.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. B-2-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO. 86358H EV 7
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : B-2
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $3,999,700
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $3,999,700
THIS CERTIFIES THAT CEDE & CO.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC. OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
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 MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, 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, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN
ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE RESTRICTIONS SHALL NOT APPLY TO
THE CLASS X CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X CERTIFICATES
ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS BEEN GRANTED AN EXEMPTION BY THE
DEPARTMENT OF LABOR SIMILAR TO PTE 90-30, OR SUCH ENTITY ACTS AS A SELLING AGENT
FOR SUCH CLASS X CERTIFICATES OR (II) IN SECONDARY MARKET TRANSFERS THEREAFTER.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. B-3-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO. 86358H EW 5
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : B-3
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $2,285,600
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $2,285,600
THIS CERTIFIES THAT CEDE & CO.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST
IN, STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC.
OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS
NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN THE "REMIC ASSETS" AS DEFINED IN THE AGREEMENT REFERRED TO BELOW,
WHICH IS A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), AND IS NOT TREATED AS INDEBTEDNESS OF THE
TRUST REFERRED TO BELOW. EACH PURCHASER OF THE INTEREST REPRESENTED BY THIS
CERTIFICATE WILL BE REQUIRED TO REPRESENT IN AN AFFIDAVIT THAT IT IS NOT A
"DISQUALIFIED ORGANIZATION" AND WILL NOT TRANSFER THIS CERTIFICATE TO A
"DISQUALIFIED ORGANIZATION." THE TERM "DISQUALIFIED ORGANIZATION" IS DEFINED IN
SECTION 860(E)(5) OF THE CODE AND IN THE AGREEMENT. EACH PURCHASER WILL ALSO BE
REQUIRED TO REPRESENT IN SUCH AFFIDAVIT THAT (A) IT IS NOT ACQUIRING
CERTIFICATES FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION AND (B) IT WILL NOT
TRANSFER THIS CERTIFICATE UNLESS (1) IT HAS RECEIVED A SIMILAR AFFIDAVIT FROM
THE PROPOSED TRANSFEREE AND (2) AS OF THE TIME OF THE TRANSFER, IT DOES NOT HAVE
ACTUAL KNOWLEDGE THAT THE AFFIDAVIT OF THE PROPOSED TRANSFEREE IS FALSE. IN THE
EVENT THAT LEGISLATION IS ENACTED WHICH WOULD SUBJECT THE TRUST REFERRED TO
BELOW TO TAX (OR DISQUALIFY THE TRUST REFERRED TO BELOW) ON THE TRANSFER OF AN
INTEREST REPRESENTED BY THIS CERTIFICATE TO ANY OTHER PERSON OR PERSONS,
STRUCTURED ASSET MORTGAGE INVESTMENTS INC. SHALL, WITHOUT FURTHER ACTION ON THE
PART OF THE HOLDERS OF THE CLASS R CERTIFICATES BE EMPOWERED, TO THE FULLEST
EXTENT POSSIBLE AND AS IF THEY HAD SO VOTED, TO AMEND THE AGREEMENT REFERRED TO
BELOW TO RESTRICT OR PROHIBIT PROSPECTIVELY SUCH TRANSFER. THIS CERTIFICATE MAY
NOT BE TRANSFERRED TO A NON-U.S. PERSON AS DESCRIBED IN SECTION 5.05(C) OF THE
AGREEMENT REFERRED TO BELOW WITHOUT THE PRIOR WRITTEN CONSENT OF THE TAX MATTERS
PERSON AND STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF
THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED
HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. R-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO. 86358H EX 3
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : R
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $100
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $100
THIS CERTIFIES THAT BEAR STEARNS SECURITIES CORP.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST
IN, STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC.
OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS
NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF
THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED
HEREIN. THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1),(2)(3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH ALL
THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) A
REPRESENTATION OR CERTIFICATION AS TO COMPLIANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. THIS
CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, 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, AND/OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE
PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT
AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY
PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE RESTRICTIONS SHALL NOT APPLY TO
THE CLASS X CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X CERTIFICATES
ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS BEEN GRANTED AN EXEMPTION BY THE
DEPARTMENT OF LABOR SIMILAR TO PTE 90-30, OR SUCH ENTITY ACTS AS A SELLING AGENT
FOR SUCH CLASS X CERTIFICATES OR (II) IN SECONDARY MARKET TRANSFERS THEREAFTER.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. B-4-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO.
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : B-4
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $1,599,900
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $1,599,900
THIS CERTIFIES THAT LIBERTY SAVINGS BANK, F.S.B.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST
IN, STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC.
OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS
NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF
THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED
HEREIN. THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1),(2)(3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH ALL
THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) A
REPRESENTATION OR CERTIFICATION AS TO COMPLIANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. THIS
CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, 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, AND/OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE
PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT
AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY
PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE RESTRICTIONS SHALL NOT APPLY TO
THE CLASS X CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X CERTIFICATES
ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS BEEN GRANTED AN EXEMPTION BY THE
DEPARTMENT OF LABOR SIMILAR TO PTE 90-30, OR SUCH ENTITY ACTS AS A SELLING AGENT
FOR SUCH CLASS X CERTIFICATES OR (II) IN SECONDARY MARKET TRANSFERS THEREAFTER.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. B-5-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO.
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : B-5
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $685,700
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $685,700
THIS CERTIFIES THAT LIBERTY SAVINGS BANK, F.S.B.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST
IN, STRUCTURED ASSET MORTGAGE INVESTMENTS INC., LIBERTY LENDING SERVICES, INC.
OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS
NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"). THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF
THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED
HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1),(2)(3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH ALL
THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) A
REPRESENTATION OR CERTIFICATION AS TO COMPLIANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. THIS
CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, 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, AND/OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE
PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT
AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY
PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE RESTRICTIONS SHALL NOT APPLY TO
THE CLASS X CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X CERTIFICATES
ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS BEEN GRANTED AN EXEMPTION BY THE
DEPARTMENT OF LABOR SIMILAR TO PTE 90-30, OR SUCH ENTITY ACTS AS A SELLING AGENT
FOR SUCH CLASS X CERTIFICATES OR (II) IN SECONDARY MARKET TRANSFERS THEREAFTER.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. B-6-1 SERIES 1998-10
EVIDENCING A BENEFICIAL INTEREST IN THE BELOW NAMED TRUST
CONSISTING OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS:
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
CUSIP NO.
CUT-OFF DATE : NOVEMBER 1, 1998 CLASS : B-6
FIRST DISTRIBUTION DATE : DECEMBER 25, 1998 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION
DATE : JULY 25, 2028 OF THIS CERTIFICATE
MASTER SERVICER : LIBERTY LENDING ("DENOMINATION"): $1,142,814
SERVICES, INC.
PASS-THROUGH RATE : 6.90% APPROXIMATE ORIGINAL CLASS
PRINCIPAL AMOUNT : $1,142,814
THIS CERTIFIES THAT LIBERTY SAVINGS BANK, F.S.B.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional, first
lien, fixed rate, fully amortizing or balloon payment, mortgage loans, secured
by one- to four-family residences and condominium units located primarily in
California (collectively, the "Mortgage Loans"), which will be sold to the Trust
by Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Liberty Savings Bank, F.S.B ("Liberty") in its individual capacity and
as trustee to SAMI. Liberty Lending Services, Inc. ("LLSI") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among SAMI, as seller, LLSI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of 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.
The Assumed Final Distribution Date is the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount or Notional Amount,
as applicable, of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount, as applicable, of not less than
$1,000,000, in immediately available funds (by wire transfer or otherwise) to
the account specified in writing by such Person to the Trustee. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.
UNLESS THIS CERTIFICATE HAS BEEN COUNTERSIGNED BY AN AUTHORIZED SIGNATORY OF THE
TRUSTEE BY MANUAL SIGNATURE, THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY
BENEFIT UNDER THE AGREEMENT, OR BE VALID FOR ANY PURPOSE.
IN WITNESS WHEREOF, THE TRUSTEE HAS CAUSED THIS CERTIFICATE TO BE DULY
EXECUTED.
Dated: November 30, 1998
Countersigned: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Not in its individual capacity but solely as
Trustee
By___________________________ By_________________________________________
Authorized signatory of AUTHORIZED OFFICER
Bankers Trust Company
of California, N.A., not
in its individual capacity
but solely as Trustee
<PAGE>
EXHIBIT A-2
FORM OF REVERSE OF CERTIFICATES
<PAGE>
STRUCTURED ASSET MORTGAGE INVESTMENTS TRUST 1998-10
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-10
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in ten
Classes. The Certificates, in the aggregate, evidence the entire beneficial
ownership interest in the Trust formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust for payment hereunder and that the Trustee
is not liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Master Servicer and the rights of the Certificateholders under the Agreement
from time to time by the Master Servicer and the Trustee with the consent of the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% (or in certain cases, Holders of Certificates of affected
Classes evidencing such percentage of the Fractional Undivided Interests
thereof). Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in the City of Irvine, State of
California, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in authorized denominations representing a like aggregate
Fractional Undivided Interest will be issued to the designated transferee. In
the case of classes of Certificates not registered under the Securities Act of
1933, as amended, additional documentation will be required to be provided to
the Trustee prior to the effectiveness of a transfer.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Master Servicer, the Trustee and any agent of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Master Servicers, the Trustee nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust created thereby
(other than the obligations to make payments to Certificateholders with respect
to the termination of the Agreement) shall terminate upon the earlier of (i) the
later of the (A) final payment or other liquidation (or Monthly Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other related assets in accordance with the terms
of the Agreement. Such optional repurchase may be made only on or after the
Distribution Date on which the aggregate Scheduled Principal Balance of the
Mortgage Loans is less than 10% of the aggregate Cut-off Date Scheduled
Principal Balance of the Mortgage Loans. The exercise of such right will effect
the early retirement of the Certificates. The Trust also may be terminated on
any Distribution Date upon the determination, based upon an opinion of counsel,
that the REMIC status of the REMIC Assets has been lost or that a substantial
risk exists that such status will be lost for the then current year. In no
event, however, will the Trust created by the Agreement continue beyond the
expiration of 21 years after the death of certain persons identified in the
Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto __________________________________________________________________________
_______________________________________________________________________________
Please print or typewrite name and address including postal zip code assignee)
the within Certificate and hereby authorizes the transfer of registration of
such interest to the assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
Dated: _____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to_____________________________________________________________
_______________________________________________________________________________
FOR THE ACCOUNT OF ____________________________________________________________
ACCOUNT NUMBER ______________, OR, IF MAILED BY CHECK TO_______________________
_______________________________________________________________________________
APPLICABLE STATEMENTS SHOULD BE MAILED TO______________________________________
_______________________________________________________________________________
THIS INFORMATION IS PROVIDED BY _______________________________________________
THE ASSIGNEE NAMED ABOVE, OR __________________________________________________
as its agent.
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
(Available Upon Request)
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF THE SELLER
CONCERNING THE MORTGAGE LOANS
(a) The information set forth and to be set forth in the Mortgage Loan
Schedule was and will be true and correct in all material respects at the date
or dates respecting which such information is furnished;
(b) [Reserved].
(c) The Mortgage Loan has not been delinquent 30 days or more on more
than one occasion during the 12 months preceding the Cut-Off Date. As of the
Closing Date, the Mortgage Loan will not be dishonored and will not be
delinquent in payment more than 30 days, except for no more than three Mortgage
Loans representing less than 0.25% of the Cut-off Date Scheduled Principal
Balance of the Mortgage Loans which will be 59 days or less delinquent; there
are no defaults under the terms of the Mortgage Loan; and the Seller has not
advanced funds, or induced, solicited or knowingly received any advance of funds
from a party other than the owner of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the payment of any amount required by the
Mortgage Loan;
(d) There are no delinquent taxes, ground rents, assessments or other
outstanding charges affecting the related Mortgaged Property;
(e) The Mortgage Note and the Mortgage are 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 and the
Mortgage, or the exercise of any right thereunder, render the Mortgage Note or
Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(f) The Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, except with respect to
certain releases in part that do not materially affect the value of the
Mortgaged Property, nor has any instrument been executed that would effect any
such satisfaction, release, cancellation, subordination or rescission;
(g) Immediately prior to the transfer and assignment to the Trust, the
Mortgage Note and the Mortgage were not subject to an assignment or pledge, and
the Seller had good and marketable title to and was the sole owner of, and had
full right to transfer and sell, the Mortgage Loan to the Trust free and clear
of any encumbrance, equity, lien, pledge, charge, claim or security interest;
(h) 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 permitting
acceleration; and neither the Seller nor any prior mortgagee has waived any
default, breach, violation or event permitting acceleration;
(i) There are no mechanics, or similar liens or claims which have been
filed for work, labor or material affecting the related Mortgaged Property which
are or may be liens prior to or equal to the lien of the related Mortgage;
(j) All improvements subject to the Mortgage lie wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) except for DE MINIMUS
encroachments permitted by the Fannie Mae Guide (MBS Special Servicing Option)
and which has been noted on the appraisal, and no improvements on adjoining
properties encroach upon the Mortgaged Property except those which are insured
against by a title insurance policy and all improvements on the property comply
with all applicable zoning and subdivision laws and ordinances;
(k) The Mortgaged Property at origination of the Mortgage Loan and
currently is free of damage and waste or any such damage and waste is adequately
covered by an insurance policy, and at origination of the Mortgage Loan and
currently there is, no proceeding pending for the total or partial condemnation
thereof;
(l) The original Loan-to-Value Ratio of each Mortgage Loan either was
not more than 95.00% or the excess over 80.00% is insured as to payments
defaults by a Primary Mortgage Insurance Policy issued by a primary mortgage
insurer acceptable to Fannie Mae and Freddie Mac until the Loan-to-Value Ratio
of such Mortgage Loan is reduced to 80.00% except for one Mortgage Loan within
an original Loan-to-Value Ratio of 84.71% which does not have a Primary Mortgage
Insurance Policy;
(m) The Mortgage creates a first lien or a first priority ownership
interest in an estate in fee simple in real property securing the related
Mortgage Note, free and clear of all adverse claims, liens and encumbrances
having priority over the first lien of the Mortgage subject only to (1) the lien
of non-delinquent current real property taxes and assessments not yet due and
payable, (2) covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording which are
acceptable to mortgage lending institutions generally and either (A) which are
referred to or otherwise considered in the appraisal made for the originator of
the Mortgage Loan, or (B) which do not adversely affect the appraised value of
the Mortgaged Property as set forth in such appraisal, and (3) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property;
(n) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which have been recorded to the extent any such recordation is
required by applicable law, and copies of which written instruments are included
in the Mortgage File. No other instrument of waiver, alteration or modification
has been executed, and no Mortgage has been released, in whole or in part, from
the terms thereof except in connection with an assumption agreement, which
assumption agreement is part of the Mortgage File and the terms of which are
reflected in the Mortgage Loan Schedule;
(o) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer pursuant to standard hazard policies conforming to
the requirements of the Pooling and Servicing Agreement. All such standard
hazard policies are in effect and on the date of origination contained a
standard mortgagee clause naming the originator and its successors in interest
as loss payee and such clause is still in effect and all premiums due thereon
have been paid. If the Mortgaged Property is located in an area identified by
the Federal Emergency Management Agency as having special flood hazards under
the Flood Disaster Protection Act of 1973, as amended, such Mortgaged Property
is covered by flood insurance in an amount not less than that set forth in the
Pooling and Servicing Agreement. The Mortgage obligates the Mortgagor thereunder
to maintain all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(p) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;
(q) The Mortgage is a valid, subsisting and enforceable (subject to
the exceptions set forth in clause (m) above) first lien on the Mortgaged
Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems affixed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing securing the
Mortgage Note's original principal balance. The Mortgage and the Mortgage Note
do not contain any evidence of any other security interest or other interest or
right thereto. Such lien is free and clear of all adverse claims, liens and
encumbrances having priority over the first lien of the Mortgage subject only to
permitted encumbrances set forth in clause (m) (1), (2) and (3) above. Any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable first lien and first priority security interest on
the property described therein;
(r) The Mortgage Note and the related Mortgage are original and
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in all respects in accordance with its terms subject to
bankruptcy, insolvency and other laws of general application affecting the
rights of creditors, and the Seller has taken all action necessary to transfer
such rights of enforceability to the Trust. All parties to the Mortgage Note and
the Mortgage had the legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note and the Mortgage. The Mortgage Note and
the Mortgage have been duly and properly executed by such parties. The proceeds
of the Mortgage Loan have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow funds
therefor have been complied with;
(s) The Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy of insurance, issued by a
title insurer qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring (subject to the exceptions contained in (m) (1),
(2) and (3) above) the originator, its respective successors and assigns, as to
the first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan. The originator, its respective successors and assigns are the
sole insured of such lender's title insurance policy, such lender's title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by the Pooling and
Servicing Agreement and this Agreement and will inure to the benefit of the
Trust and its assigns without any further act. No claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage has done, by act or omission, anything which would impair the coverage
of such lender's title insurance policy;
(t) Each Mortgage Loan was originated by or for Headlands Mortgage
Company ("Headlands"). Each Mortgage Loan complies in all material respects with
all the terms, conditions and requirements of Headlands' underwriting standards
in effect at the time of origination of such Mortgage Loan; provided, that
certain Mortgage Loans may have characteristics outside of such underwriting
guidelines where compensating factors are present acceptable to the mortgage
banking industry. The Mortgage Note and Mortgage are on uniform Fannie
Mae/Freddie Mac instruments or are on forms acceptable to Fannie Mae or Freddie
Mac. The Mortgage Loan bears interest at a fixed rate as set forth in the
Mortgage Loan Schedule, and Monthly Payments under the Mortgage Note are due and
payable on the first day of each month. The Mortgage Loan contains the usual and
enforceable provisions of the originator at the time of origination for the
acceleration of the payment of the unpaid principal amount if the related
Mortgaged Property is sold without the prior consent of the mortgagee
thereunder;
(u) The related Mortgage contains enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
(v) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Trust to the trustee under the deed
of trust, except in connection with a trustee's sale or attempted sale after
default by the Mortgagor;
(w) The Mortgage File contains an appraisal of the related Mortgaged
Property made and signed prior to the final approval of the mortgage loan
application by a qualified appraiser, approved by the originator thereof. The
appraisal is in a form generally acceptable to Fannie Mae or Freddie Mac;
(x) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to
above and such collateral does not serve as security for any other obligation;
(y) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of such mortgage loans;
(z) [Reserved];
(aa) Each Mortgage Loan has an original term to maturity of not more
than 30 years, with interest payable in arrears on the first day of each month.
No Mortgage Loan contains terms or provisions which would result in negative
amortization;
(bb) Each of the Mortgaged Properties consists of a single parcel of
real property with single-family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit in a condominium
project. Any condominium unit either conforms with applicable Fannie Mae or
Freddie Mac requirements regarding such dwellings or is covered by a waiver
confirming that such condominium unit is acceptable to Fannie Mae or Freddie Mac
or is otherwise "warrantable" with respect thereto;
(cc) The Mortgage Loans were originated with full, or alternative or
reduced documentation;
(dd) The Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located; and
(ee) Each Mortgage Loan was originated by, (i) a savings and loan
association, savings bank, commercial bank, credit union, insurance company or
similar institution which is supervised and examined by a federal or State
authority, (ii) a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Section 203 and 211 of the National Housing Act or (iii)
a mortgage banker or broker licensed or authorized to do business in the
jurisdiction in which the related Mortgaged Property is located, applying the
same standards and procedures used by the applicable seller in originating
Mortgage Loans directly.
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE
(for Trustee)
LOAN INFORMATION
Name of Mortgagor: _____________________________
Loan No.: ____________________________
TRUSTEE
Name: Bankers Trust Company of California N.A.
Address: 3 Park Plaza, 16th Floor
Irvine, CA 92614
Attention: Corporate Trust Department,
ref: Bear Stearns/Liberty (SAMI) 1998-10
Trustee Mortgage
File No.: ____________________________
MASTER SERVICER
Name: Liberty Lending Services, Inc.
Address: 2251 Rombach Avenue
Wilmington, OH 45177
ATTN: ______________
Certificates: Mortgage Pass-Through Certificates,
Series 1998-10
The undersigned hereby acknowledges that it has received from Bankers
Trust Company of California, N.A., as Trustee for the holders of Structured
Asset Mortgage Investments Trust 1998-10, Mortgage Pass-Through Certificates,
Series 1998-10, the documents referred to below (the "Documents"). All
capitalized terms not otherwise defined in this Request for Release shall have
the meanings given them in the Pooling and Servicing Agreement dated as of
November 1, 1998 (the "Pooling and Servicing Agreement") among the Trustee,
Liberty Lending Services, Inc. and Structured Asset Mortgage Investments Inc.
( ) Mortgage Note dated ________, 19__, in the original principal sum of
$____________, made by _____________, payable to, or endorsed
to the order of, the Trustee.
( ) Mortgage recorded on _____________ as instrument
no. _____________ in the County Recorder's Office of the
County of _______________, State of ____________ in book/reel/
docket _______________ of official records at page/image ________.
( ) Deed of Trust recorded on _______________ as instrument
no. _________ in the County Recorder's Office of the
County of _______________, State of _______________ in
book/reel/docket __________ of official records at page/image
____________________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee,
recorded on ______________ as instrument no. ______ in
the County Recorder's Office of the County of _______________, State
of _______________ in book/reel/docket __________ of official records at
page/image ________________.
( ) Other documents, including any amendments, assignments
or other assumptions of the Mortgage Note or Mortgage:
( ) _____________________________
( ) _____________________________
( ) _____________________________
The undersigned hereby acknowledges and agrees as follows:
(1) The Master Servicer shall, and if the Master Servicer
releases the Documents to a Sub-Servicer or related Insurer the Master
Servicer shall cause such Sub-Servicer or related Insurer to, hold and
retain possession of the Documents in trust for the benefit of the
Trustee, solely for the purposes provided in the Agreement.
(2) The Master Servicer shall not cause or permit the Documents
to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the
Master Servicer assert or seek to assert any claims or rights of setoff to
or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return the Documents to the
Trustee when the need therefor no longer exists, unless the Mortgage Loan
relating to the Documents has been liquidated and the proceeds thereof
have been remitted to the Certificate Account or the Documents are being
used to pursue foreclosure or other legal proceedings and except as
expressly provided in the Agreement.
(4) Prior to the return of the Documents to the Trustee, the
Master Servicer shall, and if the Master Servicer releases such Documents
to a Sub-Servicer or related Insurer, the Master Servicer shall cause such
Sub-Servicer or related Insurer to, retain the Documents in its control
unless the Documents have been delivered to an attorney, or to a public
trustee or other public official as required by law, to initiate or pursue
legal action or other proceedings for the foreclosure of the Mortgaged
Property either judicially or nonjudicially, and the Master Servicer has
delivered to the Trustee a certificate of a Servicing Officer certifying
as to the name and address of the Person to which the Documents were
delivered and the purpose or purposes of such delivery.
(5) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the Master
Servicer shall at all times be earmarked for the account of the Trustee,
and the Master Servicer shall keep the Documents and any proceeds separate
and distinct from all other property in the possession, custody or control
of the Master Servicer.
Date: ______________________, 19__
LIBERTY LENDING SERVICES, INC.
By: _______________________________________
Name:
Title:
<PAGE>
EXHIBIT E
Affidavit pursuant to
Section 860E(e)(4) of the
Internal Revenue Code of
1986, as amended, and for
other purposes
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of__________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended,
and will not be a disqualified organization as of [Closing Date] [date of
purchase]; (ii) it is not acquiring the Structured Asset Mortgage Investments
Trust 1998-10, Mortgage Pass-Through Certificates, Series 1998-10, Class R
Certificate (the "Residual Certificate") for the account of a disqualified
organization; (iii) it consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by Structured Asset Mortgage
Investments Inc. (upon advice of counsel) to constitute a reasonable arrangement
to ensure that the Residual Certificate will not be owned directly or indirectly
by a disqualified organization; and (iv) it will not transfer such Residual
Certificate unless (a) it has received from the transferee an affidavit in
substantially the same form as this affidavit containing these same four
representations and (b) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false.
3. That the Investor is one of the following: (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
taxable as such created or organized in or under the laws of the United States
or any political subdivision thereof or (iii) an estate that is subject to U.S.
federal income tax regardless of the source of its income, or (iv) a trust other
than a "foreign trust," as defined in Section 7701(a)(31) of the Code.
4. That the Investor's taxpayer identification number is ___________.
5. That no purpose of the acquisition of the Residual Certificate is
to avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificate, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificate.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificate as they become due.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this day of , 19__.
[NAME OF INVESTOR]
By:
[Name of Officer]
[Title of Officer]
[Address of Investor for
receipt of distributions]
Address of Investor
for receipt of tax information:
<PAGE>
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this day of , 19__.
NOTARY PUBLIC
COUNTY OF __________________
STATE OF __________________
My commission expires the ___ day of _____________ , 19__.
<PAGE>
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
[SELLER]
Bankers Trust Company of
California, N.A.
3 Park Plaza, 16th Floor
Irvine, California 92614
Attention: Attention: Corporate Trust Department,
ref: Bear Stearns/Liberty (SAMI) 1998-10
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: Structured Asset Mortgage Investments Trust 1998-10,
Mortgage Pass-Through Certificates, Series 1998-10 (the
"Certificates"), including the Class B-4, Class B-5,Class B-6
(THE "PRIVATELY OFFERED CERTIFICATES")
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates are
not being registered under the Securities Act of 1933, as
amended (the "Act") or any applicable state securities or
"Blue Sky" laws, and are being sold to us in a transaction
that is exempt from the registration requirements of such
laws;
(ii) any information we desired concerning the Certificates,
including the Privately Offered Certificates, the trust in
which the Certificates represent the entire beneficial
ownership interest (the "Trust") or any other matter we
deemed relevant to our decision to purchase Privately
Offered Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment in
Privately Offered Certificates; we are an institutional
"accredited investor" as defined in Section 501(a) of
Regulation D promulgated under the Act and a sophisticated
institutional investor;
(iv) we are acquiring Privately Offered Certificates for our own
account, not as nominee for any other person, and not with a
present view to any distribution or other disposition of the
Privately Offered Certificates;
(v) we agree the Privately Offered Certificates must be held
indefinitely by us (and may not be sold, pledged,
hypothecated or in any way disposed of) unless subsequently
registered under the Act and any applicable state securities
or "Blue Sky" laws or an exemption from the registration
requirements of the Act and any applicable state securities
or "Blue Sky" laws is available;
(vi) we agree that in the event that at some future time we wish
to dispose of or exchange any of the Privately Offered
Certificates (such disposition or exchange not being
currently foreseen or contemplated), we will not transfer or
exchange any of the Privately Offered Certificates unless:
(A) (1) the sale is to an Eligible Purchaser (as
defined below), (2) if required by the Pooling and Servicing
Agreement (as defined below) a letter to substantially the
same effect as either this letter or, if the Eligible
Purchaser is a Qualified Institutional Buyer as defined
under Rule 144A of the Act, the Rule 144A and Related
Matters Certificate in the form attached to the Pooling and
Servicing Agreement (as defined below) (or such other
documentation as may be acceptable to the Trustee) is
executed promptly by the purchaser and delivered to the
addressees hereof and (3) all offers or solicitations in
connection with the sale, whether directly or through any
agent acting on our behalf, are limited only to Eligible
Purchasers and are not made by means of any form of general
solicitation or general advertising whatsoever; and
(B) if the Privately Offered Certificate is not
registered under the Act (as to which we acknowledge you
have no obligation), the Privately Offered Certificate is
sold in a transaction that does not require registration
under the Act and any applicable state securities or "blue
sky" laws and, if Bankers Trust Company of California,
N.A.(the "Trustee") so requests, a satisfactory Opinion of
Counsel is furnished to such effect, which Opinion of
Counsel shall be an expense of the transferor or the
transferee;
(vii) we agree to be bound by all of the terms (including those
relating to restrictions on transfer) of the Pooling and
Servicing Agreement (as defined below), pursuant to which
the Trust was formed; we have reviewed carefully and
understand the terms of the Pooling and Servicing Agreement;
(viii) we either: (i) are not acquiring the Privately Offered
Certificate directly or indirectly by, or on behalf of, 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 ("ERISA"), and/or section
4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), or (ii) hereby certify that the proposed transfer
and/or holding of a Privately Offered Certificate and the
servicing, management and/or operation of the Trust: (i)
will not result in a prohibited transaction under Section
406 of ERISA or Section 4975 of the Code which is not
covered under an individual or class prohibited transaction
exemption including but not limited to Department of Labor
Prohibited Transaction Exemption ("PTE") 84-14 (Class
Exemption for Plan Asset Transactions Determined by
Independent Qualified Professional Asset Managers), PTE
91-38 (Class Exemption for Certain Transactions Involving
Bank Collective Investment Funds), PTE 90-1 (Class Exemption
for Certain Transactions Involving Insurance Company Pooled
Separate Accounts), PTE 95-60 (Class Exemption for Certain
Transactions Involving Insurance Company General Accounts)
and PTCE 96-23 (Class Exemption for Plan Asset Transactions
Determined by In-House Asset Managers and (ii) will not give
rise to any additional fiduciary duties under ERISA on the
part of the Master Servicer or the Trustee.
(ix) We understand that each of the Class B-4, B-5 and B-6
Certificates bears, and will continue to bear, legends to
substantially the following effect: "THIS CERTIFICATE HAS
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS
INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2)
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN
CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or
(7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH ALL
OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING
NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B)
THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE
TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY
OTHER APPLICABLE JURISDICTION."
"THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY
BY, OR ON BEHALF OF, 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,
AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A
CERTIFICATE AND THE SERVICING, MANAGEMENT AND/OR OPERATION
OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY
PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN
INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION
EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR
PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL
FIDUCIARY DUTIES ON THE PART OF THE MASTER SERVICER OR THE
TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A
BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE
EVIDENCED BY A REPRESENTATION TO SUCH EFFECT BY OR ON BEHALF
OF A HOLDER OF A PRIVATE CERTIFICATE OR CLASS X CERTIFICATE.
THE ABOVE RESTRICTIONS SHALL NOT APPLY TO THE CLASS X
CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X
CERTIFICATES ARE UNDERWRITTEN, PLACED BY AN ENTITY WHICH HAS
BEEN GRANTED AN EXEMPTION BY THE DEPARTMENT OF LABOR SIMILAR
TO PTE 90-30, OR SUCH ENTITY ACTS AS A SELLING AGENT FOR
SUCH CLASS X CERTIFICATES OR (II) IN SECONDARY MARKET
TRANSFERS THEREAFTER."
"ELIGIBLE PURCHASER" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of November 1, 1998 among
Structured Asset Mortgage Investments Inc., Liberty Lending Services, Inc. and
Bankers Trust Company of California, N.A., as Trustee (the "Pooling and
Servicing Agreement").
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any):___________________
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ____ day of ________, 19__.
Very truly yours,
[PURCHASER]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
<PAGE>
- -------------------------------------------
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
<PAGE>
EXIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[Date]
[SELLER]
Bankers Trust Company of
California, N.A.
3 Park Plaza, 16th Floor
Irvine, CA 92614
Attention: Attention: Corporate Trust Department,
ref: Bear Stearns/Liberty (SAMI) 1998-10
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: Structured Asset Mortgage Investments Trust 1998-10 Mortgage
Pass-Through Certificates, Series 1998-10 (the "Certificates"),
including the CLASS B-4, CLASS B-5, CLASS B-6 CERTIFICATES (THE
"PRIVATELY OFFERED CERTIFICATES")
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered
Certificates, the undersigned certifies to each of the parties to whom this
letter is addressed that it is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act of 1933, as amended (the "Act")) as follows:
1. It owned and/or invested on a discretionary basis eligible securities
(excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to a
repurchase agreement and swaps), as described below:
Date: _____________, 19__ (must be on or after the close of its most recent
fiscal year)
Amount: $_________________; and
2. The dollar amount set forth above is:
a. greater than $100 million and the undersigned is one of the following
entities:
(1) |_| an insurance company as defined in Section 2(13) of the Act;
or1
(2) |_| an investment company registered under the Investment
Company Act or any business development company as defined
in Section 2(a)(48) of the Investment Company Act of 1940;
or
(3) |_| a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958; or
(4) |_| a plan (i) established and maintained by a state, its
political subdivisions, or any agency or instrumentality of
a state or its political subdivisions, the laws of which
permit the purchase of securities of this type, for the
benefit of its employees and (ii) the governing investment
guidelines of which permit the purchase of securities of
this type; or
(5) |_| a business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940; or
(6) |_| a corporation (other than a U.S. bank, savings and loan
association or equivalent foreign institution), partnership,
Massachusetts or similar business trust, or an organization
described in Section 501(c)(3) of the Internal Revenue Code;
or
(7) |_| a U.S. bank, savings and loan association or equivalent
foreign institution, which has an audited net worth of at
least $25 million as demonstrated in its latest annual
financial statements; or
(8) |_| an investment adviser registered under the Investment
Advisers Act; or
____________________
1 A purchase by an insurance company for one or more of its separate
accounts, as defined by Section 2(a)(37) of the Investment Company Act
of 1940, which are neither registered nor required to be registered
thereunder, shall be deemed to be a purchase for the account of such
insurance company.
b. |_| greater than $10 million, and the undersigned is a
broker-dealer registered with the SEC; or
c. |_| less than $10 million, and the undersigned is a
broker-dealer registered with the SEC and will only purchase
Rule 144A securities in transactions in which it acts as a
riskless principal (as defined in Rule 144A); or
d. |_| less than $100 million, and the undersigned is an investment
company registered under the Investment Company Act of 1940,
which, together with one or more registered investment
companies having the same or an affiliated investment
adviser, owns at least $100 million of eligible securities;
or
e. |_| less than $100 million, and the undersigned is an entity,
all the equity owners of which are qualified institutional
buyers.
The undersigned further certifies that it is purchasing a Privately
Offered Certificate for its own account or for the account of others that
independently qualify as "Qualified Institutional Buyers" as defined in Rule
144A. It is aware that the sale of the Privately Offered Certificates is being
made in reliance on its continued compliance with Rule 144A. It is aware that
the transferor may rely on the exemption from the provisions of Section 5 of the
Act provided by Rule 144A. The undersigned understands that the Privately
Offered Certificates may be resold, pledged or transferred only to (i) a person
reasonably believed to be a Qualified Institutional Buyer that purchases for its
own account or for the account of a Qualified Institutional Buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance in Rule
144A, or (ii) an institutional "accredited investor," as such term is defined
under Rule 501 of the Act in a transaction that otherwise does not constitute a
public offering.
The undersigned agrees that if at some future time it wishes to
dispose of or exchange any of the Privately Offered Certificates, it will not
transfer or exchange any of the Privately Offered Certificates to a Qualified
Institutional Buyer without first obtaining a Rule 144A and Related Matters
Certificate in the form hereof from the transferee and delivering such
certificate to the addressees hereof. Prior to making any transfer of Privately
Offered Certificates, if the proposed Transferee is an institutional "accredited
investor," the transferor shall obtain from the transferee and deliver to the
addressees hereof an Investment Letter in the form attached to the Pooling and
Servicing Agreement dated as of November 1, 1998 among Structured Asset Mortgage
Investments Inc., as Seller, Liberty Lending Services, Inc. as Master Servicer,
and Bankers Trust Company of California, N.A., as Trustee, pursuant to which the
Certificates were issued.
The undersigned certifies that it either: (i) is not acquiring the
Privately Offered Certificate directly or indirectly by, or on behalf of, 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 ("ERISA"),
and/or section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), or (ii) the proposed transfer and/or holding of a Privately Offered
Certificate and the servicing, management and/or operation of the Trust and its
assets: (i) will not result in a prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code which is not covered under an individual or
class prohibited transaction exemption including but not limited to Department
of Labor Prohibited Transaction Exemption ("PTE") 84-14 (Class Exemption for
Plan Asset Transactions Determined by Independent Qualified Professional Asset
Managers), PTE 91-38 (Class Exemption for Certain Transactions Involving Bank
Collective Investment Funds), PTE 90-1 (Class Exemption for Certain Transactions
Involving Insurance Company Pooled Separate Accounts), PTE 95-60 (Class
Exemption for Certain Transactions Involving Insurance Company General Accounts)
and PTCE 96-23 (Class Exemption for Plan Asset Transactions Determined by
In-House Asset Managers and (ii) will not give rise to any additional fiduciary
duties under ERISA on the part of the Master Servicer or the Trustee.
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any):___________________
<PAGE>
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ____ day of ________, 19__.
Very truly yours,
[PURCHASER]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
- -----------------------------------------
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
<PAGE>
EXHIBIT G
FORM OF INITIAL CERTIFICATION
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Liberty Lending Services, Inc.
2251 Rombach Avenue
Wilmington, OH 45177
Re: Pooling and Servicing Agreement dated as of
November 1, 1998, among Structured Asset
Mortgage Investments Inc., as seller, Liberty
Lending Services, Inc., as master servicer, and
Bankers Trust Company of California, N.A., as
trustee, regarding Structured Asset Mortgage
Investments Trust 1998-10, Mortgage Pass-Through
Certificates, SERIES 1998-10
------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that: (i) all documents required
to be included in the Mortgage File pursuant to the Pooling and Servicing
Agreement are in its possession; (ii) such documents have been reviewed by it
and appear regular on their face, have, where applicable, been executed and
relate to such Mortgage Loan; and (iii) based on examination by it, and only as
to such documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor Name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as
Trustee
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF FINAL CERTIFICATION
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Liberty Lending Services, Inc.
2251 Rombach Avenue
Wilmington, OH 45177
Re: Pooling and Servicing Agreement dated as of
November 1, 1998, among Structured Asset
Mortgage Investments Inc., as seller, Liberty
Lending Services, Inc., as master servicer, and
Bankers Trust Company of California, N.A., as
trustee, regarding Structured Asset Mortgage
Investment Trust 1998-10, Mortgage Pass-Through
Certificates, SERIES 1998-10
-------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has received the documents set forth
in Section 2.01 and has determined that (i) all documents required to be
included in the Mortgage File pursuant to the Pooling and Servicing Agreement
are in its possession; (ii) such documents have been reviewed by it and appear
regular on their face, have, where applicable, been executed and relate to such
Mortgage Loan; and (iii) based on examination by it, and only as to such
documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of 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.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.
as Trustee
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT I
FORM OF ERISA LETTER FOR CLASS X CERTIFICATES
[Date]
[SELLER]
Bankers Trust Company of
California, N.A.
3 Park Plaza, 16th Floor
Irvine, California 92614
Attention: Attention: Corporate Trust Department,
ref: Bear Stearns/Liberty (SAMI) 1998-10
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: Structured Asset Mortgage Investments Trust 1998-10,
Mortgage Pass-Through Certificates, Series 1998-10
(the "Certificates"), INCLUDING THE CLASS X
CERTIFICATES(THE "CLASS X CERTIFICATES")
Dear Ladies and Gentlemen:
In connection with our purchase of Class X Certificates, we confirm
that:
(i) we either:
(A) (i) are not acquiring the Class X Certificates
directly or indirectly by, or on behalf of, 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 ("ERISA"), and/or
section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), or (ii) hereby certify that the
proposed transfer and/or holding of a Class X
Certificate and the servicing, management and/or
operation of the Trust: (i) will not result in a
prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code which is not covered under an
individual or class prohibited transaction exemption
including but not limited to Department of Labor
Prohibited Transaction Exemption ("PTE") 84-14 (Class
Exemption for Plan Asset Transactions Determined by
Independent Qualified Professional Asset Managers), PTE
91-38 (Class Exemption for Certain Transactions
Involving Bank Collective Investment Funds), PTE 90-1
(Class Exemption for Certain Transactions Involving
Insurance Company Pooled Separate Accounts), PTE 95-60
(Class Exemption for Certain Transactions Involving
Insurance Company General Accounts) and PTCE 96-23
(Class Exemption for Plan Asset Transactions Determined
by In-House Asset Managers and (ii) will not give rise
to any additional fiduciary duties under ERISA on the
part of either Master Servicer or the Trustee; or
(B) hereby certify that the Class X Certificates
either: (i) are underwritten, placed by an entity which
has been granted an exemption by the Department of
Labor similar to PTE 90-30, or such entity acts as a
selling agent for such Class X Certificates or (ii) are
being transfered in a secondary market transfer
thereafter;
(ii) We understand that if (B) above does not apply, the
Class X Certificates bear, and will continue to bear, a
legend to substantially the following effect:
"THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR
INDIRECTLY BY, OR ON BEHALF OF, 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, AND/OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE
PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND
THE SERVICING, MANAGEMENT AND/OR OPERATION OF THE TRUST
AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED
TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR
CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT
NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION
("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE
96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL
FIDUCIARY DUTIES ON THE PART OF THE MASTER SERVICER OR
THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN
OWNER OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL
CERTIFICATE AND WILL BE EVIDENCED BY A REPRESENTATION
TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE OR CLASS X CERTIFICATE. THE ABOVE
RESTRICTIONS SHALL NOT APPLY TO THE CLASS X
CERTIFICATES EITHER: (I) IN THE EVENT THAT THE CLASS X
CERTIFICATES ARE UNDERWRITTEN, PLACED BY AN ENTITY
WHICH HAS BEEN GRANTED AN EXEMPTION BY THE DEPARTMENT
OF LABOR SIMILAR TO PTE 90-30, OR SUCH ENTITY ACTS AS A
SELLING AGENT FOR SUCH CLASS X CERTIFICATES OR (II) IN
SECONDARY MARKET TRANSFERS THEREAFTER."
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of November 1, 1998 among
Structured Asset Mortgage Investments Inc., Liberty Lending Services, Inc. and
Bankers Trust Company of California, N.A., as Trustee (the "Pooling and
Servicing Agreement").
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any):___________________
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned on the ____ day of
________, 19__.
Very truly yours,
[PURCHASER]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
<PAGE>
- -----------------------------------
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
