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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 26, 1999
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-51279 13-3633241
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
245 Park Avenue
New York, New York 10167
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code, is (212) 272-2000
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Not applicable
(b) Not applicable
(c) Exhibits:
1. Pooling and Servicing Agreement, dated as of February 1, 1999 among
Structured Asset Mortgage Investments Inc. as depositor, Norwest Bank Minnesota,
National Association as master servicer and The First National Bank of Chicago
as trustee. Investors other than those specifically requesting them.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf of the
Registrant by the undersigned thereunto duly authorized.
STRUCTURED ASSET MORTGAGE
INVESTMENTS INC.
By: /s/ Sara Bonesteel
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Name: Sara Bonesteel
Title: Managing Director
Dated: February 26, 1999
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EXHIBIT INDEX
Item 601 (a) of Sequentially
Exhibit Regulation S-K Numbered
Number Exhibit No. Description Page
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1 4 Pooling and Servicing 5
Agreement
EXHIBIT
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STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
Depositor,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Master Servicer
and
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of February 1, 1999
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Structured Asset Mortgage Investments Inc.
Mortgage Pass-Through Certificates
Series 1999-1
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
<S> <C> <C>
Section 2.01. Conveyance of Mortgage Loans to Trustee...............................................32
Section 2.02. Acceptance of Mortgage Loans by Trustee...............................................34
Section 2.03. Assignment of Interest in the Mortgage Loan Purchase Agreement
and other agreements .................................................................36
Section 2.04. Substitution of Mortgage Loans........................................................37
Section 2.05. Issuance of Certificates..............................................................37
Section 2.06. Representations and Warranties of the Trustee.........................................38
Section 2.07. Representations and Warranties Concerning the Depositor...............................39
Section 2.08. Representations and Warranties of the Master Servicer.................................40
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. Duties of the Master Servicer.........................................................42
Section 3.02 Monitoring of Servicers' Performance..................................................42
Section 3.03. Master Servicer Fidelity Bond and Master Servicer Errors and Omissions
Insurance Policy......................................................................43
Section 3.04 Master Servicer's Financial Statements and Related Information........................43
Section 3.05 Power to Act; Procedures..............................................................43
Section 3.06 Termination of Servicing Agreements; Successor Servicers..............................44
Section 3.07 "Due on Sale" Clauses; Assumption Agreements..........................................44
Section 3.08 Release of Mortgage Files.............................................................44
Section 3.09 Documents, Records and Funds in Possession of Master Servicer To Be
Held for Trustee......................................................................45
Section 3.10 The GEMICO Policies...................................................................46
Section 3.11 Standard Hazard and Flood Insurance Policies..........................................46
Section 3.12 Presentment of Claims and Collection of Proceeds......................................47
Section 3.13 Maintenance of the Primary Mortgage Insurance Policies................................47
Section 3.14 Trustee To Retain Possession of Certain Insurance Policies and Documents..............48
Section 3.15 Realization Upon Defaulted Mortgage Loans.............................................48
Section 3.16 Compensation to the Master Servicer...................................................48
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Section 3.17 REO Property..........................................................................49
Section 3.18 Annual Officer's Certificate as to Compliance.........................................49
Section 3.19 Annual Independent Accountants' Servicing Report......................................50
ARTICLE IV
Accounts
Section 4.01. Protected Accounts....................................................................51
Section 4.02. Certificate Account...................................................................52
Section 4.03. Permitted Withdrawals and Transfers from the Certificate Account......................54
ARTICLE V
Certificates
Section 5.01. Certificates..........................................................................57
Section 5.02. Registration of Transfer and Exchange of Certificates.................................61
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.....................................65
Section 5.04. Persons Deemed Owners.................................................................65
Section 5.05. Transfer Restrictions on Residual Certificates........................................65
Section 5.06. Restrictions on Transferability of Private Certificates...............................66
Section 5.07. ERISA Restrictions....................................................................67
Section 5.08. Rule 144A Information.................................................................68
ARTICLE VI
Payments to Certificateholders
Section 6.01. Distributions on the Certificates.....................................................69
Section 6.02. Allocation of Losses..................................................................71
Section 6.03. Payments..............................................................................73
Section 6.04. Statements to Certificateholders......................................................74
Section 6.05. Reserved..............................................................................76
Section 6.06. Monthly Advances......................................................................76
Section 6.07. Compensating Interest Payments........................................................77
Section 6.08. Reports of Foreclosures and Abandonment of Mortgaged Property.........................77
ARTICLE VII
The Master Servicer
Section 7.01. Liabilities of the Master Servicer....................................................78
Section 7.02. Merger or Consolidation of the Master Servicer........................................78
Section 7.03. Indemnification of the Trustee........................................................78
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Section 7.04. Limitation on Liability of the Master Servicer and Others.............................78
Section 7.05. Master Servicer Not to Resign.........................................................79
Section 7.06. Successor Master Servicer.............................................................80
Section 7.07. Sale and Assignment of Master Servicing...............................................80
ARTICLE VIII
Default
Section 8.01. Events of Default.....................................................................81
Section 8.02. Trustee to Act; Appointment of Successor..............................................82
Section 8.03. Notification to Certificateholders....................................................83
Section 8.04. Waiver of Defaults....................................................................83
Section 8.05. List of Certificateholders............................................................84
ARTICLE IX
Concerning the Trustee
Section 9.01. Duties of Trustee.....................................................................85
Section 9.02. Certain Matters Affecting the Trustee.................................................86
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.................................88
Section 9.04. Trustee May Own Certificates..........................................................88
Section 9.05. Trustee's Fees and Expenses...........................................................88
Section 9.06. Eligibility Requirements for Trustee..................................................89
Section 9.07. Insurance.............................................................................89
Section 9.08. Resignation and Removal of the Trustee................................................90
Section 9.09. Successor Trustee.....................................................................90
Section 9.10. Merger or Consolidation of Trustee....................................................91
Section 9.11. Appointment of Co-Trustee or Separate Trustee.........................................91
Section 9.12. Master Servicer Shall Provide Information as Reasonably Required......................92
Section 9.13. Federal Information Returns and Reports to Certificateholders.........................92
Section 9.14. Appointment of Custodians.............................................................93
ARTICLE X
Termination
Section 10.01. Termination Upon Repurchase by the Depositor or its Designee or
Liquidation of the Mortgage Loans.....................................................95
Section 10.02. Additional Termination Requirements...................................................98
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ARTICLE XI
Miscellaneous Provisions
Section 11.01. Intent of Parties.....................................................................99
Section 11.02. Amendment.............................................................................99
Section 11.03. Recordation of Agreement.............................................................100
Section 11.04. Limitation on Rights of Certificateholders...........................................100
Section 11.05. Acts of Certificateholders...........................................................101
Section 11.06. Governing Law........................................................................101
Section 11.07. Notices..............................................................................101
Section 11.08. Severability of Provisions...........................................................101
Section 11.09. Successors and Assigns...............................................................102
Section 11.10. Article and Section Headings.........................................................102
Section 11.11. Counterparts.........................................................................102
Section 11.12. Notice to Rating Agencies............................................................102
</TABLE>
EXHIBITS
Exhibit A-1 - Form of Class [I-A][II-A] Certificates
Exhibit A-2 - Form of Class [I-B-__][II-B-_] Certificates
Exhibit A-3 - Form of Class [R-_] Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - Representations and Warranties of BSMCC Concerning
the Mortgage Loans
Exhibit D - Request for Release of Documents
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 Custodial Agreement
Exhibit H - [Reserved]
Exhibit I - GEMICO Policies
Exhibit J - GEMICO Letters
Exhibit K - List of Mortgage Loans for which Mortgage Notes are Lost
Exhibit L - [Reserved]
Exhibit M - Additional Pledged Collateral Custodial Agreements
Exhibit N-1 - Boston Safe Servicing Agreement
Exhibit N-2 - Alliance Servicing Agreement
Exhibit N-3 - Cendant Servicing Agreement
Exhibit N-4 - First Union Servicing Agreement
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POOLING AND SERVICING AGREEMENT
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Pooling and Servicing Agreement dated as of February 1, 1999, among
Structured Asset Mortgage Investments Inc., a Delaware corporation, as the
depositor (the "Depositor"), Norwest Bank Minnesota, National Association, a
national banking association, as the master servicer (in such capacity, the
"Master Servicer") and The First National Bank of Chicago, not in its individual
capacity but solely as trustee (the "Trustee").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Depositor has acquired the
Mortgage Loans from Bear Stearns Mortgage Capital Corporation ("BSMCC"). On the
Closing Date, the Depositor 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.
The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC I to be treated for federal income tax purposes as a
REMIC. On the Startup Day, all the Classes of REMIC I Regular Certificates will
be designated "regular interests" in such REMIC and the Class R-1 Certificate
will be designated the "residual interests" in such REMIC.
The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC II to be treated for federal income tax purposes as a
REMIC. On the Startup Day, all the Classes of REMIC II Regular Certificates will
be designated "regular interests" in such REMIC and the Class R-2 Certificate
will be designated the "residual interests" in such REMIC.
The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC III to be treated for federal income tax purposes as a
REMIC. On the Startup Day, all the Classes of Certificates except for the Class
R-3 Certificate will be designated "regular interests" in such REMIC and the
Class R-3 Certificate will be designated the "residual interests" in such REMIC.
The Group I 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 approximately $190,838,660. The initial principal amount of
the Group I Certificates will not exceed such Outstanding Principal Balance. The
Group II 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 approximately $101,587,265. The initial principal amount of the
Group II Certificates will not exceed such Outstanding Principal Balance.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee agree as follows:
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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.
ACCEPTED MASTER SERVICING PRACTICES: With respect to any Mortgage Loan,
as applicable, either (x) those customary mortgage servicing practices of
prudent mortgage servicing institutions that master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Trustee
or the Master Servicer (except in its capacity as successor to a Servicer), or
(y) as provided in the applicable Servicing Agreement, to the extent applicable
to any Servicer, but in no event below the standard set forth in clause (x).
ACCOUNT: The Certificate Account (including each subaccount thereof)
and the Protected Accounts as the context may require.
ACCRUED CERTIFICATE INTEREST: For any 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 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 a
Senior Certificate, such Certificate's share of any Net Interest Shortfall and,
after the applicable 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.
ADDITIONAL COLLATERAL: Any real or personal property, securities, cash,
instruments, contracts or other documents constituting or evidencing collateral
pledged as additional security for a Mortgage Loan (other than the Mortgaged
Property).
ADDITIONAL PLEDGED COLLATERAL CUSTODIAL AGREEMENTS: The agreements
governing the retention of Additional Collateral, a form of which is annexed
hereto as Exhibit M.
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.
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ALLOCABLE SHARE: With respect to each Class of Group I Subordinate
Certificates:
(a) as to any Distribution Date and amounts distributable
pursuant to clauses (i) and (iii) of the applicable Group I 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 the Group I Subordinate Certificates; and
(b) as to any Distribution Date and amounts distributable
pursuant to clauses (ii), (iv) and (v) of the applicable Group I
Subordinate Optimal Principal Amount, and as to each Class of Group I
Subordinate Certificates (other than the Class of Group I 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 such Classes of Group I Subordinate
Certificates and (y) the related Class 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
Group I 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 Group I Subordinate Certificates which
satisfy the related Class Prepayment Distribution Trigger and to the
Class of Group I Subordinate Certificates having the lowest numerical
designation in reduction of their respective Current Principal Amounts
in the order of their numerical Class designations.
With respect to each Class of Group II Subordinate Certificates:
(a) as to any Distribution Date and amounts distributable
pursuant to clauses (i) and (iii) of the applicable Group II
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 the Group II Subordinate
Certificates; and
(b) as to any Distribution Date and amounts distributable
pursuant to clauses (ii), (iv) and (v) of the applicable Group II
Subordinate Optimal Principal Amount, and as to each Class of Group II
Subordinate Certificates (other than the Class of Group II 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 such Classes of Group II Subordinate
Certificates and (y) the related Class Prepayment Distribution Trigger
has not been satisfied on such Distribution Date, 0%; provided that if
on a Distribution Date,
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the Current Principal Amount of any Class of Group II 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 Group II Subordinate Certificates which satisfy
the related Class Prepayment Distribution Trigger and to the Class of
Group II Subordinate Certificates 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 rating of AAA, in the case of Fitch, for any long-term deposit or security or
a rating of A-l+, 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 [9.12(d)], the Applicable
State Law shall be (a) the law of the State of New York and (b) 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: With respect to a Group I Mortgage Loan, the value set
forth in an appraisal made in connection with the origination of the related
Mortgage Loan as the value of the Mortgaged Property. For any Mortgaged Property
related to a Group II Mortgage Loan, 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: June 25, 2029.
BALLOON LOAN: Each of the Mortgage Loans having an original term to
maturity that is shorter than the related amortization term.
BALLOON PAYMENT: With respect to any Balloon Loan, the related
Scheduled Payment payable on the stated maturity date of such Balloon 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 Private Certificates and the Residual Certificates.
BOSTON SAFE LOAN: Any Group I Mortgage Loan.
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, Maryland,
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Minnesota, Boston, Massachusetts or Chicago, Illinois or the jurisdiction in
which the Master Servicer is 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, A-2 and A-3,
with the blanks therein appropriately completed.
CERTIFICATE ACCOUNT: The trust account or accounts created and
maintained pursuant to Section 4.02, which shall be denominated "The First
National Bank of Chicago, as Trustee f/b/o holders of Structured Asset Mortgage
Investments Inc., Mortgage Pass-Through Certificates, Series 1999-1 -
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 Monthly Advance.
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, I-A, I-B-1, I-B-2, I-B-3,
I-B-4, I-B-5, I-B-6, II-A, II- B-1, II-B-2, II-B-3, II-B-4, II-B-5, II-B-6, R-1,
R-2 and R-3.
CLASS PREPAYMENT DISTRIBUTION TRIGGER: For a Class of Group I
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 Group I Subordinate Certificates subordinate thereto, if any,
and the denominator of which is the Scheduled Principal Balance of all of the
Group I Mortgage Loans as of the related Due Date, equals or exceeds such
percentage calculated as of the Closing Date. For a Class of Group II
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 Group II Subordinate Certificates subordinate thereto, if any,
and the denominator of which is the Scheduled Principal Balance of all of the
Group II Mortgage Loans as of the related Due Date, equals or exceeds such
percentage calculated as of the Closing Date.
CLOSING DATE: February 26, 1999.
CODE: The Internal Revenue Code of 1986.
COMPENSATING INTEREST PAYMENTS: As defined in Section 6.07.
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COOPERATIVE: A corporation that has been formed for the purpose of
cooperative apartment ownership.
COOPERATIVE ASSETS: Shares issued by Cooperatives, the related Lease
and any other collateral securing the Cooperative Loans.
COOPERATIVE BUILDING: The building and other property owned by a
Cooperative.
COOPERATIVE LOAN: The indebtedness of a Mortgagor evidenced by a
Mortgage Note which is secured by Cooperative Assets.
COOPERATIVE UNIT: A specific dwelling unit in a Cooperative Building as
to which exclusive occupancy rights have been granted pursuant to a Lease.
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 One First National
Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126, Attention: Global Corporate
Trust Services.
CORRESPONDING CLASSES OF CERTIFICATES: In the case of the REMIC I
Regular Certificate, the Group I Certificates; in the case of the REMIC II
Regular Certificate, the Group II Certificates.
CUSTODIAL AGREEMENT: An agreement that may be entered into among the
Depositor, the Master Servicer, the Trustee and a Custodian in substantially the
form of Exhibit G hereto.
CUSTODIAN: A Custodian appointed pursuant to a Custodial Agreement.
CURRENT PRINCIPAL AMOUNT: With respect to any Certificate as of any
Distribution Date, the initial principal amount of such Certificate, as reduced
by (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,
taking account of the Loss Allocation Limitation and (iii) in the case of a
Subordinate Certificate, such Certificate's PRO RATA share, if any, of the
applicable Subordinate Certificate Writedown Amount for previous Distribution
Dates. With respect to any Class of 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-1,
Class R-2 and Class R-3 Certificates after the Distribution Date on which they
receive the distribution of the last dollar of their original principal amount
shall be deemed to have a Current Principal Amount equal to their Current
Principal Amount on the day immediately preceding such Distribution Date.
CUT-OFF DATE: February 1, 1999.
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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.
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.
DEPOSITOR: Structured Asset Mortgage Investments Inc., a Delaware
corporation, or its successors in interest.
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, federal savings bank mutual savings bank or savings and loan association)
or trust company (which may include the Trustee and the Master Servicer), the
deposits of which are fully insured by the FDIC to the extent provided by law.
DETERMINATION DATE: With respect to each Mortgage Loan serviced by a
Servicer, the Determination Date as defined in the related Servicing Agreement.
DISQUALIFIED ORGANIZATION: Any of the following: (i) the United States,
any State or political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the Federal Home Loan Mortgage Corporation or any successor
thereto, a majority of its board of directors is not selected by such
governmental unit), (ii) any foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on unrelated business taxable income), (iv)
rural electric and telephone cooperatives described in Section 1381(a)(2)(C) of
the Code or (v) any other Person so designated by the Owner Trustee based upon
an Opinion of Counsel that the holding of an ownership interest in a Owner Trust
Certificate by such Person may cause the Trust or any Person having an ownership
interest in the Owner Trust Certificate (other than such Person) to incur a
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in a Owner Trust
Certificate to such Person. The terms
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"United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
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.
DIVERTED AMOUNT: On any Distribution Date, an amount equal to any
Special Hazard Loss allocated to the Group II Certificates for such date
pursuant to Section 6.02(b).
DTC CUSTODIAN: The First National Bank of Chicago, 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.
FANNIE MAE: Fannie Mae (formerly the Federal National Mortgage
Association) or any successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHA: The Federal Housing Authority, or any successor thereto.
FIRST UNION: First Union National Bank.
FITCH: Fitch IBCA, Inc. and its successors in interest.
FORECLOSURE RESTRICTED LOAN: A Mortgage Loan which was between 60 and
89 days delinquent as of the Cut-off Date, as indicated on the Mortgage Loan
Schedule; provided, that if such Mortgage Loan becomes current for three
consecutive Scheduled Payments, such Mortgage Loan shall no longer be a
Foreclosure Restricted Loan.
FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of
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 Certificates in the aggregate, the fractional
undivided interest
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<PAGE>
evidenced by (i) a Class R-1, Class R-2 or Class R-3 Certificate will be deemed
to equal 0.50% multiplied by a fraction, the numerator of which is the Current
Principal Amount of such Certificate and the denominator of which is the
aggregate Current Principal Amount of such respective Class and (ii) a
Certificate of any other Class will be deemed to equal 98.5% 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 (other than the Class R-1, Class R-2 and Class R-3
Certificates).
FREDDIE MAC: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.
FUNDS TRANSFER DATE: As to any Distribution Date, the immediately
preceding Business Day.
GEMICO: General Electric Mortgage Insurance Corporation, or its
successor in interest.
GEMICO DEPOSIT: A cash deposit of $30,000 to be remitted by the
Depositor for deposit into the GEMICO Reserve Fund on the Closing Date by the
Master Servicer.
GEMICO LETTERS: The letters between BSMCC and GEMICO, attached hereto
as Exhibit J.
GEMICO LOANS: The Group II Mortgage Loans listed on the Mortgage Loan
Schedule as being insured by GEMICO.
GEMICO POLICIES: The mortgage pool insurance policies issued with
respect to the GEMICO Loans, attached as Exhibit I hereto, as amended by the
GEMICO Letters.
GEMICO RESERVE FUND: The reserve fund created by Section 3.10 hereof,
into which an amount equal to the GEMICO Deposit is made on the Closing Date.
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).
GROSS MARGIN: As to each Group I Mortgage Loan, the fixed percentage
set forth in the related Mortgage Note and indicated on the Mortgage Loan
Schedule which percentage is added to the related Index on each Interest Rate
Adjustment Date to determine (subject to rounding, the minimum and maximum
Mortgage Interest Rate and the Periodic Rate Cap the Mortgage Interest Rate
until the next Interest Rate Adjustment Date.
GROUP I AVAILABLE FUNDS: With respect to any Distribution Date, an
amount equal to the aggregate of the following amounts with respect to the Group
I 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
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previously undistributed payments on account of interest received after the
Cut-off Date and on or prior to the related Determination Date, and (b) any
Monthly Advances (including Certificate Account Advances) and Compensating
Interest Payments by the Master Servicer or the applicable Servicers with
respect to such Distribution Date, except the following with respect to the
Group I Mortgage Loans:
(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 Group I 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 representing 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) the Diverted Amount.
GROUP II AVAILABLE FUNDS: With respect to any Distribution Date, an
amount equal to the aggregate of the following amounts with respect to the Group
II 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 after the
Cut-off Date and on or prior to the related Determination Date, and (b) any
Monthly Advances (including Certificate Account Advances) and Compensating
Interest Payments by the Master Servicer or the applicable Servicers with
respect to such Distribution Date, except the following with respect to the
Group II Mortgage Loans:
(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;
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<PAGE>
(iv) amounts received on particular Group II 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 representing Monthly Advances (including
Certificate Account Advances) determined to be Nonrecoverable Advances;
and
(vi) amounts permitted to be withdrawn from the Certificate
Account pursuant to Subsection 4.03(a);
LESS
(vii) the Diverted Amount.
GROUP I CERTIFICATES: The Group I Senior Certificates and the Group I
Subordinate Certificates.
GROUP II CERTIFICATES: The Group II Senior Certificates and the Group
II Subordinate Certificates.
GROUP I CROSS-OVER DATE: The first Distribution Date on which the
aggregate Current Principal Amount of the Group I Subordinate Certificates has
been reduced to zero (giving effect to all distributions on such Distribution
Date).
GROUP II CROSS-OVER DATE: The first Distribution Date on which the
aggregate Current Principal Amount of the Group II Subordinate Certificates has
been reduced to zero (giving effect to all distributions on such Distribution
Date).
GROUP I CUT-OFF DATE BALANCE: $190,838,660.
GROUP II CUT-OFF DATE BALANCE: $101,587,265.
GROUP I MORTGAGE LOAN: Any Mortgage Loan identified on the Mortgage
Loan Schedule as belonging to Loan Group I.
GROUP II MORTGAGE LOAN: Any Mortgage Loan identified on the Mortgage
Loan Schedule as belonging to Loan Group II.
GROUP I SENIOR CERTIFICATES: The Class I-A, Class R-1 and Class R-3
Certificates.
GROUP II SENIOR CERTIFICATES: The Class II-A and Class R-2
Certificates.
GROUP I SENIOR OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date,
an amount equal to the sum, without duplication, of:
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(i) the applicable Group I Senior Percentage of all scheduled
payments of principal allocated to the Scheduled Principal Balance due
on each Outstanding Mortgage Loan in Loan Group I 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 applicable Group I Senior Prepayment Percentage of
all Principal Prepayments in part received during the related
Prepayment Period with respect to each Group I Mortgage Loan, together
with the applicable Senior Prepayment Percentage of the Scheduled
Principal Balance of each Mortgage Loan which was the subject of a
Principal Prepayment in full during the related Prepayment Period;
(iii) the lesser of (a) the applicable Group I Senior
Prepayment Percentage of all Net Liquidation Proceeds, allocable to
principal received in respect of each Group I Mortgage Loan which
became a Liquidated Mortgage Loan during the related Prepayment Period;
and (b) the Group I Senior Percentage of the Scheduled Principal
Balance of each Group I Mortgage Loan which became a Liquidated
Mortgage Loan during the related Prepayment Period; and
(iv) the applicable Group I Senior Prepayment Percentage of
the sum of (a) the Scheduled Principal Balance of each Group I Mortgage
Loan or REO Property which was purchased by BSMCC on such Distribution
Date and (b) the excess, if any, of the Scheduled Principal Balance of
a Group I Mortgage Loan that has been replaced by BSMCC 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) the principal portion of any Diverted Amount.
GROUP II SENIOR OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date,
an amount equal to the sum, without duplication, of:
(i) the applicable Group II Senior Percentage of all scheduled
payments of principal allocated to the Scheduled Principal Balance due
on each Outstanding Mortgage Loan in Loan Group II 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 applicable Group II Senior Prepayment Percentage of
all Principal Prepayments in part received during the related
Prepayment Period with respect to each Group II Mortgage Loan, together
with the applicable Group II Senior Prepayment Percentage of the
Scheduled Principal Balance of each Mortgage Loan which was the subject
of a Principal Prepayment in full during the related Prepayment Period;
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<PAGE>
(iii) the lesser of (a) the applicable Group II Senior
Prepayment Percentage of all Net Liquidation Proceeds, allocable to
principal received in respect of each Group II Mortgage Loan which
became a Liquidated Mortgage Loan during the related Prepayment Period;
and (b) the applicable Group II Senior Percentage of the Scheduled
Principal Balance of each Group II Mortgage Loan which became a
Liquidated Mortgage Loan during the related Prepayment Period; and
(iv) the applicable Group II Senior Prepayment Percentage of
the sum of (a) the Scheduled Principal Balance of each Group II
Mortgage Loan or REO Property which was purchased by BSMCC on such
Distribution Date and (b) the excess, if any, of the Scheduled
Principal Balance of a Group II Mortgage Loan that has been replaced by
BSMCC with a Substitute Mortgage Loan pursuant to Section 2.04 on such
Distribution Date over the Scheduled Principal Balance of such
Substitute Mortgage Loan;
LESS
(v) the principal portion of any Diverted Amount.
GROUP I SENIOR PERCENTAGE: Initially 97.0%. 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
Group I Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group I Mortgage Loans as of the
beginning of the related Due Period.
GROUP II SENIOR PERCENTAGE: Initially 95.0%. 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
Group II Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group II Mortgage Loans as of the
beginning of the related Due Period.
GROUP I SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date
occurring during the periods set forth below, as follows:
<TABLE>
<CAPTION>
Period (dates inclusive) Group I Senior Prepayment Percentage
- - ----------------------------------------------------------------------------------------------------
<S> <C>
March 25, 1999 - February 25, 2009 100%
March 25, 2009 - February 25, 2010 Group I Senior Percentage plus 70% of the Group I
Subordinate Percentage
March 25, 2010 - February 25, 2011 Group I Senior Percentage plus 60% of the Group I
Subordinate Percentage
March 25, 2011 - February 25, 2012 Group I Senior Percentage plus 40% of the Group I
Subordinate Percentage
- - ----------------------------------------------------------------------------------------------------
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<PAGE>
March 25, 2012 - February 25, 2013 Group I Senior Percentage plus 20% of the Group I
Subordinate Percentage
March 25, 2013 and thereafter Group I Senior Percentage
</TABLE>
Notwithstanding the foregoing, if on any Distribution Date the Group I Senior
Percentage exceeds the Group I Senior Percentage as of the Cut-Off Date, the
Group I Senior Prepayment Percentage for such Distribution Date will equal 100%.
On the Distribution Date on which the Current Principal Amounts of the Group I
Senior Certificates are reduced to zero, the Group I Senior Prepayment
Percentage shall be the minimum percentage sufficient to effect such reduction
and thereafter shall be zero.
In addition, no reduction of the Group I Senior Prepayment Percentage shall
occur on any Distribution Date unless, as of the last day of the month preceding
such Distribution Date, (i) the aggregate Scheduled Principal Balance of Group I
Mortgage Loans delinquent 60 days or more (including for this purpose any such
Group I Mortgage Loans in foreclosure and such Group I 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 Group I Subordinate Certificates does not exceed
50% and (ii) cumulative Realized Losses on the Group I Mortgage Loans do not
exceed (a) 30% of the applicable Original Group I Subordinate Principal Balance
if such Distribution Date occurs between and including March 2009 and February
2010, (b) 35% of the Original Group I Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (c)
40% of the applicable Original Group I Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012, (d)
45% of the aggregate Current Principal Amount, of the Group I Subordinate
Certificates as of the Cut-off Date (the "Original Group I Subordinate Principal
Balance") if such Distribution Date occurs between and including March 2012 and
February 2013, and (e) 50% of the applicable Original Group I Subordinate
Principal Balance if such Distribution Date occurs during or after March 2013.
GROUP II SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date
occurring during the periods set forth below, as follows:
<TABLE>
<CAPTION>
Period (dates inclusive) Group II Senior Prepayment Percentage
- - ----------------------------------------------------------------------------------------------------
<S> <C>
March 25, 1999 - February 25, 2002 100%
March 25, 2002 - February 25, 2003 Group II Senior Percentage plus 60% of the Group
II Subordinate Percentage
March 25, 2003 - February 25, 2004 Group II Senior Percentage plus 40% of the Group
II Subordinate Percentage
March 25, 2004 - February 25, 2005 Group II Senior Percentage plus 20% of the Group
II Subordinate Percentage
- - ----------------------------------------------------------------------------------------------------
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<PAGE>
March 25, 2005 and thereafter Group II Senior Percentage
</TABLE>
Notwithstanding the foregoing, if on any Distribution Date the Group II Senior
Percentage exceeds the Group II Senior Percentage as of the Cut-Off Date, the
Group II Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
Group II Senior Certificates are reduced to zero, the Group II Senior Prepayment
Percentage shall be the minimum percentage sufficient to effect such reduction
and thereafter shall be zero.
In addition, no reduction of the Group II 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 Group II Mortgage Loans delinquent 60 days or more
(including for this purpose any such Mortgage Loans in foreclosure and Group II
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 Group II Subordinate
Certificates does not exceed 50%, or (y) the aggregate Scheduled Principal
Balance of the Group II Mortgage Loans delinquent 60 days or more (including for
this purpose any such Mortgage Loans in foreclosure and Group II 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 Group II 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 aggregate Current Principal
Amounts of the Group II Subordinate Certificates as of the Cut-off Date (the
"Original Group II Subordinate Principal Balance") if such Distribution Date
occurs between and including March 2002 and February 2003, (b) 35% of the
Original Group II Subordinate Principal Balance if such Distribution Date occurs
between and including March 2003 and February 2004, (c) 40% of the Original
Group II Subordinate Principal Balance if such Distribution Date occurs between
and including March 2004 and February 2005, (d) 45% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including March 2005 and February 2006, and (e) 50% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs during or after
March 2006; or (B) (i) the aggregate Scheduled Principal Balance of the Group II
Mortgage Loans delinquent 60 days or more (including for this purpose any such
Mortgage Loans in foreclosure and Group II 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 Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including March 2002 and February 2003, (b) 15% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including March 2003 and February 2004, (c) 20% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including March 2004 and February 2005, (d) 25% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including March 2005 and February 2006, and (e) 30% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs during or after
March 2006.
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<PAGE>
GROUP I SUBORDINATE CERTIFICATE: A Class I-B-1, Class I-B-2, Class
I-B-3, Class I-B-4, Class I-B-5 or Class I-B-6 Certificate.
GROUP II SUBORDINATE CERTIFICATE: A Class II-B-1, Class II-B-2, Class
II-B-3, Class II-B-4, Class II-B-5 or Class II-B-6 Certificate.
GROUP I SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any
Distribution Date, the amount by which (a) the sum of the Current Principal
Amounts of all the Group I Certificates (after giving effect to the distribution
of principal and the allocation of applicable Realized Losses in reduction of
the Current Principal Amounts of such Group I Certificates on such Distribution
Date) exceeds (b) the aggregate Scheduled Principal Balances of the Group I
Mortgage Loans on the Due Date related to such Distribution Date less any
Deficient Valuation on such loans occurring prior to such Distribution Date.
GROUP II SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any
Distribution Date, the amount by which (a) the sum of (i) the sum of the Current
Principal Amounts of all the Group II Certificates (after giving effect to the
distribution of principal and the allocation of applicable Realized Losses in
reduction of the Current Principal Amounts of such Group II Certificates on such
Distribution Date) and (ii) the Deficiency Amount exceeds (b) the aggregate
Scheduled Principal Balances of the Group II Mortgage Loans on the Due Date
related to such Distribution Date less any Diverted Amount on such loans
occurring prior to such Distribution Date.
GROUP I 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 Group I
Subordinate Certificates immediately prior to such Distribution Date):
(i) the applicable Group I Subordinate Percentage of the
principal portion of all Scheduled Payments due on each Outstanding
Mortgage Loan in Loan Group I 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 applicable Group I Subordinate Prepayment Percentage
of each Principal Payment in part during the related Prepayment Period
with respect to each Group I Mortgage Loan and the applicable Group I
Subordinate Prepayment Percentage of the Scheduled Principal Balance of
each Group I Mortgage Loan that was the subject of a Principal
Prepayment in full during the related Prepayment Period;
(iii) the excess, if any, of (A) all Net Liquidation Proceeds
with respect to the Group I Mortgage Loans 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
Group I Senior Optimal Principal Amount on such Distribution Date;
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<PAGE>
(iv) the applicable Group I Subordinate Prepayment Percentage
of the sum of (a) the Scheduled Principal Balance of each Group I
Mortgage Loan or REO Property which was purchased with respect to such
Distribution Date and (b) the difference, if any, between the Scheduled
Principal Balance of a Group I Mortgage Loan that has been replaced
with a Substitute Mortgage Loan 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 Group I Senior Certificates have all been reduced to
zero, 100% of any Group I Senior Optimal Principal Amount.
After the aggregate current Principal Amounts of the Group I Subordinate
Certificates have been reduced to zero, the Group I Subordinate Optimal
Principal Amount shall be zero.
GROUP II 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 Group II
Subordinate Certificates immediately prior to such Distribution Date):
(i) the applicable Group II Subordinate Percentage of the
principal portion of all Scheduled Payments due on each Outstanding
Mortgage Loan in Loan Group II 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 applicable Group II Subordinate Prepayment Percentage
of each Principal Payment in part during the related Prepayment Period
with respect to each Group II Mortgage Loan and the applicable Group II
Subordinate Prepayment Percentage of the Scheduled Principal Balance of
each Group II Mortgage Loan that was the subject of a Principal
Prepayment in full during the related Prepayment Period;
(iii) the excess, if any, of (A) all Net Liquidation Proceeds
with respect to the Group II Mortgage Loans 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
Group II Senior Optimal Principal Amount on such Distribution Date;
(iv) the applicable Group II Subordinate Prepayment Percentage
of the sum of (a) the Scheduled Principal Balance of each Group II
Mortgage Loan or REO Property which was purchased with respect to such
Distribution Date and (b) the difference, if any, between the Scheduled
Principal Balance of a Group II Mortgage Loan that has been replaced
with a Substitute Mortgage Loan on such Distribution Date over the
Scheduled Principal Balance of such Substitute Mortgage Loan; and
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<PAGE>
(v) on the Distribution Date on which the Current Principal
Amounts of the Group II Senior Certificates have all been reduced to
zero, 100% of any Group II Senior Optimal Principal Amount.
After the aggregate current Principal Amounts of the Group II Subordinate
Certificates have been reduced to zero, the Group II Subordinate Optimal
Principal Amount shall be zero.
GROUP I SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the applicable Group I Senior Percentage.
GROUP II SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the applicable Group II Senior Percentage.
GROUP I SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date,
100% minus the Group I Senior Prepayment Percentage, except that on any
Distribution Date after the Current Principal Amounts of the Group I Senior
Certificates have each been reduced to zero, the Group I Subordinate Prepayment
Percentage will equal 100%.
GROUP II SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date,
100% minus the Group II Senior Prepayment Percentage, except that on any
Distribution Date after the Current Principal Amounts of the Group II Senior
Certificates have each been reduced to zero, the Group II Subordinate Prepayment
Percentage will equal 100%.
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 Depositor, the Master Servicer 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 and the Custodian, and their
respective officers, directors, agents and employees, and any separate
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 Depositor or the Master
Servicer and of any Affiliate of the Depositor or the Master Servicer, (b) does
not have any direct financial interest or any material indirect financial
interest in the Depositor or the Master Servicer or any Affiliate of the
Depositor or the Master Servicer and (c) is not connected with the Depositor 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.
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<PAGE>
INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the requirements
of Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act or
any entity all of the equity holders in which come within such paragraphs.
INSURANCE POLICY: With respect to any Mortgage Loan, any standard
hazard insurance policy, flood insurance policy, Primary Mortgage Insurance
Policy or title insurance policy.
INSURANCE PROCEEDS: Amounts paid by the insurer under any Insurance
Policy or the GEMICO 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 Certificates, the calendar month preceding the month in which such
Distribution Date occurs.
INTEREST RATE ADJUSTMENT DATE: With respect to each Group I Mortgage
Loan, the date on which the Mortgage Interest Rate is adjusted.
INTEREST SHORTFALL: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
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
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<PAGE>
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.
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 or related 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 or the related Servicer and not recovered by the Master Servicer or the
related Servicer under any Primary Mortgage Insurance Policy or GEMICO Policy
for reasons other than the Master Servicer's or the related 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.
LOAN GROUP I: The group of Mortgage Loans designated as belonging to
Loan Group I on the Mortgage Loan Schedule.
LOAN GROUP II: The group of Mortgage Loans designated as belonging to
Loan Group II on the Mortgage Loan Schedule.
LOAN SUMMARY AND REMITTANCE REPORT: The report to be submitted by the
Master Servicer to the Trustee pursuant to Subsection 6.05(b).
LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan other than a
Boston Safe Loan, 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.
With respect to any Boston Safe Loan, the ratio of the principal balance of such
Mortgage Loan at origination, or the Stated Principal Balance of such Mortgage
Loan as of the Cut-Off Date or such other date as is specified, less the minimum
value of Additional Collateral equal to the lesser of (a) the Appraised Value of
the Mortgaged Property and (b) if the Mortgage
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Loan was made to finance the acquisition of the related Mortgaged Property, the
purchase price of the Mortgaged Property, expressed as a percentage.
LOSS ALLOCATION LIMITATION: The meaning specified in Section 6.02
hereof.
LOST NOTES: The original Mortgage Notes that have been lost, as
indicated on Exhibit K hereto.
MASTER SERVICER: As of the Closing Date, Norwest Bank Minnesota,
National Association and, thereafter, its respective successors in interest who
meet the qualifications pursuant to this Agreement.
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.
MASTER SERVICING FEE RATE: As to any Boston Safe Loan, a per annum rate
of 0.015% and as to each other Mortgage Loan, a per annum rate equal to 0.035%.
MONTHLY ADVANCE: An advance (including a Certificate Account Advance)
of principal or interest required to be made by the applicable Servicer or, in
the case of the First Union Loans, the applicable First Union subservicer
pursuant to the related Servicing Agreement or the Master Servicer pursuant to
Section 6.06.
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 is equal to the "Mortgage Interest Rate" set forth with respect thereto on
the Mortgage Loan Schedule.
MORTGAGE LOAN: A mortgage loan (including Cooperative Loans)
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 PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of February 26, 1999, between BSMCC, as seller, and Structured Asset
Mortgage Investments Inc., as purchaser, and all amendments thereof and
supplements thereto.
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, such
schedule setting forth the following information with respect to each Mortgage
Loan: (1) the Company's Mortgage Loan identifying number; (2) the
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Mortgagor's name; (3) the street address of the Mortgaged Property including the
city and the state code; (4) a code indicating whether the Mortgaged Property is
a single family residence, condominium, shares in a cooperative corporation, or
a 2-4 family residence; (5) a description of Additional Collateral, if any, and
the value thereof at the close of business on the Cut-off Date;
(6)
the original months to maturity or the remaining months to maturity from the
Cut-off Date, in any case based on the original amortization schedule, and if
different, the maturity expressed in the same manner but based on the actual
amortization schedule; (7) the Loan-to-Value Ratio at origination; (8) the
Mortgage Interest Rate as of the origination and Cut-off Dates; (9) the date on
which the Mortgage Loan was originated; (10) the stated maturity date; (11) the
amount of the Scheduled Payment; (12) the last payment date on which a payment
was actually applied to the outstanding principal balance; (13) the original
principal amount of the Mortgage Loan; (14) the principal balance of the
Mortgage Loan as of the close of business on the Cut-off Date, after deduction
of the payments of principal due on or before the Cut-off Date, whether or not
collected; (15) the Index; (16) the next Interest Rate Adjustment Date; (17) the
Gross Margin; (18) the minimum and maximum Mortgage Interest Rate under the
terms of the Mortgage Note; (19) the minimum value of any Additional Collateral
required under the terms of the Mortgage Loan; (20) the date on which the first
Scheduled Payment was due; (21) the periodic rate cap; (22) a code indicating
whether the Mortgaged Property is owner-occupied, a second home or an investment
property; (23) a code indicating the purpose of the loan; (24) the related
Servicing Fee Rate; and (25) the related Servicer. With respect to the Mortgage
Loans in the aggregate, the Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date: (1) the number of Mortgage Loans; (2) the
current aggregate outstanding principal balance of the Mortgage Loans; and (3)
the weighted average Mortgage Interest Rate of the Mortgage Loans.
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 applicable Servicer in accordance with the related Servicing Agreement
and (ii) unreimbursed Monthly Advances.
NET RATE: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the sum of (i) the Master Servicing Fee
Rate and (ii) the related Servicing Fee Rate.
NONRECOVERABLE ADVANCE: Any advance or Monthly Advance (i) which was
previously made or is proposed to be made by the Master Servicer or applicable
Servicer and (ii) which, in the
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good faith judgment of the Master Servicer or applicable Servicer, will not or,
in the case of a proposed advance or Monthly Advance, would not, be ultimately
recoverable by the Master Servicer or applicable Servicer from Liquidation
Proceeds, Insurance Proceeds or future payments on the Mortgage Loan for which
such advance or Monthly Advance was made.
OFFERED CERTIFICATE: Any Class I-A, Class II-A, Class R-1, Class R-2,
Class R-3, Class I-B-l, Class I-B-2, Class I-B-3, Class II-B-1, Class II-B-2 and
Class II-B-3 Certificate.
OFFERED SUBORDINATE CERTIFICATES: The Class I-B-l, Class I-B-2, Class
I-B-3, Class II-B-1, Class II-B-2 and Class II-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 or the Depositor.
ORIGINAL GROUP I SUBORDINATE PRINCIPAL BALANCE: The sum of the
aggregate Current Principal Amounts of each Class of Group I Subordinate
Certificates as of the Cut-off Date.
ORIGINAL GROUP II SUBORDINATE PRINCIPAL BALANCE: The sum of the
aggregate Current Principal Amounts of each Class of Group II 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 or replaced.
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.
PASS-THROUGH RATE: As to each Class of Certificates, the rate of
interest determined as provided with respect thereto in Section 5.01(d). Any
monthly calculation of interest at a stated rate shall be based upon annual
interest at such rate divided by twelve.
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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 or the Master Servicer 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 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 or the Master Servicer)
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;
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(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 or common trust fund having the
Applicable Credit Rating or better from each Rating Agency, including
any such fund for which the Trustee or the Master Servicer or any
affiliate of the Trustee or the Master Servicer acts as a manager or an
advisor;
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.
PERMITTED TRANSFEREE: Any Person other than a Disqualified Organization
or an "electing large partnership" (as defined by Section 775 of the Code).
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 Residual Certificates and the
Private Certificates.
PREPAYMENT PERIOD: With respect to any Mortgage Loan and any
Distribution Date, the calendar month preceding the month in which such
Distribution Date occurs.
PRIMARY MORTGAGE INSURANCE POLICY: With respect to any Group II
Mortgage Loan, 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 CERTIFICATES: Any Class I-B-4, Class I-B-5, Class I-B-6, Class
II-B-4, Class II-B-5 and Class II-B-6 Certificates.
PROTECTED ACCOUNT: An account established and maintained in the name of
the Trustee for the benefit of Certificateholders by the Master Servicer or any
Servicer with respect to the Mortgage
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Loans and with respect to REO Property in a Designated Depository Institution or
Rating Agency Eligible Account 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 or the Master Servicer, 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 any Servicer, (ii) is
maintained with an entity which is an institution whose deposits are insured by
the FDIC, the unsecured and uncollateralized long-term debt obligations of which
shall be rated "A" or higher by S&P and 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, or (d) a principal
subsidiary of a bank holding company, 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, (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
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REMIC: A real estate mortgage investment conduit, as defined in the
Code.
REMIC I: That group of assets contained in the Trust Fund designated as
a REMIC consisting of (i) the Group I Mortgage Loans, (ii) the related
Certificate Account, (iii) any REO Property relating to the Group I Mortgage
Loans, (iv) the rights with respect to the Boston Safe Servicing Agreement and
(v) any proceeds of the foregoing.
REMIC I CERTIFICATES: The REMIC I Regular Certificates and the Class
R-1 Certificates.
REMIC I REGULAR CERTIFICATES: As defined in Section 5.01(c).
REMIC II: That group of assets contained in the Trust Fund designated
as a REMIC consisting of (i) the Group II Mortgage Loans, (ii) the related
Certificate Account, (iii) any REO Property relating to the Group II Mortgage
Loans, (iv) the rights with respect to the Alliance Servicing Agreement, the
Cendant Servicing Agreement and the First Union Servicing Agreement and (v) any
proceeds of the foregoing.
REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class
R-2 Certificates.
REMIC II REGULAR CERTIFICATES: As defined in Section 5.01(c).
REMIC III: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC I Regular Certificates and the Group II
Regular Certificates.
REMIC III CERTIFICATES: The Certificates and the Class R-3
Certificates.
REMIC III REGULAR CERTIFICATES: The Certificates other than the Class
R-3 Certificates.
REMIC OPINION: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause any Series REMIC to fail to qualify as a REMIC while any regular interest
in any Series REMIC is outstanding, (ii) result in a tax on prohibited
transactions with respect to any Series REMIC or (iii) constitute a taxable
contribution to any Series REMIC 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 Article II
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
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related Mortgaged Property was acquired with respect thereto, 100% of the
Outstanding Principal Balance at the date of the acquisition), (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 and
reduced by (iii) any portion of the related Master Servicing Fees, Servicing
Fees, Monthly Advances and 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 CERTIFICATES: The Class R-1, Class R-2 and Class R-3
Certificates.
RESPONSIBLE OFFICER: Any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement or any other officer of
the Trustee to whom matters under this Agreement may be referred.
RULE 144A CERTIFICATE: The certificate to be furnished by each
purchaser of a Private Certificate (which is also a Physical 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.
S&P: Standard and Poor's, a division of The McGraw-Hill Companies,
Inc., and 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.
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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. 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 DEPOSITOR, 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 OR
AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE."
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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.
SERIES REMIC: Any of REMIC I, REMIC II or REMIC III.
SERVICER REMITTANCE DATE: With respect to each Mortgage Loan, the date
set forth in the related Servicing Agreement.
SERVICER: With respect to the Group I Mortgage Loans, Boston Safe
Deposit and Trust Company. With respect to the Group II Mortgage Loans, Cendant
Mortgage Company, Alliance Mortgage Company or First Union National Bank of
North Carolina, as indicated on the Mortgage Loan Schedule.
SERVICING AGREEMENT: One of the following agreements, attached hereto
as Exhibits N-1 through N-4: The Mortgage Loan Sale, Warranties and Servicing
Agreements, dated as of August 1, 1998, February 1, 1999 and February 1, 1999,
between Boston Safe Deposit and Trust Company and BSMCC, (ii) the Purchase,
Warranties and Servicing Agreement dated as of May 1, 1998, between Cendant
Mortgage Company and BSMCC, (iii) the Servicing Agreement, dated as of February
1, 1999, between Alliance Mortgage Company and BSMCC and (iv) the Servicing
Agreement, dated as of February 1, 1999, between First Union National Bank and
BSMCC.
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 Servicing
Fee Rate.
SERVICING FEE RATE: A per annum rate with respect to each Mortgage
Loan, as set forth on the Mortgage Loan Schedule.
SERVICING OFFICER: Any officer of the Master Servicer or any Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans.
SPECIAL HAZARD LOSS: A Realized Loss attributable to damage or a direct
physical loss suffered by a Mortgaged Property (including any Realized Loss due
to the presence or suspected presence of hazardous wastes or substances on a
Mortgaged Property) other than any such damage or loss covered by a hazard
policy or a flood insurance policy required to be maintained in respect of such
Mortgaged Property under this Agreement or any loss due to normal wear and tear
or certain other causes.
STARTUP DAY: February 26, 1999.
SUBORDINATE CERTIFICATES: The Group I Subordinate Certificates and the
Group II Subordinate Certificates.
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SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee
pursuant to Section 2.04, in each case, (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 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 ADMINISTRATION AND TAX MATTERS PERSON: The Master Servicer or any
successor thereto or assignee thereof shall serve as tax administrator hereunder
and as agent for each Tax Matters Person. The Holder of each Class of Residual
Certificates shall be the Tax Matters Person for each of the related Series
REMICs, as more particularly set forth in Section 9.13 hereof.
TRUST FUND or TRUST: The corpus of the trust created by this Agreement,
consisting of the Mortgage Loans and the other assets described in Section
2.01(a).
TRUSTEE: The First National Bank of Chicago, or its successor in
interest, or any successor trustee appointed as herein provided.
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.
UNITED STATES PERSON: A citizen or resident of the United States, a
corporation or partnership (including an entity treated as a corporation or
partnership for federal income tax purposes) created or organized in, or under
the laws of, the United States or any state thereof or the District of Columbia
(except, in the case of a partnership, to the extent provided in regulations) or
an estate whose income is subject to United States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more such United States Persons have the authority to control all substantial
decisions of the trust. To the extent prescribed in regulations by the Secretary
of the Treasury, which have not yet been issued, a trust which was in existence
on August 20, 1996 (other than a trust treated as owned by the grantor under
subpart E of part I of subchapter J of chapter 1 of the Code), and which was
treated as a United States person on August 20, 1996 may elect to continue to be
treated as a United States person notwithstanding the previous sentence.
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE. (a) The
Depositor 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 (subject to the right of the Master Servicer
to receive all income from Permitted Investments under Section 4.02(c)), (iii)
such assets relating to the Mortgage Loans as from time to time may be held by
the Master Servicer or the Servicers in servicing accounts or Protected Accounts
for the benefit of the holder of the Mortgage Loans, (iv) any REO Property, (v)
the Required Insurance Policies, the rights with respect to the GEMICO Policies
and any amounts paid or payable by the insurer under any Insurance Policy (to
the extent the mortgagee has a claim thereto), (vi) the rights with respect to
the Servicing Agreements and the Additional Pledged Collateral Custodial
Agreements, (vii) the Mortgage Loan Purchase Agreement to the extent provided in
Subsection 2.03(a), (viii) any proceeds of, and any payments on, any Additional
Collateral relating to a Mortgage Loan upon the liquidation thereof, and (ix)
any proceeds of the foregoing. Although it is the intent of the parties to this
Agreement that the conveyance of the Depositor'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 Depositor shall be deemed to have granted to the Trustee a
first priority perfected security interest in all of the Depositor'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 Depositor
hereby deposits with the Trustee or Custodian, with respect to (A) each Mortgage
Loan, other than Cooperative Loans (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) a certified copy of 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 proviso 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
Depositor with evidence of recording thereon, (v) the original or a copy of the
policy or certificate of primary mortgage guaranty insurance, to the extent
available, if any, (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 and
(B) each Cooperative Loan (i) the original Mortgage Note, endorsed, without
recourse to the order of the Trustee, and showing, to the extent available, an
unbroken chain
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of title from the originator to the Trustee or, in the case of a Mortgage Loan
that is subject to the terms of a consolidation and modification agreement, an
assignment of such agreement to the Trustee; (ii) the original duly executed
assignment of security agreement to the Trustee; (iii) the original Mortgage;
(iv) the acknowledgment copy of the original executed Form UCC-1 (or certified
copy thereof) with respect to the security agreement, and any required
continuation statements, with evidence of filing indicated thereon; (v) the
acknowledgment copy of the original executed Form UCC-3 with respect to the
security agreement, indicating the Trustee as the assignee of the secured party,
with evidence of filing indicated thereon; (vi) the stock certificate
representing the stock allocated to the cooperative unit, with a stock power in
blank attached; (vii) the original collateral assignment of the lease by
Mortgagor to the originator and the assignment of the collateral assignment of
the lease to the Trustee (which may be in blanket form), accompanied by the
original lease; (viii) a copy of the recognition agreement; (ix) if applicable
and to the extent available, the original intervening assignments, including
warehousing assignments, if any, showing, to the extent available, an unbroken
chain of the related Mortgage Loan to the Trustee, together with a copy of the
related Form UCC-3 with evidence of filing thereon; (x) the originals of each
assumption, modification or substitution agreement, if any, relating to the
Mortgage Loan; and (xi) the certificate of primary mortgage insurance, if
applicable;
PROVIDED, HOWEVER, that in lieu of the foregoing, the Depositor 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 Depositor in time to permit their delivery as specified
above, the Depositor may deliver a true copy thereof with a certification by
BSMCC or the related Servicer, 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"; (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 BSMCC or the related Servicer, to such effect) the Depositor
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 (z) in lieu of the Mortgage Notes relating to the
Mortgage Loans, each as identified in the list delivered by the Depositor to the
Trustee or Custodian on the Closing Date and set forth in Exhibit K hereto, the
Depositor may deliver a lost note affidavit and, if available, a copy of each
original Mortgage Note; 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 Depositor, in lieu of delivering the above documents,
may deliver to the Trustee a certification to such effect and shall deposit all
amounts paid in respect of such Mortgage Loans in the Certificate Account on the
Closing Date. The Depositor shall deliver such original documents (including any
original documents as to which certified copies had previously been delivered)
to the Trustee or Custodian promptly after they are received. The Depositor
shall cause, at its expense, the assignment of the Security Instrument to the
Trustee to be recorded not later than 180 days after the Closing Date. With
respect to the Cooperative Loans, the Depositor will, promptly after the Closing
Date, cause the related financing statements (if not yet filed) and an
assignment thereof from the Depositor to the Trustee to be filed in the
appropriate offices.
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Section 2.02. ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE. (a) The Trustee
acknowledges the sale, transfer and assignment of the Trust Fund to it by the
Depositor and declares that it will hold (or cause the Custodian as its agent to
hold) all the documents (or certified copies thereof) delivered to it pursuant
to Section 2.01 and any amendments, replacements or supplements thereto and all
other assets of the Trust Fund delivered to it as Trustee, or a Custodian as its
agent, constituting the Mortgage Files, and that it, or a Custodian as its
agent, holds or will hold such other assets included in the definition of "Trust
Fund" (to the extent delivered or assigned to the Trustee), in trust for the use
and benefit of all present and future Holders of the Certificates. On the
Closing Date, the Trustee or Custodian shall acknowledge with respect to each
Mortgage Loan by an Initial Certification substantially in the form of Exhibit
One to the Custodial Agreement receipt of the Mortgage File, but without review
of such Mortgage File, except to the extent necessary to confirm that such
Mortgage File contains the related Mortgage Note or lost note affidavit. No
later than 45 days after the Closing Date (or, with respect to any Substitute
Mortgage Loan, within five Business Days after the receipt by the Trustee or
Custodian thereof), the Trustee agrees, for the benefit of the
Certificateholders, to review or cause to be reviewed by a Custodian on its
behalf (such Custodian so obligated under a Custodial Agreement), each Mortgage
File delivered to it and to execute and deliver, or cause to be executed and
delivered, to the Depositor and the Master Servicer an Interim Certification
substantially in the form annexed as Exhibit Two to the Custodial Agreement. In
conducting such review, the Trustee or Custodian 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 subclauses (b)(iv), (b)(v) and (b)(vi)
of Section 2.01, the Trustee's or Custodian's obligations shall extend only to
documents actually delivered pursuant to such subsections). In performing any
such review, the Trustee or Custodian 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 or Custodian 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 or Custodian (the Custodian being so
obligated under a Custodial Agreement) shall promptly notify BSMCC. BSMCC shall
correct or cure any such defect within 90 days from the date of notice from the
Trustee or Custodian of the defect and if BSMCC fails to correct or cure the
defect within such period, and such defect materially and adversely affects the
interests of the Certificateholders in the related Mortgage Loan, BSMCC will,
subject to Section 2.04, within 90 days from the Trustee's or Custodian's
notification purchase such Mortgage Loan at the Repurchase Price; PROVIDED,
HOWEVER, that if such defect relates solely to the inability of BSMCC 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, BSMCC shall not be required to
purchase such Mortgage Loan if BSMCC 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 BSMCC 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 BSMCC
shall instead deliver a recording receipt of such recording office or, if such
receipt is not available, a certificate confirming that such documents have been
accepted for recording, and
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delivery to the Trustee or Custodian shall be effected by BSMCC within thirty
days of its receipt of the original recorded document.
(b) No later than 180 days after the Closing Date, the Trustee or
Custodian 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 Depositor and the Master Servicer a Final Certification
substantially in the form annexed Exhibit Three to the Custodial Agreement. In
conducting such review, the Trustee or Custodian 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 or Custodian 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 or Custodian (the Custodian being so
obligated under the Custodial Agreement) shall promptly notify BSMCC (PROVIDED,
HOWEVER, that with respect to those documents described in subsection (b)(iv),
(b)(v) and (b)(vi) of Section 2.01, the Trustee's or Custodian's obligations
shall extend only to the documents actually delivered pursuant to such
subsections). BSMCC shall correct or cure any such defect or shall deliver to
the Trustee or Custodian 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 or
Custodian of the defect and if BSMCC is unable to cure such defect within such
period, and if such defect materially and adversely affects the interests of the
Certificateholders in the related Mortgage Loan, BSMCC shall, subject to Section
2.04, within 90 days from the Trustee's or Custodian's notification purchase
such Mortgage Loan at the Repurchase Price, PROVIDED, HOWEVER, that if such
defect relates solely to the inability of BSMCC 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, BSMCC shall not be required to purchase such Mortgage
Loan, if BSMCC delivers such original documents or certified copy promptly upon
receipt, but in no event later than 360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by BSMCC in
accordance with Subsections 2.02(a) or (b) above, BSMCC shall provide the
Repurchase Price to the Trustee for deposit in the Certificate Account and shall
provide to the Trustee written notification detailing the components of the
Repurchase Price. Upon deposit of the Repurchase Price in the Certificate
Account, the Trustee or Custodian shall release to BSMCC the related Mortgage
File and shall execute and deliver all instruments of transfer or assignment,
without recourse, furnished to it by BSMCC as are necessary to vest in BSMCC
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,
which was previously delivered to it by Depositor in a form agreed to between
the Depositor and the Trustee, to reflect such repurchase and shall promptly
notify the Master Servicer and the Rating Agencies of such amendment. The
obligation of BSMCC to repurchase 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.
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Section 2.03. ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN PURCHASE
AGREEMENT AND OTHER AGREEMENTS. (a) The Depositor hereby assigns to the Trustee
all of its right, title and interest in the Mortgage Loan Purchase Agreement
(but none of its obligations) insofar as such contract relates to the
representations and warranties set forth in Exhibit C hereto regarding the
Mortgage Loans (including the substitution and repurchase obligations of BSMCC)
and the rights with respect to the GEMICO Policies, the Servicing Agreements and
the Additional Pledged Collateral Custodial Agreements; provided that the
obligations of BSMCC to substitute or repurchase a Mortgage Loan shall be the
Trustee's and the Certificateholders' sole remedy for any breach thereof. At the
request of the Trustee, the Depositor (or the Master Servicer, in the case of
the Servicing Agreements and GEMICO Policies, as agent for the Trustee) shall
take such actions as may be necessary to enforce the above right, title and
interest on behalf of the Trustee and the Certificateholders or shall execute
such further documents as the Trustee may reasonably require in order to enable
the Trustee to carry out such enforcement.
(b) If the Master Servicer, Depositor, Trustee or Custodian discovers a
breach of any of the representations and warranties set forth in Exhibit C or
Section 7 of the Mortgage Loan Purchase Agreement 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. BSMCC within 90
days of its discovery or receipt of notice that such breach has occurred
(whichever occurs earlier), shall cure the breach in all material respects or,
subject to Section 2.04, shall purchase the Mortgage Loan or any property
acquired with respect thereto from the Trustee at the Repurchase Price;
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 BSMCC 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 BSMCC to the extent not required by law to be paid
to the borrower.) Any such purchase by BSMCC shall be made by providing an
amount equal to the Repurchase Price to the Trustee for deposit in the
Certificate Account and the Trustee or Custodian, upon deposit of the Repurchase
Price in the Certificate Account and of written notification detailing the
components of such Repurchase Price, shall release to BSMCC the related Mortgage
File and shall execute and deliver all instruments of transfer or assignment
furnished to it by BSMCC, without recourse, as are necessary to vest in BSMCC
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 BSMCC, to purchase (or substitute a
Substitute Mortgage Loan for) any Mortgage Loan or any property acquired with
respect thereto (or pay 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 2.03, BSMCC
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may, no later than the date by which such purchase by BSMCC would otherwise be
required, tender to the Trustee or Custodian a Substitute Mortgage Loan
accompanied by a certificate of an authorized officer of BSMCC 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
or Custodian shall examine the Mortgage File for any Substitute Mortgage Loan in
the manner set forth in Section 2.02(a) and shall notify BSMCC and the Master
Servicer 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, BSMCC shall provide 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 by BSMCC
of the Repurchase Price for the purchase of a Mortgage Loan by BSMCC. After such
notification to BSMCC and, if any such excess exists, upon receipt of such
deposit, the Trustee or Custodian shall accept such Substitute Mortgage Loan
which shall thereafter be deemed to be a Mortgage Loan hereunder. 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 BSMCC. The Scheduled Principal on a Substitute Mortgage Loan due on
the Due Date in the month of substitution shall be the property of BSMCC 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 or Custodian shall release to BSMCC the
related 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 BSMCC title to and rights under any Mortgage Loan released pursuant to this
Section 2.04. BSMCC 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 the applicable
Servicing Agreement and Exhibit C shall be deemed to have been made by BSMCC
with respect to each Substitute Mortgage Loan as of the date of acceptance of
such Mortgage Loan by the Trustee or the Custodian. 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. 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 Depositor, in exchange therefor, Certificates in such authorized
denominations representing such Fractional Undivided Interests as the Depositor
has requested. The Trustee or Custodian agrees that it will hold the Mortgage
Loans and such other
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assets as may from time to time be delivered to it segregated on the books of
the Trustee or Custodian in trust for the benefit of the Certificateholders.
Section 2.06. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants to the Depositor 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 bank duly organized, validly
existing and in good standing under the laws of the United States with
a principal place of business in Chicago, Illinois.
(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 FHA or 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
fiduciary activities of a national bank. 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 by the other
parties hereto, 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; and
(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.
Section 2.07. REPRESENTATIONS AND WARRANTIES CONCERNING THE DEPOSITOR.
The Depositor hereby represents and warrants to the Trustee and the Master
Servicer as follows:
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(i) the Depositor (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 Depositor's business as
presently conducted or on the Purchaser's ability to enter into this
Agreement and to consummate the transactions contemplated hereby;
(ii) the Depositor 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 Depositor of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Depositor; 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 Depositor or its properties or the
articles of incorporation or by-laws of the Depositor, except those
conflicts, breaches or defaults which would not reasonably be expected
to have a material adverse effect on the Depositor's ability to enter
into this Agreement and to consummate the transactions contemplated
hereby;
(iv) the execution, delivery and performance by the Depositor
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
Depositor and, assuming due authorization, execution and delivery by
the other parties hereto, constitutes a valid and binding obligation of
the Depositor 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);
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Depositor, threatened against the Depositor,
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 Depositor will be determined adversely to
the Depositor and will if determined adversely to the Depositor
materially and adversely affect the Depositor's ability to enter into
this Agreement or perform its obligations under this Agreement; and the
Depositor is not in default with respect to any order of any court,
administrative agency, arbitrator or
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governmental body so as to materially and adversely affect the
transactions contemplated by this Agreement; and
(vii) immediately prior to the transfer and assignment to the
Trustee, each Mortgage Note and each Mortgage were not subject to an
assignment or pledge, and the Depositor had good and marketable title
to and was the sole owner thereof and had full right to transfer and
sell such Mortgage Loan to the Trustee free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest.
Section 2.08. REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER.
(a) The Master Servicer hereby represents and warrants to the Depositor and the
Trustee, for the benefit of the Certificateholders, as of the Closing Date that:
(i) it is validly existing and in good standing under
the laws of the United States of America as a national banking association, and
as Master Servicer has full power and authority to transact any and all business
contemplated by this Agreement and to execute, deliver and comply with its
obligations under the terms of this Agreement, the execution, delivery and
performance of which have been duly authorized by all necessary corporate action
on the part of the Master Servicer;
(ii) the execution and delivery of this Agreement by
the Master Servicer and its performance and compliance with the terms of this
Agreement will not (A) violate the Master Servicer's charter or bylaws, (B)
violate any law or regulation or any administrative 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 the Master
Servicer is a party or by which it is bound or to which any of its assets are
subject, which violation, default or breach would materially and adversely
affect the Master Servicer's ability to perform its obligations under this
Agreement;
(iii) this Agreement constitutes, assuming due
authorization, execution and delivery hereof by the other respective parties
hereto, a legal, valid and binding obligation of the Master Servicer,
enforceable against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement of creditors' rights in general, and by
general equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(iv) the Master Servicer is not in default with
respect to any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency to the extent that any such
default would materially and adversely affect its performance hereunder;
(v) the Master Servicer is not a party to or bound by
any agreement or instrument or subject to any charter provision, bylaw or any
other corporate restriction or any judgment, order, writ, injunction, decree,
law or regulation that may materially and adversely affect its ability as Master
Servicer to perform its obligations under this Agreement or that requires the
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consent of any third person to the execution of this Agreement or the
performance by the Master Servicer of its obligations under this Agreement;
(vi) no litigation is pending or, to the best of the
Master Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations under
this Agreement;
(vii) the Master Servicer, or an affiliate thereof
the primary business of which is the servicing of conventional residential
mortgage loans, is an Fannie Mae- and Freddie Mac approved seller/servicer;
(viii) no consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Master Servicer of or compliance by the Master
Servicer with this Agreement or the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders (if any) as have been obtained;
(ix) the consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Master Servicer;
(x) the Master Servicer has obtained an errors and
omissions insurance policy and a fidelity bond, each of which is in full force
and effect, and each of which provides at least such coverage as is required
hereunder; and
(xi) the Master Servicer's computer programs, systems
and applications used in master servicing the Mortgage Loans, and service any
Mortgage Loans that it directly services, will be replaced or modified and
maintained to operate in such a manner that at all times, including on and after
January 1, 2000, it can master service the Mortgage Loans, and service any
Mortgage Loans that it directly services, in accordance with the terms of this
Agreement.
(b) It is understood and agreed that the
representations and warranties set forth in this Section 2.08 shall survive the
execution and delivery of this Agreement.
Any cause of action against the Master Servicer relating to or arising
out of the breach of any representations and warranties made in this Section
shall accrue upon discovery of such breach by either the Depositor, the Master
Servicer or the Trustee or notice thereof by any one of such parties to the
other parties.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. DUTIES OF THE MASTER SERVICER. The Master Servicer shall
supervise, monitor and oversee the obligation of the Servicers to service and
administer their respective Mortgage Loans in accordance with the terms of the
applicable Servicing Agreement and shall have full power and authority to do any
and all things which it may deem necessary or desirable in connection with such
master servicing and administration. In performing its obligations hereunder,
the Master Servicer shall act in a manner consistent with Accepted Master
Servicing Practices. Furthermore, the Master Servicer shall oversee and consult
with each Servicer as necessary from time-to-time to carry out the Master
Servicer's obligations hereunder, shall receive, review and evaluate all
reports, information and other data provided to the Master Servicer by each
Servicer and shall cause each Servicer to perform and observe the covenants,
obligations and conditions to be performed or observed by such Servicer under
the applicable Servicing Agreement. The Master Servicer shall independently and
separately monitor each Servicer's servicing activities with respect to each
related Mortgage Loan, reconcile the results of such monitoring with such
information provided in the previous sentence on a monthly basis and coordinate
corrective adjustments to the Servicers' and Master Servicer's records, and
based on such reconciled and corrected information, prepare the statements
specified in Section 6.04 and any other information and statements required
hereunder. The Master Servicer shall reconcile the results of its Mortgage Loan
monitoring with the actual remittances of the Servicers to the Protected Account
pursuant to the applicable Servicing Agreements. Subject to Section 3.05, the
Trustee shall furnish the Master Servicer and the Servicers with any powers of
attorney and other documents supplied to it reasonably necessary or appropriate
to enable the Master Servicer to master service and the Servicers to service and
administer the Mortgage Loans.
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer shall have no responsibility to supervise, monitor or oversee (or be
liable in any way) for the obligations of any Servicer with respect to the
servicing and administration of any Additional Collateral, including, without
limitation, the liquidation of any such Additional Collateral in connection with
a default under the related Mortgage Loan.
Section 3.02 MONITORING OF SERVICERS' PERFORMANCE.
The Master Servicer shall be responsible for reporting to the
Trustee and the Depositor the compliance by each Servicer with its duties under
the related Servicing Agreement. In the review of each Servicer's activities,
the Master Servicer may rely upon an officer's certificate of the Servicer with
regard to such Servicer's compliance with the terms of its Servicing Agreement.
In the event that the Master Servicer, in its judgment, determines that a
Servicer should be terminated in accordance with its Servicing Agreement, or
that a notice should be sent pursuant to such Servicing Agreement with respect
to the occurrence of an event that, unless cured, would constitute grounds for
such termination, the Master Servicer shall notify the Depositor and the Trustee
thereof and the Master Servicer shall issue such notice or take such other
action as it deems appropriate.
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The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that a Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
subject to the preceding paragraph, terminate the rights and obligations of such
Servicer thereunder and either act as servicer of the related Mortgage Loans or
cause the Trustee to enter into a Servicing Agreement with a successor Servicer.
Such enforcement, including, without limitation, the legal prosecution of
claims, termination of 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, provided that the Master
Servicer shall not be required to prosecute or defend any legal action except to
the extent that the Master Servicer shall have received reasonable indemnity for
its costs and expenses in pursuing such action.
The Master Servicer shall require each Servicer to comply with
the remittance requirements and other obligations set forth in the related
Servicing Agreement.
Section 3.03. MASTER SERVICER FIDELITY BOND AND MASTER SERVICER ERRORS
AND OMISSIONS INSURANCE POLICY. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.
Section 3.04 MASTER SERVICER'S FINANCIAL STATEMENTS AND RELATED
INFORMATION. For each year this Agreement is in effect, the Master Servicer
shall submit to the Trustee, each Rating Agency and the Depositor a copy of the
Master Servicer's annual unaudited financial statements on or prior to May 31 of
each year, which may be in the form of the consolidated financial statements of
the Master Servicer's corporate parent. Such financial statements shall include
a balance sheet, income statement and statement of retained earnings.
Section 3.05 POWER TO ACT; PROCEDURES. The Master Servicer shall master
service the Mortgage Loans and shall have full power and authority, subject to
the REMIC Provisions and the provisions of Article X hereof, to do any and all
things that it may deem necessary or desirable in connection with the master
servicing and administration of the Mortgage Loans, including but not limited to
the power and authority (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable. The Trustee
shall furnish the Master Servicer, upon request, with any powers of attorney
empowering the Master Servicer or any Servicer to execute and deliver
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and to foreclose upon or
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otherwise liquidate Mortgaged Property, and to appeal, prosecute or defend in
any court action relating to the Mortgage Loans or the Mortgaged Property, in
accordance with the applicable Servicing Agreement and this Agreement, and the
Trustee shall execute and deliver such other documents, as the Master Servicer
may request, necessary or appropriate to enable the Master Servicer to master
service and administer the Mortgage Loans and carry out its duties hereunder, in
each case in accordance with Accepted Master Servicing Practices (and the
Trustee shall have no liability for misuse of any such powers of attorney by the
Master Servicer or any Servicer). If the Master Servicer or the Trustee has been
advised that it is likely that the laws of the state in which action is to be
taken prohibit such action if taken in the name of the Trustee or that the
Trustee would be adversely affected under the "doing business" or tax laws of
such state if such action is taken in its name, then upon request of the
Trustee, the Master Servicer shall join with the Trustee in the appointment of a
co-trustee pursuant to Section 9.11 hereof. In the performance of its duties
hereunder, the Master Servicer shall be an independent contractor and shall not,
except in those instances where it is taking action in the name of the Trustee,
be deemed to be the agent of the Trustee.
Section 3.06 TERMINATION OF SERVICING AGREEMENTS; SUCCESSOR SERVICERS.
(a) The Master Servicer shall be entitled to terminate the rights and
obligations of any Servicer under the applicable Servicing Agreement in
accordance with the terms and conditions of such Servicing Agreement and without
any limitation by virtue of this Agreement. In such event, the Master Servicer
shall appoint a successor servicer or shall itself (or through an Affiliate) act
as servicer of the related Mortgage Loans.
(b) If the Master Servicer acts as Servicer, it will not
assume liability for the representations and warranties of the Servicer, if any,
that it replaces. The Master Servicer shall use reasonable efforts to have the
successor Servicer assume liability for the representations and warranties made
by the terminated Servicer in respect of the related Mortgage Loans, and in the
event of any such assumption by the successor Servicer, the Trustee or the
Master Servicer, as applicable, may, in the exercise of its business judgment,
release the terminated Servicer from liability for such representations and
warranties.
Section 3.07 "DUE ON SALE" CLAUSES; ASSUMPTION AGREEMENTS. To the
extent provided in the applicable Servicing Agreement, to the extent Mortgage
Loans contain enforceable due-on-sale clauses, the Master Servicer shall cause
the Servicers to enforce such clauses in accordance with the applicable
Servicing Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause or such clause is otherwise not enforced in accordance with
the applicable Servicing Agreement, and, as a consequence, a Mortgage Loan is
assumed, the original Mortgagor may be released from liability in accordance
with the applicable Servicing Agreement.
Section 3.08 RELEASE OF MORTGAGE FILES. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by any Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes for payment to Certificateholders on the next Distribution Date,
the Servicer will, if required under the applicable Servicing Agreement,
promptly furnish to the Trustee (or the Custodian) two copies of a certification
substantially in the form of Exhibit H hereto signed by a Servicing Officer or
in a mutually agreeable electronic format which
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will, in lieu of a signature on its face, originate from a Servicing Officer
(which certification shall include a statement to the effect that all amounts
received in connection with such payment that are required to be deposited in
the Protected Account maintained by the Master Servicer pursuant to Section 4.01
or by the applicable Servicer pursuant to its Servicing Agreement have been or
will be so deposited) and shall request that the Trustee or the Custodian,
deliver to the applicable Servicer the related Mortgage File. Upon receipt of
such certification and request, the Trustee or the Custodian (with the consent,
and at the direction of the Trustee), shall promptly release the related
Mortgage File to the applicable Servicer and the Trustee shall have no further
responsibility with regard to such Mortgage File. Upon any such payment in full,
each Servicer is authorized, to give, as agent for the Trustee, as the mortgagee
under the Mortgage that secured the Mortgage Loan, an instrument of satisfaction
(or assignment of mortgage without recourse) regarding the Mortgaged Property
subject to the Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Protected Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with the applicable Servicing
Agreement, the Trustee shall execute such documents as shall be prepared and
furnished to the Trustee by a Servicer or the Master Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Trustee or the Custodian, shall, upon the request of a
Servicer or the Master Servicer, and delivery to the Trustee or the Custodian,
of two copies of a request for release signed by a Servicing Officer
substantially in the form of Exhibit D or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer, release the related Mortgage File held in its possession or
control to the Servicer or the Master Servicer. Such trust receipt shall
obligate the Servicer or the Master Servicer to return the Mortgage File to the
Trustee or Custodian, as applicable, when the need therefor by the Servicer or
the Master Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
similar to that hereinabove specified, the trust receipt shall be released by
the Trustee or its custodian, as applicable, to the Servicer or the Master
Servicer.
Section 3.09 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
SERVICER TO BE HELD FOR TRUSTEE. (a) The Master Servicer shall transmit and each
Servicer (to the extent required by the related Servicing Agreement) shall
transmit to the Trustee such documents and instruments coming into the
possession of the Master Servicer or such Servicer from time to time as are
required by the terms hereof, or in the case of the Servicers, the applicable
Servicing Agreement, to be delivered to the Trustee. Any funds received by the
Master Servicer or by a Servicer in respect of any Mortgage Loan or which
otherwise are collected by the Master Servicer or by a Servicer as Liquidation
Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall be held for
the benefit of the Trustee and the Certificateholders subject to the Master
Servicer's right to retain or withdraw from the Protected Account the Master
Servicing Fee and other amounts provided in this Agreement, and to the right of
each Servicer to retain its Servicing Fee and other amounts as provided in the
applicable Servicing Agreement. The Master Servicer shall, (to the extent
provided in the applicable Servicing Agreement) cause each Servicer to, provide
access to information and documentation
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regarding the Mortgage Loans to the Trustee, its agents and accountants at any
time upon reasonable request and during normal business hours, and to
Certificateholders that are savings and loan associations, banks or insurance
companies, the Office of Thrift Supervision, the FDIC and the supervisory agents
and examiners of such Office and Corporation or examiners of any other federal
or state banking or insurance regulatory authority if so required by applicable
regulations of the Office of Thrift Supervision or other regulatory authority,
such access to be afforded without charge but only upon reasonable request in
writing and during normal business hours at the offices of the Master Servicer
designated by it. In fulfilling such a request the Master Servicer shall not be
responsible for determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or
under the control of, the Master Servicer, in respect of any Mortgage Loans,
whether from the collection of principal and interest payments or from
Liquidation Proceeds or Insurance Proceeds, shall be held by the Master Servicer
for and on behalf of the Trustee and the Certificateholders and shall be and
remain the sole and exclusive property of the Trustee; PROVIDED, HOWEVER, that
the Master Servicer and each Servicer shall be entitled to setoff against, and
deduct from, any such funds any amounts that are properly due and payable to the
Master Servicer or such Servicer under this Agreement or the applicable
Servicing Agreement.
Section 3.10 The GEMICO POLICIES. For each GEMICO Loan, the Master
Servicer, on behalf of the Trustee, shall enforce the rights of the Trustee with
respect to the related GEMICO Policy.
On the Closing Date, the Master Servicer shall set up a reserve fund
(the "GEMICO Reserve Fund"), which shall be a Rating Agency Eligible Account,
into which the GEMICO Deposit will be made. The Master Servicer, on behalf of
the Trustee, shall withdraw from the GEMICO Reserve Fund the annual premium with
respect to the GEMICO Policies and pay such premium to GEMICO in accordance with
such policies. The amounts on deposit in the GEMICO Reserve Fund may be invested
in Permitted Investments at the direction of the Depositor, such Permitted
Investments to mature, or to be subject to redemption or withdrawal, no later
than the date such funds are required to be withdrawn. The Depositor will
deposit promptly in the GEMICO Reserve Fund the amount of any losses from such
investments. The GEMICO Reserve Fund shall be an "outside reserve fund" for
purposes of the REMIC Regulations. Upon the termination of the Trust Fund or
final payment on the Certificates any amounts remaining on deposit in the GEMICO
Reserve Fund shall be paid to the Depositor or its designee.
Section 3.11 STANDARD HAZARD AND FLOOD INSURANCE POLICIES. For each
Mortgage Loan, the Master Servicer shall enforce any obligation of the Servicers
under the related Servicing Agreements to maintain or cause to be maintained
standard fire and casualty insurance and, where applicable, flood insurance, all
in accordance with the provisions of the related Servicing Agreements. It is
understood and agreed that such insurance shall be with insurers meeting the
eligibility requirements set forth in the applicable Servicing Agreement and
that no earthquake or other additional insurance is to be required of any
Mortgagor or to be maintained on property acquired in respect of a defaulted
loan, other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance.
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Pursuant to Section 4.01, any amounts collected by the Master
Servicer, or by any Servicer, under any insurance policies (other than amounts
to be applied to the restoration or repair of the property subject to the
related Mortgage or released to the Mortgagor in accordance with the applicable
Servicing Agreement) shall be deposited into the Protected Account, subject to
withdrawal pursuant to Sections 4.02 and 4.03. Any cost incurred by the Master
Servicer or any Servicer in maintaining any such insurance if the Mortgagor
defaults in its obligation to do so shall be added to the amount owing under the
Mortgage Loan where the terms of the Mortgage Loan so permit; PROVIDED, HOWEVER,
that the addition of any such cost shall not be taken into account for purposes
of calculating the distributions to be made to Certificateholders and shall be
recoverable by the Master Servicer or such Servicer pursuant to Sections 4.02
and 4.03.
Section 3.12 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS. The
Master Servicer shall (to the extent provided in the applicable Servicing
Agreement) cause the related Servicer to, prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies and
the GEMICO Policies and claims for FHA contracts of insurance with respect to
the Mortgage Loans, and take such actions (including the negotiation,
settlement, compromise or enforcement of the insured's claim) as shall be
necessary to realize recovery under such policies. Any proceeds disbursed to the
Master Servicer (or disbursed to a Servicer and remitted to the Master Servicer)
in respect of such policies, bonds or contracts shall be promptly deposited in
the Protected Account upon receipt, except that any amounts realized that are to
be applied to the repair or restoration of the related Mortgaged Property as a
condition precedent to the presentation of claims on the related Mortgage Loan
to the insurer under any applicable Insurance Policy or to GEMICO under the
applicable GEMICO Policy need not be so deposited (or remitted).
Section 3.13 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.
(a) The Master Servicer shall not take, or permit any Servicer (to the extent
such action is prohibited under the applicable Servicing Agreement) to take, any
action that would result in noncoverage under any applicable Primary Mortgage
Insurance Policy of any loss which, but for the actions of such Master Servicer
or Servicer, would have been covered thereunder. The Master Servicer shall use
its best reasonable efforts to cause each Servicer (to the extent required under
the related Servicing Agreement) to keep in force and effect (to the extent that
the Mortgage Loan requires the Mortgagor to maintain such insurance), primary
mortgage insurance applicable to each Mortgage Loan in accordance with the
provisions of this Agreement and the related Servicing Agreement, as applicable.
The Master Servicer shall not, and shall not permit any Servicer (to the extent
required under the related Servicing Agreement) to, cancel or refuse to renew
any such Primary Mortgage Insurance Policy that is in effect at the date of the
initial issuance of the Mortgage Note and is required to be kept in force
hereunder except in accordance with the provisions of this Agreement and the
related Servicing Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause each
Servicer (to the extent required under the related Servicing Agreement) to
present, on behalf of the Trustee and the Certificateholders, claims to the
insurer under any Primary Mortgage Insurance Policies and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policies respecting defaulted Mortgage Loans.
Pursuant to Section 4.01, any amounts collected by the Master Servicer or any
Servicer under any Primary Mortgage Insurance
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Policies shall be deposited in the Protected Account, subject to withdrawal
pursuant to Sections 4.02 and 4.03.
Section 3.14 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE POLICIES
AND DOCUMENTS. The Trustee (or its Custodian, if any, as directed by the
Trustee), shall retain possession and custody of the originals of the Primary
Mortgage Insurance Policies or certificate of insurance if applicable and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer otherwise
has fulfilled its obligations under this Agreement, the Trustee (or its
Custodian, if any, as directed by the Trustee) shall also retain possession and
custody of each Mortgage File in accordance with and subject to the terms and
conditions of this Agreement. The Master Servicer shall promptly deliver or
cause to be delivered to the Trustee (or its Custodian, if any, as directed by
the Trustee), upon the execution or receipt thereof the originals of the Primary
Mortgage Insurance Policies and any certificates of renewal thereof, and such
other documents or instruments that constitute portions of the Mortgage File
that come into the possession of the Master Servicer from time to time.
Section 3.15 REALIZATION UPON DEFAULTED MORTGAGE LOANS. The Master
Servicer shall cause each Servicer (to the extent required under the related
Servicing Agreement) to foreclose upon, repossess or otherwise comparably
convert the ownership of Mortgaged Properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments, all in
accordance with the applicable Servicing Agreement.
Notwithstanding the foregoing, in the event that a Foreclosure
Restricted Loan goes into foreclosure, if acquiring title to the related
Mortgaged Property by foreclosure or by deed in lieu of foreclosure would cause
the concentration of the Group II Loans that are currently included in the Trust
Fund after foreclosure to exceed 0.75% of the current Stated Principal Balance
of the Group II Loans, the Master Servicer will not be permitted to acquire
title to such Group II Loan on behalf of the Trust Fund. Instead, the Master
Servicer will inform BSMCC and BSMCC shall purchase from the Trust Fund the
related Group II Loan at the Repurchase Price.
Section 3.16 COMPENSATION TO THE MASTER SERVICER. The Master Servicer
shall be entitled either (a) to pay itself the Master Servicing Fee, as reduced
pursuant to Section 6.07, in respect of remittances from the Servicers prior to
the deposit of such payment in the Protected Account, (b) to withdraw from the
Protected Account, subject to Section 4.02, the Master Servicing Fee or (c)
receive its Master Servicing Fee on those Mortgage Loans serviced by First Union
from amounts on deposit in the Certificate Account as described below. Servicing
compensation in the form of assumption fees, if any, late payment charges, as
collected, if any, or otherwise (but not including any prepayment premium or
penalty) shall be retained by the Master Servicer (or the applicable Servicer)
and shall not be deposited in the Protected Account. In addition, the Master
Servicer will be entitled to retain, as additional compensation, any interest
remitted by a Servicer in connection with a Principal Prepayment in Full or
otherwise in excess of amounts required to be remitted to the Certificate
Account. If the Master Servicer does not retain or withdraw the Master Servicing
Fee from the Protected Account as provided herein, the Master Servicer shall be
entitled to direct the
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Trustee to pay the Master Servicing Fee to the Master Servicer by withdrawal
from the Certificate Account to the extent that payments have been received with
respect to the applicable Mortgage Loan. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
and shall not be entitled to reimbursement therefor except as provided in this
Agreement. Pursuant to Article IV all income and gain realized from any
investment of funds in the Protected Account and the Certificate Account (other
than the funds held therein with respect to the Mortgage Loans serviced by First
Union) shall be for the benefit of the Master Servicer as additional
compensation.
The amount of the aggregate Master Servicing Fees payable to
the Master Servicer in respect of any Distribution Date shall be reduced in
accordance with Section 6.07.
Section 3.17 REO PROPERTY. (a) In the event the Trust Fund acquires
ownership of any REO Property in respect of any related Mortgage Loan, the deed
or certificate of sale shall be issued to the Trustee, or to its nominee, on
behalf of the related Certificateholders. The Master Servicer shall, to the
extent provided in the applicable Servicing Agreement, to cause the applicable
Servicer to sell, any REO Property as expeditiously as possible and in
accordance with the provisions of this Agreement and the related Servicing
Agreement, as applicable. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall protect and conserve, or cause the applicable Servicer to
protect and conserve, such REO Property in the manner and to the extent required
by the applicable Servicing Agreement, subject to the REMIC Provisions.
(b) The Master Servicer shall, to the extent required by the
related Servicing Agreement, cause the applicable Servicer (other than First
Union) to deposit all funds collected and received in connection with the
operation of any REO Property in the Protected Account.
(c) The Master Servicer and the applicable Servicer, upon the
final disposition of any REO Property, shall be entitled to reimbursement for
any related unreimbursed Monthly Advances and other unreimbursed advances as
well as any unpaid Master Servicing Fees or Servicing Fees from Liquidation
Proceeds received in connection with the final disposition of such REO Property;
provided, that any such unreimbursed Monthly Advances as well as any unpaid
Master Servicing Fees or Servicing Fees may be reimbursed or paid, as the case
may be, prior to final disposition, out of any net rental income or other net
amounts derived from such REO Property.
(d) The Liquidation Proceeds from the final disposition of the
REO Property, net of any payment to the Master Servicer and the applicable
Servicer (other than First Union) as provided above shall be deposited in the
Protected Account on or prior to the Determination Date in the month following
receipt thereof and be remitted by wire transfer in immediately available funds
to the Trustee for deposit into the related Certificate Account on the next
succeeding Funds Transfer Date;
Section 3.18 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE. (a) The
Master Servicer shall deliver to the Trustee and the Rating Agencies on or
before May 31 of each year, commencing on May 31, 2000, an Officer's
Certificate, certifying that with respect to the period ending December 31: (i)
such Servicing Officer has reviewed the activities of such Master Servicer
during the preceding calendar year or portion thereof and its performance under
this Agreement, (ii) to the best
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of such Servicing Officer's knowledge, based on such review, such Master
Servicer has performed and fulfilled its duties, responsibilities and
obligations under this Agreement in all material respects throughout such year,
or, if there has been a default in the fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof, (iii) nothing has come to
the attention of such Servicing Officer to lead such Servicing Officer to
believe that any Servicer has failed to perform any of its duties,
responsibilities and obligations under its Servicing Agreement in all material
respects throughout such year, or, if there has been a material default in the
performance or fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof.
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).
Section 3.19 ANNUAL INDEPENDENT ACCOUNTANTS' SERVICING REPORT. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Rating Agencies and the Depositor on or
before May 31 of each year, commencing on May 31, 2000 to the effect that, with
respect to the most recently ended fiscal year, such firm has examined certain
records and documents relating to the Master Servicer's performance of its
servicing obligations under this Agreement and pooling and servicing and trust
agreements in material respects similar to this Agreement and to each other and
that, on the basis of such examination conducted substantially in compliance
with the audit program for mortgages serviced for Freddie Mac or the Uniform
Single Attestation Program for Mortgage Bankers, such firm is of the opinion
that the Master Servicer's activities have been conducted in compliance with
this Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by Freddie Mac requires it
to report. Copies of such statements shall be provided to any Certificateholder
upon request by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies. If
such report discloses exceptions that are material, the Master Servicer shall
advise the Trustee whether such exceptions have been or are susceptible of cure,
and will take prompt action to do so.
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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 enforce
the obligation of each Servicer to establish and maintain a servicing account in
accordance with the applicable Servicing Agreement 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 48 hours 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 Servicer, including Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds, and advances made from the Servicer's own funds
(less servicing compensation as permitted by Section 3.16, in the case of the
Master Servicer, and by the applicable Servicing Agreement in the case of any
Servicer) and all other amounts to be deposited in the related Protected
Account. The Master Servicer is hereby authorized to make withdrawals from and
deposits to the related Protected Account 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 or a Rating Agency
Eligible Account in the name of the Trustee for the benefit of
Certificateholders. The Master Servicer may, and the Master Servicer may permit
a 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 as additional compensation as provided in Section 3.16 of this
Agreement or by the related Servicer under the applicable Servicing 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 Servicer. The Master Servicer shall
itself, or shall cause the related Servicer (to the extent provided in the
Servicing Agreement) 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) Subject to this Article IV, 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):
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(i) Scheduled Payments on the Mortgage Loans received or any
related portion thereof advanced by the Master Servicer or Servicers
(other than First Union) which were due on or before the related Due
Date, net of the amount thereof comprising the Master
Servicing Fee or Servicing Fees;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the Master Servicer or related Servicers (other than First
Union) 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 or Servicing
Fees;
(iii) Partial prepayments of principal received by the Master
Servicer or related Servicers (other than First Union) for such
Mortgage Loans in the related Prepayment Period; and
(iv) Any amount to be used as a Certificate Account Advance.
In addition, on or before each Advancing Date, the Master Servicer shall deposit
in the Certificate Account (or remit to the Trustee for deposit therein) any
Monthly Advances required to be made by the Master Servicer with respect to the
Mortgage Loan serviced by First Union pursuant to Section 6.06.
(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 Servicer for Monthly Advances 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 and the Servicers may be
retained by them and need not be deposited in the Certificate Account.
(d) The Master Servicer shall promptly deliver to the Trustee, upon
request, 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 non-interest bearing trust 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;
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(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 by BSMCC pursuant to Sections 2.02 or 2.03, any amounts which
are to be treated pursuant to Section 2.05 as the payment of such a
Repurchase Price, and all proceeds of any Mortgage Loans or property
acquired with respect thereto repurchased by the Depositor or its
designee pursuant to Section 10.01;
(v) Any other amounts received by the Master Servicer or the
Trustee and required to be deposited in the Certificate Account
pursuant to this Agreement; and
(vi) Any amounts received from First Union.
(b) All amounts 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 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)(i), (ii),
(iii), (iv), (vi), (vii), (ix) and (xi) need not be credited by the Master
Servicer or the related Servicer to the Certificate Account and may be retained
by the Master Servicer or the related 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 trust account of the
Trust Fund segregated on the books of the Trustee and held by the Trustee in
trust in its Corporate Trust Office and the Certificate Account and the funds
deposited therein shall not be subject to, and shall be protected from, all
claims, liens, and encumbrances of any creditors or depositors of the Trustee or
the Master Servicer (whether made directly, or indirectly through a liquidator
or receiver of the Trustee or the Master Servicer). The amount at any time
credited to the Certificate Account shall be (i) fully insured by the FDIC to
the maximum coverage provided thereby, (ii) invested, in the name of the
Trustee, or its nominee, for the benefit of the Certificateholders, in Permitted
Investments described in clause (viii) of the definition of Permitted
Investments to be held by the Trustee as the Master Servicer may select, 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 be payable on demand or 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
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Business Day preceding such Distribution Date (except that (i) any investment in
the institution with which the Certificate Account is maintained may mature on
such Distribution Date and (ii) any other investment may mature on such
Distribution Date if the Trustee shall advance funds on such Distribution Date
to the Certificate Account in the amount payable on such investment on such
Distribution Date, pending receipt thereof to the extent necessary to make
distributions on the Certificates). The Master Servicer shall be entitled to all
investment earnings on amounts in the Certificate Account other than on funds
held therein with respect to the First Union Loans, which investment earnings
shall be remitted by the Trustee to First Union. With respect to the Certificate
Account and the funds deposited therein, the Trustee shall take such action as
may be necessary to ensure that the Certificateholders shall be entitled to the
priorities afforded to such a trust account (in addition to a claim against the
estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e), if applicable, or
any applicable comparable state statute applicable to state chartered banking
corporations.
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) to reimburse the Master Servicer or any Servicer for any
Monthly Advance of its own funds or any advance of such Servicer's own
funds, the right of the Master Servicer or a Servicer to reimbursement
pursuant to this subclause (i) 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 advance
was made;
(ii) to reimburse the Master Servicer or any Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular
Mortgage Loan for amounts expended by the Master Servicer or such
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;
(iii) to reimburse the Master Servicer or any 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 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 (xi) of this Subsection 4.03(a) to the Master Servicer; and
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(ii) such Liquidation Expenses were not included in the computation of
such Excess Liquidation Proceeds;
(iv) to pay the Master Servicer or any Servicer (payment to
any 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
Servicer would have been entitled to receive under subclause (ix) 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;
(v) to pay the Master Servicer or any Servicer (payment to any
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, from the Repurchase Price for any Mortgage Loan,
the amount which it or such Servicer would have been entitled to
receive under subclause (ix) of this Subsection 4.03(a) as servicing
compensation;
(vi) to reimburse the Master Servicer or any Servicer for
advances of funds pursuant to Sections 3.11 and 3.12, 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;
(vii) to reimburse the Master Servicer or any Servicer for any
Monthly Advance or advance, after a Realized Loss has been allocated
with respect to the related Mortgage Loan if the Monthly Advance or
advance has not been reimbursed pursuant to clauses (i) and (vi);
(viii) to pay the Master Servicer as set forth in Section
3.16;
(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections
7.04(c) and (d) and 11.03;
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds;
(xi) to clear and terminate the Certificate Account pursuant
to Section 10.01;
(xii) to reimburse or pay any Servicer any such amounts as are
due thereto under the applicable Servicing Agreement and have not been
retained by or paid to the Servicer, to the extent provided in the
related Servicing Agreement; and
(xiii) to remove amounts deposited in error.
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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
(vi), inclusive, and (viii) 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 pay the amount
distributable to the Holders of the Certificates payable in accordance with
Section 6.01 from the funds in the Certificate Account:
(c) Notwithstanding the provisions of this Section 4.03, the Master
Servicer may, but is not required to, allow the 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 Servicers are entitled as
servicing compensation (including income on Permitted Investments) or
reimbursement of any reimbursable advances made by such Servicers.
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ARTICLE V
Certificates
Section 5.01. CERTIFICATES. (a) The Depository, the Depositor and the
Trustee have entered into a Depository Agreement dated as of February 26, 1999
(the "Depository Agreement"). Except for the Residual Certificates, the Private
Certificates and 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 Residual Certificates 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 Depositor 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 Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Depositor is unable to
locate a qualified successor within 30 days or (ii) the Depositor at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall 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 the definitive Certificates. None of the Master
Servicer, the Depositor 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) (i) REMIC I will be evidenced by (x) the REMIC I Regular
Certificates, which will be uncertificated and non-transferable, are hereby
designated as the "regular interests" in REMIC I
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and have a total principal balance equal to the sum of the principal balances of
the Corresponding Classes of Certificates and accrue interest at a Pass-Through
Rate equal to the weighted average of the Pass-Through Rates of the
Corresponding Classes of Certificates and (y) the Class R-1 Certificate, which
is hereby designated as the single "residual interest" in REMIC I. Except as
discussed below, principal and interest shall be payable to, and shortfalls,
losses and prepayments are allocable to, the REMIC I Regular Certificates in the
same order and priority as payments are to be made on, and shortfalls, losses
and prepayments are allocable to, the Corresponding Classes of Certificates.
(ii) REMIC II will be evidenced by (x) the REMIC II Regular Certificates, which
will be uncertificated and non-transferable are hereby designated as the
"regular interests" in REMIC II and have a total principal balance equal to the
sum of the principal balances of the Corresponding Classes of Certificates and
accrue interest at a Pass-Through Rate equal to the weighted average of the
Pass-Through Rates of the Corresponding Classes of Certificates and (y) the
Class R-2 Certificate, which is hereby designated as the single "residual
interest" in REMIC II. Except as discussed below, principal and interest shall
be payable to, and shortfalls, losses and prepayments are allocable to, the
REMIC II Regular Certificates in the same order and priority as payments are to
be made on, and shortfalls, losses and prepayments are allocable to, the
Corresponding Classes of Certificates.
(d) The Classes of the Certificates (other than the Class R-1 and Class
R-2 Certificates) shall have the following designations, initial principal
amounts and Pass-Through Rates:
Designation Initial Principal Amount Pass-through Rate
----------- ------------------------ -----------------
I-A $ 185,112,900.00 (1)
I-B-1 $ 1,908,000.00 (1)
I-B-2 $ 954,000.00 (1)
I-B-3 $ 954,000.00 (1)
I-B-4 $ 954,000.00 (1)
I-B-5 $ 477,000.00 (1)
I-B-6 $ 478,659.00 (1)
II-A $ 96,507,800.00 (2)
II-B-1 $ 1,777,700.00 (2)
II-B-2 $ 1,117,500.00 (2)
II-B-3 $ 711,100.00 (2)
II-B-4 $ 558,700.00 (2)
II-B-5 $ 406,400.00 (2)
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II-B-6 $ 507,964.85 (2)
R-1 $ 50.00 (1)
R-2 $ 100.00 (2)
R-3 $ 50.00 (1)
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(1) The Group I Certificates will bear interest at a variable rate equal to the
weighted average of (i) the Net Rates of the Group I Mortgage Loans, on the
basis of the related Principal Balances thereof (ii) the Net Rates of the Group
II Mortgage Loans, on the basis of the Deficiency Amount.
(2) The Group II Certificates will bear interest at a variable rate equal to the
weighted average of the Net Rates of the Group II Mortgage Loans.
(e) With respect to each Distribution Date, each Class of 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 of such Class applicable to
such Distribution Date.
(f) The Certificates shall be substantially in the forms set forth in
Exhibits A-1, A-2 and A-3. On original issuance, the Trustee shall sign,
countersign and shall deliver them at the direction of the Depositor. 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 Depositor 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 (other than the Residual 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
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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. Each Class of
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. Each Class of Residual Certificates shall be issued in certificated
fully-registered form in denominations of $50 each with respect to the Class R-1
and Class R-3 and $100 with respect to the Class R-2. 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, the Certificate in the entire Current
Principal Amount of the respective Class and (ii) in the case of each Class of
Private Certificates, Individual Certificates all in an aggregate principal
amount that shall equal the 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 Depositor to the Depository or pursuant to the Depository's
instructions, shall be delivered by the Depositor 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
Responsible Officers 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 each
Series REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, each Series REMIC shall have a tax
year that is a calendar year and shall report income on an accrual basis.
(k) The Trustee on behalf of the Trust shall cause each Series REMIC to
elect to be treated as a real estate mortgage investment conduit 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.
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(l) The Assumed Final Distribution Date for distributions on the
Certificates is June 25, 2029; the latest possible maturity date of the REMIC I
Regular Certificates is June 25, 2029; the latest possible maturity date of the
REMIC II Regular Certificates is June 25, 2029. The Assumed Final Distribution
Date in the case of the Class I-A Certificates is the Distribution Date on which
the Current Principal Amount of Class I-A Certificates is reduced to zero,
assuming a constant percentage of 0% CPR and the assumptions set forth under
"Yield and Prepayment Considerations-Decrement Tables" in the Prospectus
Supplement. The Assumed Final Distribution Date in the case of all Classes of
Group I Certificates other than the Class I-A Certificates is the Distribution
Date in the month following the latest scheduled maturity of all the Group I
Mortgage Loans. The Assumed Final Distribution Date in the case of the Class
II-A Certificates is the Distribution Date on which the Current Principal Amount
of Class II-A Certificates is reduced to zero, assuming a constant percentage of
0% CPR and the assumptions set forth under "Yield and Prepayment
Considerations-Decrement Tables" in the Prospectus Supplement. The Assumed Final
Distribution Date in the case of all Classes of Group II Certificates other than
the Class II-A Certificates is the Distribution Date in the month following the
latest scheduled maturity of all the Group II Mortgage Loans.
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 or comparable
evidence as to its QIB status.
(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
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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 or comparable evidence as to its QIB
status.
(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:
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(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 or comparable evidence
as to its QIB status.
(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, 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(h) above or any
integral multiple of $1.00 in excess thereof) by surrendering such Certificate
at the Corporate Trust Office, 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
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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 by the
registered holder in person, or by a duly authorized attorney-in-fact.
(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
Depositor 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 each Class of Subordinate
Certificates, whether upon original issuance or upon issuance of any other
Certificate of any such Class in exchange therefor or upon transfer 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
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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
DEPOSITOR, 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 OR AN OPINION OF
COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE
CERTIFICATE.
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 Depositor, the Master Servicer or
the Trustee and any agent of the Depositor, 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. None of the Master Servicer, the
Depositor, the Trustee nor any agent of the Master Servicer, the Depositor 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 third Business Day preceding such Record Date.
Section 5.05. TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES.(a)
Residual Certificates, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person and the Depositor. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Depositor 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 Depositor 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).
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(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 purchasers thereof) delivers to the Tax
Matters Person, the Trustee and the Depositor 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 a Permitted Transferee and that (ii) such
transferee is not acquiring such Residual Certificate for the account of any
person who is not a Permitted Transferee. The Tax Matters Person shall not
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 any Person who is not a Permitted Transferee, such transfer, sale
or other disposition shall be deemed to be of no legal force or effect
whatsoever and such Person 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 Tax Matters Person or the Depositor 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 Trustee and the Depositor, 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 Depositor to ensure that
the Residual Certificates are not transferred to any Person who is not a
Permitted Transferee and that any transfer of such Residual Certificates will
not cause the imposition of a tax upon the Trust or cause any Series REMIC to
fail to qualify as a REMIC.
(c) Unless the Tax Matters Person shall have consented in writing
(which consent may be withheld in the Tax Matters Person's sole discretion), the
Residual Certificates (including a beneficial interest therein) may not be
purchased by or transferred to any person who is not a United
States Person.
(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
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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 Depositor) 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 Class of Private Certificates shall bear a Securities Legend.
Section 5.07. ERISA RESTRICTIONS. (a) Subject to the provisions of
subsection (b), no Class of Private 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 either (i) the Trustee and the
Master Servicer with an Opinion of Counsel satisfactory to the Trustee and the
Master Servicer, which opinion will not be at the expense of the Trustee or the
Master Servicer, that the purchase of such Certificates by or on behalf of such
Plan is permissible under applicable law, will not constitute or result in a
non-exempt prohibited transaction under ERISA or Section 4975 of the Code and
will not subject the Trustee or the Master Servicer to any obligation in
addition to those undertaken in the Pooling and Servicing Agreement or (ii) a
representation or certification to the Trustee (upon which the Trustee is
authorized to rely) to the effect that the proposed transfer and/or holding of
such 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 subject the Master
Servicer or the Trustee to any obligation in addition to those undertaken in the
Agreement.
(b) Any Person acquiring an interest in a Book-Entry Certificate or a
Global Certificate which is a Subordinate Certificate, by acquisition of such
Certificate, shall be deemed to have represented to the Trustee that either: (i)
it is 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) the
transfer and/or holding of
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an interest in such Certificate to that Person and the subsequent 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 subject the Master
Servicer or the Trustee to any obligation in addition to those undertaken in the
Agreement.
(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 Depositor 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
Depositor 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. The Master Servicer shall cooperate with the Depositor and furnish the
Depositor such information in the Master Servicer's possession as the Depositor
may reasonably request.
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ARTICLE VI
Payments to Certificateholders
Section 6.01. DISTRIBUTIONS ON THE CERTIFICATES. (a) Interest and
principal on the Group I Certificates will be distributed monthly on each
Distribution Date, commencing in March 1999, in an aggregate amount equal to the
Group I Available Funds for such Distribution Date.
(i) GROUP I SENIOR CERTIFICATES. (A) On each Distribution
Date, the Group I Available Funds will be distributed in the
following order of priority among the Group I Senior
Certificates:
FIRST, PRO RATA, the Accrued Certificate Interest on
each Class of Group I Senior Certificates for such
Distribution Date;
SECOND, any Accrued Certificate Interest on each
Class of Group I Senior Certificates remaining
undistributed from previous Distribution Dates, to
the extent of remaining Group I Available Funds;
THIRD, to the Group I Senior Certificates in
reduction of the Current Principal Amounts thereof:
the Group I Senior Optimal Principal Amount,
in the following order of priority:
first, to the Class R-1 and Class
R-3 Certificates, on a PRO RATA
basis, until the Current Principal
Amounts thereof have been reduced to
zero; and
second, to the Class I-A
Certificates, until the Current
Principal Amount thereof has been
reduced to zero;
provided, however, that each Distribution
Date after the Cross-Over Date,
distributions of principal on the
outstanding Group I Senior Certificates will
be made PRO RATA among all Group I Senior
Certificates, regardless of the allocation,
or sequential nature, of principal payments
described in this priority THIRD, based upon
the then Current Principal Amounts of such
Group I Senior Certificates.
(ii) GROUP I SUBORDINATE CERTIFICATES. On each
Distribution Date, the Group I Available Funds
remaining after the distributions described above
under Section 6.01(a)(i) will be distributed among
the Group I Subordinate Certificates sequentially, in
the following order, to the Class I-B-1, Class I-
B-2, Class I-B-3, Class I-B-4, Class I-B-5 and Class
I-B-6 Certificates, in each case up to an amount
equal to and in the following order: (a) the
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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) Interest and principal on the Group II Certificates will be
distributed monthly on each Distribution Date, commencing in March 1999, in an
aggregate amount equal to the Group II Available Funds for such Distribution
Date.
(i) GROUP II SENIOR CERTIFICATES. (A) On each Distribution
Date, the Group II Available Funds will be distributed in the
following order of priority among the Group II Senior
Certificates:
FIRST, PRO RATA, the Accrued Certificate Interest on
each Class of Group II Senior Certificates for such
Distribution Date;
SECOND, any Accrued Certificate Interest on each
Class of Group II Senior Certificates remaining
undistributed from previous Distribution Dates, to
the extent of remaining Group II Available Funds;
THIRD, to the Group II Senior Certificates in
reduction of the Current Principal Amounts thereof:
the Group II Senior Optimal Principal
Amount, in the following order of priority:
first, to the Class R-2
Certificates, until the Current
Principal Amount thereof has been
reduced to zero; and
second, to the Class II-A
Certificates, until the Current
Principal Amount thereof has been
reduced to zero;
provided, however, that each Distribution
Date after the Cross-Over Date,
distributions of principal on the
outstanding Group II Senior Certificates
will be made PRO RATA among all Group II
Senior Certificates, regardless of the
allocation, or sequential nature, of
principal payments described in this
priority THIRD, based upon the then Current
Principal Amounts of such Group II Senior
Certificates.
(ii) GROUP II SUBORDINATE CERTIFICATES. On each
Distribution Date, the Group II Available Funds
remaining after the distributions described above
under Section 6.01(b)(i) will be distributed among
the Group II Subordinate Certificates sequentially,
in the following order, to the Class II-B-1, Class
II- B-2, Class II-B-3, Class II-B-4, Class II-B-5 and
Class II-B-6 Certificates, in each case up to an
amount equal to and in the following order: (a) the
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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.
(c) "Pro rata" distributions among Classes of Certificates will be made
in proportion to the then Current Principal Amount of such Classes.
(d) On each Distribution Date, any Group I Available Funds remaining
after payment of interest and principal as described above will be distributed
to the Class R-I Certificates. On each Distribution Date, any Group II Available
Funds remaining after payment of interest and principal as described above will
be distributed to the Class R-II Certificates.
(e) No Accrued Certificate Interest will be payable with respect to any
Class of Certificates after the Distribution Date on which the Current Principal
Amount of such Certificate has been reduced to zero.
(f) 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 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 and/or Realized
Losses for such Distribution Date. In addition, the amount of any interest
shortfalls will constitute unpaid Accrued Certificate Interest and will be
distributable to holders of the Certificates of the related Classes entitled to
such amounts on subsequent Distribution Dates, to the extent of the applicable
Available Funds after current interest distributions as required herein. Any
such amounts so carried forward will not bear interest. Shortfalls in interest
payments will not be offset by a reduction in the servicing compensation of the
Master Servicer or otherwise, except to the extent of applicable Compensating
Interest Payments.
(g) The expenses and fees of the Trust shall be paid by the REMIC, to
the extent that such expenses relate to the assets of the REMIC.
Section 6.02. ALLOCATION OF LOSSES. (a) On or prior to each
Determination Date, the Master Servicer shall determine the amount of any
Realized Loss in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month.
(b) With respect to any Certificates on any Distribution Date,
the principal portion of each Realized Loss on a Group I Mortgage Loan
shall be allocated as follows:
first, to the Class I-B-6 Certificates until
the Current Principal Amount thereof has been reduced to zero;
second, to the Class I-B-5 Certificates
until the Current Principal Amount thereof has been reduced to zero;
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third, to the Class I-B-4 Certificates until
the Current Principal Amount thereof has been reduced to zero;
fourth, to the Class I-B-3 Certificates
until the Current Principal Amount thereof has been reduced to zero;
fifth, to the Class I-B-2 Certificates until
the Current Principal Amount thereof has been reduced to zero;
sixth, to the Class I-B-1 Certificates until
the Current Principal Amount thereof has been reduced to zero; and
seventh, to the Classes of Group I Senior
Certificates, PRO RATA, in accordance with their Current Principal
Amounts;
provided, that if a Realized Loss otherwise allocable to the Group I Senior
Certificates pursuant to clause SEVENTH is a Special Hazard Loss, such Realized
Loss shall be allocated to the Group I Senior Certificates and the Group II
Certificates then outstanding on a PRO RATA basis.
(c) With respect to any Certificates on any Distribution Date,
the principal portion of each Realized Loss on a Group II Mortgage Loan
shall be allocated as follows:
first, to the Class II-B-6 Certificates
until the Current Principal Amount thereof has been reduced to zero;
second, to the Class II-B-5 Certificates
until the Current Principal Amount thereof has been reduced to zero;
third, to the Class II-B-4 Certificates
until the Current Principal Amount thereof has been reduced to zero;
fourth, to the Class II-B-3 Certificates
until the Current Principal Amount thereof has been reduced to zero;
fifth, to the Class II-B-2 Certificates
until the Current Principal Amount thereof has been reduced to zero;
sixth, to the Class II-B-1 Certificates
until the Current Principal Amount thereof has been reduced to zero;
and
seventh, to the Classes of Group II Senior
Certificates, PRO RATA, in accordance with their Current Principal
Amounts.
(d) Notwithstanding the foregoing, no such allocation of any Realized
Loss shall be made on a Distribution Date to any Class of Certificates to the
extent that such allocation would result in
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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 all of the Mortgage Loans as of the
first day of the month of such Distribution Date (such limitation, the "Loss
Allocation Limitation").
(e) Any Realized Losses allocated to a Class of Certificates shall be
allocated among the Certificates of such Class in proportion to their respective
Current Principal Amounts. Any allocation of Realized Losses shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date.
(f) Realized Losses 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.
(g) On each Distribution Date, the Master Servicer shall determine the
Group I and Group II Subordinate Certificate Writedown Amount. Any such Group I
Subordinate Certificate Writedown Amount shall effect a corresponding reduction
in the Group I Current Principal Amount of (i) if prior to the Group I
Cross-Over Date, the Current Principal Amounts of the Group I Subordinate
Certificates, in the reverse order of their numerical Class designations and
(ii) from and after the Group I Cross-Over Date, the Group I 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. Any such Group II Subordinate
Certificate Writedown Amount shall effect a corresponding reduction in the Group
II Current Principal Amount of (i) if prior to the Group II Cross-Over Date, the
Current Principal Amounts of the Group II Subordinate Certificates, in the
reverse order of their numerical Class designations and (ii) from and after the
Group II Cross-Over Date, the Group II 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.
(h) The interest portion of any Realized Losses with respect to the
Group I Mortgage Loans occurring on or prior to the Group I Cross-Over Date will
not be allocated among any Group I Certificates, but will reduce the amount of
Group I Available Funds on the related Distribution Date. As a result of the
subordination of the Group I Subordinate Certificates, in right of distribution,
such Realized Losses will be borne first by the Group I Subordinate Certificates
in inverse order of their numerical Class designations. The interest portion of
any Realized Losses with respect to the Group II Mortgage Loans occurring on or
prior to the Group II Cross-Over Date will not be allocated among any Group II
Certificates, but will reduce the amount of Group II Available Funds on the
related Distribution Date. As a result of the subordination of the Group II
Subordinate Certificates, in right of distribution, such Realized Losses will be
borne first by the Group II Subordinate Certificates in inverse order of their
numerical Class designations.
Section 6.03. PAYMENTS. (a) 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
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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 the amount to be distributed to each Class and, based on such amounts,
the Trustee shall determine the amount to be distributed to each
Certificateholder. All of the Trustee's calculations of payments shall be based
solely on information provided to the Trustee by the Master Servicer. The
Trustee shall not be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.
(b) 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 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 6.04. 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 Depositor and the
Rating Agencies, a statement setting forth the following information, expressed
with respect to clauses (i) through (vi) in the aggregate and as a Fractional
Undivided Interest representing an initial Current Principal Amount of $1,000 or
in the case of the Residual Certificates, an initial Current Principal Amount of
$50 for each of the Class R-1 and Class R-3 Certificates, an initial Current
Principal Amount of $100 for the Class R-2 Certificates and expressed with
respect to clauses (viii) through (xv) with respect to Loan Group I and Loan
Group II separately:
(i) the Current Principal Amount 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 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 Certificates;
(v) the amount of the distribution allocable to interest on
each Class of Certificates;
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(vi) the Pass-Through Rates for each Class of Certificates
with respect to such Distribution Date;
(vii) the Current Principal Amount of each Class of
Certificates after such Distribution Date;
(viii) the amount of any Monthly Advances, Compensating
Interest Payments and outstanding unreimbursed advances by the Master
Servicer or the related Servicers 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
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(xvii) the then applicable Group I and Group II Senior
Percentage, Group I and Group II Senior Prepayment Percentage, Group I
and Group II Subordinate Percentage and Group I and Group II
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 6.05 upon which the Trustee may conclusively rely and which
the Trustee shall not be required to confirm or verify. The information
furnished by the Master Servicer shall be sufficient for the Trustee to
calculate any payments or statements it is required to make.
The Master Servicer may make available each month, to any interest
party, the monthly statement to Certificateholders via the Master Servicer's
website, electronic bulletin board and its fax-on-demand service. The Master
Servicer's website will be located at "www.ctslink.com." The Master Servicer's
electronic bulletin board may be accessed by calling (301) 815-6620 and its fax-
on-demand service may be accessed by calling (301) 815-6610.
(b) By April 30 of each year beginning in 2000, 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. 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 reports described above.
Section 6.05. RESERVED.
Section 6.06. MONTHLY ADVANCES. If the Scheduled Payment 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 (and for which no required advance has been
made by the related Servicer or First Union subservicer) 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 Master Servicing Fee and 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 Servicer or First Union subservicer is required to do so. The Master
Servicer's obligation to make the Monthly Advances with respect to unpaid
Balloon Payments for which no required advance is made by the
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related Servicer or First Union subservicer is limited to the amount of the
related Scheduled Payment due immediately prior to such Balloon Payment. Any
amount used as a Certificate Account Advance shall be replaced by the Master
Servicer by deposit in the appropriate subaccount of the Certificate Account on
or before any future date on which and to the extent that funds in the
appropriate subaccount of 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 6.07. COMPENSATING INTEREST PAYMENTS. The Master Servicer shall
deposit in the Certificate Account not later than each Funds Transfer 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 as calculated
with respect to Mortgage Loans not serviced by First Union for the related
Distribution Date and (ii) the Master Servicing Fee for such Distribution Date
(such amount, the "Compensating Interest Payment"), but only to the extent a
Compensating Interest Payment was required to be made, and was not so made, by
the related Servicer pursuant to the related Servicing Agreement. The Master
Servicer shall not be entitled to any reimbursement of any Compensating Interest
Payment.
Section 6.08. REPORTS OF FORECLOSURES AND ABANDONMENT OF MORTGAGED
PROPERTY. Each year the Master Servicer shall report or cause to be reported by
the related Servicer 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.
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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.
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. (a) The Master Servicer
agrees to the extent described in Section 7.03(b) to indemnify the Indemnified
Persons for, and to hold them harmless against, any loss, liability or expense
incurred on their part, arising out of, or in connection with, this Agreement,
including the costs and expenses (including reasonable legal fees and expenses)
of defending themselves against (i) any loss, liability or expense related to
the Master Servicer's 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 the Master Servicer'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, provided that with respect to any
such claim, the Trustee shall have given the Master Servicer and the Depositor
written notice thereof promptly after the Trustee shall have with respect to
such claim knowledge thereof.
(b) The Depositor will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise referred to in
Subsection (a) above.
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 Depositor, 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
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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 the Master Servicer's 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 the Master Servicer'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, with the consent of the Trustee (which consent shall not be
unreasonably withheld), undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto 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.
(f) The Master Servicer shall not be liable for any acts or
omissions of any Servicer, except as otherwise expressly provided herein. In
particular, the Master Servicer shall not be liable for any servicing errors or
interruptions resulting from any failure of any Servicer to maintain computer
and other information systems that are year-2000 compliant.
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
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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. SUCCESSOR MASTER SERVICER. In connection with the
appointment of any successor Master Servicer or the assumption of the duties of
the Master Servicer, the Trustee may make such arrangements for the compensation
of such successor master servicer out of payments on the Mortgage Loans as the
Trustee and such successor master servicer shall agree. If the successor master
servicer does not agree that such market value is a fair price, such successor
master servicer shall obtain two quotations of market value from third parties
actively engaged in the servicing of single-family mortgage loans.
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); (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, 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.
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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) and
only with respect to the defaulting Master Servicer:
(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.
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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 (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; and (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.
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 under this Agreement 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 (other
than advances deemed recoverable and not previously made) incurred by the Master
Servicer 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 the Master Servicer's failure to modify its computer
and any other systems in a manner such that the Master Servicer can service the
Mortgage Loans in accordance with the terms of this Agreement on and after
January 1, 2000. As compensation therefor, but subject to Section 7.06, the
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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 permitted under this Agreement 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 the provisions of Section
7.06 shall apply, 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 Trustee shall give notice of any such waiver to
the Rating Agencies.
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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.
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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 subject to Section 8.02(b) 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, but only with respect to the defaulting Master
Servicer.
(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; PROVIDED, FURTHER, that the Trustee shall not be responsible
for the accuracy or verification of any calculation provided to it pursuant to
this Agreement.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Certificate Account as provided in Sections 6.01 and 10.01 herein. In
addition, the Trustee shall immediately notify the Master Servicer if, on any
Funds Transfer Date, First Union fails to remit to the Trustee the funds
required to be remitted by First Union under its Servicing Agreement.
(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 in its individual
capacity for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the
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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 Office
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 or any Servicing
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. The Trustee shall not be liable for interest or other
compensation on uninvested funds held under this Agreement.
(f) Except for those actions that the Trustee is required to take
hereunder, the Trustee shall have no obligation or liability to take any action
or to refrain from taking any action hereunder
in the absence of written direction as provided hereunder.
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, certificate of a
Depositor or Master Servicer, 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 advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection with respect to
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any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or 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
Office has actual knowledge (which has not been cured or waived),
subject to Section 8.02(b), 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) 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 liable in its individual capacity
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) 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
Affiliates; PROVIDED, HOWEVER, that the Trustee may not appoint any
agent to perform its custodial functions with respect to the Mortgage
Files 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
4.01(b) or Section 4.02, to be unclear, the
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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; and
(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 BSMCC pursuant to this Agreement or
the Mortgage Loan Purchase Agreement or the eligibility of any Mortgage
Loan for purposes of this Agreement.
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 Depositor, 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 2.04 hereof; provided, however, that the foregoing
shall not relieve the Trustee or Custodian of the obligation to review the
Mortgage Files pursuant to Sections 2.02 and 2.04. 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 Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor 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.
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Section 9.05. TRUSTEE'S FEES AND EXPENSES. (a) The Trustee will be
compensated for its services hereunder by the Master Servicer as mutually agreed
to between the Master Servicer and the Trustee. 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
Depositor (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, and to the extent that the
funds in the Certificate Account are not sufficient to pay the Trustee's Fees.
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 or the Depositor 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 two 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'
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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 or their affiliates 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 Depositor and the Master Servicer, with a copy to
the Rating Agencies. Upon receiving such notice of resignation, the Depositor
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 Depositor 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 Depositor
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 quadruplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to
each of the Depositor, 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, the Depositor 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
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be
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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. BSMCC 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
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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.
(h) The Trustee hereby appoints Bank One, N.A. as co-trustee hereunder
for the sole and limited purpose of accepting the assignment of any Mortgage
Loan insured by FHA.
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
each of the Series REMICs shall be a calendar year and the Trustee shall
maintain or cause the maintenance of the books of each of the Series REMICs on
the accrual method of accounting.
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(b) The Master Servicer shall prepare and file or cause to be filed
with the Internal Revenue Service Federal tax information returns or elections
required to be made by the Trustee hereunder with respect to each of the Series
REMICs 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 Master Servicer 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 Series REMICs (the "REMIC Reporting
Agent") as required by IRS Form 8811. The Trustee shall make the elections to
treat each of the Series REMICs 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. The Holder of the Class
R-I Certificate is hereby designated as the "Tax Matters Person" (within the
meaning of Treas. Reg. ss.ss. 1.860F-4(d)) for REMIC I and the Holder of the
Class R-II Certificate is hereby designated as "Tax Matters Person" for REMIC
II. The Master Servicer is hereby designated and appointed as the agent of each
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 each of the Series REMICs 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 Master Servicer 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 Master Servicer shall provide upon request and upon reasonable
compensation 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 Master Servicer 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 Series REMICs or the Trust Fund.
Section 9.14. APPOINTMENT OF CUSTODIANS. The Trustee may, with the
consent of the Master Servicer and the Depositor, appoint one or more Custodians
who are not Affiliates of the Depositor or the Servicers to hold all or a
portion of the Mortgage Files as agent for the Trustee, by entering
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into a Custodial Agreement. The appointment of Norwest Bank Minnesota, National
Association as Custodian under the Custodial Agreement dated the Closing Date is
hereby authorized. Subject to Article IX, the Trustee agrees to comply with the
terms of each Custodial Agreement and to enforce the terms and provisions
thereof against the Custodian for the benefit of the Certificateholders. Each
Custodian shall be a depository institution subject to supervision by federal or
state authority, shall have a combined capital and surplus of at least
$15,000,000 and shall be qualified to do business in the jurisdiction in which
it holds any Mortgage File. Each Custodial Agreement may be amended only as
provided in Section 11.02. The Trustee shall notify the Certificateholders of
the appointment of any Custodian (other than the Custodian appointed as of the
Closing Date) pursuant to this Section 9.14.
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ARTICLE X
Termination
Section 10.01. TERMINATION UPON REPURCHASE BY THE DEPOSITOR OR ITS
DESIGNEE OR LIQUIDATION OF THE MORTGAGE LOANS. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Depositor, 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 with respect to the
Group I Mortgage Loans:
(i) upon the repurchase by or at the direction of the
Depositor or its designee or the Master Servicer of all Group I
Mortgage Loans and all related REO Property remaining in the Trust at a
price equal to (a) 100% of the Outstanding Principal Balance of each
Group I Mortgage Loan (other than a Group I 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 related REO Property,
less the good faith estimate of the Depositor of liquidation expenses
to be incurred in connection with its disposal thereof (but not more
than the Outstanding Principal Balance of the related Group I 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 Depositor and the Trustee at the
expense of the Depositor; or
(ii) upon the later of the making of the final payment or
other liquidation, or any advance with respect thereto, of the last
Group I Mortgage Loan remaining in the Trust Fund or the disposition of
all property acquired with respect to any such Group I 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) Subject to Section 10.02, the respective obligations and
responsibilities of the Depositor, 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 with respect to the Group II Mortgage Loans:
(i) upon the repurchase by or at the direction of the
Depositor or its designee or the Master Servicer of all Group II
Mortgage Loans and all related REO Property remaining in the Trust at a
price equal to (a) 100% of the Outstanding Principal Balance of each
Group II Mortgage Loan (other than a Group II 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
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value of any related REO Property, less the good faith estimate of the
Depositor of liquidation expenses to be incurred in connection with its
disposal thereof (but not more than the Outstanding Principal Balance
of the related Group II 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
Depositor and the Trustee at the expense of the Depositor; or
(ii) upon the later of the making of the final payment or
other liquidation, or any advance with respect thereto, of the last
Group II Mortgage Loan remaining in the Trust Fund or the disposition
of all property acquired with respect to any such Group II 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.
(c) 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.
(d) The right of the Depositor or its designee or the Master Servicer
to repurchase all Group I Loans pursuant to Subsection 10.01(a)(i) above shall
be exercisable only if (i) the aggregate Scheduled Principal Balance of the
Group I Loans at the time of any such repurchase is less than 5% (or 2 1/2% with
respect to the Master Servicer's rights) of the portion of the Group I Cut-off
Date Balance, or (ii) the Depositor, based upon an Opinion of Counsel, has
determined that the REMIC status of REMIC I has been lost or that a substantial
risk exists that such REMIC status will be lost for the then-current taxable
year. The right of the Depositor or its designee or the Master Servicer to
repurchase all Group II Loans pursuant to Subsection 10.01(b)(i) above shall be
exercisable only if (i) the aggregate Scheduled Principal Balance of the Group
II Loans at the time of any such repurchase is less than 1% of the portion of
the Group II Cut-off Date Balance, or (ii) the Depositor, based upon an Opinion
of Counsel, has determined that the REMIC status of REMIC II 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 Depositor may elect to
terminate the related REMIC at any time, and upon such election, the Depositor
or its designee shall repurchase all the Group I or Group II Mortgage Loans, as
applicable. The foregoing right of the Master Servicer to repurchase any of the
Mortgage Loans are subordinate to such rights of the Depositor or its designee
and may only be exercised after receipt of written notice from the Depositor
waiving its right to repurchase the Mortgage Loans.
(e) The Trustee shall give notice of any termination to the applicable
Group I or Group II Certificateholders, as applicable, with a copy to the Rating
Agencies, upon which such Certificateholders shall surrender their Certificates
to the Trustee for payment of the final distribution and cancellation. 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 such Certificates will be
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made upon presentation and surrender of such Certificates at the office of the
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of such
Certificates at the office of the Trustee therein specified.
(f) If the option of the Depositor or Master Servicer to repurchase or
cause the repurchase of all Group I Mortgage Loans or Group II Mortgage Loans
under Subsection 10.01(a)(i) or Subsection 10.01 (b)(i), respectively, above is
exercised, the Depositor and/or its designee or Master Servicer 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 related Mortgage Loans being purchased by it and all property acquired with
respect to such Mortgage Loans remaining in the related REMIC. Upon the
presentation and surrender of the Certificates, the Trustee shall distribute an
amount equal to (i) the amount otherwise distributable to the related
Certificateholders (other than the holder of the Class or Classes of related
Residual 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 related Certificateholders of each Class, and (iii) the
remainder to the related Residual Certificateholder. If the Group I or Group II
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 Group I or Group II Subordinate Certificates, respectively, having the
highest numerical designation or, if after the applicable Group I or Group II
Cross-Over Date, respectively, to the Group I or Group II Senior Certificates,
respectively, PRO RATA. Upon deposit of the required repurchase price and
following such final Distribution Date, the Trustee or Custodian shall release
promptly to the Depositor and/or its designee or Master Servicer, as the case
may be, the Mortgage Files for the remaining applicable Mortgage Loans, and the
Accounts with respect thereto 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(g).
(g) 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) and
10.01(b)(ii) above, the Master Servicer shall deliver to the Trustee for deposit
in the Certificate Account all distributable amounts remaining in the Protected
Account, and shall cause any 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 remaining Certificateholders, in accordance with their
respective interests, all distributable amounts remaining in the Certificate
Account. Upon deposit by any 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 or Custodian shall release promptly to the
Depositor or its designee 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(g).
(h) 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
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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 Depositor to repurchase all the Group I or Group II Mortgage Loans under
Subsection 10.01(a)(i) or 10.01(b)(i) above is exercised, REMIC I or REMIC II,
respectively, 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 any Series REMIC or (ii)
cause any Series 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 Depositor, the Master Servicer, as agent
for the respective Tax Matters Persons, shall adopt a plan of complete
liquidation of any Series REMIC provided to it by the Depositor 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 of any of the Series REMICs 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 Depositor; and
(iii) at the time of the making of the final payment on any
such Certificates, the Trustee shall distribute or credit from the
Certificate Account (or cause to be distributed or credited) (i) to the
Certificateholders, other than the Holder of the corresponding Residual
Certificates, the Current Principal Amount of the Certificates plus 30
days' interest thereon at the applicable Pass-Through Rate, and (ii) to
the corresponding Residual Certificateholder, all cash on hand from the
Certificate Account (other than cash retained to meet claims); and the
corresponding REMIC 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 of the
relevant REMIC upon the written request of the Depositor and to take such action
in connection therewith as may be reasonably requested by the Depositor and (ii)
appoint the Depositor 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 such REMIC.
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ARTICLE XI
Miscellaneous Provisions
Section 11.01. INTENT OF PARTIES. The parties intend that each of the
Series REMICs 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 Depositor, 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
Depositor, 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 any of the Series REMICs 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 Section 11.02(b), Certificates
registered in the name of or held for the benefit of the Depositor, the Master
Servicer, a Servicer or the Trustee or any Affiliate thereof shall be entitled
to vote their Undivided Fractional 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.
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(e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement.
(f) Notwithstanding any provision of this Agreement to the contrary,
this Agreement may not be amended, modified or waived in any manner than would
be adverse to any interest of the Master Servicer, without the Master Servicer's
prior written consent.
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 the Trust's 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
Depositor, 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.
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(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 Depositor. 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
Depositor, if made in the manner provided in this Section 11.05.
Section 11.06. 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 11.07. NOTICES. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at, mailed by registered mail,
return receipt requested, postage prepaid, or by recognized overnight courier,
to or transmitted by facsimile to (i) in the case of the Depositor, 245 Park
Avenue, New York, New York 10167, Attention: Vice President-Servicing,
telecopier number: (212) 272-5591, or to such other address as may hereafter be
furnished to the other parties hereto in writing; (ii) in the case of the
Trustee, at its Corporate Trust Office, telecopier number: (312) 407-1708, or
such other address as may hereafter be furnished to the other parties hereto in
writing; (iii) in the case of the Master Servicer, 11000 Broken Land Parkway,
Columbia, Maryland 21044 (Attention: SAMI 1999-1), telecopier number: (410)
884-2360; or (iv) in the case of the Rating Agencies, Fitch IBCA, Inc., One
State Street Plaza, 32nd Floor, New York, New York 10004 ), telecopier number:
(212) 480-4438, and Standard & Poor's, 26 Broadway, New York, New York, 10004,
Attention: Residential Mortgage Surveillance, telecopier number: (212) 412-0224.
Any notice delivered to the Depositor, 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 11.08. 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
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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 11.09. 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 11.10. 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 11.11. 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 11.12. 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 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 or any Servicing
Agreement (as reported to it by the Master Servicer);
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 6.04 and Section 3.19, 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 6.04; and
2. Each annual independent public accountants' servicing report
received as described in Section 3.19.
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IN WITNESS WHEREOF, the Depositor, the 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 Depositor
By: /s/ Sara Bonesteel
-------------------------------
Name: Sara Bonesteel
Title: Managing Director
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By: /s/ Rick Tarnas
-------------------------------
Name: Rick Tarnas
Title: Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Master Servicer
By: /s/ Randy Reider
-------------------------------
Name: Randy Reider
Title: Assistant Vice President
Accepted and Agreed:
BEAR STEARNS MORTGAGE CAPITAL
CORPORATION
By /s/ Baron Silverstein
---------------------
Name: Baron Silverstein
Title: Managing Director
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of February, 1999 before me, a notary public in and for
said State, personally appeared Sara Bonesteel, known to me to be a Managing
Director 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/ Mark Zweifler
----------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the 26th day of February, 1999 before me, a notary public in and for
said State, personally appeared Rick Tarnas, known to me to be a Vice President
of The First National Bank of Chicago, 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/ K. Gkounas
--------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the 23rd day of February, 1999 before me, a notary public in and for
said State, personally appeared Randy Reider, known to me to be an Assistant
Vice President of Norwest Bank Minnesota, National Association, 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/ Sharon Surgui
-----------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of February, 1999 before me, a notary public in and for
said State, personally appeared Baron Silverstein, known to me to be a Managing
Director of Bear Stearns Mortgage Capital Corporation, 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/ Mark Zweifler
-------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A-1
FORM OF CLASS [I-A][II-A] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
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.
A-1-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Certificate No. __ _____ Pass-Through Rate
Class [I-A][II-A] Senior Percentage Interest: ___
Date of Pooling and Servicing
Agreement and Cut-off Date:
February 1, 1999
First Distribution Date: Aggregate Initial Current Principal Amount of this
March 25, 1999 Certificate as of the Cut-off Date: _________
Master Servicer: Initial Current Principal Amount of this Certificate
Norwest Bank Minnesota, as of the Cut-off Date: ___________
National Association
Assumed Final CUSIP __________
Distribution Date:
June 25, 2029
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1999-1
evidencing a percentage interest in the distributions
allocable to the Class [I-A][II-A] Certificates with respect
to a Trust Fund consisting primarily of a pool of
conventional one- to four-family adjustable interest rate
mortgage loans sold by STRUCTURED ASSET MORTGAGE INVESTMENTS
INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments Inc., the Master Servicer, the Trustee referred to
below or Bear Stearns Mortgage Capital Corporation or any of their affiliates or
any other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by Structured Asset Mortgage
Investments Inc., the Master Servicer, the Trustee or Bear Stearns Mortgage
Capital Corporation or any of their affiliates or any other person. None of the
Company, the Master Servicer, Bear Stearns Mortgage Capital Corporation or any
of their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that [Cede & Co.][_______________] is the
registered owner of the Percentage Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust") generally consisting of conventional, first lien, adjustable
rate mortgage loans secured by one- to four- family residences, individual
condominium and cooperative units (collectively, the "Mortgage Loans") sold by
Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by Bear Stearns Mortgage Capital Corporation to SAMI. Norwest Bank
Minnesota, National Association ("Norwest") will act as
A-1-2
<PAGE>
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"), between SAMI, as depositor,
Norwest Bank Minnesota, National Association, as master servicer and The First
National Bank of Chicago, 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 a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Mortgage
Loans. 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 (or if such last day is not a Business Day,
the Business Day immediately preceding such last day) of the calendar month
preceding the month of such Distribution Date, an amount equal to the product of
the Percentage Interest evidenced by this Certificate and the amount (of
interest and principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of 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 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 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. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principle Amount hereof will be reduced to the extent of distributions
allocable to principle hereon and any Realized Losses allocable hereto.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in seventeen Classes. The Certificates, in the aggregate, evidence the
entire beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
A-1-3
<PAGE>
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund 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 Depositor and the rights of the Certificateholders under the
Agreement from time to time by the Depositor and the Trustee with the consent of
the Holders of Certificates evidencing Percentage Interests aggregating not less
than 66- 2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Percentage 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 for such purposes, 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 Percentage Interest
will be issued to the designated transferee.
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 Percentage 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 Servicer, the Trustee nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
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
A-1-4
<PAGE>
Trust Fund 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 assets of the Trust Fund 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 unpaid principal
balance of the Mortgage Loans is less than the percentage of the aggregate
Stated Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. The Trust Fund also may be terminated on any Distribution Date
upon the determination, based upon an opinion of counsel, that the REMIC status
of the Trust Fund 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 Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.
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.
A-1-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: February 26, 1999 THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Trustee
By:____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [I-A][II-A] Certificates referred to
in the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
Authorized signatory of The First
National Bank of Chicago, not in its
individual capacity but solely as
Trustee
By:____________________________________
Authorized Signatory
<PAGE>
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 of assignee) a Percentage Interest evidenced by the within
Mortgage Pass-Through Certificate and hereby authorizes the transfer of
registration of such interest to 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 A-2
FORM OF CLASS [I-B-__][II-B-_] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
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 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
A-2-1
<PAGE>
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,
PTE 96-23 OR SECTION 401(C) OF ERISA AND THE REGULATIONS TO BE PROMULGATED
THEREUNDER AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE
PART OF THE DEPOSITOR, 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 OR AN OPINION OF COUNSEL TO SUCH EFFECT BY
OR ON BEHALF OF A HOLDER OF A [CLASS I-B-__][II-B-__][PRIVATE] CERTIFICATE.]
A-2-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Certificate No. ___ ______ Pass-Through Rate
Class [I-B-__][II-B-__] Percentage Interest: ___
Date of Pooling and Servicing
Agreement and Cut-off Date:
February 1, 1999
First Distribution Date: Aggregate Initial Current Principal Amount of this
March 25, 1999 Certificate as of the Cut-off Date: ________
Master Servicer: Initial Current Principal Amount of this
Norwest Bank Minnesota, Certificate as of the Cut-off Date: ________
National Association
Assumed Final CUSIP ____________
Distribution Date:
June 25, 2029
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1999-1
evidencing a percentage interest in the distributions
allocable to the Class [I-B-__] [II-B-__] Certificates with
respect to a Trust Fund consisting primarily of a pool of
conventional one- to four-family adjustable interest rate
mortgage loans sold by STRUCTURED ASSET MORTGAGE INVESTMENTS
INC.
This Certificate is payable solely from the assets of the
Trust, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer, the Trustee referred to below or
Bear Stearns Mortgage Capital Corporation or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by Structured Asset Mortgage
Investments Inc., the Master Servicer, the Trustee or Bear Stearns Mortgage
Capital Corporation or any of their affiliates or any other person. None of the
Company, the Master Servicer, Bear Stearns Mortgage Capital Corporation or any
of their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that [Bear, Stearns Securities
Corporation][____________] is the registered owner of the Percentage
Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust fund
(the "Trust Fund") generally consisting of conventional, first lien,
adjustable rate mortgage loans secured by one- to four- family
residences, individual condominium and cooperative units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments Inc. ("SAMI"). The Mortgage Loans were sold by Bear
Stearns Mortgage Capital Corporation to SAMI. Norwest Bank Minnesota,
National Association
A-2-3
<PAGE>
("Norwest") 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 Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), between SAMI, as depositor, Norwest Bank Minnesota, National
Association, as master servicer and The First National Bank of Chicago, 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 a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Mortgage
Loans. 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 (or if such last day is not a Business Day,
the Business Day immediately preceding such last day) of the calendar month
preceding the month of such Distribution Date, an amount equal to the product of
the Percentage Interest evidenced by this Certificate and the amount (of
interest or principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of 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 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 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. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principle Amount hereof will be reduced to the extent of distributions
allocable to principle hereon and any Realized Losses allocable hereto.
[This Class [I-B-__][II-B-__] Certificate has not been and
will not be registered under the Securities Act of 1933, as amended (the "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 Act and other applicable laws
and only (1) pursuant to Rule 144A under the 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
A-2-4
<PAGE>
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 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
purchasing not for distribution in violation of the 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 an Opinion of Counsel as to
compliance with all applicable securities laws of the United States.
This Class [I-B-__][II-B-__] 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, PTE 96-23 or Section 401(c) of ERISA and the
regulations promulgated thereunder and (ii) will not give rise to any additional
fiduciary duties on the part of the Depositor, 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 or
an Opinion of Counsel to such effect by or on behalf of a Holder of a
[I-B-__][II-B-__][Private] Certificate.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in seventeen Classes. The Certificates, in the aggregate, evidence the
entire beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund 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 Depositor and the rights of the Certificateholders under the
Agreement from time to time by the Depositor and the Trustee with the consent of
the Holders of Certificates evidencing Percentage Interests aggregating not less
than 66- 2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Percentage 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
A-2-5
<PAGE>
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 for such purposes, 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 Percentage Interest
will be issued to the designated transferee.
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 Percentage 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 Servicer, the Trustee nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
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 Fund 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 assets
of the Trust Fund 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 unpaid principal balance of the Mortgage Loans is less than the
percentage of the aggregate Stated Principal Balance specified in the Agreement
of the Mortgage Loans at the Cut-off Date. The exercise of such right will
effect the early retirement of the Certificates. The Trust Fund also may be
terminated on any Distribution Date upon the determination, based upon an
opinion of counsel, that the REMIC status of the Trust Fund 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 Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.
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.
A-2-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: February 26, 1999 THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Trustee
By:_________________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class [I-B-__][II-B-__] Certificates
referred to in the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
Authorized signatory of The First National
Bank of Chicago, not in its individual
capacity but solely as Trustee
By:_________________________________________
Authorized Signatory
<PAGE>
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 of assignee) a Percentage Interest
evidenced by the within Mortgage Pass-Through Certificate and hereby authorizes
the transfer of registration of such interest to 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 A-3
FORM OF CLASS R-[__] CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A
NON-UNITED STATES PERSON, A PUBLICLY TRADED PARTNERSHIP OR A DISQUALIFIED
ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
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,
PTE 96-23 OR SECTION 401(C) OF ERISA AND THE REGULATIONS TO BE PROMULGATED
THEREUNDER 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 AND WILL BE EVIDENCED BY A REPRESENTATION
OR AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A
PHYSICAL CERTIFICATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (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, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO
<PAGE>
IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES
CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND
SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
B-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Certificate No. __ ____ Pass-Through Rate
Class R-[__] Senior Percentage Interest: ___
Date of Pooling and Servicing Aggregate Initial Current Principal Amount of
Agreement and Cut-off Date: this Certificate as of the Cut-off Date: ______
February 1, 1999
First Distribution Date: Initial Current Principal Amount of this
March 25, 1999 Certificate as of the Cut-off Date: _______
Master Servicer:
Norwest Bank Minnesota,
National Association
Assumed Final Distribution Date: CUSIP _________
June 25, 2029
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1999-1
evidencing a percentage interest in the distributions
allocable to the Class R-[__] Certificates with respect to a
Trust Fund consisting primarily of a pool of conventional
one- to four-family adjustable interest rate mortgage loans
sold by STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments Inc., the Master Servicer or the Trustee referred to
below or any of their affiliates or any other person. Neither this Certificate
nor the underlying Mortgage Loans are guaranteed or insured by any governmental
entity or by Structured Asset Mortgage Investments Inc., the Master Servicer or
the Trustee or any of their affiliates or any other person. None of Structured
Asset Mortgage Investments Inc., the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.
This certifies that [Bear, Stearns Securities
Corporation][___________] is the registered owner of the Percentage Interest
evidenced hereby in the beneficial ownership interest of Certificates of the
same Class as this Certificate in a trust fund (the "Trust Fund") generally
consisting of conventional, first lien, adjustable rate mortgage loans secured
by one- to four- family residences, individual condominium and cooperative units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments Inc. ("SAMI"). The Mortgage Loans were sold by Bear Stearns Mortgage
Capital Corporation to SAMI. Norwest Bank Minnesota, National Association
B-3
<PAGE>
("Norwest") 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 Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), between SAMI, as depositor, Norwest Bank Minnesota, National
Association, as master servicer and The First National Bank of Chicago, 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 set forth above. 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 (or if such last
day is not a Business Day, the Business Day immediately preceding such last day)
of the calendar month preceding the month of such Distribution Date, an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount (of interest and principal, if any) required to be distributed to
the Holders of Certificates of the same Class as this Certificate. The Assumed
Final Distribution Date is the first anniversary of 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 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. 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. The Initial Current Principal
Amount of this Certificate is set forth above. The Current Principal Amount
hereof will be reduced to the extent of distributions allocable to principal
hereon and any Realized Losses allocable hereto.
Each Holder of this Certificate will be deemed to have agreed
to be bound by the restrictions set forth in the Agreement to the effect that
(i) each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the delivery
to the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Seller will have the right, in its
sole discretion and without notice to the Holder of this
B-4
<PAGE>
Certificate, to sell this Certificate to a purchaser selected by the Company,
which purchaser may be the Seller, or any affiliate of the Seller, on such terms
and conditions as the Seller may choose.
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,
PTE 96-23 or Section 401(c) of ERISA and the regulations promulgated thereunder
and (ii) will not give rise to any additional fiduciary duties on the part of
the Seller, the Master Servicer or the Trustee, which will be deemed represented
by an owner of a Book-Entry Certificate and will be evidenced by a
representation or an Opinion of Counsel to such effect by or on behalf of a
Holder of a Definitive Certificate.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in seventeen Classes. The Certificates, in the aggregate, evidence the
entire beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund 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 Seller and the rights of the Certificateholders under the
Agreement from time to time by the Seller and the Trustee with the consent of
the Holders of Certificates evidencing Percentage Interests aggregating not less
than 66- 2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Percentage 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 for such purposes, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee
B-5
<PAGE>
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 Percentage Interest will be issued to the
designated transferee.
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 Percentage 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 Seller, 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 none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
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 Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund 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 assets
of the Trust Fund 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 unpaid principal balance of the Mortgage Loans is less than the
percentage of the aggregate Stated Principal Balance specified in the Agreement
of the Mortgage Loans at the Cut-off Date. The exercise of such right will
effect the early retirement of the Certificates. In no event, however, will the
Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.
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.
B-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: February 26, 1999 THE FIRST NATIONAL BANK OF CHICAGO
Not in its individual capacity but solely as
Trustee
By:_________________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-[__] Certificates referred to in
the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
Authorized signatory of Norwest Bank
Minnesota, National Association, not in
its individual capacity but solely as
Trustee
By:_____________________________________
Authorized Signatory
B-7
<PAGE>
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 of assignee) a Percentage Interest evidenced
by the within Mortgage Pass-Through Certificate and hereby authorizes the
transfer of registration of such interest to 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.
B-8
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
----------------------
The Preliminary and Final Mortgage Loan Schedules shall set
forth the following information with respect to each Mortgage Loan:
(1) the loan number;
(2) the Mortgagor's name;
(3) the street address (including city, state and zip code) of the
Mortgaged Property;
(4) the property type;
(5) the Mortgage Rate;
(6) the Master Servicing Rate;
(7) the Net Rate;
(8) the original term;
(9) the maturity date;
(10) the stated remaining term to maturity;
(11) the original principal balance;
(12) the first payment date;
(13) the principal and interest payment in effect as of the Cut-off Date;
(14) the unpaid principal balance as of the Cut-off Date;
(15) the Loan-to-Value Ratio at origination;
(16) paid-through date;
(17) the insurer of any Primary Mortgage Insurance Policy;
(18) the Mortgage Loan Group;
(19) the Gross Margin, if applicable;
B-1
<PAGE>
(20) the Maximum Lifetime Mortgage Rate, if applicable;
(21) the Minimum Lifetime Mortgage Rate, if applicable;
(22) the Periodic Rate Cap, if applicable; and
(23) the number of days delinquent, if any.
Such schedule also shall set forth for all of the Mortgage Loans, the total
number of Mortgage Loans, the total of each of the amounts described under (xi)
and (xiv) above, the weighted average by principal balance as of the Cut-off
Date of each of the rates described under (v), (vi) and (vii) above, and the
weighted average remaining term to maturity by unpaid principal balance as of
the Cut-off Date.
B-2
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BSMCC
CONCERNING THE MORTGAGE LOANS
[SEE SECTION 8 OF MORTGAGE LOAN PURCHASE AGREEMENT]
C-1
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, National Association
1015 10th Avenue S.E.
Minneapolis, MN 55414-0031
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of
February 1, 1999, among Structured Asset Mortgage Investments
Inc., as Depositor, Norwest Bank Minnesota, National
Association, as Master Servicer, and The First National Bank
of Chicago, as Trustee (the "Trustee")
In connection with the administration of the Mortgage Loans held by you
as Custodian on behalf of the Trustee for the related Trust Fund pursuant to the
above-captioned Agreement, we request the release, and hereby acknowledge
receipt, of the Mortgage File for the Mortgage Loan described below, for the
reason indicated.
Mortgage Loan Number:
- - --------------------
Mortgagor Name, Address & Zip Code:
- - ----------------------------------
Reason For Requesting Documents (Check One):
- - -------------------------------
_________ 1. Mortgage Paid in Full (and all amounts received or to
be received in connection with such payment have been or will be remitted to the
Master Servicer for deposit in the appropriate subaccount of the Certificate
Account)
2. Foreclosure
3. Substitution
4. Other Liquidation (Repurchases, etc.)
5. Nonliquidation Reason:______________________
Address to which Custodian should
Deliver the Mortgage File: ____________________________
____________________________
____________________________
D-1
<PAGE>
By:___________________________
(authorized signer)
Issuer:_______________________
Address:______________________
______________________
Date:_________________________
Custodian
- - ---------
Norwest Bank Minnesota, National Association
Please acknowledge the execution of the above request by your signature and date
below:
________________________________ _______________________________
Signature Date
Documents returned to Custodian:
________________________________ _______________________________
Custodian Date
D-2
<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/she 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/she 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
(the "Code"), and will not be a disqualified organization as of [Closing Date]
[date of purchase]; (ii) it is not acquiring the Structured Asset Mortgage
Investments Inc. Mortgage Pass-Through Certificates, Series 1999-1, Class R-1,
Class R-2 and Class R-3 Certificates (the "Residual Certificates") 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 Certificates will not be
owned directly or indirectly by a disqualified organization; and (iv) it will
not transfer such Residual Certificates 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)(3 1 )] of the Code.
4. That the Investor's taxpayer identification number is .
5. That no purpose of the acquisition of the Residual Certificates is
to avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.
E-1
<PAGE>
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:
E-2
<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__.
E-3
<PAGE>
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
The First National Bank of Chicago
One North State Street
Chicago, Illinois 60602
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: SAMI Series 1999-1 Mortgage Pass-Through Certificates (the
"Certificates"), including the [Class I-B-4, Class I-B-5, Class
I-B-6, Class II-B-4, Class II-B- 5 AND CLASS II-B-6] Certificates
(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
F-1-1
<PAGE>
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 The First National Bank of Chicago (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, 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, and/or section 4975 of the Internal
Revenue Code of 1986, as amended, or (ii) are
providing a representation or an opinion of counsel
to the effect that 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 any prohibited
transaction which is not covered under an individual
or class prohibited transaction exemption, including,
but not limited to, Prohibited Transaction
F-1-2
<PAGE>
Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE
95-60, PTE 96-23 or Section 401(c) of ERISA and the
regulations promulgated thereunder and (II) will not
give rise to any additional fiduciary duties on the
part of the Depositor, the Master Servicer or the
Trustee.
(ix) We understand that each of the Class [I-B-4, I-B-5,
Class I-B-6, Class II-B-4, Class II-B-5 and Class
II-B-6] Certificates bears, and will continue to
bear, a legend to substantiate 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
F-1-3
<PAGE>
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, PTE
96-23 OR SECTION 401(C) OF ERISA AND THE REGULATIONS
TO BE PROMULGATED THEREUNDER AND (II) WILL NOT GIVE
RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART
OF THE Depositor, 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 OR AN OPINION
OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER
OF A PRIVATE CERTIFICATE."
"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 February 1, 1999 among
Structured Asset Mortgage Investments Inc. and The First National Bank of
Chicago, 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):_____________________
F-1-4
<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]
F-1-5
<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]
F-1-6
<PAGE>
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[Date]
The First National Bank of Chicago
One North State Street
Chicago, Illinois 60602
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: SAMI Series 1999-1 Mortgage Pass-Through Certificates,
Class I-B-4, Class I-B-5, Class I-B-6, Class II-B-4, Class II-
B-5 and Class II-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:
F-2-1
<PAGE>
(24) o an insurance company as defined in Section
2(13) of the Act1; or
(25) o 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
(26) o 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
(27) o 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
(28) o a business development company as defined in
Section 202(a)(22) of the Investment
Advisers Act of 1940; or
(29) o 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
(30) o 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
(31) o an investment adviser registered under the
Investment Advisers Act; or
b. o greater than $10 million, and the undersigned is a
broker-dealer registered with the SEC; or
c. o 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. o 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
- - ----------------
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
l 940, which are neither registered nor required to be registered
thereunder, shall be deemed to be a purchase for the account of such
insurance company.
F-2-2
<PAGE>
e. o 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 February 1, 1999 among Structured Asset Mortgage
Investments Inc. and The First National Bank of Chicago, as Trustee, pursuant to
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, and/or
section 4975 of the Internal Revenue Code of 1986, as amended, or (ii) is
providing a representation or an opinion of counsel to the effect that 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 any prohibited transaction which is not covered under a prohibited
transaction exemption, including, but not limited to, Prohibited Transaction
Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23 or Section
401(c) of ERISA and the regulations to be promulgated thereunder and (II) will
not give rise to any additional fiduciary duties on the part of the Depositor,
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.
F-2-3
<PAGE>
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]
F-2-4
<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]
F-2-5
<PAGE>
EXHIBIT G
FORM OF CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from
time to time, the "Agreement"), dated as of February 26, 1999, by and among THE
FIRST NATIONAL BANK OF CHICAGO, as trustee (including its successors under the
Pooling Agreement defined below, the "Trustee"), STRUCTURED ASSET MORTGAGE
INVESTMENTS INC., as company (together with any successor in interest, the
"Company"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as master servicer
(together with any successor in interest or successor under the Pooling
Agreement referred to below, the "Master Servicer") and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as custodian (together with any successor in interest or
any successor appointed hereunder, the "Custodian").
W I T N E S S E T H T H A T :
- - - - - - - - - - - - - -
WHEREAS, the Company, the Master Servicer and the Trustee have
entered into a Pooling and Servicing Agreement, dated as of February 1, 1999,
relating to the issuance of Structured Asset Mortgage Investments Inc., Mortgage
Pass-Through Certificates, Series 1999-1 (as in effect on the date of this
agreement, the "Original Pooling Agreement," and as amended and supplemented
from time to time, the "Pooling Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the
Trustee for the purposes of receiving and holding certain documents and other
instruments delivered by the Company or the Master Servicer under the Pooling
Agreement and the Servicers under their respective Servicing Agreements, all
upon the terms and conditions and subject to the limitations hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Trustee, the Company,
the Master Servicer and the Custodian hereby agree as follows:
ARTICLE I
Definitions
Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned in the Original Pooling Agreement,
unless otherwise required by the context herein.
G-1
<PAGE>
ARTICLE II
Custody of Mortgage Documents
Section 2.1. CUSTODIAN TO ACT AS AGENT; ACCEPTANCE OF MORTGAGE
FILES. The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges receipt of the Mortgage Files relating to the Mortgage
Loans identified on the schedule attached hereto (the "Mortgage Files") and
declares that it holds and will hold the Mortgage Files as agent for the
Trustee, in trust, for the use and benefit of all present and future
Certificateholders.
Section 2.2. RECORDATION OF ASSIGNMENTS. If any Mortgage File
includes one or more assignments of Mortgage to the Trustee that have not been
recorded, each such assignment shall be delivered by the Custodian to the
Company for the purpose of recording it in the appropriate public office for
real property records, and the Company, at no expense to the Custodian, shall
promptly cause to be recorded in the appropriate public office for real property
records each such assignment of Mortgage and, upon receipt thereof from such
public office, shall return each such assignment of Mortgage to the Custodian.
Section 2.3. REVIEW OF MORTGAGE FILES.
(a) On or prior to the Closing Date, the Custodian shall
deliver to the Trustee an Initial Certification in the form annexed hereto as
Exhibit One evidencing receipt of a Mortgage File for each Mortgage Loan listed
on the Schedule attached hereto (the "Mortgage Loan
Schedule").
(b) Within 45 days of the Closing Date, the Custodian agrees,
for the benefit of Certificateholders, to review, in accordance with the
provisions of Section 2.02 of the Pooling Agreement, each such document, and
shall deliver to the Trustee an Interim Certification in the form annexed hereto
as Exhibit Two to the effect that all such documents have been executed and
received and that such documents relate to the Mortgage Loans identified on the
Mortgage Loan Schedule, except for any exceptions listed on Schedule A attached
to such Interim Certification. The Custodian shall be under no duty or
obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face. Upon receipt of written notification from the Master Servicer or any
Servicer, signed by a Servicing Officer, that the Master Servicer or any
Servicer, as the case may be, has made a deposit into the Protected Account or
Certificate Account in payment for the purchase of the related Mortgage Loan in
an amount equal to the Purchase Price for such Mortgage Loan, the Custodian
shall release to the related Servicer the related Mortgage File.
(c) Upon receipt of all documents required to be in the
Mortgage Files the Custodian shall deliver to the Trustee a Final Certification
in the form annexed hereto as Exhibit Three evidencing the completeness of the
Mortgage Files.
G-2
<PAGE>
Upon receipt of written request from the Trustee, the
Custodian shall as soon as practicable supply the Trustee with a list of all of
the documents relating to the Mortgage Loans then contained in the Mortgage
Files.
Section 2.4. NOTIFICATION OF BREACHES OF REPRESENTATIONS AND
WARRANTIES. Upon discovery by the Custodian of a breach of any representation or
warranty made by the Company as set forth in the Pooling Agreement with respect
to a Mortgage Loan relating to a Mortgage File, the Custodian shall give prompt
written notice to the Company, the related Servicer and the Trustee.
Section 2.5. CUSTODIAN TO COOPERATE; RELEASE OF MORTGAGE
FILES. Upon the repurchase or substitution of any Mortgage Loan pursuant to
Article II of the Pooling Agreement or payment in full of any Mortgage Loan, or
the receipt by the Custodian that payment in full will be escrowed in a manner
customary for such purposes, the Custodian agrees promptly to release to the
related Servicer the related Mortgage File. The Company shall deliver to the
Custodian and the Custodian agrees to accept the Mortgage Note and other
documents constituting the Mortgage File with respect to any Substitute Mortgage
Loan.
From time to time as is appropriate for the servicing or
foreclosures of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy, the Master Servicer or related Servicer shall
deliver to the Custodian a certificate in the form of Exhibit D to the Pooling
Agreement of a Servicing Officer requesting that possession of all of the
Mortgage File be released to the Master Servicer or related Servicer and
certifying as to the reason for such release and that such release will not
invalidate any insurance coverage provided in respect of the Mortgage Loan under
any of the Insurance Policies. Upon receipt of the foregoing, the Custodian
shall deliver the Mortgage File or such document to the Master Servicer or
related Servicer. The Master Servicer or related Servicer shall cause each
Mortgage File or any document therein so released to be returned to the
Custodian when the need therefor by the Master Servicer or related Servicer no
longer exists, unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Protected Account or Certificate Account or (ii) the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Master Servicer or related Servicer has
delivered to the Custodian a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery.
Section 2.6. ASSUMPTION AGREEMENTS. In the event that any
assumption agreement or substitution of liability agreement is entered into with
respect to any Mortgage Loan subject to this Agreement in accordance with the
terms and provisions of the Pooling Agreement, the Master Servicer, to the
extent provided in the related Servicing Agreement, shall cause the related
Servicer to notify the Custodian and the Master Servicer that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which shall be added to
the related Mortgage File and, for all purposes,
G-3
<PAGE>
shall be considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting parts thereof.
ARTICLE III
Concerning the Custodian
Section 3.1. CUSTODIAN A BAILEE AND AGENT OF THE TRUSTEE. With
respect to each Mortgage Note, Mortgage and other documents constituting each
Mortgage File which are delivered to the Custodian, the Custodian is exclusively
the bailee and agent of the Trustee and has no instructions to hold any Mortgage
Note or Mortgage for the benefit of any person other than the Trustee and the
Certificateholders and undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.5 of this Agreement, no Mortgage Note, Mortgage or
Mortgage File shall be delivered by the Custodian to the Company, the Servicers
or the Master Servicer or otherwise released from the possession of the
Custodian.
Section 3.2. [Reserved]
Section 3.3. CUSTODIAN MAY OWN CERTIFICATES. The Custodian in
its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Custodian.
Section 3.4. MASTER SERVICER TO PAY CUSTODIAN'S FEES AND
EXPENSES. The Master Servicer covenants and agrees to pay to the Custodian from
time to time, and the Custodian shall be entitled to, reasonable compensation
for all services rendered by it in the exercise and performance of any of the
powers and duties hereunder of the Custodian, and the Master Servicer will pay
or reimburse the Custodian upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Custodian in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ), except any such expense, disbursement or advance as
may arise from its negligence or bad faith or to the extent that such cost or
expense is indemnified for by the Company pursuant to the Pooling Agreement.
Section 3.5. CUSTODIAN MAY RESIGN; TRUSTEE MAY REMOVE
CUSTODIAN. The Custodian may resign from the obligations and duties hereby
imposed upon it as such obligations and duties relate to its acting as Custodian
of the Mortgage Loans. Upon receiving such notice of resignation, the Trustee
shall either take custody of the Mortgage Files itself and give prompt notice
thereof to the Company, the Master Servicer and the Custodian, or promptly
appoint a successor Custodian by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Custodian and one copy to
the successor Custodian. If the Trustee shall not have taken custody of the
Mortgage Files and no successor Custodian shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
G-4
<PAGE>
resignation, the resigning Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian.
The Trustee may remove the Custodian at any time with the
consent of the Master Servicer. In such event, the Trustee shall appoint, or
petition a court of competent jurisdiction to appoint, a successor Custodian
hereunder. Any successor Custodian shall be a depository institution subject to
supervision or examination by federal or state authority shall be able to
satisfy the other requirements contained in Section 3.7 and shall be
unaffiliated with the Servicer or the Company.
Any resignation or removal of the Custodian and appointment of
a successor Custodian pursuant to any of the provisions of this Section 3.5
shall become effective upon acceptance of appointment by the successor
Custodian. The Trustee shall give prompt notice to the Company and the Master
Servicer of the appointment of any successor Custodian. No successor Custodian
shall be appointed by the Trustee without the prior approval of the Company and
the Master Servicer.
Section 3.6. MERGER OR CONSOLIDATION OF CUSTODIAN. Any Person
into which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 3.7. REPRESENTATIONS OF THE CUSTODIAN. The Custodian
hereby represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.
ARTICLE IV
Miscellaneous Provisions
Section 4.1. NOTICES. All notices, requests, consents and
demands and other communications required under this Agreement or pursuant to
any other instrument or document delivered hereunder shall be in writing and,
unless otherwise specifically provided, may be delivered personally, by telegram
or telex, or by registered or certified mail, postage prepaid, return receipt
requested, at the addresses specified on the signature page hereof (unless
changed by the particular party whose address is stated herein by similar notice
in writing), in which case the notice will be deemed delivered when received.
Section 4.2. AMENDMENTS. No modification or amendment of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by all parties hereto, and neither the Company, the Master
Servicer nor the Trustee shall enter into any amendment
G-5
<PAGE>
hereof except as permitted by the Pooling Agreement. The Trustee shall give
prompt notice to the Custodian of any amendment or supplement to the Pooling
Agreement and furnish the Custodian with written copies thereof.
SECTION 4.3. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 4.4. 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 properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Company and at the Trust's expense on
direction by the Trustee, but only upon direction accompanied by an Opinion of
Counsel reasonably satisfactory to the Company to the effect that the failure to
effect such recordation is likely to materially and adversely affect the
interests of the Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts
shall constitute but one and the same instrument.
Section 4.5. SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
G-6
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
Address: THE FIRST NATIONAL BANK OF
CHICAGO
as Trustee
One North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Structured Asset Mortgage Investments Inc.
Series 1999-1
By:______________________________
Name:
Title:
Address: STRUCTURED ASSET MORTGAGE
INVESTMENTS INC.
245 Park Avenue
New York, New York 10167
By:______________________________
Name:
Title:
Address: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Master Servicer
11000 Broken Land Parkway
Columbia, Maryland 21044
By:______________________________
Name:
Title:
Address: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Custodian
1015 10th Avenue S.E., MS 0031
Minneapolis, Minnesota 55414
By:______________________________
Name:
Title:
G-7
<PAGE>
STATE OF ILLINOIS )
) ss:
COUNTY OF COOK )
On the ____ day of February, 1999, before me, a notary public
in and for said State, personally appeared ___________________, known to me to
be a _________________ of The First National Bank of Chicago, a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation and acknowledged to me that
such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[SEAL]
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the ____ day of February, 1999, before me, a notary public
in and for said State, personally appeared __________________ known to me to be
a Trust Officer of Norwest Bank Minnesota, National Association, a national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said national banking association,
and acknowledged to me that such national banking association executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[SEAL]
G-9
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 26th day of February, 1999, before me, a notary public
in and for said State, personally appeared _____________, known to me to be a
___________of Structured Asset Mortgage Investments Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the 26th day of February, 1999, before me, a notary public
in and for said State, personally appeared ______________, known to me to be a
__________of Norwest Bank Minnesota, National Association, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
February 26, 1999
The First National Bank of Chicago
One North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Structured Asset Mortgage Investments Inc., Series 1999-1
Re: Custodial Agreement, dated as of February 26, 1999, by and among The
First National Bank of Chicago, Structured Asset Mortgage Investments
Inc. and Norwest Bank Minnesota, National Association relating to
Mortgage Pass-through Certificates, Series 1999-1
---------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, and subject to Section 2.02 of the Pooling Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Mortgage File
(which contains an original Mortgage Note or lost note affidavit) to the extent
required in Section 2.01 of the Pooling Agreement with respect to each Mortgage
Loan listed in the Mortgage Loan Schedule.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_____________________________
G-1
<PAGE>
EXHIBIT TWO
FORM OF CUSTODIAN INTERIM CERTIFICATION
________________, 1999
The First National Bank of Chicago
One North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Structured Asset Mortgage Investments Inc., Series 1999-1
Re: Custodial Agreement, dated as of February 26, 1999, by and among The
First National Bank of Chicago, Structured Asset Mortgage Investments
Inc. and Norwest Bank Minnesota, National Association relating to
Mortgage Pass-through Certificates, Series 1999-1
---------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, the undersigned, as Custodian, hereby certifies that it has
received a Mortgage File to the extent required pursuant to Section 2.01 of the
Pooling Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, and it has reviewed the Mortgage File and the Mortgage Loan Schedule
and has determined that: all required documents have been executed and received
and that such documents related to the Mortgage Loans identified on the Mortgage
Loan Schedule, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_____________________________
G-2
<PAGE>
EXHIBIT THREE
FORM OF CUSTODIAN FINAL CERTIFICATION
_______________, 1999
The First National Bank of Chicago
One North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Structured Asset Mortgage Investments Inc., Series 1999-1
Re: Custodial Agreement, dated as of February 26, 1999, by and among The
First National Bank of Chicago, Structured Asset Mortgage Investments
Inc. and Norwest Bank Minnesota, National Association relating to
Mortgage Pass-through Certificates, Series 1999-1
---------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, the undersigned, as Custodian, hereby certifies that it has
received a Mortgage File with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule containing with respect to each such
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 originator thereof to the Person endorsing it to the Trustee
or an original lost note affidavit from the related Seller stating that
the original Mortgage Note was lost, misplaced or destroyed, together
with a copy of the related Mortgage Note;
(ii) The original Mortgage with evidence of recording
indicated thereon or a copy of the Mortgage certified by the public
recording office in which such mortgage has been recorded;
(iii) An original Assignment of the Mortgage to the Trustee
with evidence of recording indicated thereon or a copy of such
assignment certified by the public recording office in which such
assignment has been recorded;
(iv) With respect to each Mortgage Loan, the original recorded
assignment or assignments of the Mortgage showing an unbroken chain of
title from the originator thereof to the Person assigning it to the
Trustee or a copy of such assignment or assignments of
<PAGE>
the Mortgage certified by the public recording office in which such
assignment or assignments have been recorded; and
(v) The original of each modification, assumption, extension
or guaranty agreement, if any, relating to such Mortgage Loan or a copy
of each modification, assumption, extension or guaranty agreement
certified by the public recording office in which such document has
been recorded.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
EXHIBIT H
[RESERVED]
H-1
<PAGE>
EXHIBIT I
GEMICO Policies
(Provided upon request)
I-1
<PAGE>
EXHIBIT J
GEMICO Letters
(Provided upon request)
J-1
<PAGE>
EXHIBIT K
List of Mortgage Loans for which Mortgage Notes are Lost
(Provided upon request)
K-1
<PAGE>
EXHIBIT L
[Reserved]
L-1
<PAGE>
EXHIBIT M
Additional Pledged Collateral Security Custodial Agreements
(Provided upon request)
M-1
<PAGE>
EXHIBIT N-1
Boston Safe Servicing Agreement
(Provided upon request)
N-1
<PAGE>
EXHIBIT N-2
Alliance Servicing Agreement
================================================================================
BEAR STEARNS MORTGAGE CAPITAL CORPORATION
Owner
ALLIANCE MORTGAGE COMPANY
Servicer
SERVICING AGREEMENT
Dated as of February 1, 1999
================================================================================
N-2-1
<PAGE>
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit B Custodial Account Letter Agreement
Exhibit C Escrow Account Letter Agreement
N-2-2
<PAGE>
THIS IS A SERVICING AGREEMENT, dated as of February 1, 1999, and is
executed between Bear Stearns Mortgage Capital Corporation (the "Owner") and
Alliance Mortgage Company (the "Servicer").
W I T N E S S E T H :
WHEREAS, the Owner is the owner of the Mortgage Loans;
WHEREAS, the Owner and the Servicer wish to prescribe the permanent
management, servicing and control of the Mortgage Loans;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby
acknowledged, the Owner and the Servicer agree as follows:
ARTICLE XII
DEFINITIONS
Section 12.01 DEFINED TERMS.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following meaning
specified in this Article:
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage
Loan, those mortgage servicing practices (including collection procedures) of
prudent mortgage lending institutions which service mortgage loans of the same
type and in the same geographic location as the Mortgage Loans, but in no event
less than as required by the Fannie Mae Guide.
ADJUSTMENT DATE: As to each ARM Loan, the date on which the
Mortgage Interest Rate is adjusted in accordance with the terms of the related
Mortgage Note.
AGREEMENT: This Servicing Agreement including all exhibits
hereto, amendments hereof and supplements hereto.
ARM LOANS: First lien, conventional, 1-4 family residential
Mortgage Loans with interest rates which adjust from time to time in accordance
with the related Index and are subject to Periodic Rate Caps and Lifetime Rate
Caps and which do not permit conversion to fixed interest
rates.
BIF: The Bank Insurance Fund, or any successor thereto.
N-2-3
<PAGE>
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or
(ii) a legal holiday in the States of Washington or New York, or (iii) a day on
which banks in the States of New York, Florida or Washington are authorized or
obligated by law or executive order to be closed.
CODE: The Internal Revenue Code of 1986, as it may be amended
from time to time, or any successor statute thereto, and applicable U.S.
Department of the Treasury regulations issued pursuant thereto.
CONDEMNATION PROCEEDS: All awards or settlements in respect of
a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents or applicable law.
CUSTODIAL ACCOUNT: The separate trust demand account or
accounts created and maintained pursuant to Section 4.04 which shall be entitled
"Alliance Mortgage Company Custodial Account in trust for [Owner], Owner of
Whole Loan Mortgages and various Mortgagors" and shall
be established at a Qualified Depository.
CUT-OFF DATE: February 1, 1998.
DETERMINATION DATE: The 15th day (or if such 15th day is not a
Business Day, the Business Day immediately preceding such 15th day) of the month
of the Remittance Date.
DUE DATE: Each day on which payments of principal and interest
are required to be paid in accordance with the terms of the related Mortgage
Note, exclusive of any days of grace.
DUE PERIOD: With respect to any Remittance Date, the period
commencing on the second day of the month preceding the month of such Remittance
Date and ending on the first day of the month of the Remittance Date.
EFFECTIVE DATE: February 26, 1999.
ESCROW ACCOUNT: The separate trust account or accounts created
and maintained pursuant to Section 4.06 which shall be entitled "Alliance
Mortgage Company Escrow Account, in trust for [Owner], Owner of Whole Loan
Mortgages and various Mortgagors" and shall be
established at a Qualified Depository.
ESCROW PAYMENTS: With respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
(including flood, as applicable) premiums, condominium charges, and any other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant to
the Mortgage, any other document or applicable law.
ERRORS AND OMISSIONS INSURANCE: An errors and omissions
insurance policy to be maintained by the Servicer pursuant to Section 4.12.
N-2-4
<PAGE>
EVENT OF DEFAULT: Any one of the conditions or circumstances
enumerated in Section 9.01.
FANNIE MAE: Fannie Mae, or any successor thereto.
FANNIE MAE GUIDE: The Fannie Mae Selling Guide and the Fannie
Mae Servicing Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FIDELITY BOND: A fidelity bond to be maintained by the
Servicer pursuant to Section 4.12.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended from time to time.
FREDDIE MAC: Freddie Mac, or any successor thereto.
FREDDIE MAC GUIDE: The Freddie Mac Selling Guide and the
Freddie Mac Servicing Guide and all amendments or additions thereto.
GAAP: Generally accepted accounting procedures, consistently
applied.
HUD: The United States Department of Housing and Urban
Development or any successor.
INDEX: With respect to each ARM Loan, on the related
Adjustment Date, the index used to determine the Mortgage Interest Rate on each
such ARM Loan.
INSURANCE PROCEEDS: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
LIFETIME RATE CAP: With respect to each ARM Loan, the maximum
Mortgage Interest Rate over the term of such Mortgage Loan, as specified in the
related Mortgage Note.
LIQUIDATION PROCEEDS: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise, other than
amounts received following the acquisition of an REO Property pursuant to
Section 4.13.
MARGIN: With respect to each ARM Loan, the fixed percentage
amount set forth in each related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate.
N-2-5
<PAGE>
MONTHLY ADVANCE: The aggregate of the advances made by the
Servicer on any Remittance Date pursuant to Section 5.03.
MONTHLY PAYMENT: With respect to each Mortgage Loan, the
scheduled monthly payment of principal and interest thereon which is payable by
the related Mortgagor under the related Mortgage Note.
MORTGAGE: The mortgage, deed of trust or other instrument
securing a Mortgage Note which creates a first lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note.
MORTGAGE FILE: The Mortgage Loan Documents 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 on any Mortgage Loan in accordance with the provisions of the related
Mortgage Note, and in the case of an ARM Loan, as adjusted from time to time on
each Adjustment Date for such Mortgage Loan to equal the Index for such Mortgage
Loan plus the Margin for such Mortgage Loan, and subject to the limitations on
such interest rate imposed by the Periodic Rate Cap and the Lifetime Rate Cap.
MORTGAGE LOAN: An individual Mortgage Loan described herein
and as further identified on the Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
MORTGAGE LOAN DOCUMENTS: The original mortgage loan legal
documents for each Mortgage Loan.
MORTGAGE LOAN REMITTANCE RATE: With respect to each Mortgage
Loan, the annual rate of interest remitted to the Owner, which shall be equal to
the related Mortgage Interest Rate minus the Servicing Fee Rate.
MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans
attached hereto as EXHIBIT A, such schedule being acceptable to the Owner and
the Servicer.
MORTGAGE NOTE: The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
MORTGAGED PROPERTY: The underlying real property securing
repayment of a Mortgage Note, consisting of a single parcel of real estate
considered to be real estate under the laws of the State in which such real
property is located, which may include condominium units and planned unit
developments, improved by a residential dwelling.
N-2-6
<PAGE>
MORTGAGOR: The obligor(s) on a Mortgage Note. The Mortgagor is
a natural person who is a party to the Mortgage Note and Mortgage in an
individual capacity.
OCC: The Office of the Comptroller of the Currency, its
successors and assigns.
OFFICERS' CERTIFICATE: A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Senior Vice
President or a Vice President or by the Treasurer and the Secretary or one of
the Assistant Treasurers or Assistant Secretaries of the Servicer, and delivered
to the Owner as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be
an employee of the party on behalf of whom the opinion is being given,
reasonably acceptable to the Owner.
OTS: The Office of Thrift Supervision, its successors and
assigns.
OWNER: Bear Stearns Mortgage Capital Corporation, its
successors in interest and assigns.
PASS-THROUGH TRANSFER: The sale or transfer of same or all of
the Mortgage Loans to a trust as part of a publicly issued or privately placed,
rated or unrated Mortgage pass-through transaction.
PERIODIC RATE CAP: With respect to each ARM Loan, the maximum
increase or decrease in the Mortgage Interest Rate on any Adjustment Date.
PERMITTED INVESTMENTS: Any one or more of the following
obligations or securities:
(i) direct obligations of, and 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; provided that obligations of Freddie Mac or Fannie
Mae shall be Permitted Investments only if, at the time of
investment, they are rated in one of the two highest rating
categories by Standard & Poor's Rating Services, a division of
The McGraw- Hill Companies Inc., Moody's Investors Service,
Inc. and Fitch IBCA Inc.;
(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 and subject to supervision and
examination by federal and/or state banking authorities,
provided that the commercial paper and/or the short-term
deposit 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 are rated in one of the two
highest rating categories by Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies Inc.,
Moody's Investors Service, Inc. and Fitch
N-2-7
<PAGE>
IBCA Inc. 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;
(iv) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United
States of America or any state thereof that are rated in one
of the two highest rating categories by Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies Inc.,
Moody's Investors Service, Inc. and Fitch IBCA Inc. 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 Permitted Investments to exceed
10% of the aggregate outstanding principal balances and
amounts of all the Permitted Investments;
(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) which are rated in one of the
two highest rating categories by Standard & Poor's Rating
Services, a division of The McGraw- Hill Companies Inc.,
Moody's Investors Service, Inc. and Fitch IBCA Inc. at the
time of such investment;
(vi) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to
each of Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc., Moody's Investors Service, Inc.
and Fitch IBCA Inc.; and
(vii) any money market funds 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 other securities and which money market
funds are rated in one of the two highest rating categories by
Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies Inc., Moody's Investors Service, Inc.
and Fitch IBCA Inc.
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
N-2-8
<PAGE>
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.
PERSON: Any individual, corporation, partnership, joint
venture, association, joint- stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PREPAYMENT INTEREST SHORTFALL: The sum of the differences
between interest actually received in a Due Period as a result of a full or
partial prepayment or other unscheduled receipt of principal (including as a
result of a liquidation) on each Mortgage Loan as to which such a payment is
received and the interest portion of the Monthly Payment of such Mortgage Loan
scheduled to be due at the applicable Mortgage Loan Remittance Rate.
PRIMARY MORTGAGE INSURANCE POLICY: Each primary policy of
mortgage insurance, or any replacement policy therefor obtained by the Servicer
pursuant to Section 4.08.
PRIME RATE: The prime rate of U.S. money center banks as
published from time to time in THE WALL STREET JOURNAL.
PRINCIPAL PREPAYMENT: Any payment or other recovery of
principal on a Mortgage Loan, full or partial, which is received in advance of
its scheduled Due Date, including any prepayment fee or premium thereon and
which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment.
QUALIFIED APPRAISER: An appraiser, duly appointed by the
Servicer, who had no interest, direct or indirect in the Mortgaged Property or
in any loan made on the security thereof, and whose compensation is not affected
by the approval or disapproval of the Mortgage Loan, which appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
FIRREA and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
QUALIFIED DEPOSITORY: (a) the corporate trust department of a
national bank, or (b) a depository, the accounts of which are insured by the
FDIC through the BIF or the SAIF and the short term debt ratings and the long
term deposit ratings of which are rated in the highest rating category by
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies
Inc., Moody's Investors Service, Inc. and Fitch IBCA Inc.
QUALIFIED INSURER: An insurance company duly qualified as such
under the laws of the state in which the Mortgaged Property is are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by Fannie
Mae and Freddie Mac and whose claims-paying ability is rated in the two highest
rating categories by one of Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies Inc., Moody's Investors Service, Inc. or Fitch IBCA
Inc. with respect to primary
N-2-9
<PAGE>
mortgage insurance and in the two highest rating categories for general
policyholder rating and financial performance index rating by Best's with
respect to hazard and flood insurance.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC PROVISIONS: The provisions of the Federal income tax law
relating to a REMIC, which appear at Section 860A through 860G of Subchapter M
of Chapter 1, Subtitle A of the Code, and related provisions, and regulations,
rulings or pronouncements promulgated thereunder, as the foregoing may be in
effect from time to time.
REMITTANCE DATE: The 18th day of any month, or if such 18th
day is not a Business Day, the first Business Day immediately following such
18th day, subject to the provisions of the ninth paragraph of Section 4.01 if
Fannie Mae or Freddie Mac becomes an Owner. The first
Remittance Date shall occur on March 18, 1999.
REO DISPOSITION: The final sale by the Servicer of any REO
Property.
REO DISPOSITION PROCEEDS: Amounts received by the Servicer in
connection with a related REO Disposition.
REO PROPERTY: A Mortgaged Property acquired by the Servicer on
behalf of the Owner as described in Section 4.13.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
SERVICER: Alliance Mortgage Company, or any of its successors
in interest or any successor under this Agreement appointed as herein provided.
SERVICING ADVANCES: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred prior to, on and subsequent to the Effective Date in the
performance by the Servicer of its servicing obligations relating to each
Mortgage Loan, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement,
administrative or judicial proceedings, or any legal work or advice specifically
related to servicing the Mortgage Loans (excluding work performed by any
in-house counsel staff of the Servicer or any affiliate thereof), including but
not limited to, foreclosures, bankruptcies, condemnations, drug seizures,
elections, foreclosures by subordinate or superior lienholders, and other legal
actions incidental to the servicing of the Mortgage Loans (provided that such
expenses are reasonable and that the Servicer specifies the Mortgage Loan(s) to
which such expenses relate), (c) the management and liquidation of the Mortgaged
Property if the Mortgaged Property is acquired in full or partial satisfaction
of the Mortgage, (d) taxes, assessments, water rates, sewer rates and other
charges which are or may become a lien upon the Mortgaged Property superior to
the related Mortgage Loan, and Primary Mortgage Insurance Policy premiums and
fire and hazard (including flood, as applicable) insurance coverage and (e)
compliance with the obligations under Section 4.08.
N-2-10
<PAGE>
SERVICING FEE: With respect to each Mortgage Loan, the amount
of the annual fee the Owner shall pay to the Servicer, which shall, for a period
of one full month, be equal to one-twelfth of the product of (a) the applicable
Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respecting which any related interest payment on a
Mortgage Loan is computed. The obligation of the Owner to pay the Servicing Fee
is limited to, and the Servicing Fee is payable solely from, the interest
portion (not including recoveries of interest from Liquidation Proceeds or
otherwise) of such Monthly Payment actually collected by the Servicer, or as
otherwise provided under Section 4.05.
SERVICING FEE RATE: The Servicing Fee Rate shall be a rate per
annum equal to 0.25% per annum for Mortgage Loans which have a fixed Mortgage
Interest Rate and 0.375% per annum for ARM Loans.
SERVICING FILE: With respect to each Mortgage Loan, the file
retained by the Servicer consisting of originals of all documents in the
Mortgage File which have not been delivered to the Owner or Custodian and copies
of the Mortgage Loan Documents.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Owner upon request, as such list may from time to time be
amended.
STATED PRINCIPAL BALANCE: As to each Mortgage Loan as of any
date of determination, (a) the principal balance of such Mortgage Loan after
giving effect to payments of principal due, whether or not received, minus (b)
all amounts previously distributed to the Owner with respect to the Mortgage
Loan representing payments or recoveries of principal or advances in lieu
thereof.
WHOLE LOAN TRANSFER: The sale or transfer of some or all of
the ownership interest in the Mortgage Loans by the Owner to one or more third
parties in whole loan or participation format, which third party may be Fannie
Mae or Freddie Mac.
ARTICLE XIII
SERVICING OF MORTGAGE LOANS;
RECORD TITLE AND POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 13.01 SERVICING OF MORTGAGE LOANS.
From and after the Effective Date, the Servicer does hereby
agree to service the Mortgage Loans, but subject to the terms of this Agreement.
The rights of the Owner to receive payments with respect to the Mortgage Loans
shall be as set forth in this Agreement.
N-2-11
<PAGE>
Section 13.02 MAINTENANCE OF SERVICING FILES.
The Servicer shall maintain a Servicing File consisting of all
documents necessary to service the Mortgage Loans. The possession of each
Servicing File by the Servicer is for the sole purpose of servicing the Mortgage
Loan, and such retention and possession by the Servicer is in a custodial
capacity only. The Servicer acknowledges that the ownership of each Mortgage
Loan, including the Mortgage Note, the Mortgage, the contents of the related
Mortgage File and all rights, benefits, proceeds and obligations arising
therefrom or in connection therewith, has been vested in the Owner. All rights
arising out of the Mortgage Loans including, but not limited to, all funds
received on or in connection with the Mortgage Loans and all records or
documents with respect to the Mortgage Loans prepared by or which come into the
possession of the Servicer shall be received and held by the Servicer in trust
for the exclusive benefit of and at the will of the Owner as the owner of the
related Mortgage Loans. Any portion of the related Mortgage Files retained by
the Servicer shall be appropriately identified in the Servicer's computer system
to clearly reflect the ownership of the related Mortgage Loans by the Owner. The
Servicer shall release its custody of the contents of the related Mortgage Files
only in accordance with written instructions of the Owner, except when such
release is required as incidental to the Servicer's servicing of the Mortgage
Loans, such written instructions shall not be required.
Section 13.03 BOOKS AND RECORDS.
The Servicer shall be responsible for maintaining, and shall
maintain, a complete set of books and records for the Mortgage Loans (together
with complete set of back-up copies of same which will be readily retrievable in
the event of a disaster) which shall be appropriately identified in the
Servicer's computer system to clearly reflect the ownership of the Mortgage Loan
by the Owner. In particular, the Servicer shall maintain in its possession,
available for inspection by the Owner, or its designee and shall deliver to the
Owner upon demand, evidence of compliance with all federal, state and local
laws, rules and regulations, and requirements of Fannie Mae or Freddie Mac, as
applicable, including but not limited to, documentation as to the method used in
determining the applicability of the provisions of the Flood Disaster Protection
Act of 1973, as amended, to the Mortgaged Property, documentation evidencing
insurance coverage and eligibility of any condominium project for approval by
Fannie Mae, documentation evidencing compliance with the form, content and
timing requirements specified for all notices to be delivered to Mortgagors and
periodic inspection reports as required by Section 4.13. To the extent that
original documents are not required for purposes of realization of Liquidation
Proceeds or Insurance Proceeds, documents maintained by the Servicer may be in
the form of microfilm or microfiche or such other reliable means of recreating
original documents, including but not limited to, optical imagery techniques so
long as the Servicer complies with the requirements of the Fannie Mae and
Freddie Mac Guides.
The Servicer shall maintain with respect to each Mortgage Loan
and shall make available for inspection by any Owner or its designee the related
Servicing File during the time the Owner retains ownership of a Mortgage Loan
(or any part thereof) and thereafter in accordance with
applicable laws and regulations.
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Section 13.04 TRANSFER OF MORTGAGE LOANS.
The Servicer shall keep at its servicing office books and
records in which, subject to such reasonable regulations as it may prescribe
from time to time, the Servicer shall note transfers of Mortgage Loans. No
transfer of a Mortgage Loan may be made unless such transfer is in compliance
with the terms hereof. For the purposes of this Agreement, the Servicer shall be
under no obligation to deal with any person with respect to this Agreement or
any Mortgage Loan unless a notice of the transfer of such Mortgage Loan has been
delivered to the Servicer in accordance with this Section 2.04. The Owner may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans, provided, however, that the transferee will not be deemed to be
an Owner hereunder binding upon the Servicer unless such transferee shall agree
in writing to be bound by the terms of this Agreement and by the terms of an
Assignment and Assumption Agreement reasonably acceptable to the Owner and the
Servicer. The Owner also shall advise the Servicer in writing of the transfer.
Upon receipt of notice of the permitted transfer, the Servicer shall mark its
books and records to reflect the ownership interest in the Mortgage Loans of
such assignee, and shall release the previous Owner from its obligations
hereunder with respect to the Mortgage Loans sold or transferred.
Section 13.05 DELIVERY OF MORTGAGE LOAN DOCUMENTS.
The Servicer shall forward to the Custodian on behalf of the
Owner original documents evidencing an assumption, modification, consolidation
or extension of any Mortgage Loan entered into in accordance with Section 4.01
or 6.01 within one week of their execution; provided, however, that the Servicer
shall provide the Custodian on behalf of the Owner with a certified true copy of
any such document submitted for recordation within one week of its execution,
and shall provide the original of any document submitted for recordation or a
copy of such document certified by the appropriate public recording office to be
a true and complete copy of the original within 180 days of its execution. If
delivery is not completed within 180 days solely due to delays in making such
delivery by reason of the fact that such documents shall not have been returned
by the appropriate recording office, the Servicer shall continue to use its best
efforts to effect delivery as soon as possible thereafter.
From time to time the Servicer may have a need for Mortgage
Loan Documents to be released by the Owner. If the Servicer shall require any of
the Mortgage Loan Documents, the Servicer shall notify the Owner in writing of
such request, which request shall specify in reasonable detail the Servicer's
reason for the request. The Owner shall deliver to the Servicer within a
reasonable period of time, any requested documentation previously delivered to
the Owner as part of the Mortgage File, provided that such documentation is
promptly returned to the Owner when the Servicer no longer requires possession
of the document, and provided that during the time that any such documentation
is held by the Servicer, such possession is in trust for the benefit of and at
the will of the Owner.
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Section 13.06 QUALITY CONTROL PROCEDURES.
The Servicer must have an internal quality control program
that verifies, on a regular basis, the existence and accuracy of the legal
documents, credit documents, property appraisals, and underwriting decisions.
The program must be capable of evaluating and monitoring the overall quality of
its servicing activities. The purpose of the program is to ensure that the
Mortgage Loans are serviced in accordance with prudent mortgage servicing
practices, accounting principles and this Agreement; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
ARTICLE XIV
REPRESENTATIONS AND WARRANTIES
OF THE SERVICER
The Servicer represents, warrants and covenants to the Owner
that as of the Effective Date or as of such date specifically provided herein:
(a) The Servicer is a duly organized and validly existing
corporation in good standing under the laws of the State of its organization and
is qualified to transact business in, is in good standing under the laws of, and
possesses all licenses necessary for the conduct of its business in, each state
in which any Mortgaged Property is located or is otherwise exempt or not
required under applicable law to effect such qualification or license and no
demand for such qualification or license has been made upon the Servicer by any
such state, and in any event the Servicer is in compliance with the laws of each
such State to the extent necessary to ensure the enforceability of each Mortgage
Loan and the servicing of the Mortgage Loans in accordance with the terms of
this Agreement;
(b) The Servicer has full power and authority to execute,
deliver and perform, and to enter into and consummate all transactions
contemplated by this Agreement and to conduct its business as presently
conducted, has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of the Servicer, enforceable
against it in accordance with its terms subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance;
(c) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated thereby and hereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement
will conflict with any of the terms, conditions or provisions of the Servicer's
charter or by-laws, each as amended to the Effective Date, or materially
conflict with or result in a material breach of any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the material
violation
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of any law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject;
(d) There is no action, litigation, proceeding or
investigation pending or threatened with respect to the Servicer which is
reasonably likely to have a material adverse effect on the execution, delivery
or enforceability of this Agreement, or which is reasonably likely to have a
material adverse effect on the business, operations, property, assets or
financial condition of the Servicer or which would impair materially the
Servicer's ability to perform under this Agreement;
(e) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with this Agreement
or the consummation of the transactions contemplated by this Agreement except
for consents, approvals, authorizations and orders which have been obtained;
(f) The consummation of the transactions contemplated by this
Agreement is in the ordinary course of business of the Servicer;
(g) The Servicer is an approved seller/servicer of residential
mortgage loans for Fannie Mae and Freddie Mac with such facilities, procedures
and personnel necessary for the sound servicing of such mortgage loans. The
Servicer is in good standing to service mortgage loans for Fannie Mae and
Freddie Mac and no event has occurred which would make the Servicer unable to
comply with eligibility requirements or which would require notification to
either Fannie Mae or Freddie Mac;
(h) The Servicer does not believe, nor does it have any cause
or reason to believe, that it cannot perform each and every covenant contained
in this Agreement;
(i) No statement, report or other document furnished or to be
furnished pursuant to the Agreement or in connection with the transaction
contemplated hereby contains or will contain any statement that is or will be
inaccurate or misleading in any material respect or omits to state a material
fact required to be stated therein or necessary to make the information and
statements therein not misleading; and
(j) No fraud, misrepresentation or omission of fact with
respect to a Mortgage Loan has taken place on the part of the Servicer.
ARTICLE XV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 15.01 SERVICER TO ACT AS SERVICER.
The Servicer, as independent contract servicer, shall service
and administer the Mortgage Loans in accordance with this Agreement and with
Accepted Servicing Practices, and shall
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have full power and authority, acting alone, to do or cause to be done any and
all things in connection with such servicing and administration which the
Servicer may deem necessary or desirable and consistent with the terms of this
Agreement and with Accepted Servicing Practices and shall exercise the same care
that it customarily employs for its own account. Except as set forth in this
Agreement, the Servicer shall service the Mortgage Loans in accordance with
Accepted Servicing Practices in strict compliance with the servicing provisions
of the Fannie Mae Guide and this Agreement, which include, but are not limited
to, strict compliance with the provisions regarding the prompt liquidation of
Mortgage Loans, the collection of Mortgage Loan payments, the payment of taxes,
insurance and other charges, the maintenance of hazard (including flood, as
applicable) insurance with a Qualified Insurer, the maintenance of Fidelity Bond
and Errors and Omissions Insurance, inspections, the restoration of Mortgaged
Property, the maintenance of Primary Mortgage Insurance Policies, insurance
claims, and title insurance, management of REO Property, permitted withdrawals
with respect to REO Property, liquidation reports, and reports of foreclosures
and abandonments of Mortgaged Property, the transfer of Mortgaged Property, the
release of Mortgage Files, annual statements, and examination of records and
facilities. In the event of any conflict, inconsistency or discrepancy between
any of the servicing provisions of this Agreement and any of the servicing
provisions of the Fannie Mae Guide, the provisions of this Agreement shall
control and be binding upon the Owner and the Servicer. The Owner may, at its
option, deliver powers-of-attorney to the Servicer sufficient to allow the
Servicer as servicer to execute all documentation requiring execution on behalf
of Owner with respect to the servicing of the Mortgage Loans, including
satisfactions, partial releases, modifications and foreclosure documentation or,
in the alternative, shall as promptly as reasonably possible, execute and return
such documentation to the Servicer.
Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of any such term or in any manner grant indulgence to any Mortgagor
if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the Owner,
provided, however, that unless the Servicer has obtained the prior written
consent of the Owner, the Servicer shall not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate,
forgive the payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal) or change the final
maturity date on such Mortgage Loan. In the event of any such modification which
has been agreed to in writing by the Owner and which permits the deferral of
interest or principal payments on any Mortgage Loan, the Servicer shall, on the
Business Day immediately preceding the related Remittance Date in any month in
which any such principal or interest payment has been deferred, deposit in the
Custodial Account from its own funds, in accordance with Section 4.04 and
Section 5.03, the difference between (a) such month's principal and one month's
interest at the related Mortgage Loan Remittance Rate on the unpaid principal
balance of such Mortgage Loan and (b) the amount paid by the Mortgagor. The
Servicer shall be entitled to reimbursement for such advances to the same extent
as for all other advances pursuant to Section 4.05. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered, to prepare, execute and deliver, all instruments of
satisfaction or cancellation, or of full release, or of partial release with the
prior written consent of the Owner, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties.
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In servicing and administering the Mortgage Loans, the
Servicer shall employ Accepted Servicing Practices, giving due consideration to
the Owner's reliance on the Servicer.
The Servicer shall accomplish and do all reasonable acts
necessary to perfect title of the Mortgage Loans in Owner's name, to ensure the
enforceability of each Mortgage Loan and the servicing of each Mortgage Loan.
Servicer shall use its reasonable best efforts to acquire incomplete or missing
documentation, correct inaccurate information and record documents with the
appropriate public offices.
The Servicer shall perform all of its servicing
responsibilities hereunder or may, with the Owner's prior written approval,
which approval can be withheld for any or no reason, cause a subservicer to
perform any such servicing responsibilities on its behalf, but the use by the
Servicer of a subservicer shall not release the Servicer from any of its
obligations hereunder and the Servicer shall remain responsible hereunder for
all acts and omissions of each subservicer as fully as if such acts and
omissions were those of the Servicer. Any such subservicer that the Owner shall
be requested to consent to must be a Fannie Mae approved seller/servicer or a
Freddie Mac seller/servicer in good standing and no event shall have occurred,
including but not limited to, a change in insurance coverage, which would make
it unable to comply with the eligibility requirements for lenders imposed by
Fannie Mae or for seller/servicers by Freddie Mac, or which would require
notification to Fannie Mae or Freddie Mac. The Servicer shall pay all fees and
expenses of each subservicer from its own funds, and a subservicer's fee shall
not exceed the Servicing Fee.
At the cost and expense of the Servicer, without any right of
reimbursement from the Custodial Account, the Servicer shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange, with the
Owner's prior written approval, which approval can be withheld for any or no
reason, for any servicing responsibilities to be performed by a successor
subservicer meeting the requirements in the preceding paragraph, provided,
however, that nothing contained herein shall be deemed to prevent or prohibit
the Servicer, at the Servicer's option, from electing to service the related
Mortgage Loans itself. In the event that the Servicer's responsibilities and
duties under this Agreement are terminated pursuant to Section 8.04, 9.01 or
10.01, and if requested to do so by the Owner, the Servicer shall at its own
cost and expense terminate the rights and responsibilities of each subservicer
effective as of the date of termination of the Servicer. The Servicer shall pay
all fees, expenses or penalties necessary in order to terminate the rights and
responsibilities of each subservicer from the Servicer's own funds without
reimbursement from the Owner.
Notwithstanding any of the provisions of this Agreement
relating to agreements or arrangements between the Servicer and a subservicer or
any reference herein to actions taken through a subservicer or otherwise, the
Servicer shall not be relieved of its obligations to the Owner and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Servicer shall be
entitled to enter into an agreement with a subservicer for indemnification of
the Servicer by the subservicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
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Any subservicing agreement and any other transactions or
services relating to the Mortgage Loans involving a subservicer shall be deemed
to be between such subservicer and Servicer alone, and the Owner shall have no
obligations, duties or liabilities with respect to such Subservicer including no
obligation, duty or liability of Owner to pay such subservicer's fees and
expenses. For purposes of distributions and advances by the Servicer pursuant to
this Agreement, the Servicer shall be deemed to have received a payment on a
Mortgage Loan when a subservicer has received such payment.
Notwithstanding the foregoing, if Mortgage Loans are sold by
the Owner to Fannie Mae or Freddie Mac pursuant to a Whole Loan Transfer, the
Servicer, at the direction of Owner, shall service such Mortgage Loans to Fannie
Mae or Freddie Mac as the case may be, in accordance with such entity's
guidelines; provided that if the Servicer is servicing for Fannie Mae, the
related Remittance Date shall be the 18th day of each month and if for Freddie
Mac, the first Tuesday of each month or as either Fannie Mae or Freddie Mac
shall require. The Servicer shall make to such respective entity such entity's
required servicing representations and warranties as of the date of sale of the
Mortgage Loans by the Owner to Fannie Mae or Freddie Mac, as applicable.
Underwriting representations and warranties to be made by the Servicer shall
only be those contained herein restated as of such date of sale.
Section 15.02 COLLECTION OF MORTGAGE LOAN PAYMENTS.
Continuously from the Effective Date until the date each
Mortgage Loan ceases to be subject to this Agreement, the Servicer will proceed
diligently to collect all payments due under each Mortgage Loan when the same
shall become due and payable and shall, to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of related Primary
Mortgage Insurance Policy, follow such collection procedures as it follows with
respect to mortgage loans comparable to the Mortgage Loans and held for its own
account. Further, the Servicer will take reasonable care in ascertaining and
estimating annual ground rents, taxes, assessments, water rates, fire and hazard
(including flood, as applicable) insurance premiums, mortgage insurance
premiums, and all other charges that, as provided in the Mortgage, will become
due and payable to the end that the installments payable by the Mortgagors will
be sufficient to pay such charges as and when they become due and payable.
With respect to any Mortgage Loan that becomes sixty-one (61)
or more days delinquent in payment of principal and interest, the Servicer shall
service such Mortgage Loan in accordance with the standard of care the Servicer
employs when servicing similarly delinquent mortgage loans for its own account
and a standard of care which shall be in compliance with Accepted Servicing
Practices and the servicing provisions contained in the Fannie Mae Guide for
similarly delinquent mortgage loans.
Section 15.03 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
The Servicer shall use its reasonable efforts, consistent with
Accepted Servicing Practices and the procedures that the Servicer would use in
servicing loans for its own account, to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the
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Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 4.01. The Servicer shall use its reasonable efforts to
realize upon defaulted Mortgage Loans in such manner as will maximize the
receipt of principal and interest by the Owner, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its reasonable
discretion (i) that such restoration will increase the proceeds of liquidation
of the related Mortgage Loan to the Owner after reimbursement to itself for such
expenses, and (ii) that such expenses will be recoverable by the Servicer
through Insurance Proceeds or Liquidation Proceeds from the related Mortgaged
Property, as contemplated in Section 4.05. The Servicer shall promptly notify
the Owner in writing of the commencement of foreclosure proceedings. The
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings or functions as Servicing Advances; provided, however, that it
shall be entitled to reimbursement therefor from the related Mortgaged Property,
as contemplated in Section 4.05. Notwithstanding anything to the contrary
contained herein, in connection with a foreclosure or acceptance of a deed in
lieu of foreclosure, in the event the Servicer has reasonable cause to believe
that a Mortgaged Property is contaminated by hazardous or toxic substances or
wastes, or if the Owner otherwise requests an environmental inspection or review
of such Mortgaged Property, such an inspection or review is to be conducted by a
qualified inspector. Upon completion of the inspection, the Servicer shall
promptly provide the Owner with a written report of the environmental
inspection. After reviewing the environmental inspection report, the Owner shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
Section 15.04 ESTABLISHMENT OF CUSTODIAL ACCOUNTS; DEPOSITS IN
CUSTODIAL ACCOUNTS.
The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Custodial
Accounts. The Custodial Account shall be established with a Qualified
Depository. Funds deposited in the Custodial Account, which shall be deposited
within 24 hours of receipt, shall at all times be insured by the FDIC up to the
FDIC insurance limits, or must be invested in Permitted Investments for the
benefit of the Owner. Funds deposited in the Custodial Account may be drawn on
by the Servicer in accordance with Section 4.05. The creation of any Custodial
Account shall be evidenced by a letter agreement in the form shown in EXHIBIT B
hereto. The original of such letter agreement shall be furnished to the Owner no
later than the Effective Date.
The Servicer shall deposit in the Custodial Account on a daily
basis, and retain therein the following payments and collections:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans due on or after the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the related Mortgage Loan Remittance Rate received after the Cut-off
Date;
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(iii) all Liquidation Proceeds and REO Disposition Proceeds
received after the Cut-off Date;
(iv) any net amounts received by the Servicer after the
Cut-off Date in connection with any REO Property pursuant to Section 4.13;
(v) all Insurance Proceeds received after the Cut-off Date
including amounts required to be deposited pursuant to Sections 4.08 and 4.10,
other than proceeds to be held in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor in
accordance with the Servicer's normal servicing procedures, the loan documents
or applicable law;
(vi) all Condemnation Proceeds affecting any Mortgaged
Property received after the Cut-off Date other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law;
(vii) any Monthly Advances as provided in Section 5.03;
(viii) any amounts received after the Cut-off Date and
required to be deposited in the Custodial Account pursuant to Section 6.02;
(ix) with respect to each full or partial Principal Prepayment
received after the Cut-off Date, any Prepayment Interest Shortfalls, to the
extent of the Servicer's aggregate Servicing Fee received with respect to the
related Due Period; and
(x) the amount of any outstanding Temporary Reimbursement (as
defined below) to the extent that the funds that are available in the Custodial
Account for remittance to the Owner on the related Remittance Date are less than
the amount of payments required to be made to the Owner on such Remittance Date,
such deposit to be made no later than the Business Day prior to such Remittance
Date.
The foregoing requirements for deposit in the Custodial
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges and assumption fees, to the extent permitted by Section 6.01, need not
be deposited by the Servicer in the Custodial Account. Any interest paid on
funds deposited in the Custodial Account by the Qualified Depository shall
accrue to the benefit of the Servicer and the Servicer shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to Section
4.05(v).
Section 15.05 PERMITTED WITHDRAWALS FROM THE CUSTODIAL
ACCOUNT.
The Servicer may, from time to time, make withdrawals from the
Custodial Account for the following purposes:
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(i) to make payments to the Owner in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances, the Servicer's
right to reimburse itself pursuant to this subclause (ii) being limited to
amounts received on the related Mortgage Loan which represent late collections
(net of the related Servicing Fees) of principal and/or interest
respecting which any such advance was made;
(iii) to reimburse itself for unreimbursed Servicing Advances
and unreimbursed Monthly Advances, the Servicer's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan being limited
to Liquidation Proceeds, Condemnation Proceeds and Insurance Proceeds received
after the Cut-off Date related to such Mortgage Loan;
(iv) to reimburse itself for unreimbursed Monthly Advances
which are not reimbursable pursuant to subsections (ii) or (iii) above (a
"Temporary Reimbursement");
(v) to pay to itself as servicing compensation (a) any
interest earned on funds in the Custodial Account (all such interest to be
withdrawn monthly not later than each Remittance
Date) and (b) any payable Servicing Fee;
(vi) to transfer funds to another Qualified Depository in
accordance with Section 4.09 hereof;
(vii) to remove funds inadvertently placed in the Custodial
Account in error by the Servicer; and
(viii) to clear and terminate the Custodial Account upon the
termination of this Agreement.
Section 15.06 ESTABLISHMENT OF ESCROW ACCOUNTS; DEPOSITS IN
ESCROW ACCOUNTS.
The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts. Each Escrow Account shall be
established with a depository in accordance with Accepted Servicing Practices.
Funds deposited in each Escrow Account, which shall be deposited within 24 hours
of receipt, shall at all times be insured in a manner to provide maximum
insurance under the insurance limitations of the FDIC, or must be invested in
Permitted Investments. Funds deposited in an Escrow Account may be drawn on by
the Servicer in accordance with Section 4.07. The creation of any Escrow Account
shall be evidenced by a letter agreement in the form shown in EXHIBIT C. The
original of such letter agreement shall be furnished to the Owner no later than
the Effective Date.
The Servicer shall deposit in the Escrow Account or Accounts
on a daily basis, and retain therein:
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(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any items as are required
under the terms of this Agreement;
(ii) all Insurance Proceeds and Condemnation Proceeds which
are to be applied to the restoration or repair of any Mortgaged Property; and
(iii) all Servicing Advances for Mortgagors whose Escrow
Payments are insufficient to cover escrow disbursements.
The Servicer shall make withdrawals from an Escrow Account
only to effect such payments as are required under this Agreement, and for such
other purposes as shall be as set forth in and in accordance with Section 4.07.
The Servicer shall be entitled to retain any interest paid on funds deposited in
an Escrow Account by the Qualified Depository other than interest on escrowed
funds required by law to be paid to the Mortgagor and, to the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account is non-interest bearing or that interest
paid thereon is insufficient for such purposes.
Section 15.07 PERMITTED WITHDRAWALS FROM ESCROW ACCOUNT.
Withdrawals from the Escrow Account may be made by the
Servicer only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, fire and hazard (including flood, as applicable)
insurance premiums, Primary Mortgage Insurance Policy
premiums, if applicable, and comparable items;
(ii) to reimburse Servicer for any Servicing Advance made by
the Servicer with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder;
(iii) to refund to the Mortgagor any funds as may be
determined to be overages;
(iv) for transfer to the Custodial Account in connection with
an acquisition of REO Property;
(v) for application to restoration or repair of the Mortgaged
Property;
(vi) to pay to the Servicer, or to the Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow Account;
(vii) to pay to the Mortgagors or other parties Insurance
Proceeds deposited in accordance with Section 4.06;
(viii) to remove funds inadvertently placed in an Escrow
Account in error by the Servicer; and
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(ix) to clear and terminate the Escrow Account on the
termination of this Agreement.
As part of its servicing duties, the Servicer shall pay to the
Mortgagors interest on funds in an Escrow Account, to the extent required by
law, and to the extent that interest earned on funds in the Escrow Account is
insufficient, shall pay such interest from its own funds, without any
reimbursement therefor.
Section 15.08 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES;
MAINTENANCE OF PRIMARY MORTGAGE INSURANCE
POLICIES; COLLECTIONS THEREUNDER.
With respect to each Mortgage Loan, the Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of Primary Mortgage Insurance Policy
premiums and fire and hazard (including flood, as applicable) insurance coverage
and shall obtain, from time to time, all bills for the payment of such charges,
including renewal premiums and shall effect payment thereof prior to the
applicable penalty or termination date and at a time appropriate for securing
maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage or applicable law. To the extent that the Mortgage does
not provide for Escrow Payments, the Servicer shall determine that any such
payments are made by the Mortgagor at the time they first become due. The
Servicer assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments.
The Servicer will maintain in full force and effect Primary
Mortgage Insurance Policies issued by a Qualified Insurer with respect to each
Mortgage Loan for which such coverage is herein required. Such coverage will be
maintained until the ratio of the current outstanding principal balance of the
related Mortgage Loan to the appraised value of the related Mortgaged Property,
based on the most recent appraisal of the Mortgaged Property performed by a
Qualified Appraiser, such appraisal to be included in the Servicing File, is
reduced to 80.00% or less, or such other amount as required by applicable law.
The Servicer will not cancel or refuse to renew any Primary Mortgage Insurance
Policy that is required to be kept in force under this Agreement unless a
replacement Primary Mortgage Insurance Policy for such canceled or nonrenewed
policy is obtained from and maintained with a Qualified Insurer. The Servicer
shall not take any action which would result in noncoverage under any applicable
Primary Mortgage Insurance Policy of any loss which, but for the actions of the
Servicer would have been covered thereunder. In connection with any assumption
or substitution agreement entered into or to be entered into pursuant to Section
6.01, the Servicer shall promptly notify the insurer under the related Primary
Mortgage Insurance Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such policy and shall take all actions
which may be required by such insurer as a condition to the continuation of
coverage under the Primary Mortgage Insurance Policy. If such Primary Mortgage
Insurance Policy
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is terminated as a result of such assumption or substitution of liability, the
Servicer shall obtain a replacement Primary Mortgage Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer
agrees to prepare and present, on behalf of [itself and] the Owner, claims to
the insurer under any Private Mortgage Insurance Policy in a timely fashion in
accordance with the terms of such Primary Mortgage Insurance Policy and, in this
regard, to take such action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policy respecting a defaulted Mortgage Loan. Pursuant
to Section 4.04, any amounts collected by the Servicer under any Primary
Mortgage Insurance Policy shall be deposited in the Custodial Account, subject
to withdrawal pursuant to Section 4.05.
Section 15.09 TRANSFER OF ACCOUNTS.
The Servicer may transfer the Custodial Account or the Escrow
Account to a different Qualified Depository from time to time. Such transfer
shall be made only upon obtaining the prior written consent of the Owner, which
consent will not be unreasonably withheld.
Section 15.10 MAINTENANCE OF HAZARD INSURANCE.
The Servicer shall cause to be maintained for each Mortgage
Loan fire and hazard insurance with extended coverage as is customary in the
area where the Mortgaged Property is located in an amount which is equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan or (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan, and (b) the percentage such that the proceeds thereof shall
be sufficient to prevent the Mortgagor and/or the Mortgagee from becoming a
co-insurer. If required in accordance with Accepted Servicing Practices, the
Servicer will cause to be maintained a flood insurance policy meeting the
requirements of Accepted Servicing Practices, in an amount representing coverage
not less than the least of (i) the outstanding principal balance of the Mortgage
Loan, (ii) the maximum insurable value of the improvements securing such
Mortgage Loan or (iii) the maximum amount of insurance which is available under
the Flood Disaster Protection Act of 1973, as amended. The Servicer shall also
maintain on the REO Property, fire and hazard insurance with extended coverage
in an amount which is at least equal to the maximum insurable value of the
improvements which are a part of such property, liability insurance and, to the
extent required and available under the Flood Disaster Protection Act of 1973,
as amended, flood insurance in an amount as provided above. Any amounts
collected by the Servicer under any such policies other than amounts to be
deposited in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or REO Property, or released to the Mortgagor in accordance
with the Servicer's normal servicing procedures, shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 4.05. It is
understood and agreed that no other additional insurance need be required by the
Servicer or the Mortgagor or maintained on property acquired in respect of the
Mortgage Loans, other than pursuant to the Fannie Mae Guide or such applicable
state or federal laws and regulations as shall at any time be in force and as
shall require such additional insurance. All such policies shall be endorsed
with standard mortgagee clauses with loss payable to the Servicer and its
successors and/or assigns and shall provide for at least thirty days prior
written notice of any cancellation, reduction in the amount or material change
in coverage to the Servicer. The Servicer
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shall not interfere with the Mortgagor's freedom of choice in selecting either
his insurance carrier or agent, provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies currently reflect a General Policy Rating in Best's Key Rating Guide
currently acceptable to Fannie Mae and are licensed to do business in the state
wherein the property subject to the policy is located.
If a Mortgage is secured by a unit in a condominium project,
the Servicer shall verify that the coverage required of the homeowners'
association, including hazard, flood, liability, and fidelity coverage, is being
maintained in accordance with the then current Fannie Mae requirements, and the
Servicer will exercise reasonable efforts to secure from the homeowners'
association its agreement to notify the Servicer promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
Section 15.11 [RESERVED].
Section 15.12 FIDELITY BOND, ERRORS AND OMISSIONS INSURANCE..
The Servicer shall maintain, at its own expense, a blanket
Fidelity Bond and an Errors and Omissions Insurance policy, with broad coverage
with responsible companies on all officers, employees or other persons acting in
any capacity with regard to the Mortgage Loans and who handle funds, money,
documents and papers relating to the Mortgage Loans. The Fidelity Bond and
Errors and Omissions Insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the Servicer against losses, including
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of
such persons. Such Fidelity Bond and errors and omissions insurance shall also
protect and insure the Servicer against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring the Fidelity Bond and Errors and Omissions Insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such Fidelity Bond and Errors and
Omissions Insurance policy shall be at least equal to the corresponding amounts
required by Fannie Mae in the Fannie Mae Guide or by Freddie Mac in the Freddie
Mac Guide. The Servicer shall, upon request of Owner, deliver to the Owner a
certificate from the surety and the insurer as to the existence of the Fidelity
Bond and Errors and Omissions Insurance policy and shall obtain a statement from
the surety and the insurer that such Fidelity Bond or insurance policy shall in
no event be terminated or materially modified without thirty days prior written
notice to the Owner. The Servicer shall notify the Owner within five Business
Days of receipt of notice that such Fidelity Bond or Errors and Omissions
Insurance policy will be, or has been, materially modified or terminated. The
Owner and its successors or assigns as their interests may appear must be named
as loss payees on the Fidelity Bond and as additional insured on the Errors and
Omissions Insurance policy.
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Section 15.13 TITLE, MANAGEMENT AND DISPOSITION OF REO
PROPERTY.
In the event that title to any Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be taken in the name of the Owner or its designee. Any such Person or
Persons holding such title other than the Owner shall acknowledge in writing
that such title is being held as nominee for the benefit of the Owner.
The Servicer shall notify the Owner in accordance with the
Fannie Mae Guide of each acquisition of REO Property upon such acquisition, and
thereafter assume the responsibility for marketing such REO Property in
accordance with Accepted Servicing Practices. Thereafter, the Servicer shall
continue to provide certain administrative services to the Owner relating to
such
REO
Property as set forth in this Section 4.13. The REO Property must be sold within
three years following the end of the calendar year of the date of acquisition,
unless a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held and (i) the Owner shall have
been supplied with an Opinion of Counsel to the effect that the holding by the
related trust of such Mortgaged Property subsequent to such three-year period
(and specifying the period beyond such three-year period for which the Mortgaged
Property may be held) will not result in the imposition of taxes on "prohibited
transactions" of the related trust as defined in Section 860F of the Code, or
cause the related REMIC to fail to qualify as a REMIC, in which case the related
trust may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel), or (ii) the Owner or the Servicer shall
have applied for, prior to the expiration of such three-year period, an
extension of such three-year period in the manner contemplated by Section
856(e)(3) of the Code, in which case the three-year period shall be extended by
the applicable period. If a period longer than three years is permitted under
the foregoing sentence and is necessary to sell any REO Property, (i) the
Servicer shall report monthly to the Owner as to progress being made in selling
such REO Property and (ii) if, with the written consent of the Owner, a purchase
money mortgage is taken in connection with such sale, such purchase money
mortgage shall name the Servicer as mortgagee, and such purchase money mortgage
shall not be held pursuant to this Agreement, but instead a separate
participation agreement between the Servicer and Owner shall be entered into
with respect to such purchase money mortgage.
Notwithstanding any other provision of this Agreement, if a
REMIC election has been made, no Mortgaged Property held by a REMIC shall be
rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the related trust or sold in such a
manner or pursuant to any terms that would (i) cause such Mortgaged Property to
fail to qualify at any time as "foreclosure property" within a meaning of
Section 860G(a)(8) of the Code, (ii) subject the related trust to the imposition
of any federal or state income taxes on "net income from foreclosure property"
with respect to such Mortgaged Property within the meaning of Section 860G(c) of
the Code, or (iii) cause the sale of such Mortgaged Property to result in the
receipt by the related trust or any income from non-permitted assets as
described in Section 860F(a) (2)(B) of the Code, unless the Servicer has agreed
to indemnify and hold harmless the related trust with respect to the imposition
of any such taxes.
The Servicer shall, either itself or through an agent selected
by the Servicer, and in accordance with the Fannie Mae Guide, manage, conserve,
protect and operate each REO Property
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in the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. Each REO
Disposition shall be carried out by the Servicer at such price and upon such
terms and conditions as the Servicer deems to be in the best interest of the
Owner. The REO Disposition Proceeds from the sale of the REO Property shall be
promptly deposited in the Custodial Account. As soon as practical thereafter,
the expenses of such sale shall be paid and the Servicer shall reimburse itself
for any related Servicing Advances, or Monthly Advances made pursuant to Section
5.03.
The Servicer shall cause each REO Property to be inspected
promptly upon the acquisition of title thereto and shall cause each REO Property
to be inspected at least monthly thereafter or more frequently as may be
required by the circumstances. The Servicer shall make or cause the inspector to
make a written report of each such inspection. Such reports shall be retained in
the Mortgage File and copies thereof shall be forwarded by the Servicer to the
Owner.
Section 15.14 INSPECTIONS.
The Servicer shall inspect the Mortgaged Property as often as
deemed necessary by the Servicer to assure itself that the value of the
Mortgaged Property is being preserved. In addition, if any Mortgage Loan is more
than sixty (60) days delinquent, the Servicer immediately shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted Servicing Practices. The Servicer shall keep a written report of each
such inspection.
ARTICLE XVI
PAYMENTS TO THE OWNER
Section 16.01 REMITTANCES.
On each Remittance Date, the Servicer shall remit to the Owner
(i) all amounts credited to the Custodial Account as of the close of business on
the related preceding Determination Date, except Principal Prepayments received
on or after the first day of the calendar month in which the Remittance Date
occurs shall be remitted to the Owner on the next following Remittance Date, net
of charges against or withdrawals from the Custodial Account pursuant to Section
4.05, plus, to the extent not already deposited in the Custodial Account, the
sum of (ii) all Monthly Advances, if any, which the Servicer is obligated to
distribute pursuant to Section 5.03 and (iii) all Prepayment Interest Shortfalls
the Servicer is required to make up pursuant to Section 4.05, minus (iv) any
amounts attributable to Monthly Payments collected after the Cut-off Date but
due on a Due Date or Dates subsequent to the last day of the related Due Period,
which amounts shall be remitted on the related Remittance Date next succeeding
the Due Period for such amounts.
With respect to any remittance received by the Owner after the
Business Day on which such payment was due, the Servicer shall pay to the Owner
interest on any such late payment at an annual rate equal to the Prime Rate,
adjusted as of the date of each change, plus two percentage points, but in no
event greater than the maximum amount permitted by applicable law. Such interest
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shall be deposited in the Custodial Account by the Servicer on the date such
late payment is made and shall cover the period commencing with the day
following such Business Day and ending with the Business Day on which such
payment is made, both inclusive. Such interest shall be remitted along with the
distribution payable on the next succeeding related Remittance Date. The payment
by the Servicer of any such interest shall not be deemed an extension of time
for payment or a waiver of any Event of Default by the Servicer.
Section 16.02 STATEMENTS TO THE OWNER.
The Servicer shall furnish to the Owner an individual Mortgage
Loan accounting report (a "Report"), as of the last Business Day of each month,
in the Servicer's assigned loan number order to document Mortgage Loan payment
activity on an individual Mortgage Loan basis. With respect to each month, such
Report shall be received by the Owner no later than the fifth Business Day of
the following month of the related Remittance Date on a disk or tape or other
computer- readable format, in such format as may be mutually agreed upon by both
the Owner and the Servicer, and in hard copy, which Report shall contain the
following:
(i) With respect to each Monthly Payment (on both an actual
and scheduled basis with respect to Mortgage Loan balances and on an actual
basis with respect to paid-through dates), the amount of such remittance
allocable to principal (including a separate breakdown of any Principal
Prepayment, including the date of such prepayment, and any prepayment penalties
or premiums, along with a detailed report of interest (including Prepayment
Interest Shortfall) on Principal Prepayment amounts remitted in accordance with
Section 5.01);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to interest;
(iii) the amount of servicing compensation received by the
Servicer during the prior distribution period;
(iv) the aggregate Stated Principal Balance of the Mortgage
Loans;
(v) the amount of Monthly Advances made by the Servicer
pursuant to Section 5.03;
(vi) the aggregate of any expenses reimbursed to the Servicer
during the prior distribution period pursuant to Section 4.05;
(vii) the number and aggregate outstanding principal balances
of Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days, (3) 90
days or more; (b) as to which foreclosure has commenced; and (c) as to which REO
Property has been acquired; and
(viii) such other reports or information as may reasonably be
required by the Owner.
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The Servicer shall also provide a trial balance, sorted in the
Owner's assigned loan number order, in such form as the Servicer and the Owner
shall agree, with each such Report.
The Servicer shall prepare and file any and all information
statements or other filings required to be delivered to any governmental taxing
authority or to Owner pursuant to any applicable law with respect to the
Mortgage Loans and the transactions contemplated hereby. In addition, the
Servicer shall provide the Owner with such information concerning the Mortgage
Loans as is necessary for the Owner to prepare its federal income tax return as
the Owner may reasonably request from time to time.
In addition, not more than 60 days after the end of each
calendar year, the Servicer shall furnish to each Person who was an Owner at any
time during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances of principal and interest for the applicable portion of such year.
Section 16.03 MONTHLY ADVANCES BY THE SERVICER.
Not later than the close of business on the Business Day
preceding each Remittance Date, the Servicer shall deposit in the Custodial
Account an amount equal to all payments not previously advanced by the Servicer,
whether or not deferred pursuant to Section 4.01, of principal and interest,
adjusted to the related Mortgage Loan Remittance Rate, which are delinquent at
the close of business on the related Determination Date; provided, however, that
the amount of any such deposit may be reduced by (i) the Amount Held for Future
Distribution (as defined below) then on deposit in the Custodial Account, plus
(ii) with respect to the initial Remittance Date, the Non-held Early Pay Amount
(as defined below). Any portion of the Amount Held for Future Distribution used
to pay Monthly Advances shall be replaced by the Servicer by deposit into the
Custodial Account on any future Remittance Date to the extent that the funds
that are available in the Custodial Account for remittance to the Owner on such
Remittance Date are less than the amount of payments required to be made to the
Owner on such Remittance Date.
The "Amount Held for Future Distribution" as to any Remittance
Date shall be the total of the amounts held in the Custodial Account at the
close of business on the preceding Determination Date which were received after
the Cut-off Date on account of (i) Liquidation Proceeds, Insurance Proceeds,
Principal Prepayments, received or made in the month of such Remittance Date and
(ii) payments which represent early receipt of scheduled payments of principal
and interest due on a date or dates subsequent to the related Due Date. The
"Non-held Early Pay Amount" shall be the total of the amounts on account of
payments which represent early receipt of scheduled payments of principal and
interest received on or prior to the Cut-off Date.
The Servicer's obligation to make such Monthly Advances as to
any Mortgage Loan will continue through the final disposition or liquidation of
the Mortgaged Property, unless the Servicer deems such advance to be
nonrecoverable from Liquidation Proceeds, REO Disposition Proceeds or Insurance
Proceeds with respect to the applicable Mortgage Loan. In such latter event, the
Servicer shall deliver to the Owner an Officer's Certificate of the Servicer to
the effect that an officer of the Servicer has reviewed the related Mortgage
File and has obtained a recent appraisal
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and has made the reasonable determination that any additional advances are
nonrecoverable from Liquidation or Insurance Proceeds with respect to the
applicable Mortgage Loan.
The Servicer shall have the right at any time, pursuant to
Section 4.05(iv), to withdraw funds on deposit in the Custodial Account to
reimburse itself for any unreimbursed Monthly Advances made by Servicer pursuant
to this Section 5.03 which are not permanently reimbursable on a loan-level
basis pursuant to Sections 4.05(ii) and 4.05(iii). Such amounts so reimbursed to
the Servicer pursuant to Section 4.05(iv) are defined therein as "Temporary
Reimbursement" and are required to be replaced by the Servicer pursuant to
Section 4.04(x) by deposit into the Custodial Account on the Business Day prior
to any Remittance Date to the extent that the funds that are available in the
Custodial Account for remittance to the Owner on such Remittance Date are less
than the amount of payments required to be made to the Owner on such Remittance
Date.
Section 16.04 LIQUIDATION REPORTS.
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Owner pursuant to a deed-in-lieu of foreclosure, the
Servicer shall submit to the Owner a liquidation report with respect to such
Mortgaged Property in such form as the Servicer and the Owner shall agree. The
Servicer shall also provide reports on the status of REO Property containing
such information as Owner may reasonably require.
ARTICLE XVII
GENERAL SERVICING PROCEDURES
Section 17.01 ASSUMPTION AGREEMENTS.
The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of a Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under any "due-on-sale" clause to the extent permitted by law; provided,
however, that the Servicer shall not exercise any such rights if prohibited by
law or the terms of the Mortgage Note from doing so or if the exercise of such
rights would impair or threaten to impair any recovery under the related Primary
Mortgage Insurance Policy, if any. If the Servicer reasonably believes it is
unable under applicable law or the mortgage loan documents to enforce such
"due-on-sale" clause, the Servicer, with the approval of the Owner (such
approval not to be unreasonably withheld), will enter into an assumption
agreement with the person to whom the Mortgaged Property has been conveyed or is
proposed to be conveyed, pursuant to which such person becomes liable under the
Mortgage Note and, to the extent permitted by applicable law, the Mortgagor
remains liable thereon. Where an assumption is allowed pursuant to this Section
6.01, the Servicer, with the prior consent of the primary mortgage insurer, if
any, is authorized to enter into a substitution of liability agreement with the
person to whom the Mortgaged Property has been conveyed or is proposed to be
conveyed pursuant to which the original Mortgagor is released from liability and
such Person is substituted as
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mortgagor and becomes liable under the related Mortgage Note. Any such
substitution of liability agreement shall be in lieu of an assumption agreement.
In connection with any such assumption or substitution of
liability, the Servicer shall follow the underwriting practices and procedures
of the Fannie Mae Guide. With respect to an assumption or substitution of
liability, the Mortgage Interest Rate borne by the related Mortgage Note and the
amount of the Monthly Payment may not be changed. The Servicer shall notify the
Owner that any such substitution of liability or assumption agreement has been
completed by forwarding to the Owner the original of any such substitution of
liability or assumption agreement, which document shall be added to the related
Mortgage File and shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. All fees collected by the Servicer for entering into an assumption
or substitution of liability agreement shall belong to the Servicer.
Notwithstanding the foregoing paragraphs of this section or
any other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan by operation of law or any assumption which
the Servicer may be restricted by applicable law from preventing. For purposes
of this Section 6.01, the term "assumption" is deemed to also include a sale of
the Mortgaged Property subject to the Mortgage that is not accompanied by an
assumption or substitution of liability agreement.
Section 17.02 SATISFACTION OF MORTGAGES AND RELEASE OF
MORTGAGE FILES.
Upon the payment in full of any Mortgage Loan, the Servicer
will immediately notify the Owner with a certification and request for release
by a Servicing Officer, which certification shall include a statement to the
effect that all amounts received in connection with such payment which are
required to be deposited in the Custodial Account pursuant to Section 4.04 have
been so deposited, and a request for delivery to the Servicer of the portion of
the Mortgage File. Upon receipt of such certification and request, the Owner
shall promptly release the related Mortgage Loan Documents to the Servicer and
the Servicer shall prepare and deliver for execution by the Owner or at the
Owner's option execute under the authority of a power of attorney delivered to
the Servicer by the Owner any satisfaction or release. No expense incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Custodial Account.
In the event the Servicer satisfies or releases a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or should it otherwise prejudice any right the Owner may have under the
mortgage instruments, the Servicer, upon written demand, shall remit within two
Business Days to the Owner the difference between the amount to which the Owner
is entitled hereunder with respect to such Mortgage Loan and the amount, if any,
previously distributed to the Owner relating thereto, by deposit thereof in the
Custodial Account. The Servicer shall maintain the Fidelity Bond insuring the
Servicer against any loss it may sustain with respect to any Mortgage Loan not
satisfied in accordance with the procedures set forth herein.
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From time to time and as appropriate for the servicing or
foreclosure of the Mortgage Loans, including for the purpose of collection under
any Primary Mortgage Insurance Policy, upon request of the Servicer and delivery
to the Owner of a servicing receipt signed by a Servicing Officer, the Owner
shall release the portion of the Mortgage File to the Servicer. Such servicing
receipt shall obligate the Servicer to promptly return the related Mortgage Loan
Documents to the Owner, when the need therefor by the Servicer no longer exists,
unless the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Custodial Account or
the Mortgage File or such document has been delivered to an attorney, or to a
public trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property either judicially or non- judicially, and the Servicer
has promptly delivered to the Owner a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery.
Upon receipt of a certificate of a Servicing Officer stating that such Mortgage
Loan was liquidated, the servicing receipt shall be released by the Owner to the
Servicer.
Section 17.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Servicer shall
be entitled to retain from interest payments on the related Mortgage Loan the
amounts provided for as the Servicer's Servicing Fee with respect to such
Mortgage Loan. Additional servicing compensation in the form of assumption fees,
as provided in Section 6.01, late payment charges and other ancillary fees
(excluding prepayment fees) shall be retained by the Servicer to the extent not
required to be deposited in the Custodial Account. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for.
Section 17.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Owner not later than 90 days
following the end of each fiscal year of the Servicer, an Officers' Certificate
stating, as to each signatory thereof, that (i) a review of the activities of
the Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all of its obligations under this Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officers and the nature and status thereof except for
such defaults as such Officers in their good faith judgment believe to be
immaterial.
Section 17.05 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
SERVICING REPORT.
Not later than 90 days following the end of each fiscal year
of the Servicer, the Servicer at its expense shall cause a firm of independent
public accountants which is a member of the American Institute of Certified
Public Accountants to furnish a statement to the Owner to the effect that such
firm has examined certain documents and records relating to the Servicer's
servicing of mortgage loans of the same type as the Mortgage Loans pursuant to
servicing agreements
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substantially similar to this Agreement, which agreements may include this
Agreement, and that, on the basis of such an examination, conducted
substantially in accordance with the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that the Servicer's servicing has
been conducted in compliance with the agreements examined pursuant to this
Section 6.05, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement.
Section 17.06 OWNER'S RIGHT TO EXAMINE SERVICER RECORDS.
The Owner shall have the right to examine and audit, at its
expense, upon reasonable notice to the Servicer, during business hours or at
such other times as might be reasonable under applicable circumstances, any and
all of the books, records, documentation or other information of the Servicer,
or held by another for the Servicer or on its behalf or otherwise, which relate
to the performance or observance by the Servicer of the terms, covenants or
conditions of this Agreement.
The Servicer shall provide to the Owner and any supervisory
agents or examiners representing a state or federal governmental agency having
jurisdiction over the Owner, including but not limited to OTS, FDIC and other
similar entities, access to any documentation regarding the Mortgage Loans in
the possession of the Servicer which may be required by any applicable
regulations. Such access shall be afforded without charge, upon reasonable
request, during normal business hours and at the offices of the Servicer, and in
accordance with the applicable federal government agency, FDIC, OTS, or any
other similar regulations.
Section 17.07 COMPLIANCE WITH REMIC PROVISIONS.
If a REMIC election has been made with respect to the
arrangement under which the Mortgage Loans and REO Property are held, the
Servicer shall not take any action, cause the REMIC to take any action or fail
to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be could (i) endanger the
status of the REMIC as a REMIC or (ii) result in the imposition of a tax upon
the REMIC (including but not limited to the tax on "prohibited transactions" as
defined in Section 860F(a)(2) of the Code and the tax on "contribution" to a
REMIC set forth in Section 860G(d) of the Code unless the Servicer has received
an Opinion of Counsel (at the expense of the party seeking to take such actions)
to the effect that the contemplated action will not endanger such REMIC status
or result in the imposition of any such tax.
Section 17.08 NON-SOLICITATION.
The Servicer shall not knowingly conduct any solicitation
exclusively targeted to the Mortgagors for the purpose of inducing or
encouraging the early prepayment or refinancing of the related Mortgage Loans.
It is understood and agreed that promotions undertaken by the Servicer or any
agent or affiliate of the Servicer which are directed to the general public at
large, including, without limitation, mass mailings based on commercially
acquired mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this section.
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Section 6.09 YEAR 2000 CONSIDERATION.
Notwithstanding anything stated to the contrary in this
Agreement, Servicer shall upgrade its technology and computer systems software
and hardware to ensure compliance with the Accepted Servicing Practices and to
ensure that its servicing practices are consistent with the servicing practices
of prudent mortgage servicing institutions. Servicer agrees that the technology
and computer systems software and hardware it uses or relies upon to perform its
responsibilities under the Agreements will be (what is commonly referred to as)
"Year 2000" compliant on or before March 31, 1999, or such earlier date as may
be required by any applicable regulatory agency. This covers technology and
computer systems software and hardware which is owned and/or managed internally
by Servicer or by outside vendors or service bureaus. The Servicer shall provide
the Owner with an Officers' Certificate certifying that its technology and
computer systems software and hardware are Year 2000 compliant no later than
March 31, 1999. Failure to provide Owner with such certification shall
constitute a material breach of this Agreement.
ARTICLE XVIII
REPORTS TO BE PREPARED BY SERVICER
Section 18.01 SERVICER SHALL PROVIDE INFORMATION AS REASONABLY
REQUIRED.
The Servicer shall furnish to the Owner during the term of
this Agreement such periodic, special or other reports, information or
documentation, whether or not provided for herein, as shall be necessary,
reasonable or appropriate in respect to the Owner, or otherwise in respect of
the Mortgage Loans and the performance of the Servicer under this Agreement,
including any reports, information or documentation reasonably required to
comply with any regulations regarding any supervisory agents or examiners of the
Owner all such reports or information to be as provided by and in accordance
with such applicable instructions and directions as the Owner may reasonably
request in relation to this Agreement or the performance of the Servicer under
this Agreement. The Servicer agrees to execute and deliver all such instruments
and take all such action as the Owner, from time to time, may reasonably request
in order to effectuate the purpose and to carry out the terms of this Agreement.
Upon written request from the Owner, the Servicer promptly
shall provide the Owner with documentation reasonably necessary to permit Owner
to ensure that rate adjustments on ARM Loans have been appropriately made.
ARTICLE XIX
THE SERVICER
Section 19.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
The Servicer agrees to indemnify the Owner and hold it
harmless from and against any and all claims, losses, damages, penalties, fines,
forfeitures, legal fees and related costs,
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judgments, and any other costs, fees and expenses that the Owner may sustain in
any way related to the failure of the Servicer to perform in any way its duties
and service the Mortgage Loans in strict compliance with the terms of this
Agreement and for breach of any representation or warranty of the Servicer
contained herein. The Servicer shall immediately notify the Owner if a claim is
made by a third party with respect to this Agreement or the Mortgage Loans,
assume (with the consent of the Owner and with counsel reasonably satisfactory
to the Owner) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Owner in respect of
such claim but failure to so notify the Owner shall not limit its obligations
hereunder. The Servicer agrees that it will not enter into any settlement of any
such claim without the consent of the Owner. The Servicer shall be entitled to
reimbursement by the Owner for all reasonable costs and expenses it incurs in
connection with the assumption of the defense of any such claim except in the
event that such claim is subject to the indemnification set forth in the first
sentence of this Section 8.01. The provisions of this Section 8.01 shall survive
termination of this Agreement.
Section 19.02 MERGER OR CONSOLIDATION OF THE SERVICER.
The Servicer will keep in full effect its existence, rights
and franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, 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 or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer whether or not related to loan servicing, shall
be the successor of the Servicer hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the successor or
surviving Person shall be an institution (i) having a GAAP net worth of not less
than $25,000,000, (ii) the deposits of which are insured by the FDIC, SAIF
and/or BIF, or which is a HUD-approved mortgagee whose primary business is in
origination and servicing of first lien mortgage loans, and (iii) which is a
Fannie Mae or Freddie Mac approved seller/servicer in good standing.
Section 19.03 LIMITATION ON LIABILITY OF THE SERVICER AND
OTHERS.
Neither the Servicer nor any of the officers, employees or
agents of the Servicer shall be under any liability to the Owner for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment made in good faith; provided, however,
that this provision shall not protect the Servicer or any such person against
any breach of warranties or representations made herein, or failure to perform
in any way its obligations in compliance with any standard of care set forth in
this Agreement, or any liability which would otherwise be imposed by reason of
negligence or any breach of the terms and conditions of this Agreement. The
Servicer and any officer, employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
the Owner respecting
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any matters arising hereunder. The Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement and which
in its opinion may involve it in any expenses or liability; provided, however,
that the Servicer may, with the consent of the Owner, which consent shall not be
unreasonably withheld, undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto. In such event, the reasonable legal expenses and costs of such
action and any liability resulting therefrom attributable to the Owner shall be
expenses, costs and liabilities for which the Owner will be liable, and the
Servicer shall be entitled to be reimbursed therefor from the Owner upon written
demand.
Section 19.04 SERVICER NOT TO RESIGN.
The Servicer shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Servicer and the Owner or
upon the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Owner which Opinion of
Counsel shall be in form and substance acceptable to the Owner. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 11.01.
Section 19.05 NO TRANSFER OF SERVICING.
With respect to the retention of the Servicer to service the
Mortgage Loans hereunder, the Servicer acknowledges that the Owner has acted in
reliance upon the Servicer's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this section, the Servicer shall not either assign this
Agreement or the servicing hereunder or delegate its rights or duties hereunder
or any portion thereof, or sell or otherwise dispose of all or substantially all
of its property or assets, without the prior written approval of the Owner,
which consent shall be granted or withheld in the Owner's sole discretion;
provided that the Servicer may assign the Agreement and the servicing hereunder
without the consent of Owner to an affiliate of the Servicer to which all
servicing of the Servicer is assigned so long as (i) such affiliate is a Fannie
Mae and Freddie Mac approved servicer and (ii) if it is intended that such
affiliate be spun off to the shareholders of the Servicer, such affiliate have a
GAAP net worth of at least $25,000,000 and (iii) such affiliate shall deliver to
the Owner a certification pursuant to which such affiliate shall certify that it
can perform in strict compliance with the terms of this Agreement, it agrees to
be bound by the terms and conditions of this Agreement and shall certify that
such affiliate is a Fannie Mae and Freddie Mac approved servicer in good
standing.
ARTICLE XX
DEFAULT
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Section 20.01 EVENTS OF DEFAULT.
In case one or more of the following Events of Default by the
Servicer shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the Owner any
payment required to be made under the terms of this Agreement;
(ii) any failure on the part of the Servicer duly to observe
or perform in any material respect any other of the covenants or agreements on
the part of the Servicer set forth in this Agreement, the breach of which has a
material adverse effect and which continue unremedied for a period of thirty
(30) days (except that such number of days shall be fifteen in the case of a
failure to pay any premium for any insurance policy required to be maintained
under this Agreement and such failure shall be deemed to have a material adverse
effect or if the Servicer cannot resume normal servicing in strict compliance
with the terms of this Agreement following the occurrence of any disaster that
adversely impacts its servicing facilities) after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Owner; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) the Servicer ceases to be approved by either Fannie Mae
or Freddie Mac as a mortgage loan seller and servicer for more than thirty days;
or
(vii) the Servicer attempts to assign its right to servicing
compensation hereunder or the Servicer attempts, without the consent of the
Owner, to sell or otherwise dispose of all or substantially all of its property
or assets or to assign this Agreement or the servicing responsibilities
hereunder or to delegate its duties hereunder or any portion thereof except as
otherwise permitted herein; or
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(viii) the Servicer ceases to be qualified to transact
business in any jurisdiction where it is currently so qualified, but only to the
extent such non-qualification materially and adversely affects the Servicer's
ability to perform its obligations hereunder;
then, and in each and every such case, so long as an Event of
Default shall not have been remedied, the Owner, by notice in writing to the
Servicer may, in addition to whatever rights the Owner may have under Section
8.01 and at law or equity to damages, including injunctive relief and specific
performance, terminate all the rights and obligations of the Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof without
compensating the Servicer for the same. On or after the receipt by the Servicer
of such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the successor appointed pursuant to Section 11.01. Upon
written request from the Owner, the Servicer shall prepare, execute and deliver,
any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans and related documents, or otherwise, at the Servicer's sole expense. The
Servicer agrees to cooperate with the Owner and such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to the
Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans or any REO Property.
Section 20.02 WAIVER OF DEFAULTS.
The Owner may waive only by written notice any default by the
Servicer in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived in writing.
ARTICLE XXI
TERMINATION
Section 21.01 TERMINATION.
The respective obligations and responsibilities of the
Servicer shall terminate upon: (i) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan or
the disposition of all REO Property and the remittance of all funds due
hereunder; or (ii) by mutual consent of the Servicer and the Owner in writing;
or (iii) termination by the Owner pursuant to Section 9.01. Additionally, the
Owner shall have the right to terminate the rights and obligations of the
Servicer hereunder, without cause, to the extent that the Servicer has not
purchased the servicing rights from the initial Owner. Simultaneously with any
such termination and the
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transfer of servicing hereunder, the Servicer shall be entitled to be reimbursed
for any outstanding Servicing Advances and Monthly Advances.
Section 21.02 REMOVAL OF MORTGAGE LOANS FROM INCLUSION UNDER
THIS AGREEMENT UPON A WHOLE LOAN TRANSFER OR A
PASS-THROUGH TRANSFER.
The Servicer acknowledges that with respect to some or all of
the Mortgage Loans, the Owner may effect one or more Whole Loan Transfers and/or
one or more Pass-Through Transfers. With respect to each Whole Loan Transfer or
Pass-Through Transfer, as the case may be, entered into by the Owner, the
Servicer agrees:
(i) to cooperate fully with the Owner, any prospective
purchaser, any rating agency or any party to any agreement
executed in connection with such Whole Loan Transfer or
Pass-Through Transfer, with respect to all reasonable requests
and due diligence procedures, including without limitation to
provide scheduled balances as of a specified cut-off date, and
to use its best efforts to facilitate such Whole Loan Transfer
or Pass-Through Transfer, as the case may be; and
(ii) to execute all agreements executed in connection with
such Whole Loan Transfer or Pass-Through Transfer that govern
the servicing and administration of the Mortgage Loans (and
any agreements and other documents incidental thereto) as the
Owner shall request, which governing documents, in the case of
a Pass-Through Transfer, shall contain provisions customarily
included in publicly issued or privately placed rated
secondary mortgage market transactions and, in the case of a
Whole Loan Transfer, shall contain servicing provisions in
accordance with the Fannie Mae or Freddie Mac Guide; and
(iii) as of the closing date of the Whole Loan Transfer or
Pass-Through Transfer, as the case may be,(a) to restate, for
the benefit of the owners of the Mortgage Loans, the
representations and warranties contained in Article III, (b)
to make, for the benefit of the owners of the Mortgage Loans,
the same representations and warranties that the Owner is
giving with respect to the Whole Loan Transfer or Pass-Through
Transfer, as the case may be and (c) to make those certain
servicing representations and warranties required by Fannie
Mae or Freddie Mac, as the case may be, with respect to such
Whole Loan Transfer, to such entity, as applicable; and
(iv) with respect to a Pass-Through Transfer only, at the
Owner's request, to deliver to the Owner, for inclusion in the
offering document for the related securities, servicing
disclosure as may be necessary and as may be mutually agreed
upon by the Servicer and the Owner, and in connection with the
delivery of such disclosure, an agreed-upon procedures letter
concerning such disclosure, which letter shall be issued by an
accounting firm selected by the Servicer and acceptable to the
Owner.
All Mortgage Loans not sold or transferred pursuant to a Whole
Loan Transfer or Pass-Through Transfer shall continue to be serviced in
accordance with the terms of this Agreement.
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ARTICLE XXII
MISCELLANEOUS PROVISIONS
Section 22.01 SUCCESSOR TO THE SERVICER.
Prior to termination of the Servicer's responsibilities and
duties under this Agreement pursuant to Sections 8.04, 9.01 or 10.01(ii), the
Owner shall (i) succeed to and assume all of the Servicer's responsibilities,
rights, duties and obligations under this Agreement, or (ii) appoint a successor
having the characteristics set forth in Section 8.02 hereof and which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement prior to the termination of the
Servicer's responsibilities, duties and liabilities under this Agreement. In
connection with such appointment and assumption, the Owner may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as the Owner and such successor shall agree. In the event that the
Servicer's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this section and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Article III and the remedies available to the Owner under
Section 8.01, it being understood and agreed that the provisions of such Article
III and Section 8.01 shall be applicable to the Servicer notwithstanding any
such resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Owner an instrument accepting
such appointment, whereupon such successor shall become fully vested with all
the rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Servicer or this Agreement pursuant to
Section 8.04, 9.01 or 10.01 shall not affect any claims that the Owner may have
against the Servicer arising prior to any such termination or resignation.
The Servicer shall promptly deliver to the successor the funds
in the Custodial Account and the Escrow Account and the Mortgage Files and
related documents and statements held by it hereunder and the Servicer shall
account for all funds. The Servicer shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer. The successor
shall reimburse the Servicer for unrecovered Servicing Advances which the
successor retains hereunder and which would otherwise have been recovered by the
Servicer pursuant to this Agreement but for the appointment of the successor
servicer.
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Upon a successor's acceptance of appointment as such, the
Servicer shall notify the Owner of such appointment.
Section 22.02 AMENDMENT.
This Agreement may be amended from time to time by the
Servicer and the Owner by written agreement signed by the Servicer and the
Owner.
Section 22.03 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 of
all the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the Servicer's expense on direction of the Owner
accompanied by an opinion of counsel to the effect that such recordation
materially and beneficially affects the interest of the Owner or is necessary
for the administration or servicing the Mortgage Loans.
Section 22.04 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO PRINCIPLES OF CONFLICTS OF LAWS. THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 22.05 NOTICES.
Any demands, notices or other communications permitted or
required hereunder shall be in writing and shall be deemed conclusively to have
been given if personally delivered at or mailed by registered mail, postage
prepaid, and return receipt requested or transmitted by telecopier
and confirmed by a similar mailed writing, as follows:
(i) if to the Servicer:
4500 Salisbury Road
Jacksonville, Florida 32216
Attention: Michael C. Koster
(ii) if to the Owner:
Bear Stearns Mortgage Capital Corporation
Attn: Baron Silverstein
245 Park Avenue
New York, New York 10167
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or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice, or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
address (as evidenced, in the case of registered or certified mail, by the date
noted on the return receipt).
Section 22.06 SEVERABILITY OF PROVISIONS.
Any part, provision, representation or warranty of this
Agreement which is prohibited or which is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in good
faith, to develop a structure the economic effect of which is nearly as possible
the same as the economic effect of this Agreement without regard to such
invalidity.
Section 22.07 EXHIBITS.
The exhibits to this Agreement are hereby incorporated and
made a part hereof and are an integral part of this Agreement.
Section 22.08 GENERAL INTERPRETIVE PRINCIPLES.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall
be deemed to include the other gender;
(ii) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(iii) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs," and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
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(iv) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(v) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision; and
(vi) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 22.09 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including,
without limitation, (i) consents, waivers and modifications which may hereafter
be executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 22.10 CONFIDENTIALITY OF INFORMATION.
Each party recognizes that, in connection with this Agreement,
it may become privy to non-public information regarding the financial condition,
operations and prospects of the other party. Except as required to be disclosed
by law, each party agrees to keep all non-public information regarding the other
party strictly confidential, and to use all such information solely in order to
effectuate the purpose of this Agreement.
Section 22.11 [Reserved].
Section 22.12 ASSIGNMENT BY THE OWNER.
The Owner shall have the right, without the consent of the
Servicer hereof, to assign, in whole or in part, its interest under this
Agreement with respect to some or all of the Mortgage Loans, and designate any
person to exercise any rights of the Owner hereunder, by executing an assignment
and assumption agreement reasonably acceptable to the Owner and Servicer and the
assignee or designee shall accede to the rights and obligations hereunder of the
Owner with respect to such Mortgage Loans. All references to the Owner in this
Agreement shall be deemed to include its assignees or designees.
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Section 22.13 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to
create a co-partnership or joint venture between the parties hereto and the
services of the Servicer shall be rendered as an
independent contractor and not as agent for Owner.
Section 22.14 EXECUTION; SUCCESSORS AND ASSIGNS.
This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Servicer and the Owner and
their respective successors and assigns.
Section 22.15 ENTIRE AGREEMENT.
Each of the Servicer and the Owner acknowledge that no
representations, agreements or promises were made to it by the other party or
any of its employees other than those representations, agreements or promises
specifically contained herein. This Agreement sets forth the entire
understanding between the parties hereto and shall be binding upon all
successors of both parties.
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IN WITNESS WHEREOF, the Servicer and the Owner have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the date and year first
above written.
ALLIANCE MORTGAGE COMPANY
Servicer
By: /s/ Michael C. Koster
------------------------------------
Name: Michael C. Koster
Title:
BEAR STEARNS MORTGAGE CAPITAL
CORPORATION
Owner
By: /s/ Mary Haggarty
-----------------------------------
Mary Haggarty
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
(date)
To:______________________
_________________________
_________________________
(the "Depository")
As "Servicer" under the Servicing Agreement, dated as of (the
"Agreement"), we hereby authorize and request you to establish an account, as a
Custodial Account pursuant to Section 4.04 of the Agreement, to be designated as
"[Servicer] Custodial Account, in trust for [Owner], Owner of Whole Loan
Mortgages, and various Mortgagors." All deposits in the account shall be subject
to withdrawal therefrom by order signed by the Servicer. You may refuse any
deposit which would result in violation of the requirement that the account be
fully insured as described below. This letter is submitted to you in duplicate.
Please execute and return one original to us.
______________________________
By:___________________________
Name:_________________________
Title:________________________
The undersigned, as "Depository", hereby certifies that the
above described account has been established under Account Number __________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured up to applicable limits by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund or the Savings Association Insurance
Fund or will be invested in Permitted Investments as defined in the Agreement.
[ ]
(name of Depository)
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
(date)
To:______________________
_________________________
_________________________
(the "Depository")
As "Servicer" under the Servicing Agreement, dated as of
_____________________________ (the "Agreement"), we hereby authorize and request
you to establish an account, as an Escrow Account pursuant to Section 4.06 of
the Agreement, to be designated as "[Servicer] Escrow Account, in trust for
[Owner], Owner of Whole Loan Mortgages, and various Mortgagors." All deposits in
the account shall be subject to withdrawal therefrom by order signed by the
Servicer. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This letter is
submitted to you in duplicate. Please execute and return one original to us.
______________________________
By:___________________________
Name:_________________________
Title:________________________
The undersigned, as "Depository", hereby certifies that the
above described account has been established under Account Number __________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured up to applicable limits by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund or the Savings Association Insurance
Fund or will be invested in Permitted Investments as defined in the Agreement.
[ ]
(name of Depository)
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT N-3
Cendant Servicing Agreement
- - --------------------------------------------------------------------------------
BEAR STEARNS MORTGAGE CAPITAL CORPORATION
Purchaser
CENDANT MORTGAGE CORPORATION
Company
PURCHASE, WARRANTIES AND SERVICING AGREEMENT
Dated as of May 1, 1998
- - --------------------------------------------------------------------------------
N-3-1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 1.01 Defined Terms.................................................................2
ARTICLE II
SERVICING OF MORTGAGE LOANS;
RECORD TITLE AND POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Servicing of Mortgage Loans..................................................12
Section 2.02 Record Title and Possession of Mortgage Files;
Maintenance of Servicing Files...............................................12
Section 2.03 Books and Records............................................................13
Section 2.04 Transfer of Mortgage Loans...................................................13
Section 2.05 Delivery of Mortgage Loan Documents..........................................14
Section 2.06 Quality Control Procedures...................................................15
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY; REPURCHASE
Section 3.01 Representations and Warranties of the Company................................16
Section 3.02 Representations and Warranties as to Individual Mortgage Loans...............18
Section 3.03 Repurchase; Substitution.....................................................23
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer...................................................26
Section 4.02 Collection of Mortgage Loan Payments.........................................28
Section 4.03 Realization Upon Defaulted Mortgage Loans....................................28
Section 4.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.....................................................................29
Section 4.05 Permitted Withdrawals From the Custodial Account.............................30
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow Accounts................31
Section 4.07 Permitted Withdrawals From Escrow Account....................................32
Section 4.08 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary
Mortgage Insurance Policies; Collections Thereunder..........................33
Section 4.09 Transfer of Accounts.........................................................34
Section 4.10 Maintenance of Hazard Insurance..............................................34
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<PAGE>
Section 4.11 [RESERVED]...................................................................35
Section 4.12 Fidelity Bond, Errors and Omissions Insurance................................35
Section 4.13 Title, Management and Disposition of REO Property............................35
ARTICLE V
PAYMENTS TO THE PURCHASER
Section 5.01 Remittances..................................................................37
Section 5.02 Statements to the Purchaser..................................................37
Section 5.03 Monthly Advances by the Company..............................................39
Section 5.04 Liquidation Reports..........................................................39
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Assumption Agreements........................................................40
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files......................41
Section 6.03 Servicing Compensation.......................................................41
Section 6.04 Annual Statement as to Compliance............................................42
Section 6.05 Annual Independent Certified Public Accountants' Servicing
Report.......................................................................42
Section 6.06 Purchaser's Right to Examine Company Records.................................42
ARTICLE VII
REPORTS TO BE PREPARED BY COMPANY
Section 7.01 Company Shall Provide Information as Reasonably Required.....................44
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims..........................................45
Section 8.02 Merger or Consolidation of the Company.......................................45
Section 8.03 Limitation on Liability of the Company and Others............................45
Section 8.04 Company Not to Resign........................................................46
Section 8.05 No Transfer of Servicing.....................................................46
ARTICLE IX
DEFAULT
Section 9.01 Events of Default............................................................48
Section 9.02 Waiver of Defaults...........................................................49
ARTICLE X
TERMINATION
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<PAGE>
Section 10.01 Termination..................................................................50
Section 10.02 Removal of Mortgage Loans from Inclusion under this Agreement
upon a Whole Loan Transfer or a Pass-Through Transfer........................50
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Successor to the Company.....................................................52
Section 11.02 Amendment....................................................................53
Section 11.03 Recordation of Agreement.....................................................53
Section 11.04 Governing Law................................................................53
Section 11.05 Notices......................................................................53
Section 11.06 Severability of Provisions...................................................54
Section 11.07 Exhibits.....................................................................54
Section 11.08 General Interpretive Principles..............................................54
Section 11.09 Reproduction of Documents....................................................55
Section 11.10 Confidentiality of Information...............................................55
Section 11.11 Recordation of Assignments of Mortgage.......................................55
Section 11.12 Assignment by Purchaser......................................................55
Section 11.13 No Partnership...............................................................56
Section 11.14 Execution; Successors and Assigns............................................56
Section 11.15 Entire Agreement.............................................................56
</TABLE>
Exhibit A Contents of Mortgage File
Exhibit B Form of Term Sheet
Exhibit C Form of Assignment and Assumption Agreement
Exhibit D Custodial Account Letter Agreement
Exhibit E Escrow Account Letter Agreement
Exhibit F Purchase Terms
N-3-4
<PAGE>
THIS IS A PURCHASE, WARRANTIES AND SERVICING AGREEMENT, dated as of May
1, 1998, and is executed between Bear Stearns Mortgage Capital Corporation, as
purchaser (the "Purchaser"), and Cendant Mortgage Corporation (the "Company"),
as seller and servicer.
W I T N E S S E T H :
WHEREAS, the Purchaser has heretofore agreed to purchase from the
Company and the Company has heretofore agreed to sell to the Purchaser, from
time to time on the terms and conditions set forth below, certain residential
fixed and/or adjustable rate Mortgage Loans;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the related Mortgage Loan
Schedule, which is attached to the related Term Sheet as SCHEDULE I; and
WHEREAS, the Purchaser and the Company wish to prescribe the
management, servicing and control of the Mortgage Loans;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Purchaser and the Company agree as
follows:
N-3-5
<PAGE>
ARTICLE XXIII
DEFINITIONS
Section 23.01. Defined Terms
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following meaning
specified in this Article:
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage
Loan, those mortgage servicing practices (including collection procedures) that
are in accordance with the Fannie Mae Guide or the Freddie Mac Guide, as
applicable.
ADJUSTMENT DATE: As to each ARM Loan, the date on which the
Mortgage Interest Rate is adjusted in accordance with the terms of the related
Mortgage Note.
AGREEMENT: This Purchase, Warranties and Servicing Agreement
including all exhibits hereto, amendments hereof and supplements hereto.
APPRAISED VALUE: The lesser of (i) the value set forth in an
appraisal made in connection with the origination of the related Mortgage Loan
as the value of the Mortgaged Property; however, in the event that more than one
such appraisal shall have been made, the value shall be the lowest value set
forth in any such appraisals or (ii) the sales price of the Mortgaged Property;
provided, however, that in the case of a refinanced Mortgage Loan, such value
shall be based solely on clause (i) herein.
ARM LOANS: First lien, conventional, 1-4 family residential
Mortgage Loans with interest rates which adjust from time to time in accordance
with the related Index and are subject to Periodic Rate Caps and Lifetime Rate
Caps and which do not permit conversion to fixed interest
rates.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice
of transfer or equivalent instrument, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale or transfer of the Mortgage Loan.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or
(ii) a legal holiday in the State of New York, or (iii) a day on which banks in
the States of New York or New Jersey are authorized or obligated by law or
executive order to be closed.
CLOSING DATE: With respect to any Mortgage Loan, the date
stated on the related Term Sheet.
COMPANY: Cendant Mortgage Corporation or any of its successors
in interest or any successor under this Agreement appointed as herein provided.
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<PAGE>
CONDEMNATION PROCEEDS: All awards or settlements in respect of
a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
CUSTODIAL ACCOUNT: The separate demand account or accounts
created and maintained pursuant to Section 4.04 which shall be entitled "Cendant
Mortgage Corporation Custodial Account in trust for the Purchaser, Owner of
Whole Loan Mortgages and various Mortgagors" and shall be established at a
Qualified Depository.
CUSTODIAN: With respect to any Mortgage Loan, the entity
stated on the related Term Sheet, and its successors and assigns, as custodian
for the Purchaser.
CUT-OFF DATE: With respect to any Mortgage Loan, the date
stated on the related Term Sheet.
DETERMINATION DATE: The 15th day (or if such 15th day is not a
Business Day, the Business Day immediately preceding such 15th day) of the month
of the related Remittance Date.
DUE DATE: The day of the month on which the Monthly Payment is
due on a Mortgage Loan, which is the first day of each month exclusive of any
days of grace.
DUE PERIOD: With respect to any Remittance Date, the period
commencing on the second day of the month preceding the month of such Remittance
Date and ending on the first day of the month of the Remittance Date.
ESCROW ACCOUNT: The separate trust account or accounts created
and maintained pursuant to Section 4.06 which shall be entitled "Cendant
Mortgage Corporation Escrow Account, in trust for the Purchaser, Owner of Whole
Loan Mortgages and various Mortgagors" and shall be established at a Qualified
Depository.
ESCROW PAYMENTS: With respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other
document.
EVENT OF DEFAULT: Any one of the conditions or circumstances
enumerated in Section 9.01.
FANNIE MAE: Fannie Mae, or any successor thereto.
FANNIE MAE GUIDE: The Fannie Mae Selling Guide and the Fannie
Mae Servicing Guide and all amendments or additions thereto.
N-3-7
<PAGE>
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FIDELITY BOND: A fidelity bond to be maintained by the Company
pursuant to Section 4.12.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended from time to time.
FREDDIE MAC: Freddie Mac, or any successor thereto.
FREDDIE MAC GUIDE: The Freddie Mac Selling Guide and the
Freddie Mac Servicing Guide and all amendments or additions thereto.
GAAP: Generally accepted accounting procedures, consistently
applied.
HUD: The United States Department of Housing and Urban
Development or any successor.
INDEX: With respect to each ARM Loan, on the related
Adjustment Date, the index used to determine the Mortgage Interest Rate on each
such ARM Loan, as specified in the related Mortgage Note and as set forth on the
related Term Sheet.
INSURANCE PROCEEDS: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
LIFETIME RATE CAP: With respect to each ARM Loan, the maximum
Mortgage Interest Rate over the term of such Mortgage Loan, as specified in the
related Mortgage Note and as set forth in the related Mortgage Loan Schedule.
LIQUIDATION PROCEEDS: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise, other than
amounts received following the acquisition of an REO Property pursuant to
Section 4.13.
LOAN-TO-VALUE RATIO or LTV: With respect to any Mortgage Loan,
the ratio of the original outstanding principal amount of the Mortgage Loan, to
the lesser of the Appraised Value of the Mortgaged Property at origination or
the purchase price of the Mortgaged Property.
MARGIN: With respect to each ARM Loan, the fixed percentage
amount set forth in each related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate, as set forth in the
related Mortgage Loan Schedule.
MONTHLY ADVANCE: The aggregate of the advances made by the
Company on any Remittance Date pursuant to Section 5.03.
N-3-8
<PAGE>
MONTHLY PAYMENT: The scheduled monthly payment of principal
and interest on a Mortgage Loan which is payable by a Mortgagor under the
related Mortgage Note.
MORTGAGE: The mortgage, deed of trust or other instrument
securing a Mortgage Note which creates a first lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note.
MORTGAGE FILE: The Mortgage Loan Documents 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 on any Mortgage Loan in accordance with the provisions of the related
Mortgage Note, initially equal to the Mortgage Interest Rate set forth with
respect thereto on the related Mortgage Loan Schedule, and in the case of an ARM
Loan, as adjusted from time to time on each Adjustment Date for such Mortgage
Loan to equal the Index for such Mortgage Loan plus the Margin for such Mortgage
Loan, and subject to the limitations on such interest rate imposed by the
Periodic Rate Cap and the Lifetime Rate Cap.
MORTGAGE LOAN: An individual Mortgage Loan described on the
related Term Sheet and as further identified on the related Mortgage Loan
Schedule attached to such Term Sheet, which Mortgage Loan includes without
limitation the Mortgage File, the Monthly Payments, Principal Prepayments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds, and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan, excluding replaced or repurchased
mortgage loans.
MORTGAGE LOAN DOCUMENTS: With respect to each Mortgage Loan,
the documents listed in EXHIBIT A.
MORTGAGE LOAN REMITTANCE RATE: With respect to each Mortgage
Loan, the annual rate of interest remitted to the Purchaser, which shall be
equal to the related Mortgage Interest Rate minus the Servicing Fee Rate.
MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans
attached to the related Term Sheet as SCHEDULE I, such schedule setting forth
the following information as to each Mortgage Loan:
(1) the Company's Mortgage Loan identifying number;
(2) the Mortgagor's name;
(3) the street address of the Mortgaged Property including the
state;
(4) a code indicating whether the Mortgaged Property is
owner-occupied;
N-3-9
<PAGE>
(5) a code indicating the type of residential property
constituting the Mortgaged Property;
(6) the original months to maturity or the remaining months to
maturity from the related Cut-off Date, in any case based on the original
amortization schedule and, if different, the maturity expressed in the same
manner but based on the actual amortization schedule;
(7) the Loan-to-Value Ratio at origination;
(8) the Mortgage Interest Rate as of the related Cut-off Date;
(9) the stated maturity date;
(10) the amount of the Monthly Payment as of the related
Cut-off Date;
(11) the original principal amount of the Mortgage Loan;
(12) the principal balance of the Mortgage Loan as of the
close of business on the related Cut-off Date, after deduction of payments of
principal due on or before the related Cut-off Date whether or not collected;
and
(13) with respect to ARM Loans only: (a) the Margin; (b) the
Periodic Rate Cap; (c) the Lifetime Cap Rate; (d) the next Adjustment Date; and
(e) whether a Periodic Rate Cap is applied at the initial Adjustment Date.
With respect to all of the Mortgage Loans purchased on a
Closing Date, the Mortgage Loan Schedule attached to the related Term Sheet
shall set forth the following information, as of the related Cut-off Date:
(1) the number of Mortgage Loans;
(2) the current aggregate outstanding principal balance of the
Mortgage Loans;
(3) the weighted average Mortgage Interest Rate of the
Mortgage Loans;
(4) the weighted average maturity of the Mortgage Loans;
(5) the weighted average Loan-to-Value Ratio of the Mortgage
Loans; and
(6) with respect to ARM Loans only: (a) the weighted average
Margin; (b) the weighted average Periodic Rate Cap; and (c) the weighted average
Lifetime Cap Rate.
MORTGAGE NOTE: The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
N-3-10
<PAGE>
MORTGAGED PROPERTY: The underlying real property securing
repayment of a Mortgage Note, consisting of a single parcel of real estate
considered to be real estate under the laws of the State in which such real
property is located, which may include condominium units and planned unit
developments, improved by a residential dwelling.
MORTGAGOR: The obligor on a Mortgage Note. The Mortgagor is a
natural person who is a party to the Mortgage Note and Mortgage in an individual
capacity.
OCC: Office of the Comptroller of the Currency, its successors
and assigns.
OFFICERS' CERTIFICATE: A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Senior Vice
President or a Vice President or by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Company, and delivered to
the Purchaser as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be
an employee of the party on behalf of whom the opinion is being given,
reasonably acceptable to the Purchaser.
OTS: Office of Thrift Supervision, its successors and assigns.
PASS-THROUGH TRANSFER: The sale or transfer of same or all of
the Mortgage Loans to a trust as part of a publicly issued or privately placed,
rated or unrated Mortgage pass-through transaction.
PERIODIC RATE CAP: With respect to each ARM Loan, the maximum
increase or decrease in the Mortgage Interest Rate on any Adjustment Date as set
forth in the related Mortgage Loan Schedule.
PERMITTED INVESTMENTS: Any one or more of the following
obligations or securities:
(i) direct obligations of, and 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; provided that obligations of Freddie Mac or Fannie
Mae shall be Permitted Investments only if, at the time of
investment, they are rated in one of the two highest rating
categories by Standard & Poor's Rating Services, a division of
The McGraw- Hill Companies Inc., Moody's Investors Service,
Inc., Fitch IBCA Inc. and Duff & Phelps Credit Rating Co.;
(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 and subject to supervision and
examination by federal and/or state banking authorities,
provided that the commercial paper and/or the short-term
deposit rating and/or the long-term unsecured debt obligations
or deposits of such depository institution or trust company at
the time of such
N-3-11
<PAGE>
investment or contractual commitment providing for such
investment are rated in one of the two highest rating
categories by Standard & Poor's Rating Services, a division of
The McGraw-Hill Companies Inc., Moody's Investors Service,
Inc., Fitch IBCA Inc. and Duff & Phelps Credit Rating Co. and
(b) any other demand or time deposit or certificate of deposit
that is fully insured by the Federal Deposit Insurance Cor
poration;
(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;
(iv) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United
States of America or any state thereof that are rated in one
of the two highest rating categories by Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies Inc.,
Moody's Investors Service, Inc., Fitch IBCA Inc. and Duff &
Phelps Credit Rating Co. at the time of such in vestment 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 Permitted Investments to exceed 10% of the aggregate
outstanding principal balances and amounts of all the
Permitted Investments;
(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) which are rated in one of the
two highest rating categories by Standard & Poor's Rating
Services, a division of The McGraw- Hill Companies Inc.,
Moody's Investors Service, Inc., Fitch IBCA Inc. and Duff &
Phelps Credit Rating Co. at the time of such investment;
(vi) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to
each of Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc., Moody's Investors Service, Inc.,
Fitch IBCA Inc. and Duff & Phelps Credit Rating Co.; and
(vii) any money market funds 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 other securities and which money market
funds are rated in one of the two highest rating categories by
Standard &
N-3-12
<PAGE>
Poor's Rating Services, a division of The McGraw-Hill
Companies Inc., Moody's Investors Service, Inc., Fitch IBCA
Inc. and Duff & Phelps Credit Rating Co.
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.
PERSON: Any individual, corporation, partnership, joint
venture, association, joint- stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PREPAYMENT INTEREST SHORTFALL: The sum of the differences
between interest actually received in a Due Period as a result of a full or
partial prepayment or other unscheduled receipt of principal (including as a
result of a liquidation) on each Mortgage Loan as to which such a payment is
received and the interest portion of the Monthly Payment of such Mortgage Loan
scheduled to be due at the applicable Mortgage Loan Remittance Rate.
PRIMARY MORTGAGE INSURANCE POLICY: Each primary policy of
mortgage insurance represented to be in effect pursuant to Section 3.02(cc), or
any replacement policy therefor obtained by the Company pursuant to Section
4.08.
PRIME RATE: The prime rate of U.S. money center banks as
published from time to time in THE WALL STREET JOURNAL.
PRINCIPAL PREPAYMENT: Any payment or other recovery of
principal on a Mortgage Loan, full or partial, which is received in advance of
its scheduled Due Date, including any prepayment penalty or premium thereon and
which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment.
PURCHASER: Bear Stearns Mortgage Capital Corporation, its
successors in interest and assigns.
QUALIFIED APPRAISER: An appraiser, duly appointed by the
Company, who had no interest, direct or indirect in the Mortgaged Property or in
any loan made on the security thereof, and whose compensation is not affected by
the approval or disapproval of the Mortgage Loan, which appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
FIRREA and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
QUALIFIED DEPOSITORY: (a) The Custodian or (b) a depository,
the accounts of which are insured by the FDIC through the BIF or the SAIF and
the short term debt ratings and the long term deposit ratings of which are rated
in one of the two highest rating categories by Standard &
N-3-13
<PAGE>
Poor's Ratings Services, a division of The McGraw-Hill Companies Inc., Moody's
Investors Service, Inc., Fitch IBCA Inc. and Duff & Phelps Credit Rating Co.
QUALIFIED INSURER: An insurance company duly qualified as such
under the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by Fannie
Mae and Freddie Mac and whose claims-paying ability is rated in the two highest
rating categories by one of Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies Inc., Moody's Investors Service, Inc. or Fitch IBCA
Inc. with respect to primary mortgage insurance and in the two highest rating
categories for general policyholder rating and financial performance index
rating by Best's with respect to hazard and flood insurance.
REMITTANCE DATE: The 18th day of any month, beginning in the
month immediately following the month in which the related Cut-off Date occurs,
or if such 18th day is not a Business Day, the first Business Day immediately
preceding such 18th day, subject to the provisions of the eighth paragraph of
Section 4.01 if Fannie Mae or Freddie Mac becomes a Purchaser.
REO DISPOSITION: The final sale by the Company of any REO
Property.
REO DISPOSITION PROCEEDS: Amounts received by the Company in
connection with a related REO Disposition.
REO PROPERTY: A Mortgaged Property acquired by the Company on
behalf of the Purchaser as described in Section 4.13.
REPURCHASE PRICE: With respect to a Mortgage Loan to be
repurchased, the greater of the price paid by Purchaser for such Mortgage Loan
or par, plus accrued interest thereon at the related Mortgage Loan Remittance
Rate from the date to which interest has last been paid and distributed to the
Purchaser to the end of the month in which the date of repurchase occurs, less
(i) amounts received and deposited in the Custodial Account in respect of such
Mortgage Loan but not yet distributed, if any, and (ii) amounts advanced, if
any, by the Company in respect of such Mortgage Loan.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
SERVICING ADVANCES: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Company of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement,
administrative or judicial proceedings, or any legal work or advice specifically
related to servicing the Mortgage Loans, including but not limited to,
foreclosures, bankruptcies, condemnations, drug seizures, elections,
foreclosures by subordinate or superior lienholders, and other legal actions
incidental to the servicing of the Mortgage Loans (provided that such expenses
are reasonable and that the Company specifies the Mortgage Loan(s) to which such
expenses relate), (c) the management and liquidation of the Mortgaged Property
if the Mortgaged Property is acquired in full
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<PAGE>
or partial satisfaction of the Mortgage, (d) taxes, assessments, water rates,
sewer rates and other charges which are or may become a lien upon the Mortgaged
Property, and Primary Mortgage Insurance Policy premiums and fire and hazard
insurance coverage and (e) compliance with the obligations under Section 4.08.
SERVICING FEE: With respect to each Mortgage Loan, the amount
of the annual fee the Purchaser shall pay to the Company, which shall, for a
period of one full month, be equal to one-twelfth of the product of (a) the
Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respecting which any related interest payment on a
Mortgage Loan is computed. The obligation of the Purchaser to pay the Servicing
Fee is limited to, and the Servicing Fee is payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds, to the extent permitted by Section 4.05) of such Monthly Payment
collected by the Company, or as otherwise provided under Section 4.05.
SERVICING FEE RATE: The Servicing Fee Rate shall be a rate per
annum equal to the percentage shown on the related Mortgage Loan Schedule
attached to the related Term Sheet.
SERVICING FILE: With respect to each Mortgage Loan, the file
retained by the Company consisting of originals of all documents in the Mortgage
File which are not delivered to the Purchaser and copies of the Mortgage Loan
Documents, the originals of which are delivered to the Purchaser pursuant to
Section 2.02.
SERVICING OFFICER: Any officer of the Company involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Company to the
Purchaser upon request, as such list may from time to time
be amended.
STATED PRINCIPAL BALANCE: As to each Mortgage Loan as of any
date of determination, (i) the principal balance of such Mortgage Loan at the
related Cut-off Date after giving effect to payments of principal due on or
before such date, whether or not received, minus (ii) all amounts previously
distributed to the Purchaser with respect to the Mortgage Loan representing
payments or recoveries of principal or advances in lieu thereof.
TERM SHEET: A supplemental agreement in the form attached
hereto as EXHIBIT B which shall be executed and delivered by the Company and the
Purchaser to provide for the sale and servicing pursuant to the terms of this
Agreement of the Mortgage Loans listed on SCHEDULE I attached thereto, which
supplemental agreement shall contain certain specific information relating to
such sale of such Mortgage Loans and may contain additional covenants relating
to such sale of such Mortgage Loans.
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<PAGE>
WHOLE LOAN TRANSFER: The sale or transfer of some or all of
the ownership interest in the Mortgage Loans by the Purchaser to one or more
third parties in whole loan or participation format, which third party may be
Fannie Mae or Freddie Mac.
[End of Article I]
N-3-16
<PAGE>
ARTICLE XXIV
SERVICING OF MORTGAGE LOANS;
RECORD TITLE AND POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 24.01. Servicing of Mortgage Loans
Simultaneously with the execution and delivery of each Term
Sheet, the Company does hereby agree to service the Mortgage Loans described in
the related Term Sheet and on the Mortgage Loan Schedule attached thereto as
SCHEDULE I, but subject to the terms of this Agreement, the Purchase Terms
attached hereto as EXHIBIT F and the related Term Sheet. The rights of the
Purchaser to receive payments with respect to the related Mortgage Loans shall
be as set forth in this Agreement.
Section 24.02. RECORD TITLE AND POSSESSION OF MORTGAGE
FILES; MAINTENANCE OF SERVICING FILES
As of each Closing Date, the Company hereby sells, transfers,
assigns, sets over and conveys to the Purchaser, without recourse, but subject
to the terms of this Agreement, the Purchase Terms attached hereto as EXHIBIT F
and the related Term Sheet, and the Company hereby acknowledges that the
Purchaser, subject to the terms of this Agreement, the Purchase Terms attached
hereto as EXHIBIT F and the related Term Sheet, shall have all the right, title
and interest of the Company in and to the Mortgage Loans as described on the
related Term Sheet and on the Mortgage Loan Schedule attached to such Term Sheet
as SCHEDULE I. The delivery of each Mortgage File to the Custodian is at the
expense of the Company. The Company shall maintain a Servicing File consisting
of all documents necessary to service the related Mortgage Loans. The possession
of each Servicing File by the Company is for the sole purpose of servicing the
related Mortgage Loan, and such retention and possession by the Company is in a
custodial capacity only. From the related Closing Date, but as of the related
Cut-off Date, the ownership of each Mortgage Loan, including the Mortgage Note,
the Mortgage, the contents of the related Mortgage File and all rights,
benefits, proceeds and obligations arising therefrom or in connection therewith,
has been vested in the Purchaser. All rights arising out of the related Mortgage
Loans including, but not limited to, all funds received on or in connection with
the Mortgage Loans and all records or documents with respect to the Mortgage
Loans prepared by or which come into the possession of the Company shall be
received and held by the Company in trust for the exclusive benefit of the
Purchaser as the owner of the related Mortgage Loans. Any portion of the related
Mortgage Files retained by the Company shall be appropriately identified in the
Company's computer system to clearly reflect the ownership of the related
Mortgage Loans by the Purchaser. The Company shall release its custody of the
contents of the related Mortgage Files only in accordance with written
instructions of the Purchaser, except when such release is required as
incidental to the Company's servicing of the Mortgage Loans or is in connection
with a repurchase of any Mortgage Loan or Loans with respect thereto pursuant to
this Agreement, such written instructions shall not be required.
Section 24.03. Books and Records
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<PAGE>
The sale of each Mortgage Loan has been reflected on the
Company's balance sheet and other financial statements as a sale of assets by
the Company. The Company shall be responsible for maintaining, and shall
maintain, a complete set of books and records for the Mortgage Loans which shall
be appropriately identified in the Company's computer system to clearly reflect
the ownership of the Mortgage Loan by the Purchaser. In particular, the Company
shall maintain in its possession, available for inspection by the Purchaser, or
its designee and shall deliver to the Purchaser upon demand, evidence of
compliance with all federal, state and local laws, rules and regulations, and
requirements of Fannie Mae or Freddie Mac, as applicable, including but not
limited to documentation as to the method used in determining the applicability
of the provisions of the Flood Disaster Protection Act of 1973, as amended, to
the Mortgaged Property, documentation evidencing insurance coverage and
eligibility of any condominium project for approval by Fannie Mae and periodic
inspection reports as required by Section 4.13. To the extent that original
documents are not required for purposes of realization of Liquidation Proceeds
or Insurance Proceeds, documents maintained by the Company may be in the form of
microfilm or microfiche or such other reliable means of recreating original
documents, including but not limited to, optical imagery techniques so long as
the Company complies with the requirements of the Fannie Mae Guide.
The Company shall maintain with respect to each Mortgage Loan
and shall make available for inspection by any Purchaser or its designee the
related Servicing File during the time the Purchaser retains ownership of a
Mortgage Loan and thereafter in accordance with applicable
laws and regulations.
Section 24.04. Transfer of Mortgage Loans
The Company shall keep at its servicing office books and
records in which, subject to such reasonable regulations as it may prescribe
from time to time, the Company shall note transfers of Mortgage Loans. No
transfer of a Mortgage Loan may be made unless such transfer is in compliance
with the terms hereof. For the purposes of this Agreement, the Company shall be
under no obligation to deal with any person with respect to this Agreement or
any Mortgage Loan unless a notice of the transfer of such Mortgage Loan has been
delivered to the Company in accordance with this Section 2.04. The Purchaser
may, subject to the terms of this Agreement, sell and transfer one or more of
the Mortgage Loans, PROVIDED, however, that the transferee will not be deemed to
be a Purchaser hereunder binding upon the Company unless such transferee shall
agree in writing to be bound by the terms of this Agreement and an assignment
and assumption of this Agreement in the form of EXHIBIT C hereto executed by the
transferee shall have been delivered to the Company. The Purchaser also shall
advise the Company in writing of the transfer. Upon receipt of notice of the
permitted transfer, the Company shall mark its books and records to reflect the
ownership of the Mortgage Loans of such assignee, and shall release the previous
Purchaser from its obligations hereunder with respect to the Mortgage Loans sold
or transferred.
Section 24.05. Delivery of Mortgage Loan Documents
The Mortgage Loan Documents enumerated as items (1) through
(8) in EXHIBIT A shall be delivered by the Company at its expense to the
Custodian within five (5) Business Days prior to each Closing Date and the
Company shall release such Mortgage Loan Documents as of the related Closing
Date, free of any bailment arrangement on behalf of the Company. The remaining
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<PAGE>
documents constituting Mortgage Loan Documents shall be delivered as soon as
practicable after the related Closing Date, but in any event within 30 Business
Days following the related Closing Date. If the Company cannot deliver the
original recorded Mortgage Loan Documents or the original policy of title
insurance, including riders and endorsements thereto, on the related Closing
Date, the Company shall, promptly upon receipt thereof and in any case not later
than 180 days from the related Closing Date, deliver such original documents,
including original recorded documents, to the Custodian for the benefit of the
Purchaser (unless the Company is delayed in making such delivery by reason of
the fact that such documents shall not have been returned by the appropriate
recording office). If delivery is not completed within 180 days, the Company
shall repurchase the related Mortgage Loans at the Repurchase Price in
accordance with Section 3.03 hereof.
If the Purchaser discovers any defect with respect to a
Mortgage File, the Purchaser shall give prompt written specification of such
defect to the Company, and the Company shall cure or repurchase such Mortgage
Loan in accordance with Section 3.03.
The Company shall pay all recording fees, if any, for the
Assignments of Mortgage and any other fees or costs in transferring all original
documents to the Custodian. The Company shall prepare and effect the recording
of the Assignments of Mortgage. Thereafter, the Purchaser shall pay the costs
and expenses of the Custodian. The Company shall also be required to prepare any
intervening Assignments of Mortgage in accordance with the instructions of the
Purchaser.
The Company shall forward to the Custodian on behalf of the
Purchaser original documents evidencing an assumption, modification,
consolidation or extension of any Mortgage Loan entered into in accordance with
Section 4.01 or 6.01 within one week of their execution; provided, however, that
the Company shall provide the Custodian on behalf of the Purchaser with a
certified true copy of any such document submitted for recordation within one
week of its execution, and shall provide the original of any document submitted
for recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within 180 days
of its execution. If delivery is not completed within 180 days solely due to
delays in making such delivery by reason of the fact that such documents shall
not have been returned by the appropriate recording office, the Company shall
continue to use its best efforts to effect delivery as soon as possible
thereafter, provided that if such documents are not delivered by the 270th day
from the date of execution, the Company shall repurchase the related Mortgage
Loans at the Repurchase Price in accordance with Section 3.03 hereof.
From time to time the Company may have a need for Mortgage
Loan Documents to be released by the Custodian. If the Company shall require any
of the Mortgage Loan Documents, the Company shall notify the Custodian in
writing of such request, which request shall specify in reasonable detail the
Company's reason for the request and unless the related Mortgage Loans are the
subject of a Pass-Through Transfer, such request is to be acknowledged by the
Purchaser. The Purchaser shall deliver or cause the Custodian to deliver to the
Company within a reasonable period of time, any requested documentation
previously delivered to the Custodian or the Purchaser as part of the Mortgage
File, provided that such documentation is promptly returned to the Custodian or
the Purchaser when the Company no longer requires possession of the document,
and provided that
N-3-19
<PAGE>
during the time that any such documentation is held by the Company, such
possession is in trust for the benefit of the Purchaser.
Section 24.06. Quality Control Procedures
The Company must have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal documents,
credit documents, property appraisals, and underwriting decisions. The program
must be capable of evaluating and monitoring the overall quality of its loan
production and servicing activities. The purpose of the program is to ensure
that the Mortgage Loans are originated and serviced in accordance with prudent
mortgage banking practices and accounting principles; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
[End of Article II]
N-3-20
<PAGE>
ARTICLE XXV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY; REPURCHASE
Section 25.01. Representations and Warranties of the
Company
The Company represents, warrants and covenants to the
Purchaser that as of the related Closing Date or as of such date specifically
provided herein:
(a) The Company is a validly existing corporation in good standing
under the laws of the State of New Jersey and is qualified to transact business
in, is in good standing under the laws of, and possesses all licenses necessary
for the conduct of its business in, each state in which any Mortgaged Property
is located or is otherwise exempt or not required under applicable law to effect
such qualification or license and no demand for such qualification or license
has been made upon the Company by any such state, and in any event the Company
is in compliance with the laws of each such State to the extent necessary to
ensure the enforceability of each Mortgage Loan and the servicing of the
Mortgage Loans in accordance with the terms of this Agreement;
(b) The Company has full power and authority to hold each Mortgage
Loan, to sell each Mortgage Loan pursuant to this Agreement and the related Term
Sheet and to execute, deliver and perform, and to enter into and consummate all
transactions contemplated by this Agreement and to conduct its business as
presently conducted, has duly authorized the execution, delivery and performance
of this Agreement, has duly executed and delivered this Agreement and the
related Term Sheet, and this Agreement, the related Term Sheet and each
Assignment of Mortgage to the Purchaser constitutes a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms
subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the rules of
equity, including those respecting the availability of specific performance;
(c) None of the execution and delivery of this Agreement, the
origination of the Mortgage Loans by the Company, the sale of the Mortgage Loans
to the Purchaser pursuant to the related Term Sheet, the consummation of the
transactions contemplated thereby and hereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement and the related Term
Sheet will conflict with any of the terms, conditions or provisions of the
Company's charter or by-laws or materially conflict with or result in a material
breach of any of the terms, conditions or provisions of any legal restriction or
any agreement or instrument to which the Company is now a party or by which it
is bound, or constitute a default or result in an acceleration under any of the
foregoing, or result in the material violation of any law, rule, regulation,
order, judgment or decree to which the Company or its property is subject;
(d) Each Mortgage Note, each Mortgage, each Assignment of Mortgage and
any other documents required pursuant to this Agreement to be delivered to the
Purchaser or its assignee for each Mortgage Loan have been, on or before the
related Closing Date, delivered to the Custodian or the Purchaser or its
assignees;
N-3-21
<PAGE>
(e) There is no litigation pending or, to the best of the Company's
knowledge, threatened with respect to the Company which is reasonably likely to
have a material adverse effect on the sale of the related Mortgage Loans, the
execution, delivery or enforceability of this Agreement or the related Term
Sheet, or which is reasonably likely to have a material adverse effect on the
financial condition of the Company;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with this Agreement
or the related Term Sheet, the sale of the Mortgage Loans or the consummation of
the transactions contemplated by this Agreement or the related Term Sheet except
for consents, approvals, authorizations and orders which have been obtained;
(g) The consummation of the transactions contemplated by this Agreement
and the related Term Sheet is in the ordinary course of business of the Company,
and the transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Company pursuant to this Agreement and the related Term Sheet
are not subject to bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(h) The origination, collection and servicing practices used by the
Company, with respect to each Mortgage Note and Mortgage have been in all
material respects legal, proper and prudent in the mortgage origination and
servicing business. With respect to escrow deposits and payments that the
Company collects, all such payments are in the possession of, or under the
control of, the Company, and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. No
escrow deposits or other charges or payments due under the Mortgage Note have
been capitalized under any Mortgage or the related Mortgage Note;
(i) The Company used no selection procedures that identified the
related Mortgage Loans as being less desirable or valuable than other comparable
mortgage loans in the Company's portfolio at the related Cut-off Date;
(j) The Company will treat the sale of the related Mortgage Loans to
the Purchaser as a sale for reporting and accounting purposes and, to the extent
appropriate, for federal income tax purposes;
(k) The Company is an approved seller/servicer of residential mortgage
loans for Fannie Mae and Freddie Mac with such facilities, procedures and
personnel necessary for the sound servicing of such mortgage loans. The Company
is in good standing to sell mortgage loans to and service mortgage loans for
Fannie Mae and Freddie Mac and no event has occurred which would make the
Company unable to comply with eligibility requirements or which would require
notification to either Fannie Mae or Freddie Mac;
(l) The Company does not believe, nor does it have any cause or reason
to believe, that it cannot perform each and every covenant contained in this
Agreement and the related Term Sheet; and
N-3-22
<PAGE>
(m) No statement, report or other document prepared and furnished or to
be prepared and furnished by the Company pursuant to the Agreement or the
related Term Sheet contains or will contain any statement that is or will be
inaccurate or misleading in any material respect.
Section 25.02. Representations and Warranties as to
Individual Mortgage Loans
The Company hereby represents and warrants to the Purchaser,
as to each Mortgage Loan, as of the related Closing Date, as follows:
(a) The information set forth in the Mortgage Loan Schedule attached to
the related Term Sheet is true, complete and correct in all material respects as
of the related Cut-Off Date;
(b) The Mortgage creates a first lien or a first priority ownership
interest in an estate in fee simple in real property securing the related
Mortgage Note, 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;
(c) The Mortgage Loan has not been delinquent thirty (30) days or more
at any time within the past twelve months prior to the related Cut-off Date for
such Mortgage Loan. As of the related Closing Date, the Mortgage Loan is not
delinquent in payment more than 30 days and has not been dishonored; there are
no defaults under the terms of the Mortgage Loan; and the Company 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 which are due and payable, ground
rents, assessments or other outstanding charges affecting the related Mortgaged
Property;
(e) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments 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 Mortgagor 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 on the related Mortgage Loan Schedule;
(f) 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
N-3-23
<PAGE>
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;
(g) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer pursuant to standard hazard policies conforming to
the requirements of Section 4.10 hereof. All such standard hazard policies are
in effect and on the date of origination contained a standard mortgagee clause
naming the Company 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 Section 4.10. The Mortgage obligates the
Mortgagor thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from the Mortgagor;
(h) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;
(i) The Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part nor has any instrument been
executed that would effect any such satisfaction, release, cancellation,
subordination or rescission;
(j) The Mortgage is a valid, subsisting and enforceable 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 the permitted encumbrances set forth in clause (b) (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;
(k) The Mortgage Note and the related Mortgage are original and genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors, and the Company has taken all action necessary to transfer such
rights of enforceability to the Purchaser. 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
N-3-24
<PAGE>
parties. The proceeds of the Mortgage Note 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;
(l) Immediately prior to the transfer and assignment to the Purchaser,
the Mortgage Note and the Mortgage were not subject to an assignment or pledge,
and the Company had good and marketable title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;
(m) The Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy 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 clause (b)
(1), (2) and (3) above) the Company, its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan. The Company is the sole insured of such lender's title insurance policy,
such title insurance policy has been duly and validly endorsed to the Purchaser
or the assignment to the Purchaser of the Company's interest therein does not
require the consent of or notification to the insurer and such lender's title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this Agreement.
No claims have been made under such lender's title insurance policy, and no
prior holder of the related Mortgage has done, by act or omission, anything
which would impair the coverage of such lender's title insurance policy;
(n) There is no default, breach, violation or event of acceleration
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 Company nor any prior mortgagee has waived any
default, breach, violation or event permitting acceleration;
(o) There are no mechanics, or similar liens or claims which have been
filed for work, labor or material affecting the related Mortgaged Property which
are or may be liens prior to or equal to the lien of the related Mortgage;
(p) All improvements subject to the Mortgage lie wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) and no improvements on
adjoining properties encroach upon the Mortgaged Property except those which are
insured against by the title insurance policy referred to in clause (m) above
and all improvements on the property comply with all applicable zoning and
subdivision laws and ordinances;
(q) The Mortgage Loan was originated by or for the Company. The
Mortgage Loan complies in all material respects with all the terms, conditions
and requirements of the Company's underwriting standards in effect at the time
of origination of such Mortgage Loan. The Mortgage Notes and Mortgages 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 the fixed or
N-3-25
<PAGE>
adjustable rate as set forth in the related 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;
(r) The Mortgaged Property at origination of the Mortgage Loan was and
currently is free of damage and waste and at origination of the Mortgage Loan
there was, and there currently is, no proceeding pending for the total or
partial condemnation thereof;
(s) 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
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
(t) If the Mortgage constitutes a deed of trust, a trustee, 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 Purchaser to the trustee under the
deed of trust, except in connection with a trustees sale or attempted sale after
default by the Mortgagor;
(u) 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 Company. The appraisal is
in a form generally acceptable to Fannie Mae or Freddie Mac;
(v) All parties which have had any interest in the Mortgage, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in which
they held and disposed of such interest, were) (A) in substantial compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (B) (1) organized under the laws
of such state, or (2) qualified to do business in such state, or (3) federal
savings and loan associations, national banks, a Federal Home Loan Bank or the
Federal Reserve Bank, or (4) not doing business in such state;
(w) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to
above and such collateral does not serve as security for any other obligation;
(x) The Mortgagor has received all material disclosure materials
required by applicable law with respect to the making of such mortgage loans;
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(y) Except as indicated on the related Mortgage Loan Schedule, the
Mortgage Loan does not contain "graduated payment" features or "buydown"
features;
(z) The Mortgagor is not insolvent or in bankruptcy. There does not
exist any circumstances or conditions with respect to the Mortgage, the
Mortgaged Property, the Mortgagor or the Mortgagor's credit standing that could
reasonably be expected to cause private institutional investors to regard the
Mortgage Loan as an unacceptable investment, to cause the Mortgage Loan to
become delinquent, or to materially adversely affect the value or marketability
of the Mortgage Loan;
(aa) The Mortgage Loan has an original term to maturity of not more
than thirty years, with interest payable in arrears on the first day of each
month. With respect to each ARM Loan, on each applicable Adjustment Date, the
Mortgage Interest Rate will be adjusted to equal the sum of the Index, plus the
applicable Margin rounded up or down to the nearest 0.125%; provided, that the
Mortgage Interest Rate, on each applicable Adjustment Date, will not increase by
more than the applicable Periodic Rate Cap. Over the term of each ARM Loan, the
Mortgage Interest Rate will not exceed such Mortgage Loan's Lifetime Rate Cap.
With respect to each ARM Loan, the Mortgage Note requires a monthly payment
which is sufficient (a) during the period prior to the first adjustment to the
Mortgage Interest Rate, to fully amortize the original principal balance over
the original term thereof and to pay interest at the related Mortgage Interest
Rate, and (b) during the period following each Adjustment Date, to fully
amortize the outstanding principal balance as of the first day of such period
over the then remaining term of such Mortgage Note and to pay interest at the
related Mortgage Interest Rate. With respect to each ARM Loan, the Mortgage Note
provides that when the Mortgage Interest Rate changes on an Adjustment Date, the
then outstanding principal balance will be reamortized over the remaining life
of the ARM Loan. The Mortgage Loan does not contain terms or provisions which
would result in negative amortization;
(bb) Each of the Mortgaged Properties consists of a single parcel of
real property with a detached single-family residence erected thereon, or a
two-to four-family dwelling, or a townhouse, or an individual condominium unit
in a condominium project or an individual unit in a planned unit development. No
Mortgaged Property consists of a single parcel of real property with a
cooperative housing development erected thereon. Any condominium unit or planned
unit development either conforms with applicable Fannie Mae or Freddie Mac
requirements regarding such dwellings or is covered by a waiver confirming that
such condominium unit or planned unit development is acceptable to Fannie Mae or
Freddie Mac or is otherwise "warrantable" with respect thereto. No such
residence is a mobile home or manufactured dwelling;
(cc) No Mortgage Loan has a Loan-to-Value Ratio in excess of 95.00%.
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 payment defaults by a Primary
Mortgage Insurance Policy issued by a primary mortgage insurer acceptable to
Fannie Mae and Freddie Mac; such insurance is required until the ratio of the
current outstanding principal amount of the Mortgage Loan to the appraised value
of the Mortgaged Property, based on the most recent appraisal of the Mortgaged
Property performed by a Qualified Appraiser, such appraisal to be included in
the Servicing File, is reduced below 80.00%;
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<PAGE>
(dd) Except as previously disclosed in writing by the Company to the
Purchaser, none of the Mortgaged Properties are investor owned properties and,
to the best of the Company's knowledge, each Mortgaged Property is lawfully
occupied under applicable law;
(ee) Except as previously disclosed in writing by the Company to the
Purchaser, no ARM Loan has a feature allowing the Mortgagor to convert such ARM
Loan to a fixed rate mortgage loan;
(ff) The Assignment of Mortgage is in recordable form and is acceptable
for recording under the laws of the jurisdiction in which the Mortgaged Property
is located; and
(gg) The Company is either, and each Mortgage Loan was originated by, 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, or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Section 203 and 211 of
the National Housing Act.
Section 25.03. Repurchase; Substitution
It is understood and agreed that the representations and
warranties set forth in Sections 3.01 and 3.02 shall survive the sale of the
related Mortgage Loans to the Purchaser and delivery of the related Mortgage
Loan Documents to the Purchaser or the Custodian and shall inure to the benefit
of the Purchaser, notwithstanding any restrictive or qualified endorsement on
any Mortgage Note or Assignment of Mortgage or the examination of any Mortgage
File. Upon discovery by either the Company or the Purchaser of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser in any
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other. The Company shall have a period of sixty days from the
earlier of its discovery or its receipt of notice of any such breach within
which to correct or cure such breach. The Company hereby covenants and agrees
that if any such breach cannot be corrected or cured within such sixty day
period, the Company shall, at the Purchaser's option using reasonable discretion
and not later than ninety days of its discovery or its receipt of notice of such
breach, repurchase such Mortgage Loan at the related Repurchase Price or
substitute a Mortgage Loan as provided below. In the event that any such breach
shall involve any representation or warranty set forth in Section 3.01 or those
relating to the Mortgage Loans or a portion thereof in the aggregate, and such
breach cannot be cured within sixty days of the earlier of either discovery by
or notice to the Company of such breach, all Mortgage Loans or if only certain
Mortgage Loans are affected by the breach, all of such Mortgage Loans purchased
pursuant to a related Term Sheet shall, at the option of the Purchaser, be
repurchased by the Company at the Repurchase Price. Any such repurchase shall be
accomplished by deposit in the Custodial Account of the amount of the Repurchase
Price.
If the Company is required to repurchase any Mortgage Loan
pursuant to this Section 3.03, the Company may, if the Purchaser agrees, within
two years from the related Closing Date, remove such defective Mortgage Loan
from the terms of this Agreement and substitute another mortgage loan for such
defective Mortgage Loan, in lieu of repurchasing such defective Mortgage Loan.
Any substitute Mortgage Loan shall, in the opinion of the Company, (a) have a
principal
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balance at the time of substitution not materially greater than or less than
principal balance of the defective Mortgage Loan (and if the principal balance
of the substituted mortgage loan is less than that of the defective Mortgage
Loan the Company shall also deposit in the Custodial Account the amount of any
difference, plus one month's interest thereon at the Mortgage Interest Rate
borne by the defective Mortgage Loan which amount shall be deemed to be a
Principal Prepayment), (b) have a Mortgage Interest Rate not less than, and not
and not materially greater than, the Mortgage Interest Rate of the removed
Mortgage Loan, (c) have a maturity date not materially earlier or later than the
latest maturity date of any Mortgage Loan, (d) be of the same property type and
occupancy type as such defective Mortgage Loan, (e) have a Loan-to-Value Ratio
not greater than that of the removed Mortgage Loan, (f) be current in payment of
principal and interest as of the date of substitution and (g) have payment terms
which do not vary in any material respect from the payment terms of the
defective Mortgage Loan. The opinion of the Company shall be evidenced by an
Officer's Certificate delivered to the Purchaser.
At the time of repurchase or substitution, the Purchaser and
the Company shall arrange for the reassignment of the defective Mortgage Loan to
the Company and the delivery to the Company of any documents held by the
Custodian relating to the defective Mortgage Loan.
The Company shall amend the related Mortgage Loan Schedule to
reflect the withdrawal of the removed Mortgage Loan from this Agreement and the
substitution of such substitute Mortgage Loan therefor. Upon such amendment, the
Purchaser shall review (or have its designee review) the Mortgage File delivered
to it relating to the 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 Purchaser 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 Company.
The principal payment on a substitute Mortgage Loan due on the Due Date in the
month of substitution shall be the property of the Company and the principal
payment on the Mortgage Loan for which the substitution is made due on such date
shall be the property of the Purchaser.
It is understood and agreed that the obligation of the Company
set forth in this Section 3.03 to cure, repurchase or substitute for a defective
Mortgage Loan and its obligations as set forth in Section 8.01 hereof constitute
the sole remedies of the Purchaser respecting a breach of the representations
and warranties set forth in Sections 3.01 and 3.02. If the Company fails to
repurchase or substitute for a defective Mortgage Loan in accordance with this
Section 3.03, or fails to cure a defective Mortgage Loan to Purchaser's
reasonable satisfaction in accordance with this Section 3.03, that failure
shall, upon compliance by the Purchaser with the last paragraph of this Section
3.03, be an Event of Default and the Purchaser shall be entitled to pursue all
remedies available in this Agreement as a result thereof. No provision of this
paragraph shall affect the rights of the Purchaser to terminate this Agreement
for cause, as set forth in Sections 9.01 and 10.01, and for indemnification by
the Company, as set forth in Section 8.01.
Any cause of action against the Company relating to or arising
out of the breach of any representations and warranties made in Sections 3.01
and 3.02 shall accrue as to any Mortgage
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Loan upon (i) the earlier of discovery of such breach by the Company or notice
thereof by the Purchaser to the Company, (ii) failure by the Company to cure
such breach or repurchase such Mortgage Loan as specified above, and (iii)
demand upon the Company by the Purchaser for compliance with this Agreement.
[End of Article III]
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<PAGE>
ARTICLE XXVI
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 26.01. Company to Act as Servicer
The Company, as independent contract servicer, shall service
and administer the Mortgage Loans in accordance with this Agreement and with
Accepted Servicing Practices, and shall have full power and authority, acting
alone, to do or cause to be done any and all things in connection with such
servicing and administration which the Company may deem necessary or desirable
and consistent with the terms of this Agreement and with Accepted Servicing
Practices and shall exercise the same care that it customarily employs for its
own account. Except as set forth in this Agreement, the Company shall service
the Mortgage Loans in accordance with Accepted Servicing Practices in strict
compliance with the servicing provisions of the Fannie Mae Guide, which include,
but are not limited to, provisions regarding the liquidation of Mortgage Loans,
the collection of Mortgage Loan payments, the payment of taxes, insurance and
other charges, the maintenance of hazard insurance with a Qualified Insurer, the
maintenance of fidelity bond and errors and omissions insurance, inspections,
the restoration of Mortgaged Property, the maintenance of Primary Mortgage
Insurance Policies, insurance claims, and title insurance, management of REO
Property, permitted withdrawals with respect to REO Property, liquidation
reports, and reports of foreclosures and abandonments of Mortgaged Property, the
transfer of Mortgaged Property, the release of Mortgage Files, annual
statements, and examination of records and facilities. In the event of any
conflict, inconsistency or discrepancy between any of the servicing provisions
of this Agreement and any of the servicing provisions of the Fannie Mae Guide,
the provisions of this Agreement shall control and be binding upon the Purchaser
and the Company. The Purchaser may, at its option, deliver powers-of-attorney to
the Company sufficient to allow the Company as servicer to execute all
documentation requiring execution on behalf of Purchaser with respect to the
servicing of the Mortgage Loans, including satisfactions, partial releases,
modifications and foreclosure documentation or, in the alternative, shall as
promptly as reasonably possible, execute and return such documentation to the
Company.
Consistent with the terms of this Agreement, the Company may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of any such term or in any manner grant indulgence to any Mortgagor
if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, that unless the Company has obtained the prior
written consent of the Purchaser, the Company shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
forgive the payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal) or change the final
maturity date on such Mortgage Loan. In the event of any such modification which
has been agreed to in writing by the Purchaser and which permits the deferral of
interest or principal payments on any Mortgage Loan, the Company shall, on the
Business Day immediately preceding the related Remittance Date in any month in
which any such principal or interest payment has been deferred, deposit in the
Custodial Account from its own funds, in accordance with Section 4.04 and
Section 5.03, the difference between (a) such month's principal and one month's
interest at the related Mortgage Loan Remittance Rate on the unpaid principal
balance of such Mortgage Loan and
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<PAGE>
(b) the amount paid by the Mortgagor. The Company shall be entitled to
reimbursement for such advances to the same extent as for all other advances
pursuant to Section 4.05. Without limiting the generality of the foregoing, the
Company shall continue, and is hereby authorized and empowered, to prepare,
execute and deliver, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties.
In servicing and administering the Mortgage Loans, the Company
shall employ Accepted Servicing Practices, giving due consideration to the
Purchaser's reliance on the Company.
The Company shall perform all of its servicing
responsibilities hereunder or may, with the Purchaser's prior written approval,
which approval can be withheld for any or no reason, cause a subservicer to
perform any such servicing responsibilities on its behalf, but the use by the
Company of a subservicer shall not release the Company from any of its
obligations hereunder and the Company shall remain responsible hereunder for all
acts and omissions of each subservicer as fully as if such acts and omissions
were those of the Company. Any such subservicer that the Purchaser shall be
requested to consent to must be a Fannie Mae approved seller/servicer or a
Freddie Mac seller/servicer in good standing and no event shall have occurred,
including but not limited to, a change in insurance coverage, which would make
it unable to comply with the eligibility requirements for lenders imposed by
Fannie Mae or for seller/servicers by Freddie Mac, or which would require
notification to Fannie Mae or Freddie Mac. The Company shall pay all fees and
expenses of each subservicer from its own funds, and a subservicer's fee shall
not exceed the Servicing Fee.
At the cost and expense of the Company, without any right of
reimbursement from the Custodial Account, the Company shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange, with the
Purchaser's prior written approval, which approval can be withheld for any or no
reason, for any servicing responsibilities to be performed by a successor
subservicer meeting the requirements in the preceding paragraph, provided,
however, that nothing contained herein shall be deemed to prevent or prohibit
the Company, at the Company's option, from electing to service the related
Mortgage Loans itself. In the event that the Company's responsibilities and
duties under this Agreement are terminated pursuant to Section 8.04, 9.01 or
10.01, and if requested to do so by the Purchaser, the Company shall at its own
cost and expense terminate the rights and responsibilities of each subservicer
effective as of the date of termination of the Company. The Company shall pay
all fees, expenses or penalties necessary in order to terminate the rights and
responsibilities of each subservicer from the Company's own funds without
reimbursement from the Purchaser.
Notwithstanding any of the provisions of this Agreement
relating to agreements or arrangements between the Company and a subservicer or
any reference herein to actions taken through a subservicer or otherwise, the
Company shall not be relieved of its obligations to the Purchaser and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Company shall be
entitled to enter into an agreement with a subservicer for indemnification of
the Company by the subservicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
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<PAGE>
Any subservicing agreement and any other transactions or
services relating to the Mortgage Loans involving a subservicer shall be deemed
to be between such subservicer and Company alone, and the Purchaser shall have
no obligations, duties or liabilities with respect to such Subservicer including
no obligation, duty or liability of Purchaser to pay such subservicer's fees and
expenses. For purposes of distributions and advances by the Company pursuant to
this Agreement, the Company shall be deemed to have received a payment on a
Mortgage Loan when a subservicer has received such payment.
Notwithstanding the foregoing, if Mortgage Loans are sold by
the Purchaser to Fannie Mae or Freddie Mac pursuant to a Whole Loan Transfer,
the Company, at the direction of Purchaser, shall service such Mortgage Loans to
Fannie Mae or Freddie Mac as the case may be, in accordance with such entity's
guidelines; provided that if the Company is servicing for Fannie Mae, the
related Remittance Date shall be the 18th day of each month and if for Freddie
Mac, the first Tuesday of each month or as either Fannie Mae or Freddie Mac
shall require. The Company shall make to such respective entity such entity's
required servicing representations and warranties as of the date of sale of the
Mortgage Loans by the Purchaser to Fannie Mae or Freddie Mac, as applicable.
Underwriting representations and warranties to be made by the Company shall only
be those contained herein restated as of such date of sale.
Section 26.02. Collection of Mortgage Loan Payments
Continuously from the related Closing Date until the date each
Mortgage Loan ceases to be subject to this Agreement, the Company will proceed
with reasonable diligence to collect all payments due under each Mortgage Loan
when the same shall become due and payable and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of related Primary Mortgage Insurance Policy, follow such collection procedures
as it follows with respect to mortgage loans comparable to the Mortgage Loans
and held for its own account. Further, the Company will take reasonable care in
ascertaining and estimating annual ground rents, taxes, assessments, water
rates, fire and hazard insurance premiums, mortgage insurance premiums, and all
other charges that, as provided in the Mortgage, will become due and payable to
that end that the installments payable by the Mortgagors will be sufficient to
pay such charges as and when they become due and payable.
Section 26.03. Realization Upon Defaulted Mortgage Loans
The Company shall use its reasonable efforts, consistent with
the procedures that the Company would use in servicing loans for its own account
and the requirements of the Fannie Mae Guide, to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 4.01. The Company shall use its reasonable efforts to realize upon
defaulted Mortgage Loans in such manner as will maximize the receipt of
principal and interest by the Purchaser, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Company shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan to the Purchaser after reimbursement to itself for such expenses,
and (ii) that such
N-3-33
<PAGE>
expenses will be recoverable by the Company through Insurance Proceeds or
Liquidation Proceeds from the related Mortgaged Property, as contemplated in
Section 4.05. The Company shall notify the Purchaser in writing of the
commencement of foreclosure proceedings. The Company shall be responsible for
all costs and expenses incurred by it in any such proceedings or functions as
Servicing Advances; provided, however, that it shall be entitled to
reimbursement therefor from the related Mortgaged Property, as contemplated in
Section 4.05. Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Company has reasonable cause to believe that a Mortgaged Property
is contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector at the Purchaser's expense. Upon completion of the inspection, the
Company shall promptly provide the Purchaser with a written report of the
environmental inspection. After reviewing the environmental inspection report,
the Purchaser shall determine how the Company shall proceed with respect to the
Mortgaged Property.
Section 26.04. Establishment of Custodial Accounts;
Deposits in Custodial Accounts
The Company shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Custodial
Accounts. The Custodial Account shall be established with a Qualified
Depository. Funds deposited in the Custodial Account, which shall be deposited
within 24 hours of receipt, shall at all times be insured by the FDIC up to the
FDIC insurance limits, or must be invested in Permitted Investments for the
benefit of the Purchaser. Funds deposited in the Custodial Account may be drawn
on by the Company in accordance with Section 4.05. The creation of any Custodial
Account shall be evidenced by a letter agreement in the form shown in EXHIBIT D
hereto. The original of such letter agreement shall be furnished to the
Purchaser on the initial Closing Date.
The Company shall deposit in the Custodial Account on a daily
basis, and retain therein the following payments and collections received or
made by it subsequent to the related Cutoff Date, or received by it prior to the
related Cut-off Date but allocable to a period subsequent thereto, other than in
respect of principal and interest on the related Mortgage Loans due on or before
the related Cut-off Date:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the related Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds and REO Disposition Proceeds;
(iv) any net amounts received by the Company in connection
with any REO Property pursuant to Section 4.13;
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<PAGE>
(v) all Insurance Proceeds including amounts required to be
deposited pursuant to Sections 4.08 and 4.10, other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Company's normal
servicing procedures, the loan documents or applicable law;
(vi) all Condemnation Proceeds affecting any Mortgaged
Property other than proceeds to be held in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor in
accordance with the Company's normal servicing
procedures, the loan documents or applicable law;
(vii) any Monthly Advances as provided in Section 5.03;
(viii) all proceeds of any Mortgage Loan repurchased in
accordance with Section 3.03;
(ix) any amounts required to be deposited in the Custodial
Account pursuant to Section 6.02; and
(x) with respect to each full or partial Principal Prepayment,
any Prepayment Interest Shortfalls, to the extent of the Company's aggregate
Servicing Fee received with respect to
the related Due Period.
The foregoing requirements for deposit in the Custodial
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges and assumption fees, to the extent permitted by Section 6.01, need not
be deposited by the Company in the Custodial Account. Any interest paid on funds
deposited in the Custodial Account by the Qualified Depository shall accrue to
the benefit of the Company and the Company shall be entitled to retain and
withdraw such interest from the Custodial Account pursuant to Section 4.05(iv).
The Company shall not be responsible for any losses suffered with respect to any
investment of funds in the Custodial Account.
Section 26.05. Permitted Withdrawals From the Custodial
Account
The Company may, from time to time, make withdrawals from the
Custodial Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in
the manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances, the Company's
right to reimburse itself pursuant to this subclause (ii) being limited
to amounts received on the related Mortgage Loan which represent late
collections (net of the related Servicing Fees) of principal and/or
interest respecting which any such advance was made. Where the Company
is required to repurchase a Mortgage Loan pursuant to Section 3.03, the
Company's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase
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<PAGE>
Price pursuant to such Section and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances,
any unpaid Servicing Fees and any unreimbursed Monthly Advances, the
Company's right to reimburse itself pursuant to this subclause (iii)
with respect to any Mortgage Loan being limited to Liquidation
Proceeds, Condemnation Proceeds and Insurance Proceeds related to such
Mortgage Loan. Where the Company is required to repurchase a Mortgage
Loan pursuant to Section 3.03, the Company's right to such
reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to such Section and all other amounts
required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iv) to pay to itself as servicing compensation (a) any
interest earned on funds in the Custodial Account (all such interest to
be withdrawn monthly not later than each Remittance Date), and (b) the
Servicing Fee from that portion of any payment or recovery which
represents interest with respect to a particular Mortgage Loan;
(v) to pay to itself with respect to each Mortgage Loan that
has been repurchased pursuant to Section 3.03 all amounts received
thereon and not distributed (or proposed to be included in the
Repurchase Price) as of the date on which the related Repurchase Price
is determined;
(vi) to transfer funds to another Qualified Depository in
accordance with Section 4.09 hereof;
(vii) to remove funds inadvertently placed in the Custodial
Account in error by the Company; and
(viii) to clear and terminate the Custodial Account upon the
termination of this Agreement.
Section 26.06. Establishment of Escrow Accounts; Deposits
in Escrow Accounts
The Company shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts. Each Escrow Account shall be
established with a Qualified Depository. Funds deposited in each Escrow Account
shall at all times be insured in a manner to provide maximum insurance under the
insurance limitations of the FDIC, or must be invested in Permitted Investments.
Funds deposited in an Escrow Account may be drawn on by the Company in
accordance with Section 4.07. The creation of any Escrow Account shall be
evidenced by a letter agreement in the form shown in EXHIBIT E. The original of
such letter agreement shall be furnished to the Purchaser on the initial Closing
Date.
The Company shall deposit in the Escrow Account or Accounts on
a daily basis, and retain therein:
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<PAGE>
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any items as are
required under the terms of this Agreement;
(ii) all Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property; and
(iii) all Servicing Advances for Mortgagors whose Escrow
Payments are insufficient to cover escrow disbursements.
The Company shall make withdrawals from an Escrow Account only
to effect such payments as are required under this Agreement, and for such other
purposes as shall be as set forth in and in accordance with Section 4.07. The
Company shall be entitled to retain any interest paid on funds deposited in an
Escrow Account by the Qualified Depository other than interest on escrowed funds
required by law to be paid to the Mortgagor and, to the extent required by law,
the Company shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account is non-interest bearing or that interest
paid thereon is insufficient for such purposes. The Company shall not be
responsible for any losses suffered with respect to investment of funds in the
Escrow Account.
Section 26.07. Permitted Withdrawals From Escrow Account
Withdrawals from the Escrow Account may be made by the Company
only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, fire and hazard insurance premiums, Primary
Mortgage Insurance Policy premiums, if applicable, and comparable
items;
(ii) to reimburse Company for any Servicing Advance made by
Company with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder;
(iii) to refund to the Mortgagor any funds as may be
determined to be overages;
(iv) for transfer to the Custodial Account in connection with
an acquisition of REO Property;
(v) for application to restoration or repair of the Mortgaged
Property;
(vi) to pay to the Company, or to the Mortgagor to the extent
required by law, any
interest paid on the funds deposited in the Escrow Account;
(vii) to pay to the Mortgagors or other parties Insurance
Proceeds deposited in accordance with Section 4.06;
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(viii) to remove funds inadvertently placed in an Escrow
Account in error by the Company; and
(ix) to clear and terminate the Escrow Account on the
termination of this Agreement.
As part of its servicing duties, the Company shall pay to the
Mortgagors interest on funds in an Escrow Account, to the extent required by
law, and to the extent that interest earned on funds in the Escrow Account is
insufficient, shall pay such interest from its own funds, without any
reimbursement therefor.
Section 26.08. Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Mortgage Insurance Policies; Collections Thereunder With
respect to each Mortgage Loan, the Company shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of Primary Mortgage Insurance Policy premiums and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges, including renewal premiums and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Company in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage or applicable law. To the extent that
the Mortgage does not provide for Escrow Payments, the Company shall determine
that any such payments are made by the Mortgagor at the time they first become
due. The Company assumes full responsibility for the timely payment of all such
bills and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments, provided such advances are deemed to be recoverable.
The Company will maintain in full force and effect Primary
Mortgage Insurance Policies issued by a Qualified Insurer with respect to each
Mortgage Loan for which such coverage is herein required. Such coverage will be
maintained until the ratio of the current outstanding principal balance of the
related Mortgage Loan to the appraised value of the related Mortgaged Property,
based on the most recent appraisal of the Mortgaged Property performed by a
Qualified Appraiser, such appraisal to be included in the Servicing File, is
reduced to 80.00% or less. The Company will not cancel or refuse to renew any
Primary Mortgage Insurance Policy in effect on the related Closing Date that is
required to be kept in force under this Agreement unless a replacement Primary
Mortgage Insurance Policy for such canceled or nonrenewed policy is obtained
from and maintained with a Qualified Insurer. The Company shall not take any
action which would result in noncoverage under any applicable Primary Mortgage
Insurance Policy of any loss which, but for the actions of the Company would
have been covered thereunder. In connection with any assumption or substitution
agreement entered into or to be entered into pursuant to Section 6.01, the
Company shall promptly notify the insurer under the related Primary Mortgage
Insurance Policy, if any, of such assumption or substitution of liability in
accordance with the terms of such policy and shall take all actions which may be
required by such insurer as a condition to the continuation of coverage under
the Primary Mortgage Insurance Policy. If such Primary Mortgage Insurance Policy
is
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<PAGE>
terminated as a result of such assumption or substitution of liability, the
Company shall obtain a replacement Primary Mortgage Insurance Policy as provided
above.
In connection with its activities as servicer, the Company
agrees to prepare and present, on behalf of itself and the Purchaser, claims to
the insurer under any Private Mortgage Insurance Policy in a timely fashion in
accordance with the terms of such Primary Mortgage Insurance Policy and, in this
regard, to take such action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policy respecting a defaulted Mortgage Loan. Pursuant
to Section 4.04, any amounts collected by the Company under any Primary Mortgage
Insurance Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.
Section 26.09. Transfer of Accounts
The Company may transfer the Custodial Account or the Escrow
Account to a different Qualified Depository from time to time. Such transfer
shall be made only upon obtaining the prior written consent of the Purchaser,
which consent will not be unreasonably withheld.
Section 26.10. Maintenance of Hazard Insurance
The Company shall cause to be maintained for each Mortgage
Loan fire and hazard insurance with extended coverage as is customary in the
area where the Mortgaged Property is located in an amount which is equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan or (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan, and (b) the percentage such that the proceeds thereof shall
be sufficient to prevent the Mortgagor and/or the Mortgagee from becoming a
co-insurer. If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as being a special flood
hazard area that has federally-mandated flood insurance requirements, the
Company will cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (i) the outstanding principal balance of the
Mortgage Loan, (ii) the maximum insurable value of the improvements securing
such Mortgage Loan or (iii) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended. The Company shall
also maintain on the REO Property, fire and hazard insurance with extended
coverage in an amount which is at least equal to the maximum insurable value of
the improvements which are a part of such property, liability insurance and, to
the extent required and available under the Flood Disaster Protection Act of
1973, as amended, flood insurance in an amount as provided above. Any amounts
collected by the Company under any such policies other than amounts to be
deposited in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or REO Property, or released to the Mortgagor in accordance
with the Company's normal servicing procedures, shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 4.05. It is
understood and agreed that no other additional insurance need be required by the
Company or the Mortgagor or maintained on property acquired in respect of the
Mortgage Loans, other than pursuant to the Fannie Mae Guide or such applicable
state or federal laws and regulations as shall at any time be in force and as
shall require such additional insurance. All such policies shall be endorsed
with standard mortgagee clauses with loss payable to the Company and its
successors and/or assigns and shall provide for at least thirty days prior
written notice of any cancellation, reduction in the amount
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or material change in coverage to the Company. The Company shall not interfere
with the Mortgagor's freedom of choice in selecting either his insurance carrier
or agent, provided, however, that the Company shall not accept any such
insurance policies from insurance companies unless such companies currently
reflect a General Policy Rating in Best's Key Rating Guide currently acceptable
to Fannie Mae and are licensed to do business in the state wherein the property
subject to the policy is located.
Section 26.11. [RESERVED]
Section 26.12. Fidelity Bond, Errors and Omissions
Insurance
The Company shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies on all officers, employees or other persons acting in
any capacity with regard to the Mortgage Loans and who handle funds, money,
documents and papers relating to the Mortgage Loans. The Fidelity Bond and
errors and omissions insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the Company against losses, including
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of
such persons. Such Fidelity Bond and errors and omissions insurance shall also
protect and insure the Company against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring the Fidelity Bond and errors and omissions insurance shall diminish or
relieve the Company from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such Fidelity Bond and insurance
policy shall be at least equal to the corresponding amounts required by Fannie
Mae in the Fannie Mae Guide or by Freddie Mac in the Freddie Mac Guide. The
Company shall, upon request of Purchaser, deliver to the Purchaser a certificate
from the surety and the insurer as to the existence of the Fidelity Bond and
errors and omissions insurance policy and shall obtain a statement from the
surety and the insurer that such Fidelity Bond or insurance policy shall in no
event be terminated or materially modified without thirty days prior written
notice to the Purchaser. The Company shall notify the Purchaser within five
Business Days of receipt of notice that such Fidelity Bond or insurance policy
will be, or has been, materially modified or terminated. The Purchaser and its
successors or assigns as their interests may appear must be named as loss payees
on the Fidelity Bond and as additional insured on the errors and omissions
policy.
Section 26.13. Title, Management and Disposition of REO
Property
In the event that title to any Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be taken in the name of the Purchaser or its designee. Any such
Person or Persons holding such title other than the Purchaser shall acknowledge
in writing that such title is being held as nominee for the benefit of the
Purchaser.
The Company shall notify the Purchaser in accordance with the
Fannie Mae Guide of each acquisition of REO Property upon such acquisition, and
thereafter assume the responsibility for marketing such REO Property in
accordance with Accepted Servicing Practices. Thereafter, the Company shall
continue to provide certain administrative services to the Purchaser relating to
such REO Property as set forth in this Section 4.13. The REO Property must be
sold within three years following the date of acquisition, or such other time
period as may be permitted under the provisions
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of the Internal Revenue Code of 1986, as amended, with respect to qualified
assets of a real estate mortgage investment conduit, unless the Company is
otherwise advised by the Purchaser.
The Company shall, either itself or through an agent selected
by the Company, and in accordance with the Fannie Mae Guide, manage, conserve,
protect and operate each REO Property in the same manner that it manages,
conserves, protects and operates other foreclosed property for its own account,
and in the same manner that similar property in the same locality as the REO
Property is managed. Each REO Disposition shall be carried out by the Company at
such price and upon such terms and conditions as the Company deems to be in the
best interest of the Purchaser. The REO Disposition Proceeds from the sale of
the REO Property shall be promptly deposited in the Custodial Account. AS soon
as practical thereafter, the expenses of such sale shall be paid and the Company
shall reimburse itself for any related Servicing Advances, or Monthly Advances
made pursuant to Section 5.03, in accordance with Section 4.05.
The Company shall cause each REO Property to be inspected
promptly upon the acquisition of title thereto and shall cause each REO Property
to be inspected at least monthly thereafter or more frequently as may be
required by the circumstances. The Company shall make or cause the inspector to
make a written report of each such inspection. Such reports shall be retained in
the Mortgage File and copies thereof shall be forwarded by the Company to the
Purchaser.
[End of Article IV]
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ARTICLE XXVII
PAYMENTS TO THE PURCHASER
Section 27.01. Remittances
On each Remittance Date, the Company shall remit to the
Purchaser (i) all amounts credited to the Custodial Account as of the close of
business on the related preceding Determination Date, except Principal
Prepayments received on or after the first day of the calendar month in which
the Remittance Date occurs shall be remitted to the Purchaser on the next
following Remittance Date, net of charges against or withdrawals from the
Custodial Account pursuant to Section 4.05, plus, to the extent not already
deposited in the Custodial Account, the sum of (ii) all Monthly Advances, if
any, which the Company is obligated to distribute pursuant to Section 5.03 and
(iii) all Prepayment Interest Shortfalls the Company is required to make up
pursuant to Section 4.05, minus (iv) any amounts attributable to Monthly
Payments collected but due on a Due Date or Dates subsequent to the related
preceding Determination Date, which amounts shall be remitted on the related
Remittance Date next succeeding the Due Period for such amounts. It is
understood that with respect to each Closing Date, by operation of Section 4.04,
the remittance on the first Remittance Date with respect to Mortgage Loans
purchased pursuant to the related Term Sheet is to include principal collected
after the related Cut-off Date through the related preceding Determination Date
plus interest, adjusted to the related Mortgage Loan Remittance Rate collected
through such Determination Date exclusive of any portion thereof allocable to
the period prior to the related Cutoff Date, with the adjustments specified in
clauses (ii), (iii) and (iv) above.
With respect to any remittance received by the Purchaser after
the Business Day on which such payment was due, the Company shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the Prime
Rate, adjusted as of the date of each change, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be deposited in
the Custodial Account by the Company on the date such late payment is made and
shall cover the period commencing with the day following such Business Day and
ending with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding related Remittance Date. The payment by the Company of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Company.
Section 27.02. Statements to the Purchaser
The Company shall furnish to the Purchaser an individual
Mortgage Loan accounting report (a "Report"), as of the last Business Day of
each month, in the Company's assigned loan number order to document Mortgage
Loan payment activity on an individual Mortgage Loan basis. With respect to each
month, such Report shall be received by the Purchaser no later than the fifth
Business Day of the following month of the related Remittance Date on a disk or
tape or other computer-readable format, in such format as may be mutually agreed
upon by both the Purchaser and the Company, and in hard copy, which Report shall
contain the following:
(i) With respect to each Monthly Payment (on both an actual
and scheduled basis with respect to Mortgage Loan balances and on an
actual basis with respect to paid-through
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<PAGE>
dates), the amount of such remittance allocable to principal (including
a separate breakdown of any Principal Prepayment, including the date of
such prepayment, and any prepayment penalties or premiums, along with a
detailed report of interest (including Prepayment Interest Shortfall)
on principal prepayment amounts remitted in accordance with Section
5.01);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to interest;
(iii) the amount of servicing compensation received by the
Company during the prior distribution period;
(iv) the aggregate Stated Principal Balance of the Mortgage
Loans;
(v) the amount of Monthly Advances made by the Company
pursuant to Section 5.03;
(vi) the aggregate of any expenses reimbursed to the Company
during the prior distribution period pursuant to Section 4.05;
(vii) the number and aggregate outstanding principal balances
of Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days,
(3) 90 days or more; (b) as to which foreclosure has commenced; and (c)
as to which REO Property has been acquired; and
(viii) such other reports as may reasonably be required by the
Purchaser.
The Company shall also provide a trial balance, sorted in the
Purchaser's assigned loan number order, in such form as the Company and the
Purchaser shall agree, with each such Report.
The Company shall prepare and file any and all information
statements or other filings required to be delivered to any governmental taxing
authority or to Purchaser pursuant to any applicable law with respect to the
Mortgage Loans and the transactions contemplated hereby. In addition, the
Company shall provide the Purchaser with such information concerning the
Mortgage Loans as is necessary for the Purchaser to prepare its federal income
tax return as the Purchaser may reasonably request from time to time.
In addition, not more than 60 days after the end of each
calendar year, the Company shall furnish to each Person who was a Purchaser at
any time during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances of principal and interest for the applicable portion of such year.
Section 27.03. Monthly Advances by the Company
Not later than the close of business on the Business Day
preceding each Remittance Date, the Company shall deposit in the Custodial
Account an amount equal to all payments not previously advanced by the Company,
whether or not deferred pursuant to Section 4.01, of principal
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<PAGE>
(due after the related Cut-off Date) and interest not allocable to the period
prior to the related Cut-off Date, adjusted to the related Mortgage Loan
Remittance Rate, which were due on a Mortgage Loan and delinquent at the close
of business on the related Determination Date; provided, however, that the
amount of any such deposit may be reduced by the "Amount Held for Future
Distribution" then on deposit in the Custodial Account. Any portion of the
Amount Held for Future Distribution used to pay Monthly Advances shall be
replaced by the Company by deposit into the Custodial Account on any future
Remittance Date to the extent that funds that are available in the Custodial
Account for remittance to the Purchaser on such Remittance Date are less than
the amount of payments required to be made to the Purchaser on such Remittance
Date.
The "Amount Held for Future Distribution" as to any Remittance
Date shall be the total of the amounts held in the Custodial Account at the
close of business on the preceding Determination Date on account of (i)
Liquidation Proceeds, Insurance Proceeds, Principal Prepayments, Mortgage Loan
purchases or payments pursuant to substitutions made pursuant to Section 3.03
received or made in the month of such Remittance Date and (ii) payments which
represent early receipt of scheduled payments of principal and interest due on a
date or dates subsequent to the related Due Date.
The Company's obligation to make such Monthly Advances as to
any Mortgage Loan will continue through the final disposition or liquidation of
the Mortgaged Property, unless the Company deems such advance to be
nonrecoverable from Liquidation Proceeds, REO Disposition Proceeds or Insurance
Proceeds with respect to the applicable Mortgage Loan. In such latter event, the
Company shall deliver to the Purchaser an Officer's Certificate of the Company
to the effect that an officer of the Company has reviewed the related Mortgage
File and has obtained a recent appraisal and has made the reasonable
determination that any additional advances are nonrecoverable from Liquidation
or Insurance Proceeds with respect to the applicable Mortgage Loan.
Section 27.04. Liquidation Reports
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure,
the Company shall submit to the Purchaser a liquidation report with respect to
such Mortgaged Property in such form as the Company and the Purchaser shall
agree. The Company shall also provide reports on the status of REO Property
containing such information as Purchaser may reasonably require.
[End of Article V]
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<PAGE>
ARTICLE XXVIII
GENERAL SERVICING PROCEDURES
Section 28.01. Assumption Agreements
The Company will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of a Mortgaged Property
(whether by absolute conveyance or by contract of, sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under any "due-on-sale" clause to the extent permitted by law; provided,
however, that the Company shall not exercise any such rights if prohibited by
law or the terms of the Mortgage Note from doing so or if the exercise of such
rights would impair or threaten to impair any recovery under the related Primary
Mortgage Insurance Policy, if any. If the Company reasonably believes it is
unable under applicable law to enforce such "due-on-sale" clause, the Company,
with the approval of the Purchaser (such approval not to be unreasonably
withheld), will enter into an assumption agreement with the person to whom the
Mortgaged Property has been conveyed or is proposed to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon. Where
an assumption is allowed pursuant to this Section 6.01, the Company, with the
prior consent of the primary mortgage insurer, if any, is authorized to enter
into a substitution of liability agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed pursuant to which the
original mortgagor is released from liability and such Person is substituted as
mortgagor and becomes liable under the related Mortgage Note. Any such
substitution of liability agreement shall be in lieu of an assumption agreement.
In connection with any such assumption or substitution of
liability, the Company shall follow the underwriting practices and procedures of
the Fannie Mae Guide. With respect to an assumption or substitution of
liability, the Mortgage Interest Rate borne by the related Mortgage Note and the
amount of the Monthly Payment may not be changed. The Company shall notify the
Purchaser that any such substitution of liability or assumption agreement has
been completed by forwarding to the Purchaser the original of any such
substitution of liability or assumption agreement, which document shall be added
to the related Mortgage File and shall, for all purposes, be considered a part
of such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. All fees collected by the Company for entering into
an assumption or substitution of liability agreement shall belong to the
Company.
Notwithstanding the foregoing paragraphs of this Section or
any other provision of this Agreement, the Company shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan by operation of law or any assumption which
the Company may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Section 6.01, the term "assumption" is deemed to also
include a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.
Section 28.02. Satisfaction of Mortgages and Release of
Mortgage Files
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<PAGE>
Upon the payment in full of any Mortgage Loan, the Company
will immediately notify the Custodian with a certification and request for
release by a Servicing Officer, which certification shall include a statement to
the effect that all amounts received in connection with such payment which are
required to be deposited in the Custodial Account pursuant to Section 4.04 have
been so deposited, and a request for delivery to the Company of the portion of
the Mortgage File held by the Custodian, and unless the related Mortgage Loans
are the subject of a Pass-Through Transfer, such request is to be acknowledged
by the Purchaser. Upon receipt of such certification and request, the Custodian
shall promptly release or cause the Custodian to release the related Mortgage
Loan Documents to the Company and the Company shall prepare and deliver for
execution by the Purchaser or at the Purchaser's option execute under the
authority of a power of attorney delivered to the Company by the Purchaser any
satisfaction or release. No expense incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account.
In the event the Company satisfies or releases a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or should it otherwise prejudice any right the Purchaser may have under
the mortgage instruments, the Company, upon written demand, shall remit within
two Business Days to the Purchaser the then outstanding principal balance of the
related Mortgage Loan by deposit thereof in the Custodial Account. The Company
shall maintain the Fidelity Bond insuring the Company against any loss it may
sustain with respect to any Mortgage Loan not satisfied in accordance with the
procedures set forth herein.
From time to time and as appropriate for the servicing or
foreclosure of the Mortgage Loans, including for the purpose of collection under
any Primary Mortgage Insurance Policy, upon request of the Company and delivery
to the Custodian of a servicing receipt signed by a Servicing Officer (and
unless the related Mortgage Loans are the subject of a Pass-Through Transfer,
acknowledged by the Purchaser), the Custodian shall release the portion of the
Mortgage File held by the Custodian to the Company. Such servicing receipt shall
obligate the Company to return the related Mortgage Loan Documents to the
Custodian, when the need therefor by the Company no longer exists, unless the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Custodial Account or the Mortgage File
or such document has been delivered to an attorney, or to a public trustee or
other public official as required by law, for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
either judicially or non-judicially, and the Company has delivered to the
Purchaser or the Custodian a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated, the servicing receipt shall be released by the Purchaser or the
Custodian, as applicable, to the Company.
Section 28.03. Servicing Compensation
As compensation for its services hereunder, the Company shall
be entitled to withdraw from the Custodial Account or to retain from interest
payments on the Mortgage Loans the amounts provided for as the Company's
Servicing Fee. Additional servicing compensation in the form of assumption fees,
as provided in Section 6.01, late payment charges and other ancillary
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<PAGE>
fees shall be retained by the Company to the extent not required to be deposited
in the Custodial Account. The Company shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement therefor except as
specifically provided for.
Section 28.04. Annual Statement as to Compliance
The Company will deliver to the Purchaser not later than 90
days following the end of each fiscal year of the Company (December 31st of each
year beginning in December 1998) an Officers' Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Company during the
preceding calendar year and of performance under this Agreement has been made
under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Company has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof except for such
defaults as such Officers in their good faith judgment believe to be immaterial.
Section 28.05. Annual Independent Certified Public
Accountants' Servicing Report
Not later than 90 days following the end of each fiscal year
of the Company (December 31st of each year beginning in December 1998) the
Company at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Purchaser to the effect that such firm has examined
certain documents and records relating to the Company's servicing of mortgage
loans of the same type as the Mortgage Loans pursuant to servicing agreements
substantially similar to this Agreement, which agreements may include this
Agreement, and that, on the basis of such an examination, conducted
substantially in accordance with the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that the Company's servicing has
been conducted in compliance with the agreements examined pursuant to this
Section 6.05, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement.
Section 28.06. Purchaser's Right to Examine Company Records
The Purchaser shall have the right to examine and audit, at
its expense, upon reasonable notice to the Company, during business hours or at
such other times as might be reasonable under applicable circumstances, any and
all of the books, records, documentation or other information of the Company, or
held by another for the Company or on its behalf or otherwise, which relate to
the performance or observance by the Company of the terms, covenants or
conditions of this Agreement.
The Company shall provide to the Purchaser and any supervisory
agents or examiners representing a state or federal governmental agency having
jurisdiction over the Purchaser, including but not limited to OTS, FDIC and
other similar entities, access to any documentation regarding the Mortgage Loans
in the possession of the Company which may be required by any applicable
regulations. Such access shall be afforded without charge, upon reasonable
request, during normal business hours and at the offices of the Company, and in
accordance with the applicable federal government agency, FDIC, OTS, or any
other similar regulations.
N-3-47
<PAGE>
[End of Article VI]
N-3-48
<PAGE>
ARTICLE XXIX
REPORTS TO BE PREPARED BY COMPANY
Section 29.01. Company Shall Provide Information as
Reasonably Required
The Company shall furnish to the Purchaser during the term of
this Agreement, at the Purchaser's expense with respect to the reasonable
out-of-pocket costs to the Company, such periodic, special or other reports,
information or documentation, whether or not provided for herein, as shall be
reasonably necessary or appropriate in respect to the Purchaser, or otherwise in
respect of the Mortgage Loans and the performance of the Company under this
Agreement, including any reports, information or documentation reasonably
required to comply with any regulations regarding any supervisory agents or
examiners of the Purchaser all such reports or information to be as provided by
and in accordance with such applicable instructions and directions as the
Purchaser may reasonably request in relation to this Agreement or the
performance of the Company under this Agreement. The Company agrees to execute
and deliver all such instruments and take all such action as the Purchaser, from
time to time, may reasonably request in order to effectuate the purpose and to
carry out the terms of this Agreement.
[End of Article VII]
N-3-49
<PAGE>
ARTICLE XXX
THE COMPANY
Section 30.01. Indemnification; Third Party Claims
The Company agrees to indemnify the Purchaser and hold it
harmless from and against any and all claims, losses, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Purchaser may sustain in any way related to the failure of
the Company to perform in any way its duties and service the Mortgage Loans in
strict compliance with the terms of this Agreement and for breach of any
representation or warranty of the Company contained herein. The Company shall
immediately notify the Purchaser if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans, assume (with the consent of the
Purchaser and with counsel reasonably satisfactory to the Purchaser) the defense
of any such claim and pay all expenses in connection therewith, including
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against it or the Purchaser in respect of such claim but
failure to so notify the Purchaser shall not limit its obligations hereunder.
The Company agrees that it will not enter into any settlement of any such claim
without the consent of the Purchaser unless such settlement includes an
unconditional release of the Purchaser from all liability that is the subject
matter of such claim. The provisions of this Section 8.01 shall survive
termination of this Agreement.
Section 30.02. Merger or Consolidation of the Company
The Company will keep in full effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, 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 or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Company may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Company shall be a party, or any Person succeeding to
the business of the Company whether or not related to loan servicing, shall be
the successor of the Company hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the successor or
surviving Person shall be an institution (i) having a GAAP net worth of not less
than $25,000,000, (ii) the deposits of which are insured by the FDIC, SAIF
and/or BIF, or which is a HUD-approved mortgagee whose primary business is in
origination and servicing of first lien mortgage loans, and (iii) which is a
Fannie Mae or Freddie Mac approved seller/servicer in good standing.
Section 30.03. LIMITATION ON LIABILITY OF THE COMPANY AND
OTHERS
Neither the Company nor any of the officers, employees or
agents of the Company shall be under any liability to the Purchaser for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment made in good faith;
provided, however, that this provision shall not protect the Company or any such
person against any breach of warranties or representations made herein, or
failure to perform in any way its obligations
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in compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reason of negligence or any breach
of the terms and conditions of this Agreement. The Company and any officer,
employee or agent of the Company may rely in good faith on any document of any
kind prima facie properly executed and submitted by the Purchaser respecting any
matters arising hereunder. The Company shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement and which
in its opinion may involve it in any expenses or liability; provided, however,
that the Company may, with the consent of the Purchaser, which consent shall not
be unreasonably withheld, undertake any such action which it may deem necessary
or desirable with respect to this Agreement and the rights and duties of the
parties hereto. In such event, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities for which the Purchaser will be liable, and the Company shall be
entitled to be reimbursed therefor from the Purchaser upon written demand.
Section 30.04. Company Not to Resign
The Company shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Company and the Purchaser
or upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Company. Any
such determination permitting the resignation of the Company shall be evidenced
by an Opinion of Counsel to such effect delivered to the Purchaser which Opinion
of Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Section 30.05. No Transfer of Servicing
With respect to the retention of the Company to service the
Mortgage Loans hereunder, the Company acknowledges that the Purchaser has acted
in reliance upon the Company's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section, the Company shall not either assign this
Agreement or the servicing hereunder or delegate its rights or duties hereunder
or any portion thereof, or sell or otherwise dispose of all or substantially all
of its property or assets, without the prior written approval of the Purchaser,
which consent shall be granted or withheld in the Purchaser's sole discretion;
provided that the Company may assign the Agreement and the servicing hereunder
without the consent of Purchaser to an affiliate of the Company to which all
servicing of the Company is assigned so long as (i) such affiliate is a Fannie
Mae and Freddie Mac approved servicer and (ii) if it is intended that such
affiliate be spun off to the shareholders of the Company, such affiliate have a
GAAP net worth of at least $10,000,000 and (iii) such affiliate shall deliver to
the Purchaser a certification pursuant to which such affiliate shall agree to be
bound by the terms and conditions of this Agreement and shall certify that such
affiliate is a Fannie Mae and Freddie Mac approved servicer in good standing.
[End of Article VIII]
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ARTICLE XXXI
DEFAULT
Section 31.01. Events of Default
In case one or more of the following Events of Default by the
Company shall occur and be continuing, that is to say:
(i) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this Agreement which
continues unremedied for a period of two Business Days; or
(ii) failure on the part of the Company duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Company set forth in this Agreement, the
breach of which has a material adverse effect and which continue
unremedied for a period of sixty days (except that such number of days
shall be thirty in the case of a failure to pay any premium for any
insurance policy required to be maintained under this Agreement and
such failure shall be deemed to have a material adverse effect) after
the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Company by the Purchaser; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of
debt, marshaling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Company and such decree or order shall have
remained in force undischarged or unstayed for a period of sixty days;
or
(iv) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Company or of or relating to all or
substantially all of its property; or
(v) the Company shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) the Company ceases to be approved by both Fannie Mae and
Freddie Mac as a mortgage loan seller and servicer for more than thirty
days; or
(vii) the Company attempts to assign its right to servicing
compensation hereunder or the Company attempts, without the consent of
the Purchaser, to sell or otherwise dispose of all or substantially all
of its property or assets or to assign this Agreement or the servicing
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responsibilities hereunder or to delegate its duties hereunder or any
portion thereof except as otherwise permitted herein; or
(viii) the Company ceases to be qualified to transact business
in any jurisdiction where it is currently so qualified, but only to the
extent such non-qualification materially and adversely affects the
Company's ability to perform its obligations hereunder;
then, and in each and every such case, so long as an Event of
Default shall not have been remedied, the Purchaser, by notice in writing to the
Company may, in addition to whatever rights the Purchaser may have under
Sections 3.03 and 8.01 and at law or equity to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of the
Company under this Agreement and in and to the Mortgage Loans and the proceeds
thereof without compensating the Company for the same. On or after the receipt
by the Company of such written notice, all authority and power of the Company
under this Agreement, whether with respect to the Mortgage Loans or otherwise,
shall pass to and be vested in the successor appointed pursuant to Section
12.01. Upon written request from the Purchaser, the Company shall prepare,
execute and deliver, any and all documents and other instruments, place in such
successor's possession all Mortgage Files, and do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise, at the Company's sole
expense. The Company agrees to cooperate with the Purchaser and such successor
in effecting the termination of the Company's responsibilities and rights
hereunder, including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans or any REO Property.
Section 31.02. Waiver of Defaults
The Purchaser may waive only by written notice any default by
the Company in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived in writing.
[End of Article IX]
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ARTICLE XXXII
TERMINATION
Section 32.01. Termination
The respective obligations and responsibilities of the Company
shall terminate upon: (i) the later of the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or the
disposition of all REO Property and the remittance of all funds due hereunder;
or (ii) by mutual consent of the Company and the Purchaser in writing; or (iii)
termination by the Purchaser pursuant to Section 9.01. Simultaneously with any
such termination and the transfer of servicing hereunder, the Company shall be
entitled to be reimbursed for any outstanding Servicing Advances and Monthly
Advances from any amounts paid or collected with respect to the Mortgage Loans.
Section 32.02. Removal of Mortgage Loans from Inclusion under this
Agreement upon a Whole Loan Transfer or a Pass-Through Transfer
The Company acknowledges that with respect to some or all of
the Mortgage Loans, the Purchaser intends to effect one or more Whole Loan
Transfers and/or one or more Pass-Through Transfers; provided that any such
Whole Loan Transfer or Pass-Through Transfer must occur within sixty days
following the related Closing Date with respect to the related Mortgage Loans.
With respect to each Whole Loan Transfer or Pass-Through Transfer, as the case
may be, entered into by the Purchaser, the Company agrees:
(1) to cooperate fully with the Purchaser, any prospective purchaser, any rating
agency or any party to any agreement executed in connection with such Whole Loan
Transfer or Pass-Through Transfer, with respect to all reasonable requests and
due diligence procedures and to use its best efforts to facilitate such Whole
Loan Transfer or Pass-Through Transfer, as the case may be;
(2) to execute as originator or, if the Company has agreed to continue as
servicer, as servicer, as the case may be, all agreements executed in connection
with such Whole Loan Transfer or Pass- Through Transfer that govern the
servicing and administration of the Mortgage Loans (and any agreements and other
documents incidental thereto) as the Purchaser shall reasonably request,
including without limitation pooling and servicing agreements which governing
documents, in the case of a Pass-Through Transfer, shall contain provisions
customarily included in publicly issued or privately placed rated secondary
mortgage market transactions with respect to like income-producing properties,
or otherwise necessary to achieve the rating on the securities to be offered
thereunder sought by the Purchaser and, in the case of a Whole Loan Transfer,
shall contain servicing provisions in accordance with the Fannie Mae or Freddie
Mac Guide; and
(3) as of the closing date of the Whole Loan Transfer or Pass-Through Transfer,
as the case may be, (a) to restate, for the benefit of the owners of the
Mortgage Loans, the representations and warranties contained in Section 3.01 and
Section 3.02, if applicable, provided that the Company shall not be obligated to
restate those certain representations and warranties set forth in Section
3.02(c)or Section 3.02(r) herein, (b) to make, for the benefit of the owners of
the Mortgage Loans, the same representations and warranties that the Purchaser
is giving with respect to the Whole Loan Transfer
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or Pass-Through Transfer, as the case may be and (c) to make those certain
servicing representations and warranties required by Fannie Mae or Freddie Mac,
as the case may be, with respect to such
Whole Loan Transfer, if applicable.
All Mortgage Loans not sold or transferred pursuant to a Whole
Loan Transfer or Pass-Through Transfer shall continue to be serviced in
accordance with the terms of this Agreement.
[End of Article X]
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ARTICLE XXXIII
MISCELLANEOUS PROVISIONS
Section 33.01. Successor to the Company
Prior to termination of the Company's responsibilities and
duties under this Agreement pursuant to Sections 8.04, 9.01 or 10.01(ii), the
Purchaser shall (i) succeed to and assume all of the Company's responsibilities,
rights, duties and obligations under this Agreement, or (ii) appoint a successor
having the characteristics set forth in Section 8.02 hereof and which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Company under this Agreement prior to the termination of the
Company's responsibilities, duties and liabilities under this Agreement. In
connection with such appointment and assumption, the Purchaser may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as the Purchaser and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned Sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the aforementioned Sections shall not become
effective until a successor shall be appointed pursuant to this Section and
shall in no event relieve the Company of the representations and warranties made
pursuant to Sections 3.01 and 3.02 and the remedies available to the Purchaser
under Sections 3.03 and 8.01, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, 3.03 and 8.01 shall be applicable to the Company
notwithstanding any such resignation or termination of the Company, or the
termination of this Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Company and to the Purchaser an instrument
accepting such appointment, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Company, with like effect as if originally named as a party
to this Agreement. Any termination or resignation of the Company or this
Agreement pursuant to Section 8.04, 9.01 or 10.01 shall not affect any claims
that the Purchaser may have against the Company arising prior to any such
termination or resignation.
The Company shall promptly deliver to the successor the funds
in the Custodial Account and the Escrow Account and the Mortgage Files and
related documents and statements held by it hereunder and the Company shall
account for all funds. The Company shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company. The successor
shall make such arrangements as it may deem appropriate to reimburse the Company
for unrecovered Servicing Advances which the successor retains hereunder and
which would otherwise have been recovered by the Company pursuant to this
Agreement but for the appointment of the successor servicer.
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Upon a successor's acceptance of appointment as such, the
Company shall notify the Purchaser of such appointment.
Section 33.02. Amendment
This Agreement may be amended from time to time by the Company
and the Purchaser by written agreement signed by the Company and the Purchaser.
Section 33.03. 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 of
all the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Purchaser at the Purchaser's expense.
Section 33.04. Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO PRINCIPLES OF CONFLICTS OF LAWS. THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 33.05. Notices
Any demands, notices or other communications permitted or
required hereunder shall be in writing and shall be deemed conclusively to have
been given if personally delivered at or mailed by registered mail, postage
prepaid, and return receipt requested or transmitted by telecopier
and confirmed by a similar mailed writing, as follows:
(1) if to the Company:
6000 Atrium Way
Mt. Laurel, New Jersey 08054
Attention: Ms. Elaine Monahan
Telecopier No.: (609) 439-3742
(2) if to the Purchaser:
245 Park Avenue
New York, New York 10169
Attention: Ms. Mary Haggerty
Telecopier No.: (212) 272-5591
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice, or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
address (as evidenced, in the case of registered or certified mail, by the date
noted on the return receipt).
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<PAGE>
Section 33.06. Severability of Provisions
Any part, provision, representation or warranty of this
Agreement which is prohibited or which is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in good
faith, to develop a structure the economic effect of which is nearly as possible
the same as the economic effect of this Agreement without regard to such
invalidity.
Section 33.07. Exhibits
The exhibits to this Agreement are hereby incorporated and
made a part hereof and are an integral part of this Agreement.
Section 33.08. General Interpretive Principles
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein
shall be deemed to include the other gender;
(ii) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(iii) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs," and other subdivisions without reference
to a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(iv) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also apply
to Paragraphs and other subdivisions;
(v) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular provision; and
(vi) the term "include" or "including" shall mean without
limitation by reason of enumeration.
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<PAGE>
Section 33.09. Reproduction of Documents
This Agreement and all documents relating hereto, including,
without limitation, (i) consents, waivers and modifications which may hereafter
be executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 33.10. Confidentiality of Information
Each party recognizes that, in connection with this Agreement,
it may become privy to non-public information regarding the financial condition,
operations and prospects of the other party. Except as required to be disclosed
by law, each party agrees to keep all non-public information regarding the other
party strictly confidential, and to use all such information solely in order to
effectuate the purpose of this Agreement.
Section 33.11. Recordation of Assignments of Mortgage
To the extent permitted by applicable law, each of the
Assignments of Mortgage 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, such recordation
to be effected by the Company at the Company's expense.
Section 33.12. Assignment by Purchaser
The Purchaser shall have the right, without the consent of the
Company hereof, to assign, in whole or in part, its interest under this
Agreement with respect to some or all of the Mortgage Loans, and designate any
person to exercise any rights of the Purchaser hereunder, by executing an
assignment and assumption agreement substantially in the form of EXHIBIT C
hereof and the assignee or designee shall accede to the rights and obligations
hereunder of the Purchaser with respect to such Mortgage Loans. In no event
shall Purchaser sell a partial interest in any Mortgage Loan without the written
consent of the Company, which consent shall not be unreasonably denied. All
references to the Purchaser in this Agreement shall be deemed to include its
assignees or designees. However, with respect to each Closing Date, in no event
shall there be more than three Persons at any given time having the status of
"Purchaser" hereunder with respect to the related Term Sheet.
Section 33.13. No Partnership
Nothing herein contained shall be deemed or construed to
create a co-partnership or joint venture between the parties hereto and the
services of the Company shall be rendered as an
independent contractor and not as agent for Purchaser.
Section 33.14. Execution; Successors and Assigns
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This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
Section 33.15. Entire Agreement
Each of the Company and the Purchaser acknowledge that no
representations, agreements or promises were made to it by the other party or
any of its employees other than those representations, agreements or promises
specifically contained herein. This Agreement and each Term Sheet between the
Company and the Purchaser set forth the entire understanding between the parties
hereto and shall be binding upon all successors of both parties.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date and year first above written.
CENDANT MORTGAGE CORPORATION
Company
By: /s/ Joseph Suter
------------------------------------
Name: Joseph Suter
Title: Senior Vice President
BEAR STEARNS MORTGAGE CAPITAL
CORPORATION
Purchaser
By: /s/ Mary Haggarty
------------------------------------
Name: Mary Haggarty
Title:
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EXHIBIT A
---------
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage Loan
Documents shall include each of the following items, which shall be available
for inspection by the Purchaser, and which shall be retained by the Company in
the Servicing File or delivered to the Purchaser or the Custodian
pursuant to Sections 2.02 and 2.04 of this Agreement.
1. The original Mortgage Note endorsed by the Company in the
following form: either "Without recourse, pay to the order of [name of
Custodian], as Trustee", or in blank, as instructed by the Purchaser, and signed
in the name of the Company by an authorized officer, with all intervening
endorsements showing a complete chain of title from the originator to the
Company. If the Mortgage Loan was acquired by the Company in a merger, the
endorsement must be by "_______, successor by merger to [name of predecessor]".
If the Mortgage Loan was acquired or originated by the Company while doing
business under another name, the endorsement must be by " formerly known as
[previous name]".
2. The original of any Guarantee executed in connection with
the Mortgage Note.
3. The original Mortgage with evidence of recording thereon.
If in connection with any Mortgage Loan, the Company cannot deliver or cause to
be delivered the original Mortgage with evidence of recording thereon on the
related Closing Date because of a delay caused by the public recording office
where such Mortgage has been delivered for recordation or because such public
recording office retains the original recorded Mortgage or if the original
recorded Mortgage is lost, the Company shall deliver or cause to be delivered to
the Purchaser, a photocopy of such Mortgage, together with a Certificate of the
Company that such copy is a true and correct copy thereof and (i) in the case of
a delay caused by the public recording office, a statement that such Mortgage
has been dispatched to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage certified by
such public recording office to be a true and complete copy of the original
recorded Mortgage will be promptly delivered to the Purchaser upon receipt
thereof by the Company; or (ii) in the case of a Mortgage where a public
recording office retains the original recorded Mortgage or of the original
recorded Mortgage is lost, a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
4. Any rider executed in connection with the related Mortgage
Note or Mortgage.
5. A copy of the original Assignment of Mortgage from the
Company to [name of Custodian], as Trustee, or in blank, as instructed by the
Purchaser, which assignment shall be in form and substance acceptable for
recording certified by an authorized officer of the Company to be a true and
correct copy thereof; the originals, with evidence of recording thereon or in
the case where a public recording office retains the original Assignment of
Mortgage, a copy certified by such public recording office to be a true and
complete copy of the original recorded Assignment of Mortgage shall be delivered
promptly upon receipt thereof by the Company.
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<PAGE>
6. Originals of all intervening Assignments of Mortgage,
showing a complete chain of title from the originator to the Company, with
evidence of recording thereon. If in connection with any Mortgage Loan, if the
Company cannot deliver or cause to be delivered the original intervening
Assignment of Mortgage with evidence of recording thereon on the Closing Date
because of a delay caused by the public recording office where such intervening
Assignment of Mortgage has been delivered for recordation or because such public
recording office retains the original recorded intervening Assignment of
Mortgage, or if the original recorded intervening Assignment is lost, the
Company shall deliver or cause to be delivered to the Purchaser, a photocopy of
such intervening Assignment of Mortgage, together with a Certificate of the
Company that such copy is a true and correct copy thereof and (i) in the case of
a delay caused by the public recording office, a statement that such intervening
Assignment of Mortgage has been dispatched to the appropriate public recording
office for recordation and that the original recorded intervening Assignment of
Mortgage or a copy of such intervening Assignment of Mortgage certified by such
public recording office to be a true and complete copy of the original recorded
intervening Assignment of Mortgage will be promptly delivered to the Purchaser
upon receipt thereof by the Company; or (ii) in the case of an intervening
Assignment of Mortgage where a public recording office retains the original
recorded intervening Assignment, or if the original recorded intervening
Assignment of Mortgage is lost, a copy of such intervening Assignment certified
by such public recording office to be a true and complete copy of the original
recorded intervening Assignment of Mortgage.
7. Originals of each assumption, modification, consolidation
and extension agreement, written assurance, substitution agreement, assumption
agreement or power-of-attorney, if applicable, with recording information
thereof, if any.
8. The original mortgagee policy of title insurance, including
riders and endorsements thereto, or if the policy has not yet been issued, (a) a
written commitment or interim binder for title issued by the title insurance or
escrow company dated as of the date the Mortgage Loan was funded, with a
statement by the title insurance company, or closing attorney that the priority
of the lien of the related Mortgage during the period between the date of the
funding of the related Mortgage Loan and the date of the related title policy
(which title policy shall be dated the date of recording of the related
Mortgage) is insured or (b) a preliminary title report issued by a title insurer
in anticipation of issuing a title insurance policy which evidences existing
liens and gives a preliminary opinion as to the absence of any encumbrance on
title to the Mortgaged Property, except liens to be removed on or before
purchase by the Mortgagor or which constitute customary exceptions acceptable to
lenders generally; the original policy of title insurance shall be delivered
promptly upon receipt thereof by the Company.
9. The original Primary Mortgage Insurance Policy, if required
by this Agreement.
10. Mortgage Loan closing statement (Form HUD-1) and any other
truth-in-lending or real estate settlement procedure forms required by law.
11. The original of any power of attorney.
N-3-2
<PAGE>
12. The survey of the Mortgaged Property, together with the
surveyor's certificate thereon, if applicable.
13. Originals of any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage.
N-3-3
<PAGE>
EXHIBIT B
---------
FORM OF TERM SHEET
This TERM SHEET (the "Term Sheet") dated __________, between
Cendant Mortgage Corporation, a New Jersey corporation, located at 6000 Atrium
Way, Mt. Laurel, New Jersey 08054 (the "Company") and Bear Stearns Mortgage
Capital Corporation, a Delaware corporation, located at 245 Park Avenue, New
York, New York 10167 (the "Purchaser") is made pursuant to the terms and
conditions of that certain Purchase, Warranties and Servicing Agreement (the
"Agreement") dated as of May __, 1998, between the Company and the Purchaser,
the provisions of which are incorporated herein as if set forth in full herein,
as such terms and conditions may be modified or supplemented hereby. All
initially capitalized terms used herein unless otherwise defined shall have the
meanings ascribed thereto in the Agreement.
The Purchaser hereby purchases from the Company and the
Company hereby sells to the Purchaser, all of the Company's right, title and
interest in and to the Mortgage Loans described on the Mortgage Loan Schedule
annexed hereto as SCHEDULE I, pursuant to and in accordance with the terms and
conditions set forth in the Agreement (including, without limitation, the
Purchase Terms attached to the Agreement as EXHIBIT F), as same may be
supplemented or modified hereby. Hereinafter, the Company shall service the
Mortgage Loans for the benefit of the Purchaser and all subsequent transferees
of the Mortgage Loans pursuant to and in accordance with the terms and
conditions set forth in the Agreement.
1. Definitions
-----------
For purposes of the Mortgage Loans to be sold pursuant to this Term
Sheet, the following terms shall have the following meanings:
Mortgage Loan: _____________ rate,
- - ------------- [convertible/non-convertible] residential
first lien mortgage loan having a term of
not more than _______ years, and which is
listed on the Mortgage Loan Schedule.
Closing Date: _______________________.
- - ------------
Cut-off Date: _______________________.
- - ------------
Custodian: _______________________.
- - ---------
Aggregate Principal Balance
(as of the Cut-off Date): $_______________________.
- - ------------------------
Initial Weighted Average
Mortgage Loan Remittance Rate: __________________%.
- - -----------------------------
Purchase Price Percentage: __________________%.
- - -------------------------
N-3-1
<PAGE>
[INDEX]: ________________________; [______ days for lookback
date.]
2. Additional Closing Conditions.
-----------------------------
In addition to the conditions specified in the Agreement, the
obligation of each of the Company and the Purchaser is subject to the
fulfillment, on or prior to the applicable Closing Date, of the following
additional conditions:
[None.]
3. Additional Loan Documents.
-------------------------
In addition to the contents of the Mortgage File specified in the
Agreement, the following documents shall be delivered with respect to the
Mortgage Loans:
[None.]
4. Additional Representations And Warranties.
-----------------------------------------
In addition to the representations and warranties set forth in
the Agreement, as of the date hereof and as of the Closing Date, the Company
makes the following additional representations and warranties to the Purchaser
with respect to each Mortgage Loan to be sold on a Closing Date:
[None.]
N-3-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto by their respective duly authorized officers as of the date first above
written.
CENDANT MORTGAGE CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
BEAR STEARNS MORTGAGE CAPITAL CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
N-3-3
<PAGE>
SCHEDULE I
----------
MORTGAGE LOAN SCHEDULE
N-3-1
<PAGE>
EXHIBIT C
---------
FORM OF ASSIGNMENT AND ASSUMPTION
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ___________,
between ______, a ______ corporation ("Assignor"), and _____________, a
___________ corporation ("Assignee"):
For and in consideration of the sum of TEN DOLLARS ($10.00)
and other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to the
Assignee the right, title and interest of the Assignor as described in Schedule
A attached hereto, as Purchaser in, to and under that certain Purchase,
Warranties and Servicing Agreement, (the "Purchase, Warranties and Servicing
Agreement"), dated as of , by and between Bear Stearns Mortgage Capital
Corporation ("Purchaser") and (the "Company") with respect to the Mortgage Loans
set forth on Schedule 1 hereto (the "Mortgage Loans").
2. The Assignor warrants and represents to, and covenants
with, the Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans
[with the full right to transfer the Mortgage Loans free from any and all claims
and encumbrances whatsoever;]
b. The Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other defenses available to the
Company with respect to the Purchase, Warranties and Servicing Agreement or the
Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under,
or agreed to any amendment or other modification of, the Purchase, Warranties
and Servicing Agreement or the Mortgage Loans, including without limitation the
transfer of the servicing obligations under the Purchase, Warranties and
Servicing Agreement. The Assignor has no knowledge of, and has not received
notice of, any waivers under or amendments or other modifications of, or
assignments of rights or obligations under or defaults under, the Purchase,
Warranties and Servicing Agreement, or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
with, any person in any manner, or made by general solicitation by means of
general advertising or in any other manner, or taken any other action which
would constitute a distribution of the Mortgage Loans under the Securities Act
of 1933 (the "1933 Act") or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the 1933 Act or require registration pursuant
thereto.
N-3-1
<PAGE>
3. The Assignee warrants and represents to, and covenants
with, the Assignor and the Company that:
a. The Assignee agrees to be bound, as Purchaser, by [all] of
the terms, covenants and conditions of the Purchase, Warranties and Servicing
Agreement and the Mortgage Loans, and from and after the date hereof, the
Assignee assumes for the benefit of each of the Company and the Assignor all of
the Assignor's obligations as Purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not
been registered under the 1933 Act or the securities laws of any state;
[c. The Assignee is acquiring the Mortgage Loans for
investment for its own account only and not for any other person;]
[d. The Assignee considers itself a substantial, sophisticated
institutional investor having such knowledge and financial and business matters
that is capable of evaluating the merits and the risks of investment in the
Mortgage Loans;]
[e. The Assignee has been furnished with all information
regarding the Mortgage Loans that it has requested from the Assignor or the
Company; and]
[f. Neither the Assignee nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans,
an interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the 1933 Act or which
would render the disposition of the Mortgage Loans a violation of Section 5 of
the 1933 Act or require registration pursuant thereto, nor will it act, nor has
it authorized or will it authorize any person to act, in such manner with
respect to the Mortgage Loans.]
Distributions shall be made by wire transfer of immediately
available funds to ___________ for the account of _____________ account number
________________. Applicable statements should be mailed to
_____________________________________.
N-3-2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment
and Assumption to be executed by their duly authorized officers as of the date
first above written.
_____________________________ _______________________________
Assignor Assignee
By:__________________________ By:____________________________
Its:_________________________ Its:___________________________
Taxpayer Identification Taxpayer Identification
Number:______________________ Number:________________________
N-3-3
<PAGE>
EXHIBIT D
---------
CUSTODIAL ACCOUNT LETTER AGREEMENT
(date)
To:______________________
_________________________
_________________________
(the "Depository")
As "Company" under the Purchase, Warranties and Servicing
Agreement, dated as of May 1, 1998, (the "Agreement"), we hereby authorize and
request you to establish an account, as a Custodial Account pursuant to Section
4.04 of the Agreement, to be designated as "Cendant Mortgage Corporation
Custodial Account, in trust for the Purchaser, Owner of Whole Loan Mortgages,
and various Mortgagors." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Company. You may refuse any deposit
which would result in violation of the requirement that the account be fully
insured as described below. This letter is submitted to you in duplicate. Please
execute and return one original to us.
CENDANT MORTGAGE CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
The undersigned, as "Depository", hereby certifies that the
above described account has been established under Account Number __________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured up to applicable limits by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund or the Savings Association Insurance
Fund or will be invested in Permitted Investments as defined in the Agreement.
[ ]
(name of Depository)
By:___________________________
Name:_________________________
Title:________________________
N-3-1
<PAGE>
EXHIBIT E
ESCROW ACCOUNT LETTER AGREEMENT
(date)
To:______________________
_________________________
_________________________
(the "Depository")
As "Company" under the Purchase, Warranties and Servicing
Agreement, dated as of May 1, 1998 (the "Agreement"), we hereby authorize and
request you to establish an account, as an Escrow Account pursuant to Section
4.06 of the Agreement, to be designated as "Cendant Mortgage Corporation Escrow
Account, in trust for the Purchaser, Owner of Whole Loan Mortgages, and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Company. You may refuse any deposit which would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
CENDANT MORTGAGE CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
The undersigned, as "Depository", hereby certifies that the
above described account has been established under Account Number __________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured up to applicable limits by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund or the Savings Association Insurance
Fund or will be invested in Permitted Investments as defined in the Agreement.
[ ]
(name of Depository)
By:____________________________
Name:__________________________
Title:_________________________
N-3-1
<PAGE>
EXHIBIT F
PURCHASE TERMS
SECTION 1. AGREEMENT TO SELL AND PURCHASE MORTGAGE LOANS. The Company
agrees to sell, and the Purchaser agrees to purchase, the Mortgage Loans in the
amount of the Aggregate Principal Balance (as of the related Cut-Off Date)
(after deduction of scheduled principal payments due on the related Cut-Off Date
but without deduction of certain prepayments that may have been made but not
reported to the Company as of the close of business on such date) set forth in
the related Term Sheet which shall be executed and delivered on the related
Closing Date. The Mortgage Loans shall be sold pursuant to this Agreement.
SECTION 2. MORTGAGE LOAN SCHEDULE. The Company has provided or shall
provide the Purchaser, no later than the Business Day prior to the related
Closing Date, with a Mortgage Loan Schedule relating to the Mortgage Loans to be
purchased on the related Closing Date under this Agreement, which shall be
attached to the related Term Sheet as Schedule I.
SECTION 3. PURCHASE PRICE OF THE MORTGAGE LOANS. The purchase price for
the Mortgage Loans (the "Purchase Price") shall be the sum of (i) the product of
the Purchase Price Percentage listed on the related Term Sheet and the Aggregate
Principal Balance (as of the related Cut-Off Date) listed on the related Term
Sheet and (ii) accrued interest on the Mortgage Loans at the Initial Weighted
Average Mortgage Loan Remittance Rate listed on the related Term Sheet as of the
day following the related Cut-Off Date to the day prior to the related Closing
Date, inclusive. The Purchaser shall pay the Purchase Price for the Mortgage
Loans by wire transfer of immediately available funds on or prior to the related
Closing Date to the account specified by the Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser
hereby represents and warrants to the Company as of the related Closing Date:
(a) The Purchaser is a Delaware corporation, and is, and throughout the
term of this Agreement will remain, duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the power and authority
to perform under this Agreement and the related Term Sheet;
(b) The execution and delivery of this Agreement and the related Term
Sheet have been duly authorized by all requisite action on the part of the
Purchaser;
(c) This Agreement and the related Term Sheet will be the legal, valid
and binding obligations of the Purchaser when executed, enforceable in
accordance with their 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 law;
(d) The execution and delivery of this Agreement and the related Term
Sheet by the Purchaser and the Purchaser's performance and compliance with the
terms of this Agreement and the related Term Sheet will not (i) violate the
Purchaser's charter documents or bylaws, (ii) violate any law or regulation, or
any administrative decree or order to which it is subject, or (iii) constitute
N-3-1
<PAGE>
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Purchaser is a party or which may be
applicable to the Purchaser or any of its assets;
(e) The Purchaser is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Purchaser or its properties or might have consequences that would affect
its performance hereunder;
(f) The Purchaser is not a party to or bound by any agreement or
instrument or subject to any charter documents, bylaws or any other restriction
or any judgment, order, writ, injunction, decree, law or regulation which now or
in the future may materially and adversely affect the ability of the Purchaser
to perform its obligations under this Agreement and the related Term Sheet or
which requires the consent of any third person to the execution of this
Agreement or the related Term Sheet or the performance by the Purchaser of its
obligations under this Agreement or the related Term Sheet;
(g) No litigation is pending or, to the best of the Purchaser's
knowledge, threatened against the Purchaser which might materially and adversely
affect its entering into this Agreement or the related Term Sheet or performing
its obligations under this Agreement or the related Term Sheet;
(h) The Purchaser understands that the Mortgage Loans have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or the securities laws of any state. The Purchaser is acquiring the Mortgage
Loans for investment for its own account only and not with a view to or for sale
or other transfer in connection with any distribution of the Mortgage Loans in
any manner that would violate the Securities Act or any applicable state
securities law. For purposes of the Securities Act only, the Purchaser considers
itself a substantial, sophisticated institutional investor having such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Mortgage Loans. Neither the
Purchaser nor anyone acting on its behalf has offered, transferred, pledged,
sold or otherwise disposed of any Loan or any interest in any Loan to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
any Loan or any interest in any Loan from, or otherwise approached or negotiated
with respect to any Loan, any interest in any Loan with, any person in any
manner, or made any general solicitation by means of general advertising or in
any other manner or taken any other action, which would constitute a
distribution of any Loan under the Securities Act or which would render the
disposition of any Loan a violation of Section 5 of the Securities Act or
require registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to any Loan;
and
(i) The Purchaser is either (i) not an employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any
other plan subject to Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") (each, a "Plan"), or a person acting, directly or
indirectly, on behalf of or investing with "plan assets" of any Plan (a
N-3-2
<PAGE>
"Plan Investor"), or (ii) a Plan or Plan Investor and the transaction
contemplated herein does not constitute and will not result in a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
SECTION 5. CLOSING. The closing of the purchase and sale of the
Mortgage Loans shall take place on the related Closing Date. Closing shall, at
the Purchaser's option, be either by telephone, confirmed by letter or wire or
conducted in person at the Purchaser's office.
The closing for the Mortgage Loans shall be subject to each of the
following conditions:
(a) All of the representations and warranties of the Company under this
Agreement (as they relate to the Mortgage Loans) shall be true and correct as of
the related Closing Date, and no event shall have occurred which, with notice or
the passage of time, would constitute a default under this Agreement or the
related Term Sheet;
(b) Closing Documents identified in paragraphs (a) through (e) of
Section 6 below duly executed by all signatories as required pursuant to the
respective terms thereof shall be delivered to the parties designated in
accordance with Section 6 below; and
(c) All other terms and conditions of this Agreement and the related
Term Sheet shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Company on the related Closing Date the Purchase Price in accordance with
Section 3 above.
SECTION 6. CLOSING DOCUMENTS. The Closing Documents shall consist of
the following with respect to the Mortgage Loans:
(a) The related Term Sheet executed by the Purchaser and the Company,
which may be executed in counterparts (each as executed to be delivered to the
other parties);
(b) The related Mortgage Loan Schedule, one copy to be attached to each
counterpart of the Term Sheet, as SCHEDULE I thereto;
(c) The related Mortgage File, to be delivered to the Custodian no
later than five (5) Business Days prior to the related Closing Date;
(d) an Officer's Certificate of the Company, satisfactory to the
Purchaser and substantially in the form attached hereto as Exhibit F-1;
(e) an opinion of the Company's counsel (which may be in-house
counsel), satisfactory to the Purchaser and substantially in the form attached
hereto as Exhibit F-2; and
(f) all other documents required to be delivered on the related Closing
Date pursuant to the terms of the Agreement.
N-3-3
<PAGE>
SECTION 7. COSTS. The Purchaser shall pay any commissions due its
salesmen its due diligence costs, the fees and expenses of its attorneys and
accountants and any other of its out-of-pocket costs. The Company shall pay any
transfer and recording fees and taxes, fees for title policy endorsements and
continuations, if applicable, the fees and expenses of its attorneys and
accountants, the costs of shipping the Mortgage Files to the Custodian and any
other of the Company's out-of-pocket costs.
N-3-4
<PAGE>
EXHIBIT F-1
FORM OF OFFICER'S CERTIFICATE
I, _____________, hereby certify that I am the duly elected
[Vice] President of Cendant Mortgage Corporation, a New Jersey corporation, (the
"Company") and further as follows:
1. Attached hereto is a true and correct copy of the [Charter
and By-laws/formation documents] of the Company which are in full force and
effect as of the date hereof.
2. There are no actions, suits or proceedings pending (nor, to
my knowledge, are any actions, suits or proceedings threatened), against or
affecting the Company which if adversely determined, individually or in the
aggregate, would adversely affect the Company's obligations under the Purchase,
Warranties and Servicing Agreement, dated as of ________, between the Company
and Bear Stearns Mortgage Capital Corporation ("BSMCC") and the related Term
Sheet, dated as of ________, between the Company and BSMCC (together, the
"Agreements").
3. Each person who, as an officer or representative of the
Company, signed the Agreements and any other document delivered prior hereto or
on the date hereof in connection with the sale of Mortgage Loans pursuant to the
Agreements was, at the respective times of such signing and delivery, and is now
duly elected or appointed, qualified and acting as such officer or repre
sentative, and the signatures of such persons appearing on such documents are
their genuine signatures.
4. Attached hereto is a certified true copy of the resolution
of the board of directors of the Company that authorizes the sale of the
Mortgage Loans subject to the Agreements.
5. The Company has performed and complied with all agreements
and conditions to in the Agreements which are required to be performed or
complied with by the Company on or
before the date hereof.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Company.
Dated: [Closing Date] By:______________________________
Name:____________________________
[Seal] Title: [Vice] President
N-3-5
<PAGE>
I, , a [Assistant] Secretary of the Company, hereby certify
that _______________ is the duly elected, qualified and acting [Vice] President
of the Company and that
the signature appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: [Closing Date] By:______________________________
Name:____________________________
Title: [Assistant] Secretary
<PAGE>
EXHIBIT F-2
FORM OF OPINION OF COUNSEL TO THE COMPANY
(closing date)
Bear Stearns Mortgage Capital Corporation
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
You have requested our opinion, as counsel to Cendant Mortgage Corporation (the
"Company"), with respect to certain matters in connection with the sale by the
Company of certain mortgage loans (the "Mortgage Loans"), pursuant to the
Purchase, Warranties and Servicing Agreement (the "Purchase Agreement"), dated
as of __________, 19__, between the Company, as seller and servicer, and Bear
Stearns Mortgage Capital Corporation, as purchaser (the "Purchaser"), and the
related Term Sheet, dated ______, 19__, between the Company and the Purchaser
(the "Term Sheet"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Purchase Agreement.
We have examined the following documents:
1. the Purchase Agreement;
2. the Term Sheet;
3. the form of Assignment of Mortgage;
4. the form of endorsement of the Mortgage Note; and
5. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent we have deemed necessary and proper, we have relied upon the
representations and warranties of the Company contained in the Purchase
Agreement.
Based upon the foregoing, it is our opinion that:
1. The Company is a corporation, duly organized, validly existing and
in good standing under the laws of the State of New Jersey and is
qualified to transact business in, and is in good standing under, the
laws of the State of New Jersey or is otherwise exempt under
applicable law from such qualification;
N-3-7
<PAGE>
2. The Company is an approved seller/servicer of residential mortgage
loans for Fannie Mae and Freddie Mac having the full power and
authority to engage in the transactions contemplated by the Purchase
Agreement and the related Term Sheet and all requisite power, authority
and legal right to execute and deliver the Purchase Agreement and the
related Term Sheet and to perform and observe the terms and conditions
of such instruments.
3. The Purchase Agreement and the related Term Sheet each have been
duly authorized, executed and delivered by the Company and are legal,
valid and binding agreements enforceable in accordance with their
respective terms against the Company, subject to bankruptcy laws and
other similar laws of general application affecting rights of creditors
and subject to the application of the rules of equity, including those
respecting the availability of specific performance, none of which will
materially interfere with the realization of the benefits provided
thereunder or with the Purchaser's ownership of the Mortgage Loans.
4. Either (i) no consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with the
Purchase Agreement and the related Term Sheet, or the consummation of
the transactions contemplated by the Purchase Agreement and the related
Term Sheet or (ii) any required consent, approval, authorization or
order has been obtained by the Company.
5. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of, the Purchase Agreement or the related
Term Sheet conflicts or will conflict with or results or will result in
a breach of or constitutes or will constitute a default under the
charter or by-laws of the Company, the terms of any indenture or other
agreement or instrument to which the Company is a party or by which it
is bound or to which it is subject, or any statute or order, rule,
regulations, writ, injunction or decree of any court, govern mental
authority or regulatory body to which the Company is subject or by
which it is bound.
6. There is no action, suit, proceeding or investigation pending or, to
the best of our knowledge, threatened against the Company which, in our
judgment, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial
condition, properties or assets of the Company or in any material
impairment of the right or ability of the Company to carry on its
business substantially as now conducted or in any material liability on
the part of the Company or which would draw into question the validity
of the Purchase Agreement or the related Term Sheet or of any action
taken or to be taken in connection with the transactions contemplated
hereby, or which would be likely to impair materially the ability of
the Company to perform under the terms of the Purchase Agreement or the
related Term Sheet.
7. Each Mortgage has been duly assigned and each Mortgage Note has been
duly endorsed as provided in the Purchase Agreement. Each Assignment of
Mortgage is in recordable form and is acceptable for recording under
the laws of the applicable jurisdiction. The endorsement of the
Mortgage Note, the delivery the Assignment of Mortgage, and the
N-3-8
<PAGE>
delivery of the original endorsed Mortgage Note are sufficient to
permit the Purchaser to avail itself of all protection available under
applicable law against the claims of any present or future creditors of
the Company, and are sufficient to prevent any other sale, transfer,
assignment, pledge or hypothecation of the Mortgage and the Mortgage
Note by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that purchasers to which you initially
and directly resell the Mortgage Loans may rely
on this opinion as if it were addressed to them as of its date.
Very truly yours,
___________________________
N-3-9
<PAGE>
EXHIBIT N-4
First Union Servicing Agreement
(Provided upon request)
N-4-1
