______________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported) August 1, 1996
CWMBS, INC. (as depositor under the Pooling and
Servicing Agreement, dated as of August 1, 1996,
providing for the issuance of the CWMBS, INC.,
Residential Asset Securitization Trust 1996-A6,
Mortgage Pass-Through Certificates, Series 1996-J).
CWMBS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 33-84910 95-4449516
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
155 North Lake Avenue
Pasadena, California 91101
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (818) 304-5591
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_____________________________________________________________________
Item 5. Other Events.
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On August 1, 1996, CWMBS, Inc. (the "Company") entered into a Pooling
and Servicing Agreement dated as of August 1, 1996 (the "Pooling and
Servicing Agreement"), by and among the Company, as depositor, Independent
National Mortgage Corporation ("INMC"), as seller and as master servicer, and
The Bank of New York, as trustee (the "Trustee"), providing for the issuance
of the Company's Mortgage Pass-Through Certificates, Series 1996-J (the
"Certificates"). The Pooling and Servicing Agreement is annexed hereto as
Exhibit 99.1.
In addition to the Pooling and Servicing Agreement being filed herewith,
the Company is filing the Financial Guaranty Insurance Policy issued by
Financial Security Assurance Inc. on August 29, 1996 (the "FSA Policy") in
connection with the Certificates, Class A-9. The FSA Policy is annexed
hereto as Exhibit 99.2.
Item 7. Financial Statements, Pro Forma Financial
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Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1. Pooling and Servicing Agreement, dated as of August 1, 1996,
by and among the Company, INMC and the Trustee.
99.2. Financial Guaranty Insurance Policy issued on August 29, 1996
by Financial Security Assurance Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CWMBS, INC.
By: /s/ David A. Spector
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David A. Spector
Vice President
Dated: September 13, 1996
Exhibit Index
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Exhibit Page
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99.1. Pooling and Servicing Agreement,
dated as of August 1, 1996, by
and among, the Company, INMC
and the Trustee 6
99.2. Financial Guaranty Insurance Policy
issued on August 29, 1996 by
Financial Security Assurance Inc. 211
EXHIBIT 99.1
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EXECUTION COPY
CWMBS, INC.,
Depositor
INDEPENDENT NATIONAL MORTGAGE CORPORATION
Seller and Master Servicer
and
THE BANK OF NEW YORK,
Trustee
______________________________________
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1996
______________________________________
RESIDENTIAL ASSET
SECURITIZATION TRUST 1996-A6
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-J
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
Accretion Directed Certificates . . . . . . . . . . . . . . . . . . . . . I-1
Accrual Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Accrual Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Accrual Termination Date . . . . . . . . . . . . . . . . . . . . . . . . I-1
Adjusted Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Adjusted Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . I-1
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Allocable Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Amount Available for Senior Principal . . . . . . . . . . . . . . . . . . I-2
Amount Held for Future Distribution . . . . . . . . . . . . . . . . . . . I-2
Applicable Credit Support Percentage . . . . . . . . . . . . . . . . . . I-2
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Bankruptcy Coverage Termination Date . . . . . . . . . . . . . . . . . . I-3
Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Bankruptcy Loss Coverage Amount . . . . . . . . . . . . . . . . . . . . . I-3
Blanket Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Register . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificateholder or Holder . . . . . . . . . . . . . . . . . . . . . . . I-4
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Class A-9 Net Interest Shortfall . . . . . . . . . . . . . . . . . . . . I-5
Class A-9 Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Class A-9 Policy Payments Account . . . . . . . . . . . . . . . . . . . . I-5
Class Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . I-6
Class Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . I-6
Class Optimal Interest Distribution Amount . . . . . . . . . . . . . . . I-6
Class PO Deferred Amount . . . . . . . . . . . . . . . . . . . . . . . . I-7
Class Subordination Percentage . . . . . . . . . . . . . . . . . . . . . I-7
Class Unpaid Interest Amounts . . . . . . . . . . . . . . . . . . . . . . I-7
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
COFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
COFI Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Component Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Component Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Cooperative Corporation . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Coop Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Cooperative Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Cooperative Property . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Cooperative Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Corresponding Classes of Certificates . . . . . . . . . . . . . . . . . . I-8
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Cut-off Date Pool Principal Balance . . . . . . . . . . . . . . . . . . . I-8
Cut-off Date Principal Balance . . . . . . . . . . . . . . . . . . . . . I-8
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Debt Service Reduction Mortgage Loan . . . . . . . . . . . . . . . . . . I-8
Defective Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Delay Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Denomination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Depository Participant . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Discount Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . I-10
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Distribution Account Deposit Date . . . . . . . . . . . . . . . . . . . I-10
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Duff & Phelps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
ERISA-Restricted Certificate . . . . . . . . . . . . . . . . . . . . . I-11
Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Excess Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Excess Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Expense Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Expense Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Fraud Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Fraud Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Fraud Loss Coverage Amount . . . . . . . . . . . . . . . . . . . . . . I-12
Fraud Loss Coverage Termination Date . . . . . . . . . . . . . . . . . I-13
Guaranteed Distributions . . . . . . . . . . . . . . . . . . . . . . . I-17
Indirect Participant . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Initial Bankruptcy Loss Coverage Amount . . . . . . . . . . . . . . . . I-13
Initial Component Balance . . . . . . . . . . . . . . . . . . . . . . . I-13
Initial LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Insured Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Insurer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . I-14
Interest Determination Date . . . . . . . . . . . . . . . . . . . . . . I-14
Last Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . I-14
Latest Possible Maturity Date . . . . . . . . . . . . . . . . . . . . . I-14
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
LIBOR Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Liquidated Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-14
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Majority in Interest . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Master REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Master Servicer Advance Date . . . . . . . . . . . . . . . . . . . . . I-15
Master Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Master Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . I-15
Monthly Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Moody's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
MR Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Net Prepayment Interest Shortfalls . . . . . . . . . . . . . . . . . . I-17
Non-Delay Certificates . . . . . . . . . . . . . . . . . . . . . . . . I-17
Non-Discount Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . I-21
Non-PO Formula Principal Amount . . . . . . . . . . . . . . . . . . . . I-21
Non-PO Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . . . I-18
Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Notice of Final Distribution . . . . . . . . . . . . . . . . . . . . . I-18
Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Notional Amount Certificates . . . . . . . . . . . . . . . . . . . . . I-19
Offered Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Optional Termination . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Original Applicable Credit Support Percentage . . . . . . . . . . . . . I-19
Original Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . I-19
Original Subordinated Principal Balance . . . . . . . . . . . . . . . . I-19
OTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Outside Reference Date . . . . . . . . . . . . . . . . . . . . . . . . I-20
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Outstanding Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-20
Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-23
Physical Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-23
Planned Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-23
Planned Principal Classes . . . . . . . . . . . . . . . . . . . . . . . I-23
PO Formula Principal Amount . . . . . . . . . . . . . . . . . . . . . . I-27
PO Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Pool Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . I-24
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . I-24
Prepayment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Primary Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . I-24
Principal Only Certificates . . . . . . . . . . . . . . . . . . . . . . I-24
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Principal Prepayment in Full . . . . . . . . . . . . . . . . . . . . . I-24
Private Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Pro Rata Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Proprietary Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . I-25
PUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Qualified Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Recognition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Reference Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Refinancing Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-26
Regular Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Relief Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Relief Act Reductions . . . . . . . . . . . . . . . . . . . . . . . . . I-26
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
REMIC Change of Law . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Request for Release . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Required Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . I-27
Residual Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Restricted Classes . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
SAIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
S&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Scheduled Balances . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Scheduled Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Scheduled Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Seller/Servicer Guide . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Senior Credit Support Depletion Date . . . . . . . . . . . . . . . . . I-28
Senior Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Senior Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . I-29
Senior Principal Distribution Amount . . . . . . . . . . . . . . . . . I-29
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicer Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Special Hazard Coverage Termination Date . . . . . . . . . . . . . . . I-31
Special Hazard Loss . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Special Hazard Loss Coverage Amount . . . . . . . . . . . . . . . . . . I-32
Special Hazard Mortgage Loan . . . . . . . . . . . . . . . . . . . . . I-32
SR Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Startup Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . I-32
Subordinated Certificates . . . . . . . . . . . . . . . . . . . . . . . I-32
Subordinated Percentage . . . . . . . . . . . . . . . . . . . . . . . . I-32
Subordinated Prepayment Percentage . . . . . . . . . . . . . . . . . . I-32
Subordinated Principal Distribution Amount . . . . . . . . . . . . . . I-32
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Subsidiary REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Subsidiary REMIC Interest . . . . . . . . . . . . . . . . . . . . . . . I-33
Subsidiary REMIC Regular Interest . . . . . . . . . . . . . . . . . . . I-33
Substitute Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-33
Substitution Adjustment Amount . . . . . . . . . . . . . . . . . . . . I-33
Targeted Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Targeted Principal Classes . . . . . . . . . . . . . . . . . . . . . . I-34
Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Tax Matters Person Certificate . . . . . . . . . . . . . . . . . . . . I-34
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Trustee Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Trustee Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Withdrawal Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . II-1
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans . . . . II-4
SECTION 2.03. Representations, Warranties and Covenants of the Seller
and the Master Servicer . . . . . . . . . . . . . . . . II-6
SECTION 2.04. Representations and Warranties of the Depositor as to
the Mortgage Loans . . . . . . . . . . . . . . . . . . . II-9
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases. . . . . . . . . . . . . . II-9
SECTION 2.06. Execution and Delivery of Certificates . . . . . . . . . II-10
SECTION 2.07. REMIC Matters . . . . . . . . . . . . . . . . . . . . . II-10
SECTION 2.08. Covenants of the Master Servicer . . . . . . . . . . . . II-10
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans . . . . . . . III-1
SECTION 3.02. Subservicing; Enforcement of the Obligations of
Servicers . . . . . . . . . . . . . . . . . . . . . . . III-2
SECTION 3.03. Successor Servicers . . . . . . . . . . . . . . . . . . III-3
SECTION 3.04. Liability of the Master Servicer . . . . . . . . . . . . III-3
SECTION 3.05. No Contractual Relationship Between Servicers and the
Trustee . . . . . . . . . . . . . . . . . . . . . . . . III-4
SECTION 3.06. Rights of the Depositor and the Trustee in Respect of
the Master Servicer . . . . . . . . . . . . . . . . . . III-4
SECTION 3.07. Trustee to Act as Master Servicer . . . . . . . . . . . III-4
SECTION 3.08. Collection of Mortgage Loan Payments; Servicing
Accounts; Collection Account; Certificate Account;
Distribution Account . . . . . . . . . . . . . . . . . . III-5
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts . . . . . . . . . . . . . . . . . . . . III-10
SECTION 3.10. Access to Certain Documentation and Information
Regarding the Mortgage Loans . . . . . . . . . . . . . III-10
SECTION 3.11. Permitted Withdrawals from the Certificate Account and
the Distribution Account . . . . . . . . . . . . . . . . III-11
SECTION 3.12. Maintenance of Hazard Insurance; Maintenance of Primary
Insurance Policies . . . . . . . . . . . . . . . . . . . III-13
SECTION 3.13. Enforcement of Due-On-Sale Clauses; Assumption
Agreements . . . . . . . . . . . . . . . . . . . . . . III-15
SECTION 3.14. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans . . . . . . . . . . . . . . . . . III-17
SECTION 3.15. Trustee to Cooperate; Release of Mortgage Files . . . . III-20
SECTION 3.16. Documents, Records and Funds in Possession of the Master
Servicer to be Held for the Trustee . . . . . . . . . . III-21
SECTION 3.17. Servicing Compensation . . . . . . . . . . . . . . . . III-22
SECTION 3.18. Access to Certain Documentation . . . . . . . . . . . III-23
SECTION 3.19. Annual Statement as to Compliance . . . . . . . . . . III-23
SECTION 3.20. Annual Independent Public Accountants' Servicing
Statement; Financial Statements . . . . . . . . . . . . III-23
SECTION 3.21. Errors and Omissions Insurance; Fidelity Bonds . . . . III-24
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances . . . . . . . . . . . . . . . . . . . . . . . . IV-1
SECTION 4.02. Priorities of Distribution . . . . . . . . . . . . . . . IV-1
SECTION 4.03. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . IV-6
SECTION 4.04. Policy Matters . . . . . . . . . . . . . . . . . . . . . IV-11
SECTION 4.05. Allocation of Realized Losses . . . . . . . . . . . . . IV-15
SECTION 4.06. Monthly Statements to Certificateholders . . . . . . . . IV-17
SECTION 4.07. Determination of Pass-Through Rates for COFI
Certificates . . . . . . . . . . . . . . . . . . . . . . IV-19
SECTION 4.08. Determination of Pass-Through Rates for LIBOR
Certificates . . . . . . . . . . . . . . . . . . . . . . IV-21
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates . . . . . . . . . . . . . . . . . . . . V-1
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates . . . . . . . . . . . . . . . . V-2
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . V-7
SECTION 5.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . V-8
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . . V-8
SECTION 5.06. Maintenance of Office or Agency . . . . . . . . . . . . V-8
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Master
Servicer . . . . . . . . . . . . . . . . . . . . . . . . VI-1
SECTION 6.02. Merger or Consolidation of the Depositor or the Master
Servicer . . . . . . . . . . . . . . . . . . . . . . . . VI-1
SECTION 6.03. Limitation on Liability of the Depositor, the Seller,
the Master Servicer and Others . . . . . . . . . . . . . VI-1
SECTION 6.04. Limitation on Resignation of the Master Servicer . . . . VI-2
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default . . . . . . . . . . . . . . . . . . . VII-1
SECTION 7.02. Trustee to Act; Appointment of Successor . . . . . . . . VII-3
SECTION 7.03. Notification to Certificateholders . . . . . . . . . . . VII-4
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of the Trustee . . . . . . . . . . . . . . . . . VIII-1
SECTION 8.02. Certain Matters Affecting the Trustee . . . . . . . . . VIII-2
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans. . VIII-3
SECTION 8.04. Trustee May Own Certificates . . . . . . . . . . . . . . VIII-3
SECTION 8.05. Trustee's Fees and Expenses . . . . . . . . . . . . . . VIII-4
SECTION 8.06. Eligibility Requirements for the Trustee . . . . . . . . VIII-4
SECTION 8.07. Resignation and Removal of the Trustee . . . . . . . . . VIII-5
SECTION 8.08. Successor Trustee . . . . . . . . . . . . . . . . . . . VIII-6
SECTION 8.09. Merger or Consolidation of the Trustee . . . . . . . . . VIII-6
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee . . . . . VIII-7
SECTION 8.11. Tax Matters . . . . . . . . . . . . . . . . . . . . . . VIII-8
SECTION 8.12. Periodic Filings. . . . . . . . . . . . . . . . . . . . VIII-11
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Purchase of all Mortgage
Loans . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
SECTION 9.02. Final Distribution on the Certificates . . . . . . . . . IX-1
SECTION 9.03. Additional Termination Requirements . . . . . . . . . . IX-3
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . X-1
SECTION 10.02. Recordation of Agreement; Counterparts . . . . . . . . . . X-2
SECTION 10.03. Governing Law . . . . . . . . . . . . . . . . . . . . . . X-3
SECTION 10.04. Intention of Parties . . . . . . . . . . . . . . . . . . . X-3
SECTION 10.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . X-4
SECTION 10.06. Severability of Provisions . . . . . . . . . . . . . . . . X-5
SECTION 10.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . X-5
SECTION 10.08. Limitation on Rights of Certificateholders . . . . . . . . X-5
SECTION 10.09. Inspection and Audit Rights . . . . . . . . . . . . . . . X-6
SECTION 10.10. Certificates Nonassessable and Fully Paid . . . . . . . . X-6
SCHEDULES
---------
Schedule I: Mortgage Loan Schedule . . . . . . . . . . . . . . . . S-I-1
Schedule II: Representations and Warranties of the
Seller/Master Servicer . . . . . . . . . . . . . . . . S-II-1
Schedule III: Representations and Warranties as to
the Mortgage Loans . . . . . . . . . . . . . . . . . . S-III-1
EXHIBITS
--------
Exhibit A: Form of Senior Certificate . . . . . . . . . . . . . . . . A-1
Exhibit B: Form of Subordinated Certificate . . . . . . . . . . . . . B-1
Exhibit C: Form of Residual Certificate . . . . . . . . . . . . . . . C-1
Exhibit D: Form of Notional Amount Certificate . . . . . . . . . . . D-1
Exhibit E: Form of Reverse of Certificates . . . . . . . . . . . . . E-1
Exhibit F: (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . F-1
Exhibit G: Form of Initial Certification of Trustee . . . . . . . . . G-1
Exhibit H: Form of Final Certification of Trustee . . . . . . . . . . H-1
Exhibit I: Form of Transfer Affidavit . . . . . . . . . . . . . . . . I-1
Exhibit J: Form of Transferor Certificate . . . . . . . . . . . . . . J-1
Exhibit K: Form of Investment Letter (Non-Rule 144A) . . . . . . . . K-1
Exhibit L: Form of Rule 144A Letter . . . . . . . . . . . . . . . . . L-1
Exhibit M: Form of Request for Release (for Trustee) . . . . . . . . M-1
Exhibit N: Form of Request for Release (Mortgage Loan
Paid in Full, Repurchased and Released) . . . . . . . . . N-1
Exhibit O: Form of Financial Guaranty Insurance Policy . . . . . . . O-1
THIS POOLING AND SERVICING AGREEMENT, dated as of August 1, 1996,
among CWMBS, INC., a Delaware corporation, as depositor (the "Depositor"),
INDEPENDENT NATIONAL MORTGAGE CORPORATION ("INMC"), a Delaware corporation,
as seller (in such capacity, the "Seller") and as master servicer (in such
capacity, the "Master Servicer"), and THE BANK OF NEW YORK, a banking
corporation organized under the laws of the State of New York, as trustee
(the "Trustee"),
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates. The Trust Fund for
federal income tax purposes will consist of two REMICs. The Subsidiary REMIC
will consist of all of the assets constituting the Trust Fund and will be
evidenced by the Subsidiary REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Subsidiary
REMIC) and the SR Interest as the single "residual interest" in the
Subsidiary REMIC. The Trustee will hold the Subsidiary REMIC Regular
Interests. The Master REMIC will consist of the Subsidiary REMIC Regular
Interests and will be evidenced by the Regular Certificates (which will
represent the "regular interests" in the Master REMIC) and the MR Interest
as the single "residual interest" in the Master REMIC. The Class A-R
Certificates will represent beneficial ownership of the SR Interest and the
MR Interest. The "latest possible maturity date" for federal income tax
purposes of all interests created hereby will be the Latest Possible Maturity
Date.
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess
thereof in which such Classes shall be issuable (except that one Certificate
of each Class of Certificates may be issued in a different amount and, in
addition, one Residual Certificate representing the Tax Matters Person
Certificate may be issued in a different amount):
<TABLE>
<CAPTION>
Integral Multiples
Class Certificate Minimum in Excess
Balance Pass-Through Rate Denomination of Minimum
<S> <C> <C> <C>
Class A-1 $29,271,000.00 7.000% $25,000 $1,000
Class A-2 $23,210,000.00 7.400% $25,000 $1,000
Class A-3 $19,160,000.00 7.625% $25,000 $1,000
Class A-4 $8,865,000.00 7.625% $25,000 $1,000
Class A-5 $14,053,000.00 7.625% $25,000 $1,000
Class A-6 $10,000,000.00 7.625% $25,000 $1,000
Class A-7 $10,126,000.00 7.625% $25,000 $1,000
Class A-8 (2) 0.145% $25,000 $1,000
Class A-9 $20,000,000.00 7.400% $1,000 $1,000
Class A-10 $17,103,000.00 9.000% $25,000 $1,000
Class A-11 $24,174,000.00 7.625% $25,000 $1,000
Class PO $245,090.00 (1) $25,000 $1,000
Class X (2) (3) $25,000(4) $1,000(4)
Class A-R $ 100.00 7.625% $100 N/A
Class B-1 $7,724,000.00 7.625% $25,000 $1,000
Class B-2 $3,862,000.00 7.625% $25,000 $1,000
Class B-3 $2,141,000.00 7.625% $25,000 $1,000
Class B-4 $1,448,000.00 7.625% $100,000 $1,000
Class B-5 $386,000.00 7.625% $100,000 $1,000
Class B-6 $1,062,658.30 7.625% $100,000 $1,000
</TABLE>
- ----------------------------
(1) The Class PO Certificates will be Principal Only Certificates and will
not bear interest.
(2) The Class A-8 and Class X Certificates will be Notional Amount
Certificates, will have no principal balance and will bear interest on
their respective Notional Amounts (initially $20,000,000 and
$186,557,327).
(3) The Pass-Through Rate for the Class X Certificates for any Distribution
Date will be equal to the excess of (a) the weighted average of the
Adjusted Net Mortgage Rates of the Non-Discount Mortgage Loans over (b)
7.625% per annum. The Pass-Through Rate for the Class X Certificates
for the first Distribution Date is 1.183% per annum.
(4) The minimum denomination is based on the Notional Amount.
Principal of and interest on the Subsidiary REMIC Regular Interests and
the SR Interest shall be allocated to the Corresponding Classes of
Certificates in the manner set forth in the following table:
<TABLE>
<CAPTION>
Corresponding Class of Certificates(1)
--------------------------------------
Subsidiary REMIC Initial Principal Allocation Allocation
Interest Balance Interest Rate of Principal of Interest
---------------- ----------------- ------------- ------------ -----------
<S> <C> <C> <C>
1 $29,271,000 7.000% A-1 A-1
2 $23,210,000 7.400% A-2 A-2
3 $19,160,000 7.625% A-3 A-3
4 $ 8,865,000 7.625% A-4 A-4
5 $14,053,000 7.625% A-5 A-5
6 $10,000,000 7.625% A-6 A-6
7 $10,126,000 7.625% A-7 A-7
8 $20,000,000 7.545% A-9 A-8, A-9
9 $17,103,000 9.000% A-10 A-10
10 $24,174,000 7.625% A-11 A-11
11 $ 7,724,000 7.625% B-1 B-1
12 $ 3,862,000 7.625% B-2 B-2
13 $ 2,141,000 7.625% B-3 B-3
14 $ 1,448,000 7.625% B-4 B-4
15 $ 386,000 7.625% B-5 B-5
16 $ 1,062,658._ 7.625% B-6 B-6
17 (2) (3) -- X
14 $ 100 % M-R(4) M-R(4)
SR (5) (5) A-R A-R
</TABLE>
- -----------------------
(1) The amount of principal and interest allocable from a Subsidiary REMIC
Regular Interest to its Corresponding Class of Certificates on any
Distribution Date shall be 100%.
(2) The Notional Amount of Subsidiary REMIC Interest 17 with respect to any
Distribution Date will be equal to the Notional Amount of the Class X
Certificates with respect to such Distribution Date.
(3) The Interest Rate for Subsidiary REMIC Interest 17 for any Distribution
Date will be equal to the Pass-Through Rate applicable to the Class X
Certificates with respect to such Distribution Date.
(4) The beneficial ownership of the MR Interest and the SR Interest is
represented by the Class A-R Certificates.
(5) The SR Interest will have no principal balance and will not bear
interest.
Set forth below are designations of Classes of Certificates to the
categories used herein:
Accretion Directed
Certificates . . . . . . . None.
Accrual Certificates . . . . None.
Book-Entry Certificates . . All Classes of Certificates other than the
Physical Certificates
COFI Certificates . . . . . None.
Component Certificates . . . None.
Components . . . . . . . . . For purposes of calculating distributions of
principal, the Component Certificates, if
any, will be comprised of multiple payment
components having the designations, Initial
Component Balances and Pass-Through Rates set
forth below:
Initial
Component
Designation Balance Pass-Through Rate
----------- ------- -----------------
N/A N/A N/A
Delay Certificates . . . . . All interest-bearing Classes of Certificates
other than the Non-Delay Certificates, if any.
ERISA-Restricted
Certificates . . . . . . . Class PO Certificates, Class X Certificates,
Residual Certificates and Subordinated
Certificates.
Floating Rate Certificates . None.
Inverse Floating Rate
Certificates . . . . . . . None.
LIBOR Certificates . . . . . None.
Non-Delay Certificates . . . None.
Notional Amount Certificates Class A-8 and Class X Certificates.
Offered Certificates . . . . All Classes of Certificates other than the
Private Certificates.
Physical Certificates. . . . Class A-R and Private Certificates.
Planned Principal Classes. . None.
Primary Planned Principal
Classes . . . . . . . . . None.
Principal Only Certificates. Class PO Certificates.
Private Certificates . . . . Class B-4, Class B-5 and Class B-6
Certificates.
Rating Agencies . . . . . . S&P and Fitch.
Regular Certificates . . . . All Classes of Certificates other than the
Class A-R Certificates.
Residual Certificates . . . Class A-R Certificates.
Scheduled Principal Classes. None.
Secondary Planned
Principal Classes . . . . None.
Senior Certificates . . . . Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, Class A-10, Class A-11,
Class PO, Class X and Class A-R Certificates.
Subordinated Certificates. . Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates.
Targeted Principal Classes . None.
With respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions herein
relating solely to such designations shall be of no force or effect, and any
calculations herein incorporating references to such designations shall be
interpreted without reference to such designations and amounts. Defined
terms and provisions herein relating to statistical rating agencies not
designated above as Rating Agencies shall be of no force or effect.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accretion Directed Certificates: As specified in the Preliminary
-------------------------------
Statement.
Accrual Amount: With respect to any Class of Accrual Certificates
--------------
and any Distribution Date prior to the Accrual Termination Date, the amount
allocable to interest on each such Class of Accrual Certificates with respect
to such Distribution Date pursuant to Section 4.02(a)(iii).
Accrual Certificates: As specified in the Preliminary Statement.
--------------------
Accrual Termination Date: Not applicable.
------------------------
Adjusted Mortgage Rate: As to each Mortgage Loan and at any time,
----------------------
the per annum rate equal to the Mortgage Rate less the sum of the Master
Servicing Fee Rate and the related Servicing Fee Rate.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, and at any
--------------------------
time, the per annum rate equal to the Mortgage Rate less the related Expense
Rate. For purposes of determining whether any Substitute Mortgage Loan is
a Discount Mortgage Loan or a Non-Discount Mortgage Loan and for purposes of
calculating the applicable PO Percentage and applicable Non-PO Percentage and
the Master Servicing Fee, each Substitute Mortgage Loan shall be deemed to
have an Adjusted Net Mortgage Rate equal to the Adjusted Net Mortgage Rate
of the Deleted Mortgage Loan for which it is substituted.
Advance: The payment required to be made by the Master Servicer
-------
with respect to any Distribution Date pursuant to Section 4.01, the amount
of any such payment being equal to the aggregate of payments of principal and
interest (net of the Master Servicing Fee and the applicable Servicing Fee
and net of any net income in the case of any REO Property) on the Mortgage
Loans that were due on the related Due Date and not received as of the close
of business on the related Determination Date, less the aggregate amount of
----
any such delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced.
Agreement: This Pooling and Servicing Agreement and all amendments
---------
or supplements hereto.
Allocable Share: As to any Distribution Date and any Mortgage Loan
---------------
(i) with respect to the Class X Certificates, (a) the ratio that (x) the
excess, if any, of the Adjusted Net Mortgage Rate with respect to such
Mortgage Loan over the Required Coupon bears to (y) such Adjusted Net
Mortgage Rate or (b) if the Adjusted Net Mortgage Rate with respect to such
Mortgage Loan does not exceed the Required Coupon, zero, (ii) with respect
to the Class PO Certificates, zero and (iii) with respect to each other Class
of Certificates, the product of (a) the lesser of (I) the ratio that the
Required Coupon bears to such Adjusted Net Mortgage Rate and (II) one,
multiplied by (b) the ratio that the amount calculated with respect to such
Distribution Date for such Class pursuant to clause (i) of the definition of
Class Optimal Interest Distribution Amount (without giving effect to any
reduction of such amount pursuant to Section 4.02(d)) bears to the amount
calculated with respect to such Distribution Date for each Class of
Certificates pursuant to clause (i) of the definition of Class Optimal
Interest Distribution Amount (without giving effect to any reduction of such
amount pursuant to Section 4.02(d)).
Aggregate FSA Premium: On any Distribution Date, the sum of (a)
---------------------
the FSA Premium for such Distribution Date and (b) the amount of any FSA
Premium which was not distributed to Financial Security on any prior
Distribution Date.
Amount Available for Senior Principal: As to any Distribution
-------------------------------------
Date, Available Funds for such Distribution Date reduced by the aggregate
amount distributable (or allocable to the Accrual Amount, if applicable) on
such Distribution Date in respect of the Aggregate FSA Premium pursuant to
Section 4.02(a)(i) and in respect of interest on the Senior Certificates
pursuant to Section 4.02(a)(ii).
Amount Held for Future Distribution: As to any Distribution Date,
-----------------------------------
the aggregate amount held in the Certificate Account at the close of business
on the related Determination Date on account of (i) Principal Prepayments and
Liquidation Proceeds received in the month of such Distribution Date and (ii)
all Scheduled Payments due after the related Due Date.
Applicable Credit Support Percentage: As defined in Section
------------------------------------
4.02(e).
Appraised Value: With respect to any Mortgage Loan, the Appraised
---------------
Value of the related Mortgaged Property shall be: (i) with respect to a
Mortgage Loan other than a Refinancing Mortgage Loan, the lesser of (a) the
value of the Mortgaged Property based upon the appraisal made at the time of
the origination of such Mortgage Loan and (b) the sales price of the
Mortgaged Property at the time of the origination of such Mortgage Loan; (ii)
with respect to a Refinancing Mortgage Loan, the value of the Mortgaged
Property based upon the appraisal made at the time of the origination of such
Refinancing Mortgage Loan.
Available Funds: As to any Distribution Date, the sum of (a) the
----------------
aggregate amount held in the Certificate Account at the close of business on
the related Determination Date net of the Amount Held for Future Distribution
and net of amounts permitted to be withdrawn from the Certificate Account
pursuant to clauses (i) - (viii), inclusive, of Section 3.11(a) and amounts
permitted to be withdrawn from the Distribution Account pursuant to clauses
(i) - (iii), inclusive, of Section 3.11(b), (b) the amount of the related
Advance, (c) in connection with Defective Mortgage Loans, as applicable, the
aggregate of the Purchase Prices and Substitution Adjustment Amounts
deposited on the related Distribution Account Deposit Date and (d) any amount
deposited on the related Distribution Account Deposit Date pursuant to
Section 3.12.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978,
---------------
as amended.
Bankruptcy Coverage Termination Date: The point in time at which
------------------------------------
the Bankruptcy Loss Coverage Amount is reduced to zero.
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
---------------
Valuation or Debt Service Reduction; provided, however, that a Bankruptcy
-------- -------
Loss shall not be deemed a Bankruptcy Loss hereunder so long as the Master
Servicer has notified the Trustee in writing that the Master Servicer is
diligently pursuing any remedies that may exist in connection with the
related Mortgage Loan and either (A) the related Mortgage Loan is not in
default with regard to payments due thereunder or (B) delinquent payments of
principal and interest under the related Mortgage Loan and any related escrow
payments in respect of such Mortgage Loan are being advanced on a current
basis by the Master Servicer, in either case without giving effect to any
Debt Service Reduction or Deficient Valuation.
Bankruptcy Loss Coverage Amount: As of any Determination Date, the
-------------------------------
Bankruptcy Loss Coverage Amount shall equal the Initial Bankruptcy Coverage
Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated
to the Certificates since the Cut-off Date and (ii) any permissible
reductions in the Bankruptcy Loss Coverage Amount as evidenced by a letter
of each Rating Agency to the Trustee to the effect that any such reduction
will not result in a downgrading of the then current ratings assigned to the
Classes of Certificates rated by it, without regard to the Class A-9 Policy.
Blanket Mortgage: The mortgage or mortgages encumbering the
----------------
Cooperative Property.
Book-Entry Certificates: As specified in the Preliminary
-----------------------
Statement.
Business Day: Any day other than (i) a Saturday or a Sunday, or
------------
(ii) a day on which banking institutions in the City of New York, New York,
or the State of California or the city in which the Corporate Trust Office
of the Trustee is located are authorized or obligated by law or executive
order to be closed.
Certificate: Any one of the Certificates executed by the Trustee
-----------
in substantially the forms attached hereto as exhibits.
Certificate Account: The separate Eligible Account or Accounts
-------------------
created and maintained by the Master Servicer pursuant to Section 3.08(e)
with a depository institution in the name of the Master Servicer for the
benefit of the Trustee on behalf of Certificateholders and designated
"Independent National Mortgage Corporation in trust for the registered
holders of CWMBS, Inc. Mortgage Pass-Through Certificates Series 1996-J".
Certificate Balance: With respect to any Certificate at any date,
-------------------
the maximum dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the Denomination thereof (A)
minus the sum of (i) all distributions of principal previously made with
respect thereto and (ii) all Realized Losses allocated thereto and, in the
case of any Subordinated Certificates, all other reductions in Certificate
Balance previously allocated thereto pursuant to Section 4.05 and (B) in the
case of any Class of Accrual Certificates, increased by the Accrual Amount
added to the Class Certificate Balance of such Class prior to such date.
Certificate Owner: With respect to a Book-Entry Certificate, the
-----------------
Person who is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
--------------------
5.02.
Certificateholder or Holder: The person in whose name a
----------------- ------
Certificate is registered in the Certificate Register, except that, solely
for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Depositor or any affiliate of the
Depositor shall be deemed not to be Outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Percentage Interests necessary to effect such consent has
been obtained; provided, however, that if any such Person (including the
-------- -------
Depositor) owns 100% of the Percentage Interests evidenced by a Class of
Certificates, such Certificates shall be deemed to be Outstanding for
purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee is entitled to rely conclusively on a certification
of the Depositor or any affiliate of the Depositor in determining which
Certificates are registered in the name of an affiliate of the Depositor.
Class: All Certificates bearing the same class designation as set
-----
forth in the Preliminary Statement.
Class A-9 Net Interest Shortfall: As to any Distribution Date, the
--------------------------------
amount of the reduction of the Class Optimal Interest Distribution Amount for
the Class A-9 Certificates for such Distribution Date pursuant to Section
4.02(d), other than any Relief Act Reduction allocated to such Class
pursuant to such Section on such Distribution Date.
Class A-9 Net Prepayment Interest Shortfall: As to any
-------------------------------------------
Distribution Date, the amount of the reduction of the Class Optimal Interest
Distribution Amount for the Class A-9 Certificates for such Distribution Date
pursuant to Section 4.02(d) in respect of Net Prepayment Interest Shortfall.
Class A-9 Policy: The irrevocable Financial Guaranty Insurance
----------------
Policy, No. 50499-N, including any endorsements thereto, issued by Financial
Security with respect to the Class A-9 Certificates, in the form attached
hereto as Exhibit O.
Class A-9 Policy Payments Account: The separate Eligible Account
---------------------------------
created and maintained by the Trustee pursuant to Section 4.04(c) in the name
of the Trustee for the benefit of the Class A-9 Certificateholders and
designated "The Bank of New York in trust for registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates, Series 1996-J, Class A-9". Funds
in the Class A-9 Policy Payments Account shall be held in trust for the Class
A-9 Certificateholders for the uses and purposes set forth in this Agreement.
Class A-9 Reserve Fund: The separate Eligible Account created and
----------------------
maintained by the Trustee pursuant to Section 3.08(f) with a depository
institution in the name of the Trustee for the benefit of the
Certificateholders specified in Section 3.08(f) and designated "The Bank of
New York Class A-9 Reserve Fund in trust for registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates, Series 1996-J, Class A-9". The
Class A-9 Reserve Fund will not be a part of the Trust Fund and, for all
federal income tax purposes, will be beneficially owned by Lehman Brothers
Inc.
Class A-9 Rounding Account: The separate Eligible Account
--------------------------
established and maintained by the Trustee pursuant to Section 4.03(d) in the
name of the Trustee for the benefit of the Class A-9 Certificateholders and
designated "The Bank of New York in trust for registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates, Series 1996-J, Class A-9". Funds
in the Rounding Account shall be held in trust for the Class A-9
Certificateholders for the uses and purposes set forth in this Agreement.
The Class A-9 Rounding Account will not be a part of the Trust Fund and, for
all federal income tax purposes, will be beneficially owned by Lehman
Brothers Inc.
Class A-9 Rounding Amount: With respect to any Distribution Date,
-------------------------
the amount, if any, required to be withdrawn from the Rounding Account
pursuant to Section 4.03(d).
Class Certificate Balance: With respect to any Class and as to any
-------------------------
date of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class Interest Shortfall: As to any Distribution Date and Class,
------------------------
the amount by which the amount described in clause (i) of the definition of
Class Optimal Interest Distribution Amount for such Class exceeds the amount
of interest actually distributed on such Class on such Distribution Date
pursuant to such clause (i).
Class Optimal Interest Distribution Amount: With respect to any
------------------------------------------
Distribution Date and interest-bearing Class, the sum of (i) one month's
interest accrued during the related Interest Accrual Period at the Pass-
Through Rate for such Class, on the related Class Certificate Balance or
Notional Amount, as applicable, subject to reduction pursuant to Section
4.02(d), and (ii) any Class Unpaid Interest Amounts for such Class.
Class PO Deferred Amount: As to any Distribution Date, the
------------------------
aggregate of the applicable PO Percentage of each Realized Loss, other than
any Excess Loss, to be allocated to the Class PO Certificates on such
Distribution Date on or prior to the Senior Credit Support Depletion Date or
previously allocated to the Class PO Certificate and not yet paid to the
Holders of the Class PO Certificates.
Class Subordination Percentage: With respect to any Distribution
-------------------------------
Date and each Class of Subordinated Certificates, the fraction (expressed as
a percentage) the numerator of which is the Class Certificate Balance of such
Class of Subordinated Certificates immediately prior to such Distribution
Date and the denominator of which is the aggregate of the Class Certificate
Balances of all Classes of Certificates immediately prior to such
Distribution Date.
Class Unpaid Interest Amounts: As to any Distribution Date and
------------------------------
Class of interest-bearing Certificates, the amount by which the aggregate
Class Interest Shortfalls for such Class on prior Distribution Dates exceeds
the amount distributed on such Class on prior Distribution Dates pursuant to
clause (ii) of the definition of Class Optimal Interest Distribution Amount.
Closing Date: August 29, 1996.
------------
Code: The Internal Revenue Code of 1986, including any successor
----
or amendatory provisions.
COFI: The Monthly Weighted Average Cost of Funds Index for the
----
Eleventh District Savings Institutions published by the Federal Home Loan
Bank of San Francisco.
COFI Certificates: As specified in the Preliminary Statement.
-----------------
Collection Account: The Eligible Account or Accounts established
------------------
and maintained by the Master Servicer in accordance with Section 3.08(c).
Component: As specified in the Preliminary Statement.
---------
Component Balance: With respect to any Component and any
-----------------
Distribution Date, the Initial Component Balance thereof on the Closing Date,
less all amounts applied in reduction of the principal balance of such
Component and Realized Losses allocated thereto on previous Distribution
Dates.
Component Certificates: As specified in the Preliminary Statement.
----------------------
Cooperative Corporation: The entity that holds title (fee or an
-----------------------
acceptable leasehold estate) to the real property and improvements
constituting the Cooperative Property and which governs the Cooperative
Property, which Cooperative Corporation must qualify as a Cooperative Housing
Corporation under Section 216 of the Code.
Coop Shares: Shares issued by a Cooperative Corporation.
-----------
Cooperative Loan: Any Mortgage Loan secured by Coop Shares and a
----------------
Proprietary Lease.
Cooperative Property: The real property and improvements owned by
--------------------
the Cooperative Corporation, including the allocation of individual dwelling
units to the holders of the Coop Shares of the Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a
----------------
Cooperative Property.
Corporate Trust Office: The designated office of the Trustee in
----------------------
the State of New York at which at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office
at the date of the execution of this Agreement is located at 101 Barclay
Street, 12E, New York, New York 10286 (Attn: Mortgage-Backed Securities
Group, CWMBS, Inc. Series 1996-J), facsimile no. (212) 815-4135 and which is
the address to which notices to and correspondence with the Trustee should
be directed.
Corresponding Classes of Certificates: With respect to each
-------------------------------------
Subsidiary REMIC Regular Interest, any Class of Certificates appearing
opposite such Subsidiary REMIC Regular Interest in the Preliminary Statement.
Cut-off Date: August 1, 1996.
------------
Cut-off Date Pool Principal Balance: $193,103,849.___.
-----------------------------------
Cut-off Date Principal Balance: As to any Mortgage Loan, the
------------------------------
Stated Principal Balance thereof as of the close of business on the Cut-off
Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
----------------------
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of
principal.
Debt Service Reduction Mortgage Loan: Any Mortgage Loan that
------------------------------------
became the subject of a Debt Service Reduction.
Deceased Holder: With respect to a Class A-9 Certificateholder,
---------------
as defined in Section 4.03(b).
Defective Mortgage Loan: Any Mortgage Loan which is required to
-----------------------
be repurchased pursuant to Section 2.02 or 2.03.
Deficient Valuation: With respect to any Mortgage Loan, a
-------------------
valuation by a court of competent jurisdiction of the Mortgaged Property in
an amount less than the then outstanding indebtedness under the Mortgage
Loan, or any reduction in the amount of principal to be paid in connection
with any Scheduled Payment that results in a permanent forgiveness of
principal, which valuation or reduction results from an order of such court
which is final and non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a Physical
-----------------------
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
------------------
Deleted Mortgage Loan: As defined in Section 2.03(c).
---------------------
Denomination: With respect to each Certificate, the amount set
------------
forth on the face thereof as the "Initial Certificate Balance of this
Certificate" or the "Initial Notional Amount of this Certificate" or, if
neither of the foregoing, the Percentage Interest appearing on the face
thereof.
Depositor: CWMBS, Inc., a Delaware corporation, or its successor
---------
in interest.
Depository: The initial Depository shall be The Depository Trust
----------
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code
of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the 18th day of
------------------
each month or if such 18th day is not a Business Day the next succeeding
Business Day; provided, however, that if such next succeeding Business Day
-------- -------
is less than two Business Days prior to the related Distribution Date, then
the Determination Date shall be the next Business Day preceding the 18th day
of such month.
Discount Mortgage Loan: Any Mortgage Loan with an Adjusted Net
----------------------
Mortgage Rate that is less than the Required Coupon.
Distribution Account: The separate Eligible Account created and
--------------------
maintained by the Trustee pursuant to Section 3.08(f) in the name of the
Trustee for the benefit of the Certificateholders and designated "The Bank
of New York in trust for registered holders of CWMBS, Inc. Mortgage Pass-
Through Certificates, Series 1996-J". Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses and purposes
set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
---------------------------------
12:30 p.m. Pacific time on the Business Day immediately preceding such
Distribution Date.
Distribution Date: The 25th day of each calendar month after the
-----------------
initial issuance of the Certificates, or if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in September 1996.
Due Date: With respect to any Distribution Date, the first day of
--------
the month in which the related Distribution Date occurs.
Duff & Phelps: Duff & Phelps Credit Rating Company, or any
-------------
successor thereto. If Duff & Phelps is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 10.05(b) the address for
notices to Duff & Phelps shall be Duff & Phelps Credit Rating Company, 55 E.
Monroe Street, 35th Floor, Chicago, Illinois 60603, Attention: MBS
Monitoring, or such other address as Duff & Phelps may hereafter furnish to
the Depositor and the Master Servicer.
Eligible Account: Any of (i) an account or accounts maintained
----------------
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of
a holding company, the debt obligations of such holding company, but only if
Moody's is not a Rating Agency) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein, or (ii)
an account or accounts in a depository institution or trust company in which
such accounts are insured by the FDIC or the SAIF (to the limits established
by the FDIC or the SAIF) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered
to the Trustee and to each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account or a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in
which such account is maintained, or (iii) a trust account or accounts
maintained with the trust department of a federal or state chartered
depository institution or trust company, acting in its fiduciary capacity or
(iv) any other account acceptable to each Rating Agency. Eligible Accounts
may bear interest, and may include, if otherwise qualified under this
definition, accounts maintained with the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
-----
amended.
ERISA-Restricted Certificate: As specified in the Preliminary
----------------------------
Statement.
Escrow Account: The Eligible Account or Accounts established and
--------------
maintained pursuant to Section 3.09(a).
Event of Default: As defined in Section 7.01.
----------------
Excess Loss: The amount of any (i) Fraud Loss realized after the
-----------
Fraud Loss Coverage Termination Date, (ii) Special Hazard Loss realized after
the Special Hazard Coverage Termination Date or (iii) Bankruptcy Loss
realized after the Bankruptcy Coverage Termination Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
---------------
amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage
Loan received in the calendar month in which such Mortgage Loan became a
Liquidated Mortgage Loan, net of any amounts previously reimbursed to the
Master Servicer as Nonrecoverable Advance(s) with respect to such Mortgage
Loan pursuant to Section 3.11(a)(iii), exceeds (i) the unpaid principal
balance of such Liquidated Mortgage Loan as of the Due Date in the month in
which such Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued
interest at the Mortgage Rate from the Due Date as to which interest was last
paid or advanced (and not reimbursed) to Certificateholders up to the Due
Date applicable to the Distribution Date immediately following the calendar
month during which such liquidation occurred.
Expense Fees: As to each Mortgage Loan, the sum of the related
------------
Servicing Fee, Master Servicing Fee, and Trustee Fee.
Expense Rate: As to each Mortgage Loan, the sum of the related
------------
Servicing Fee Rate, Master Servicing Fee Rate and Trustee Fee Rate.
FDIC: The Federal Deposit Insurance Corporation, or any successor
----
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
-----
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Financial Security: Financial Security Assurance Inc., a stock
------------------
insurance company organized and created under the laws of the State of New
York, or any successor thereto.
Financial Security Contact Person: The officer designated by the
---------------------------------
Master Servicer to provide information to Financial Security pursuant to
Section 4.04(i).
Financial Security Default: As defined in Section 4.04(l).
--------------------------
FIRREA: The Financial Institutions Reform, Recovery and
------
Enforcement Act of 1989.
Fitch: Fitch Investors Service, L.P., or any successor thereto.
-----
If Fitch is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 10.05(b) the address for notices to Fitch shall be Fitch
Investors Service, L.P., One State Street Plaza, New York, New York 10004,
Attention: Residential Mortgage Surveillance Group, or such other address
as Fitch may hereafter furnish to the Depositor and the Master Servicer.
FNMA: The Federal National Mortgage Association, a federally
----
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Fraud Loan: A Liquidated Mortgage Loan as to which a Fraud Loss
----------
has occurred.
Fraud Losses: Realized Losses on Mortgage Loans as to which a loss
------------
is sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a
loss by reason of the denial of coverage under any related Primary Insurance
Policy because of such fraud, dishonesty or misrepresentation.
Fraud Loss Coverage Amount: As of the Closing Date, 5,793,115
--------------------------
subject to reduction from time to time, by the amount of Fraud Losses
allocated to the Certificates. On each anniversary of the Cut-off Date, the
Fraud Loss Coverage Amount will be reduced as follows: (a) on the first
anniversary of the Cut-off Date, to an amount equal to the lesser of (i) 2%
of the then current Pool Principal Balance and (ii) the excess of the Fraud
Loss Coverage Amount as of the Cut-off Date over the cumulative amount of
Fraud Losses allocated to the Certificates since the Cut-off Date;(b) on the
second, third and fourth anniversaries of the Cut-off Date, to an amount
equal to the lesser of (i) 1% of the then current Pool Principal Balance and
(ii) the excess of the Fraud Loss Coverage Amount as of the preceding
anniversary of the Cut-off Date over the cumulative amount of Fraud Losses
allocated to the Certificates since such preceding anniversary; and (c) on
the fifth anniversary of the Cut-off Date, to zero.
Fraud Loss Coverage Termination Date: The point in time at which
-------------------------------------
the Fraud Loss Coverage Amount is reduced to zero.
FSA Premium: With respect to any Distribution Date, with respect
-----------
to the Class A-9 Policy, an amount equal to 1/12th of the product of (a) the
Class Certificate Balance of the Class A-9 Certificates as of such
Distribution Date (prior to giving effect to any distribution thereon on such
Distribution Date) and (b) 0.08%.
Guaranteed Distributions: With respect to any Distribution Date,
------------------------
(i) the Class Optimal Interest Distribution Amount for the Class A-9
Certificates for such Distribution Date (as reduced by Section 4.02(d) as
described in the definition of Class Optimal Distribution Amount) and the
amount of any Class A-9 Net Interest Shortfall that is not covered by the
Class A-9 Reserve Fund, (ii) the amount of any Realized Loss, including any
Excess Loss, allocated to the Class A-9 Certificates on such Distribution
Date and (iii) the Class Certificate Balances of the Class A-9 Certificates
to the extent unpaid on the Last Scheduled Distribution Date.
Index: With respect to any Interest Accrual Period for the COFI
-----
Certificates, the then applicable index used by the Trustee pursuant to
Section 4.07 to determine the applicable Pass-Through Rate for such Interest
Accrual Period for the COFI Certificates.
Indirect Participant: A broker, dealer, bank or other financial
--------------------
institution or other Person that clears through or maintains a custodial
relationship with a Depository Participant.
Individual Class A-9 Certificate: Any Class A-9 Certificate with
--------------------------------
a $1,000 Certificate Balance.
Initial Bankruptcy Loss Coverage Amount: $125,000.
---------------------------------------
Initial Component Balance: As specified in the Preliminary
-------------------------
Statement.
Initial LIBOR Rate: Not applicable.
------------------
Insurance Policy: With respect to any Mortgage Loan included in
----------------
the Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect, including any replacement policy or policies for any
Insurance Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to any
------------------
Insurance Policy, in each case other than any amount included in such
Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any
----------------
other insurance policy with respect to the Mortgage Loans.
Interest Accrual Period: With respect to each Class of Delay
-----------------------
Certificates, corresponding Subsidiary REMIC Regular Interest and any
Distribution Date, the calendar month prior to the month of such Distribution
Date. With respect to each Class of Non-Delay Certificates, corresponding
Subsidiary REMIC Regular Interest and any Distribution Date, the one-month
period commencing on the 25th day of the month preceding the month in which
such Distribution Date occurs and ending on the 24th day of the month in
which such Distribution Date occurs.
Interest Determination Date: With respect to (a) any Interest
---------------------------
Accrual Period for any LIBOR Certificates and (b) any Interest Accrual Period
for the COFI Certificates for which the applicable Index is LIBOR, the second
Business Day prior to the first day of such Interest Accrual Period.
Interest Rate: With respect to each Subsidiary REMIC Interest, the
-------------
applicable rate set forth or calculated in the manner described in the
Preliminary Statement.
Last Scheduled Distribution Date: The Distribution Date in the
--------------------------------
third month immediately following the month of the latest scheduled maturity
date for any of the Mortgage Loans.
Latest Possible Maturity Date: The Distribution Date following the
-----------------------------
third anniversary of the scheduled maturity date of the Mortgage Loan having
the latest scheduled maturity date as of the Cut-off Date.
LIBOR: The London interbank offered rate for one-month United
-----
States dollar deposits calculated in the manner described in Section 4.08.
LIBOR Certificates: As specified in the Preliminary Statement.
------------------
Liquidated Mortgage Loan: With respect to any Distribution Date,
------------------------
a defaulted Mortgage Loan (including any REO Property) which was liquidated
in the calendar month preceding the month of such Distribution Date and as
to which the Master Servicer has certified (in accordance with this Agree-
ment) that it has received all amounts it expects to receive in connection
with the liquidation of such Mortgage Loan including the final disposition
of an REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
--------------------
received in connection with the partial or complete liquidation of defaulted
Mortgage Loans, whether through trustee's sale, foreclosure sale or otherwise
or amounts received in connection with any condemnation or partial release
of a Mortgaged Property and any other proceeds received in connection with
an REO Property, less the sum of related unreimbursed Master Servicing Fees,
Servicing Advances and Advances.
Living Holders: Holders of the Class A-9 Certificates, other than
--------------
Deceased Holders.
Loan-to-Value Ratio: With respect to any Mortgage Loan and as to
-------------------
any date of determination, the fraction (expressed as a percentage) the
numerator of which is the principal balance of the related Mortgage Loan at
such date of determination and the denominator of which is the Appraised
Value of the related Mortgaged Property.
Maintenance: With respect to any Cooperative Unit, the rent paid
-----------
by the Mortgagor to the Cooperative Corporation pursuant to the Proprietary
Lease.
Majority in Interest: As to any Class of Regular Certificates, the
--------------------
Holders of Certificates of such Class evidencing, in the aggregate, at least
51% of the Percentage Interests evidenced by all Certificates of such Class.
Master REMIC: As described in the Preliminary Statement.
------------
Master Servicer: Independent National Mortgage Corporation, a
---------------
Delaware corporation, and its successors and assigns, in its capacity as
master servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date, 12:30
----------------------------
p.m. Pacific time on the Business Day immediately preceding such Distribution
Date.
Master Servicing Fee: As to each Mortgage Loan and any
--------------------
Distribution Date, an amount equal to one month's interest at the related
Master Servicing Fee Rate on the Stated Principal Balance of such Mortgage
Loan or, in the event of any payment of interest which accompanies a
Principal Prepayment in Full made by the Mortgagor, interest at the Master
Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan for
the period covered by such payment of interest, subject to reduction as
provided in Section 3.17.
Master Servicing Fee Rate: With respect to each Mortgage Loan,
-------------------------
0.125% per annum.
Monthly Statement: The statement delivered to the
-----------------
Certificateholders pursuant to Section 4.06.
Moody's: Moody's Investors Service, Inc., or any successor
-------
thereto. If Moody's is designated as a Rating Agency in the Preliminary
Statement, for purposes of Section 10.05(b) the address for notices to
Moody's shall be Moody's Investors Service, Inc., 99 Church Street, New York,
New York 10007, Attention: Residential Pass-Through Monitoring, or such
other address as Moody's may hereafter furnish to the Depositor or the Master
Servicer.
Mortgage: The mortgage, deed of trust or other instrument creating
--------
a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
-------------
pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loans: Such of the mortgage loans transferred and
--------------
assigned to the Trustee pursuant to the provisions hereof as from time to
time are held as a part of the Trust Fund (including any REO Property), the
mortgage loans so held being identified in the Mortgage Loan Schedule,
notwithstanding foreclosure or other acquisition of title of the related
Mortgaged Property.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time
----------------------
to time amended by the Master Servicer to reflect the addition of Substitute
Mortgage Loans and the deletion of Deleted Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, attached hereto as
Schedule I, setting forth the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name and the street address of the Mortgaged
Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Cut-off Date Principal Balance;
(vi) the first payment date of the Mortgage Loan;
(vii) the Scheduled Payment in effect as of the Cut-off Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling is either
(a) a detached single family dwelling, (b) a dwelling in a PUD, (c) a
condominium unit, (d) a two- to four-unit residential property, or (e) a
Cooperative Unit;
(xi) the Mortgage Rate;
(xii) the Servicing Fee Rate;
(xiii) the purpose for the Mortgage Loan; and
(xiv) the type of documentation program pursuant to which the
Mortgage Loan was originated.
Such schedule shall also set forth the total of the amounts described under
(v) above for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
-------------
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage
-------------
Note from time to time.
Mortgaged Property: The underlying property securing a Mortgage
------------------
Loan, which, with respect to a Cooperative Loan, is the related Coop Shares
and Proprietary Lease.
Mortgagor: The obligor(s) on a Mortgage Note.
---------
MR Interest: The sole class of "residual interest" in the Master
-----------
REMIC.
Net Prepayment Interest Shortfalls: As to any Distribution Date,
----------------------------------
the amount by which the aggregate of Prepayment Interest Shortfalls during
the related Prepayment Period exceeds an amount equal to the Master Servicing
Fee for such Distribution Date before reduction of the Master Servicing Fee
in respect of such Prepayment Interest Shortfalls.
Non-Delay Certificates: As specified in the Preliminary Statement.
----------------------
Non-Discount Mortgage Loan: Any Mortgage Loan with an Adjusted Net
--------------------------
Mortgage Rate that is greater than or equal to the Required Coupon.
Non-PO Formula Principal Amount: As to any Distribution Date, the
-------------------------------
sum of the applicable Non-PO Percentage of (a) the principal portion of each
Scheduled Payment (without giving effect, prior to the Bankruptcy Coverage
Termination Date, to any reductions thereof caused by any Debt Service
Reductions or Deficient Valuations) due on each Mortgage Loan on the related
Due Date, (b) the Stated Principal Balance of each Mortgage Loan that was
repurchased by the Seller or the Master Servicer pursuant to this Agreement
as of such Distribution Date, (c) the Substitution Adjustment Amount in
connection with any Deleted Mortgage Loan received with respect to such
Distribution Date, (d) any Insurance Proceeds or Liquidation Proceeds
allocable to recoveries of principal of Mortgage Loans that are not yet
Liquidated Mortgage Loans received during the calendar month preceding the
month of such Distribution Date, (e) with respect to each Mortgage Loan that
became a Liquidated Mortgage Loan during the calendar month preceding the
month of such Distribution Date, the amount of Liquidation Proceeds allocable
to principal received during the calendar month preceding the month of such
Distribution Date with respect to such Mortgage Loan, and (f) all partial and
full Principal Prepayments received during the related Prepayment Period.
Non-PO Percentage: As to any Discount Mortgage Loan, a fraction
-----------------
(expressed as a percentage) the numerator of which is the Adjusted Net
Mortgage Rate of such Discount Mortgage Loan and the denominator of which is
the Required Coupon. As to any Non-Discount Mortgage Loan, 100%.
Nonrecoverable Advance: Any portion of an Advance or Servicer
----------------------
Advance previously made or proposed to be made by the Master Servicer or the
related Servicer, as the case may be, that, in the good faith judgment of the
Master Servicer or such Servicer, will not be ultimately recoverable by the
Master Servicer from the related Mortgagor, related Liquidation Proceeds or
otherwise.
Notice of Claim: The notice to be delivered by the Trustee to
---------------
Financial Security with respect to any Distribution Date pursuant to Section
4.04(a), which shall be in the form attached to the Class A-9 Policy.
Notice of Final Distribution: The notice to be provided pursuant
----------------------------
to Section 9.02 to the effect that final distribution on any of the
Certificates shall be made only upon presentation and surrender thereof.
Notional Amount: With respect to any Distribution Date and the
---------------
Class X Certificates, the aggregate of the Stated Principal Balances of the
Non-Discount Mortgage Loans as of the Due Date in the month of such
Distribution Date (prior to giving effect to any Scheduled Payments due on
such Mortgage Loans on such Due Date).
Notional Amount Certificates: As specified in the Preliminary
----------------------------
Statement.
Offered Certificates: As specified in the Preliminary Statement.
--------------------
Officer's Certificate: A certificate (i) signed by the Chairman
---------------------
of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice
President, the Treasurer, the Secretary, or one of the Assistant Treasurers
or Assistant Secretaries of the Depositor or the Master Servicer, or (ii) if
provided for in this Agreement, signed by a Servicing Officer, as the case
may be, and delivered to the Depositor and the Trustee, as the case may be,
as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
------------------
counsel for the Depositor or the Master Servicer, including in-house counsel,
reasonably acceptable to the Trustee; provided, however, that with respect
-------- -------
to the interpretation or application of the REMIC Provisions, such counsel
must (i) in fact be independent of the Depositor and the Master Servicer,
(ii) not have any direct financial interest in the Depositor or the Master
Servicer or in any affiliate of either, and (iii) not be connected with the
Depositor or the Master Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
Optional Termination: The termination of the trust created
--------------------
hereunder in connection with the purchase of the Mortgage Loans pursuant to
Section 9.01(a).
Original Applicable Credit Support Percentage: With respect to
----------------------------------------------
each of the following Classes of Subordinated Certificates, the corresponding
percentage described below, as of the Closing Date:
Class B-1 8.75%
Class B-2 4.75%
Class B-3 2.75%
Class B-4 1.50%
Class B-5 0.75%
Class B-6 0.55%
Original Mortgage Loan: The Mortgage Loan refinanced in connection
----------------------
with the origination of a Refinancing Mortgage Loan.
Original Subordinated Principal Balance: The aggregate of the
---------------------------------------
Class Certificate Balances of the Subordinated Certificates as of the Closing
Date.
OTS: The Office of Thrift Supervision.
---
Outside Reference Date: As to any Interest Accrual Period for the
----------------------
COFI Certificates, the close of business on the tenth day thereof.
Outstanding: With respect to the Certificates as of any date of
-----------
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered
to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to this
Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan
-------------------------
with a Stated Principal Balance greater than zero which was not the subject
of a Principal Prepayment in Full prior to such Due Date and which did not
become a Liquidated Mortgage Loan prior to such Due Date.
Ownership Interest: As to any Residual Certificate, any ownership
------------------
interest in such Certificate including any interest in such Certificate as
the Holder thereof and any other interest therein, whether direct or
indirect, legal or beneficial.
Pass-Through Rate: For any interest-bearing Class of Certificates,
-----------------
the per annum rate set forth or calculated in the manner described in the
Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage
-------------------
interest evidenced thereby in distributions required to be made on the
related Class, such percentage interest being set forth on the face thereof
or equal to the percentage obtained by dividing the Denomination of such
Certificate by the aggregate of the Denominations of all Certificates of the
same Class.
Permitted Investments: At any time, any one or more of the
---------------------
following obligations and securities:
(i) obligations of the United States or any agency thereof,
provided that such obligations are backed by the full faith and credit
- --------
of the United States;
(ii) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia receiving the highest long-
term debt rating of each Rating Agency, or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency;
(iii) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each Rating Agency,
or such lower rating as will not result in the downgrading or withdrawal of
the ratings then assigned to the Certificates by the Rating Agencies, as
evidenced by a signed writing delivered by each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof and
subject to supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long-term
--------
unsecured debt obligations of such depository institution or trust company
(or in the case of the principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt obligations of such
holding company, but only if Moody's is not a Rating Agency) are then rated
one of the two highest long-term and the highest short-term ratings of each
Rating Agency for such securities, or such lower ratings as will not result
in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency;
(v) demand or time deposits or certificates of deposit issued by
any bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation acceptable to the Rating Agencies at
the time of the issuance of such agreements, as evidenced by a signed writing
delivered by each Rating Agency;
(vii) repurchase obligations with respect to any security described
in clauses (i) and (ii) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (iv)
above;
(viii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof which,
at the time of such investment, have one of the two highest ratings of each
Rating Agency (except if the Rating Agency is Moody's such rating shall be
the highest commercial paper rating of Moody's for any such securities), or
such lower rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by the Rating Agencies, as
evidenced by a signed writing delivered by each Rating Agency;
(ix) units of a taxable money-market portfolio having the highest
rating assigned by each Rating Agency (except (i) if Fitch or Duff & Phelps
is a Rating Agency and has not rated the portfolio, the highest rating
assigned by Moody's and (ii) if S&P is a Rating Agency, "AAAm-G" by S&P) and
restricted to obligations issued or guaranteed by the United States of
America or entities whose obligations are backed by the full faith and credit
of the United States of America and repurchase agreements collateralized by
such obligations; and
(x) such other investments bearing interest or sold at a discount
acceptable to each Rating Agency as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by the Rating
Agencies, as evidenced by a signed writing delivered by each Rating Agency
without regard to the Class A-9 Policy;
provided that no such instrument shall be a Permitted Investment if such
- --------
instrument evidences the right to receive interest only payments with respect
to the obligations underlying such instrument.
Permitted Transferee: Any person other than (i) the United States,
--------------------
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing,
(iii) an organization (except certain farmers' cooperatives described in
section 521 of the Code) which is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on unrelated
business taxable income) on any excess inclusions (as defined in section
860E(c)(1) of the Code) with respect to any Residual Certificate, (iv) rural
electric and telephone cooperatives described in section 1381(a)(2)(C) of the
Code, (v) a Person that is not a citizen or resident of the United States,
a corporation, partnership, or other entity created or organized in or under
the laws of the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States
unless such Person has furnished the transferor and the Trustee with a duly
completed Internal Revenue Service Form 4224, and (vi) any other Person so
designated by the Depositor based upon an Opinion of Counsel that the
Transfer of an Ownership Interest in a Residual Certificate to such Person
may cause the REMIC hereunder to fail to qualify as a REMIC at any time that
the Certificates are outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in section
7701 of the Code or successor provisions. A corporation will not be treated
as an instrumentality of the United States or of any State or political sub-
division thereof for these purposes if all of its activities are subject to
tax and, with the exception of the Federal Home Loan Mortgage Corporation,
a majority of its board of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
------
association, limited liability company, joint-stock company, trust, unincor-
porated organization or government, or any agency or political subdivision
thereof.
Physical Certificates: As specified in the Preliminary Statement.
---------------------
Planned Balance: Not applicable.
---------------
Planned Principal Classes: As specified in the Preliminary
-------------------------
Statement.
PO Formula Principal Amount: As to any Distribution Date, the sum
---------------------------
of the applicable PO Percentage of (a) the principal portion of each
Scheduled Payment (without giving effect, prior to the Bankruptcy Coverage
Termination Date, to any reductions thereof caused by any Debt Service
Reductions or Deficient Valuations) due on each Mortgage Loan on the related
Due Date, (b) the Stated Principal Balance of each Mortgage Loan that was
repurchased by the Seller or the Master Servicer pursuant to this Agreement
as of such Distribution Date, (c) the Substitution Adjustment Amount in
connection with any Deleted Mortgage Loan received with respect to such
Distribution Date, (d) any Insurance Proceeds or Liquidation Proceeds allo-
cable to recoveries of principal of Mortgage Loans that are not yet
Liquidated Mortgage Loans received during the calendar month preceding the
month of such Distribution Date, (e) with respect to each Mortgage Loan that
became a Liquidated Mortgage Loan during the calendar month preceding the
month of such Distribution Date, the amount of Liquidation Proceeds allocable
to principal received with respect to such Mortgage Loan during the calendar
month preceding the month of such Distribution Date with respect to such
Mortgage Loan and (f) all partial and full Principal Prepayments received
during the related Prepayment Period.
PO Percentage: As to any Discount Mortgage Loan, a fraction
-------------
(expressed as a percentage) the numerator of which is the excess of the
Required Coupon over the Adjusted Net Mortgage Rate of such Discount Mortgage
Loan and the denominator of which is the Required Coupon. As to any Non-
Discount Mortgage Loan, 0%.
Pool Stated Principal Balance: As to any Distribution Date, the
-----------------------------
aggregate of the Stated Principal Balances of the Mortgage Loans which were
Outstanding Mortgage Loans on the Due Date in the month preceding the month
of such Distribution Date.
Prepayment Interest Shortfall: As to any Distribution Date,
-----------------------------
Mortgage Loan and Principal Prepayment, the amount, if any, by which one
month's interest at the related Mortgage Rate (net of the related Master
Servicing Fee) on such Principal Prepayment exceeds the amount of interest
paid in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the calendar month
-----------------
preceding the month of such Distribution Date.
Prepayment Shift Percentage: As to any Distribution Date occurring
---------------------------
during the five years beginning on the first Distribution Date, 0%.
Thereafter, the Prepayment Shift Percentage for any Distribution Date
occurring on or after the fifth anniversary of the first Distribution Date
will be as follows: for any Distribution Date in the first year thereafter,
30%; for any Distribution Date in the second year thereafter, 40%; for any
Distribution Date in the third year thereafter, 60%; for any Distribution
Date in the fourth year thereafter, 80%; and for any Distribution Date
thereafter, 100%.
Primary Insurance Policy: Each policy of primary mortgage guaranty
------------------------
insurance or any replacement policy therefor with respect to any Mortgage
Loan.
Principal Only Certificates: As specified in the Preliminary
---------------------------
Statement.
Principal Prepayment: Any payment of principal by a Mortgagor on
--------------------
a Mortgage Loan that is received in advance of its scheduled Due Date and is
not accompanied by an amount representing scheduled interest due on any date
or dates in any month or months subsequent to the month of prepayment.
Partial Principal Prepayments shall be applied by the Master Servicer in
accordance with the terms of the related Mortgage Note.
Principal Prepayment in Full: Any Principal Prepayment made by a
----------------------------
Mortgagor of the entire principal balance of a Mortgage Loan.
Priority Amount: As to any Distribution Date, the amount equal to
---------------
the sum of (i) the product of (A) Scheduled Principal Distribution Amounts
(B) the Shift Percentage and (C) the Priority Percentage, each as of such
Distribution Date and (ii) the product of (A) Unscheduled Principal
Distribution Amounts, (B) the Prepayment Shift Percentage and (C) the
Priority Percentage, each as of such Distribution Date.
Priority Percentage: As to any Distribution Date, a fraction, the
-------------------
numerator of which is equal to the Class Certificate Balance of the Class A-
11 Certificates on such Distribution Date, and the denominator of which is
equal to the aggregate Class Certificate Balances of all of the Certificates
(other than the Class PO Certificates) on such Distribution Date.
Private Certificates: As specified in the Preliminary Statement.
--------------------
Pro Rata Share: As to any Distribution Date, the Subordinated
--------------
Principal Distribution Amount and any Class of Subordinated Certificates, the
portion of the Subordinated Principal Distribution Amount allocable to such
Class, equal to the product of the Subordinated Principal Distribution Amount
on such Distribution Date and a fraction, the numerator of which is the
related Class Certificate Balance thereof and the denominator of which is the
aggregate of the Class Certificate Balances of the Subordinated Certificates.
Proprietary Lease: With respect to any Cooperative Unit, a lease
-----------------
or occupancy agreement between a Cooperative Corporation and a holder of
related Coop Shares.
Prospectus Supplement: The Prospectus Supplement dated August 26,
---------------------
1996 relating to the Offered Certificates.
PUD: Planned Unit Development.
---
Purchase Price: With respect to any Mortgage Loan required to be
--------------
purchased by the Seller pursuant to Section 2.02 or 2.03 or purchased at the
option of the Master Servicer pursuant to Section 3.14, an amount equal to
the sum of (i) 100% of the unpaid principal balance of the Mortgage Loan on
the date of such purchase, and (ii) accrued interest thereon at the appli-
cable Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the
purchaser is the Master Servicer or (y) if the purchaser is the Seller and
the Seller is the Master Servicer) from the date through which interest was
last paid by the Mortgagor to the Due Date in the month in which the Purchase
Price is to be distributed to Certificateholders.
Qualified Insurer: A mortgage guaranty insurance company duly
-----------------
qualified as such under the laws of the state of its principal place of
business and each state having jurisdiction over such insurer in connection
with the insurance policy issued by such insurer, duly authorized and
licensed in such states to transact a mortgage guaranty insurance business
in such states and to write the insurance provided by the insurance policy
issued by it, approved as a FNMA- or FHLMC-approved mortgage insurer or
having a claims paying ability rating of at least "AA" or equivalent rating
by a nationally recognized statistical rating organization. Any replacement
insurer with respect to a Mortgage Loan must have at least as high a claims
paying ability rating as the insurer it replaces had on the Closing Date.
Rating Agency: Each of the Rating Agencies specified in the
-------------
Preliminary Statement. If either such organization or a successor is no
longer in existence, "Rating Agency" shall be such nationally recognized
statistical rating organization, or other comparable Person, as is designated
by the Depositor, notice of which designation shall be given to the Trustee.
References herein to a given rating or rating category of a Rating Agency
shall mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Mortgage Loan, an
-------------
amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the Adjusted Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced (and not reimbursed)
to Certificateholders up to the Due Date in the month in which Liquidation
Proceeds are required to be distributed on the Stated Principal Balance of
such Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation
Proceeds, if any, received during the month in which such liquidation
occurred, to the extent applied as recoveries of interest at the Adjusted Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect
to each Mortgage Loan which has become the subject of a Deficient Valuation,
if the principal amount due under the related Mortgage Note has been reduced,
the difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of
the Mortgage Loan as reduced by the Deficient Valuation. With respect to
each Mortgage Loan which has become the subject of a Debt Service Reduction
and any Distribution Date, the amount, if any, by which the principal portion
of the related Scheduled Payment has been reduced.
Recognition Agreement: With respect to any Cooperative Loan, an
---------------------
agreement between the Cooperative Corporation and the originator of such
Mortgage Loan which establishes the rights of such originator in the
Cooperative Property.
Record Date: With respect to any Distribution Date, the close of
-----------
business on the last Business Day of the month preceding the month in which
such applicable Distribution Date occurs.
Reference Bank: As defined in Section 4.08.
--------------
Refinancing Mortgage Loan: Any Mortgage Loan originated in
-------------------------
connection with the refinancing of an existing mortgage loan.
Regular Certificates: As specified in the Preliminary Statement.
--------------------
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
----------
as amended.
Relief Act Reductions: With respect to any Distribution Date and
---------------------
any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended calendar month as
a result of the application of the Relief Act, the amount, if any, by which
(i) interest collectible on such Mortgage Loan for the most recently ended
calendar month is less than (ii) interest accrued thereon for such month
pursuant to the Mortgage Note.
REMIC: A "real estate mortgage investment conduit" within the
-----
meaning of section 860D of the Code.
REMIC Change of Law: Any proposed, temporary or final regulation,
-------------------
revenue ruling, revenue procedure or other official announcement or
interpretation relating to REMICs and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law
----------------
relating to real estate mortgage investment conduits, which appear at
sections 860A through 860G of Subchapter M of Chapter 1 of the Code, and
related provisions, and regulations promulgated thereunder, as the foregoing
may be in effect from time to time as well as provisions of applicable state
laws.
REO Property: A Mortgaged Property acquired by the Trust Fund
------------
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Request for Release: The Request for Release submitted by the
-------------------
Master Servicer to the Trustee, substantially in the form of Exhibits M and
N, as appropriate.
Required Coupon: 7.625% per annum.
---------------
Required Insurance Policy: With respect to any Mortgage Loan, any
-------------------------
insurance policy that is required to be maintained from time to time under
this Agreement.
Residual Certificates: As specified in the Preliminary Statement.
---------------------
Responsible Officer: When used with respect to the Trustee, any
-------------------
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
Restricted Classes: As defined in Section 4.02(e).
------------------
SAIF: The Savings Association Insurance Fund, or any successor
----
thereto.
S&P: Standard & Poor's Ratings Group, a division of The McGraw
---
Hill Companies. If S&P is designated as a Rating Agency in the Preliminary
Statement, for purposes of Section 10.05(b) the address for notices to S&P
shall be Standard & Poor's Ratings Group, 26 Broadway, 15th Floor, New York,
New York 10004, Attention: Mortgage Surveillance Monitoring, or such other
address as S&P may hereafter furnish to the Depositor and the Master
Servicer.
Scheduled Balances: Not applicable.
------------------
Scheduled Classes: As specified in the Preliminary Statement.
-----------------
Scheduled Payment: The scheduled monthly payment on a Mortgage
-----------------
Loan due on any Due Date allocable to principal and/or interest on such
Mortgage Loan which, unless otherwise specified herein, shall give effect to
any related Debt Service Reduction and any Deficient Valuation that affects
the amount of the monthly payment due on such Mortgage Loan.
Scheduled Principal Distribution Amounts: As to any Distribution
----------------------------------------
Date, an amount equal to the sum of all amounts described in clauses (a)
through (d) of the definition of Non-PO Formula Principal Amount for such
Distribution Date; provided, however, that if a Bankruptcy Loss that is an
Excess Loss is sustained with respect to a Mortgage Loan that is not a
Liquidated Mortgage Loan, the Scheduled Principal Distribution Amounts will
be reduced on the related Distribution Date by the applicable Non-PO
Percentage of the principal portion of such Bankruptcy Loss.
Securities Act: The Securities Act of 1933, as amended.
--------------
Security Agreement: With respect to any Cooperative Loan, the
------------------
agreement between the owner of the related Coop Shares and the originator of
the related Mortgage Note, which defines the terms of the security interest
in such Coop Shares and the related Proprietary Lease.
Seller: Independent National Mortgage Corporation, a Delaware
------
corporation, and its successors and assigns, in its capacity as seller of the
Mortgage Loans to the Depositor.
Seller/Servicer Guide: The Seller/Servicer Guide for Independent
---------------------
National Mortgage Corporation's mortgage loan purchase and conduit servicing
program and all amendments and supplements thereto.
Senior Certificates: As specified in the Preliminary Statement.
-------------------
Senior Credit Support Depletion Date: The date on which the Class
------------------------------------
Certificate Balance of each Class of Subordinated Certificates has been
reduced to zero.
Senior Percentage: As to any Distribution Date, the percentage
-----------------
equivalent of a fraction the numerator of which is the aggregate of the Class
Certificate Balances of each Class of Senior Certificates (other than the
Class PO Certificates) as of such date and the denominator of which is the
aggregate of the Class Certificate Balances of all Classes of Certificates
(other than the Class PO Certificates) as of such date.
Senior Prepayment Percentage: For any Distribution Date during the
----------------------------
five years beginning on the first Distribution Date, 100%. The Senior
Prepayment Percentage for any Distribution Date occurring on or after the
fifth anniversary of the first Distribution Date will, except as provided
herein, be as follows: for any Distribution Date in the first year
thereafter, the Senior Percentage plus 70% of the Subordinated Percentage for
such Distribution Date; for any Distribution Date in the second year
thereafter, the Senior Percentage plus 60% of the Subordinated Percentage for
such Distribution Date; for any Distribution Date in the third year
thereafter, the Senior Percentage plus 40% of the Subordinated Percentage for
such Distribution Date; for any Distribution Date in the fourth year
thereafter, the Senior Percentage plus 20% of the Subordinated Percentage for
such Distribution Date; and for any Distribution Date thereafter, the Senior
Percentage for such Distribution Date (unless on any of the foregoing
Distribution Dates the Senior Percentage exceeds the initial Senior
Percentage, in which case the Senior Prepayment Percentage for such
Distribution Date will once again equal 100%). Notwithstanding the
foregoing, no decrease in the Senior Prepayment Percentage will occur if, as
of the first Distribution Date as to which any such decrease applies, (i) the
outstanding principal balance of all Mortgage Loans delinquent 60 days or
more (averaged over the preceding six month period), as a percentage of the
aggregate principal balance of the Subordinate Certificates (averaged over
the preceding six month period), is equal to or greater than 50% or (ii)
cumulative Realized Losses with respect to the Mortgage Loans exceed (a) with
respect to the Distribution Date on the fifth anniversary of the first
Distribution Date, 30% of the Original Subordinated Principal Balance, (b)
with respect to the Distribution Date on the sixth anniversary of the first
Distribution Date, 35% of the Original Subordinated Principal Balance, (c)
with respect to the Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the Original Subordinated Principal Balance, (d)
with respect to the Distribution Date on the eighth anniversary of the first
Distribution Date, 45% of the Original Subordinated Principal Balance and (e)
with respect to the Distribution Date on the ninth anniversary of the first
Distribution Date, 50% of the Original Subordinated Principal Balance.
Senior Principal Distribution Amount: As to any Distribution Date,
------------------------------------
the sum of (i) the Senior Percentage of the applicable Non-PO Percentage of
all amounts described in clauses (a) through (d) of the definition of "Non-PO
Formula Principal Amount" for such Distribution Date, (ii) with respect to
any Mortgage Loan that became a Liquidated Mortgage Loan during the calendar
month preceding the month of such Distribution Date, the lesser of (x) the
Senior Percentage of the applicable Non-PO Percentage of the Stated Principal
Balance of such Mortgage Loan and (y) either (A) the Senior Prepayment
Percentage or (B), if an Excess Loss was sustained with respect to such
Liquidated Mortgage Loan during such preceding calendar month, the Senior
Percentage of the applicable Non-PO Percentage of the amount of the
Liquidation Proceeds allocable to principal received with respect to such
Mortgage Loan and (iii) the Senior Prepayment Percentage of the applicable
Non-PO Percentage of the amounts described in clause (f) of the definition
"Non-PO Formula Principal Amount" for such Distribution Date.
Servicer: Any person with which the Master Servicer has entered
--------
into a Servicing Agreement for the servicing of all or a portion of the
Mortgage Loans pursuant to Section 3.02.
Servicer Advance: The meaning ascribed to such term in Section
----------------
3.08(d).
Servicing Account: The separate Eligible Account or Accounts
-----------------
created and maintained pursuant to Section 3.08(b).
Servicing Advances: All customary, reasonable and necessary "out
------------------
of pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) expenses reimbursable to the Master Servicer pursuant to
Section 3.14 and any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and
(iv) compliance with the obligations under Section 3.12.
Servicing Agreement: The Seller/Servicer Contract as contemplated
-------------------
by the Seller/Servicer Guide between the Master Servicer and any Servicer
relating to servicing and/or administration of certain Mortgage Loans as
provided in Section 3.02.
Servicing Fee: As to each Mortgage Loan and any Distribution Date,
-------------
an amount equal to one month's interest at the applicable Servicing Fee Rate
on the Stated Principal Balance of such Mortgage Loan.
Servicing Fee Rate: With respect to any Mortgage Loan, the per
------------------
annum rate set forth in the Mortgage Loan Schedule for such Mortgage Loan.
Servicing Officer: Any officer of the Master Servicer involved in,
-----------------
or responsible for, the administration and servicing of the Mortgage Loans
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee by the Master Servicer on the Closing Date pursuant
to this Agreement, as such list may from time to time be amended.
Shift Percentage: As of any Distribution Date occurring during the
----------------
five years beginning on the first Distribution Date, 0% and for each
Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date, 100%.
Special Hazard Coverage Termination Date: The point in time at
----------------------------------------
which the Special Hazard Loss Coverage Amount is reduced to zero.
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged
-------------------
Property on account of direct physical loss, but not including (i) any loss
of a type covered by a hazard insurance policy or a flood insurance policy
required to be maintained with respect to such Mortgaged Property pursuant
to Section 3.10 to the extent of the amount of such loss covered thereby, or
(ii) any loss caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the
Trustee, the Master Servicer or any of their agents or employees (without
regard to any portion of the loss not covered by any errors and omissions
policy);
(c) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues and then only
for the ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled or
uncontrolled, and whether such loss be direct or indirect, proximate or
remote or be in whole or in part caused by, contributed to or aggravated by
a peril covered by the definition of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war, including
action in hindering, combating or defending against an actual, impending or
expected attack:
1. by any government or sovereign power, de jure or de facto,
-- ---- -- -----
or by any authority maintaining or using military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power
or action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under quarantine
or customs regulations, confiscation by order of any government or public
authority, or risks of contraband or illegal transportation or trade.
Special Hazard Loss Coverage Amount: With respect to the first
-----------------------------------
Distribution Date, $1,931,038. With respect to any Distribution Date after
the first Distribution Date, the lesser of (a) the greatest of (i) 1% of the
aggregate of the principal balances of the Mortgage Loans, (ii) twice the
principal balance of the largest Mortgage Loan and (iii) the aggregate of the
principal balances of all Mortgage Loans secured by Mortgaged Properties
located in the single California postal zip code area having the highest
aggregate principal balance of any such zip code area and (b) the Special
Hazard Loss Coverage Amount as of the Closing Date less the amount, if any,
of Special Hazard Losses allocated to the Certificates since the Closing
Date. All principal balances for the purpose of this definition will be
calculated as of the first day of the calendar month preceding the month of
such Distribution Date after giving effect to Scheduled Payments on the
Mortgage Loans then due, whether or not paid.
Special Hazard Mortgage Loan: A Liquidated Mortgage Loan as to
----------------------------
which a Special Hazard Loss has occurred.
SR Interest: The sole class of "residual interest" in the
-----------
Subsidiary REMIC.
Startup Day: The Closing Date.
-----------
Stated Principal Balance: As to any Mortgage Loan and Due Date,
------------------------
the unpaid principal balance of such Mortgage Loan as of such Due Date as
specified in the amortization schedule at the time relating thereto (before
any adjustment to such amortization schedule by reason of any moratorium or
similar waiver or grace period) after giving effect to any previous partial
Principal Prepayments and Liquidation Proceeds allocable to principal (other
than with respect to any Liquidated Mortgage Loan) and to the payment of
principal due on such Due Date and irrespective of any delinquency in payment
by the related Mortgagor.
Subordinated Certificates: As specified in the Preliminary
-------------------------
Statement.
Subordinated Percentage: As to any Distribution Date, 100% minus
-----------------------
the Senior Percentage for such Distribution Date.
Subordinated Prepayment Percentage: As to any Distribution Date,
----------------------------------
100% minus the Senior Prepayment Percentage for such Distribution Date.
Subordinated Principal Distribution Amount: With respect to any
------------------------------------------
Distribution Date, an amount equal to (A) the sum of (i) the Subordinated
Percentage of the applicable Non-PO Percentage of all amounts described in
clauses (a) through (d) of the definition of "Non-PO Formula Principal
Amount" for such Distribution Date, (ii) with respect to each Mortgage Loan
that became a Liquidated Mortgage Loan during the calendar month preceding
the month of such Distribution Date, the applicable Non-PO Percentage of the
amount of the Liquidation Proceeds allocable to principal received with
respect to such Mortgage Loan after application of such amounts pursuant to
clause (ii) of the definition of Senior Principal Distribution Amount, up to
the Subordinated Percentage of the applicable Non-PO Percentage of the Stated
Principal Balance of such Mortgage Loan and (iii) the Subordinated Prepayment
Percentage of the applicable Non-PO Percentage of all amounts described in
clause (f) of the definition of "Non-PO Formula Principal Amount" for such
Distribution Date reduced by (B) the amount of any payments in respect of
Class PO Deferred Amounts on the related Distribution Date.
Subservicer: Any Person to which the Master Servicer has
-----------
contracted for the servicing of all or a portion of the Mortgage Loans
pursuant to Section 3.02.
Subsidiary REMIC: As described in the Preliminary Statement.
----------------
Subsidiary REMIC Interest: Any one of the Subsidiary REMIC Regular
-------------------------
Interests or the SR Interest.
Subsidiary REMIC Regular Interest: Any one of the "regular
---------------------------------
interests" in the Subsidiary REMIC described in the Preliminary Statement.
Substitute Mortgage Loan: A Mortgage Loan substituted by the
------------------------
Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in a Request for Release, substantially in the
form of Exhibit M, (i) have a Stated Principal Balance, after deduction of
the principal portion of the Scheduled Payment due in the month of
substitution, not in excess of, and not more than 10% less than, the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) be accruing interest
(net of the related Servicing Fee) at a rate no lower than and not more than
1% per annum higher than, that of the Deleted Mortgage Loan; (iii) have a
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (iv)
have a remaining term to maturity no greater than (and not more than one year
less than that of) the Deleted Mortgage Loan; (v) not be a Cooperative Loan
unless the Deleted Mortgage Loan was a Cooperative Loan and (vi) comply with
each representation and warranty set forth in Section 2.03.
Substitution Adjustment Amount: The meaning ascribed to such term
------------------------------
pursuant to Section 2.03.
Targeted Balance: Not applicable.
----------------
Targeted Principal Classes: As specified in the Preliminary
--------------------------
Statement.
Tax Matters Person: The person designated as "tax matters person"
------------------
in the manner provided under Treasury regulation Section 1.860F-4(d) and
temporary Treasury regulation Section 301.6231(a)(7)-1T. Initially, the Tax
Matters Person shall be the Trustee.
Tax Matters Person Certificate: The Class A-R Certificate with a
------------------------------
Denomination of $1.00.
Transfer: Any direct or indirect transfer or sale of any Ownership
--------
Interest in a Residual Certificate.
Trust Fund: The corpus of the trust created hereunder consisting
----------
of (i) the Mortgage Loans and all interest and principal received on or with
respect thereto after the Cut-off Date, other than such amounts which were
due on the Mortgage Loans on or before the Cut-off Date; (ii) the Certificate
Account and the Distribution Account and all amounts deposited therein
pursuant to the applicable provisions of this Agreement; (iii) property that
secured a Mortgage Loan and has been acquired by foreclosure, deed-in-lieu
of foreclosure or otherwise; (iv) the Class A-9 Policy; and (v) all proceeds
of the conversion, voluntary or involuntary, of any of the foregoing.
Trustee: The Bank of New York and its successors and, if a
-------
successor trustee is appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to one
-----------
twelfth of the Trustee Fee Rate multiplied by the Pool Stated Principal
Balance with respect to such Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the per
----------------
annum rate agreed upon in writing on or prior to the Closing Date by the
Trustee and the Depositor.
Unscheduled Principal Distribution Amounts: As to any Distribution
------------------------------------------
Date, an amount equal to the sum of (i) with respect to each Mortgage Loan
that became a Liquidated Mortgage Loan during the calendar month preceding
the month of such Distribution Date, the Non-PO Percentage of the Liquidation
Proceeds allocable to principal received with respect to such Mortgage Loan
and (ii) the applicable Non-PO Percentage of the amount described in clause
(f) of the definition of "Non-PO Formula Principal Amount" for such
Distribution Date.
Voting Rights: The portion of the voting rights of all of the
-------------
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to each Class
of Notional Amount Certificates, if any (such Voting Rights to be allocated
among the holders of Certificates of each such Class in accordance with their
respective Percentage Interests), and (b) the remaining Voting Rights (or
100% of the Voting Rights if there is no Class of Notional Amount
Certificates) shall be allocated among Holders of the remaining Classes of
Certificates in proportion to the Certificate Balances of their respective
Certificates on such date.
Withdrawal Date: The 18th day of each month, or if such day is not
---------------
a Business Day, the next preceding Business Day.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
----------------------------
(a) The Seller, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to
the Depositor, without recourse, all the right, title and interest of the
Seller in and to the Mortgage Loans, including all interest and principal
received or receivable by the Seller on or with respect to the Mortgage Loans
after the Cut-off Date and all interest and principal payments on the
Mortgage Loans received prior to the Cut-off Date in respect of installments
of interest and principal due thereafter, but not including payments of
principal and interest due and payable on the Mortgage Loans on or before the
Cut-off Date. On or prior to the Closing Date, the Seller shall deliver to
the Depositor or, at the Depositor's direction, to the Trustee or other
designee of the Depositor, the Mortgage File for each Mortgage Loan listed
in the Mortgage Loan Schedule. Such delivery of the Mortgage Files shall be
made against payment by the Depositor of the purchase price, previously
agreed to by the Seller and Depositor, for the Mortgage Loans. With respect
to any Mortgage Loan that does not have a first payment date on or before the
Due Date in the month of the first Distribution Date, the Trustee
acknowledges the deposit into the Distribution Account on the Closing Date,
of an amount equal to one month's interest at the related Adjusted Net
Mortgage Rate on the Cut-off Date Principal Balance of such Mortgage Loan.
(b) The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to
the Trustee for the benefit of the Certificateholders, without recourse, all
the right, title and interest of the Depositor in and to the Trust Fund,
together with the Depositor's right to require the Seller to cure any breach
of a representation or warranty made herein by the Seller or to repurchase
or substitute for any affected Mortgage Loan in accordance herewith. In
addition, on or prior to the Closing Date, the Depositor shall cause
Financial Security to deliver the Class A-9 Policy to the Trustee.
(c) In connection with the transfer and assignment set forth in
clause (b) above, the Depositor has delivered or caused to be delivered to
the Trustee for the benefit of the Certificateholders the following documents
or instruments with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order of
without recourse", with all intervening
- ---------------------------------
endorsements showing a complete chain of endorsement from the originator to
the Person endorsing it to the Trustee (each such endorsement being
sufficient to transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that Mortgage Note);
(ii) except as provided below, the original recorded Mortgage
or a copy of such Mortgage certified by the Seller (or, in the case of a
Mortgage for which the related Mortgaged Property is located in the
Commonwealth of Puerto Rico, a copy of such Mortgage certified by the
applicable notary) as being a true and complete copy of the Mortgage;
(iii) a duly executed assignment of the Mortgage (which may
be included in a blanket assignment or assignments), together with, except
as provided below, all interim recorded assignments of such mortgage (each
such assignment, when duly and validly completed, to be in recordable form
and sufficient to effect the assignment of and transfer to the assignee
thereof, under the Mortgage to which the assignment relates); provided that,
--------
if the related Mortgage has not been returned from the applicable public
recording office, such assignment of the Mortgage may exclude the information
to be provided by the recording office; provided, further that such assignment
-------- -------
of Mortgage need not be delivered in the case of a Mortgage for which the
related Mortgage Property is located in the Commonwealth of Puerto Rico.
(iv) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any;
(v) except as provided below, the original or duplicate
original lender's title policy and all riders thereto; and
(vi) in the case of a Cooperative Loan, the originals of the
following documents or instruments:
(a) The Coop Shares, together with a stock power in blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statement with evidence of
recording thereon which have been filed in all places required to perfect the
Seller's interest in the Coop Shares and the Proprietary Lease; and
(g) Executed UCC-3 financing statements or other appropriate
UCC financing statements required by state law, evidencing a complete and
unbroken line from the mortgagee to the Trustee with evidence of recording
thereon (or in a form suitable for recordation).
In the event that in connection with any Mortgage Loan the
Depositor cannot deliver (a) the original recorded Mortgage, (b) all interim
recorded assignments or (c) the lender's title policy (together with all
riders thereto) satisfying the requirements of clause (ii), (iii) or (v)
above, respectively, concurrently with the execution and delivery hereof
because such document or documents have not been returned from the applicable
public recording office in the case of clause (ii) or (iii) above, or because
the title policy has not been delivered to either the Master Servicer or the
Depositor by the applicable title insurer in the case of clause (v) above,
the Depositor shall promptly deliver to the Trustee, in the case of clause
(ii) or (iii) above, such original Mortgage or such interim assignment, as
the case may be, with evidence of recording indicated thereon upon receipt
thereof from the public recording office, or a copy thereof, certified, if
appropriate, by the relevant recording office, but in no event shall any such
delivery of the original Mortgage Loan and each such interim assignment or
a copy thereof, certified, if appropriate, by the relevant recording office,
be made later than one year following the Closing Date, or, in the case of
clause (v) above, later than 120 days following the Closing Date; provided,
--------
however, that in the event the Depositor is unable to deliver by such date
- -------
each Mortgage and each such interim assignment by reason of the fact
that any such documents have not been returned by the appropriate recording
office, or, in the case of each such interim assignment, because the related
Mortgage has not been returned by the appropriate recording office, the
Depositor shall deliver such documents to the Trustee as promptly as possible
upon receipt thereof and, in any event, within 720 days following the Closing
Date. The Depositor shall forward or cause to be forwarded to the Trustee
(a) from time to time additional original documents evidencing an assumption
or modification of a Mortgage Loan and (b) any other documents required to
be delivered by the Depositor or the Master Servicer to the Trustee. In the
event that the original Mortgage is not delivered and in connection with the
payment in full of the related Mortgage Loan the public recording office
requires the presentation of a "lost instruments affidavit and indemnity" or
any equivalent document, because only a copy of the Mortgage can be delivered
with the instrument of satisfaction or reconveyance, the Master Servicer
shall execute and deliver or cause to be executed and delivered such a
document to the public recording office. In the case where a public
recording office retains the original recorded Mortgage or in the case where
a Mortgage is lost after recordation in a public recording office, the Seller
shall deliver to the Trustee a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
As promptly as practicable subsequent to such transfer and
assignment, and in any event, within thirty (30) days thereafter, the Trustee
shall (i) affix the Trustee's name to each assignment of Mortgage, as the
assignee thereof, (ii) cause such assignment to be in proper form for record-
ing in the appropriate public office for real property records within thirty
(30) days after receipt thereof and (iii) cause to be delivered for recording
in the appropriate public office for real property records the assignments
of the Mortgages to the Trustee, except that, with respect to any assignment
of a Mortgage as to which the Trustee has not received the information
required to prepare such assignment in recordable form, the Trustee's
obligation to do so and to deliver the same for such recording shall be as
soon as practicable after receipt of such information and in any event within
thirty (30) days after the receipt thereof, and the Trustee need not cause
to be recorded any assignment which relates to a Mortgage Loan (a) the
Mortgaged Property and Mortgage File relating to which are located in
California or (b) in any other jurisdiction (including Puerto Rico) under the
laws of which, as evidenced by an Opinion of Counsel delivered by the Seller
(at the Seller's expense) to the Trustee, the recordation of such assignment
is not necessary to protect the Trustee's and the Certificateholders'
interest in the related Mortgage Loan.
In the case of Mortgage Loans that have been prepaid in full as of
the Closing Date, the Depositor, in lieu of delivering the above documents
to the Trustee, will deposit in the Certificate Account the portion of such
payment that is required to be deposited in the Certificate Account pursuant
to Section 3.08.
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.
-----------------------------------------------
The Trustee acknowledges receipt of the documents identified in the
Initial Certification in the form annexed hereto as Exhibit G and declares
that it holds and will hold such documents and the other documents delivered
to it constituting the Mortgage Files, and that it holds or will hold such
other assets as are included in the Trust Fund, in trust for the exclusive
use and benefit of all present and future Certificateholders. The Trustee
acknowledges that it will maintain possession of the Mortgage Notes in the
State of California, unless otherwise permitted by the Rating Agencies.
The Trustee agrees to execute and deliver on the Closing Date to
the Depositor, the Master Servicer and the Seller an Initial Certification
in the form annexed hereto as Exhibit G. Based on its review and
examination, and only as to the documents identified in such Initial
Certification, the Trustee acknowledges that such documents appear regular
on their face and relate to such Mortgage Loan. The Trustee shall be under
no duty or obligation to inspect, review or examine said documents, instru-
ments, 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 in the real estate records or that they are other than
what they purport to be on their face.
Not later than 90 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer and the Seller a Final
Certification in the form annexed hereto as Exhibit H, with any applicable
exceptions noted thereon.
If, in the course of such review, the Trustee finds any document
constituting a part of a Mortgage File which does not meet the requirements
of Section 2.01, the Trustee shall list such as an exception in the Final
Certification; provided, however, that the Trustee shall not make any
-------- -------
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or
assignee thereof, in and to that Mortgage Note or (ii) any assignment is in
recordable form or is sufficient to effect the assignment of and transfer to
the assignee thereof under the mortgage to which the assignment relates. The
Seller shall promptly correct or cure such defect within 90 days from the
date it was so notified of such defect and, if the Seller does not correct
or cure such defect within such period, the Seller shall either (a)
substitute for the related Mortgage Loan a Substitute Mortgage Loan, which
substitution shall be accomplished in the manner and subject to the
conditions set forth in Section 2.03, or (b) purchase such Mortgage Loan from
the Trustee within 90 days from the date the Seller was notified of such
defect in writing at the Purchase Price of such Mortgage Loan; provided,
--------
however, that in no event shall such substitution or purchase occur more
- -------
than 540 days from the Closing Date, except that if the substitution or
purchase of a Mortgage Loan pursuant to this provision is required by reason
of a delay in delivery of any documents by the appropriate recording office,
and there is a dispute between either the Master Servicer or the Seller and
the Trustee over the location or status of the recorded document, then such
substitution or purchase shall occur within 720 days from the Closing Date.
The Trustee shall deliver written notice to each Rating Agency within 270
days from the Closing Date indicating each Mortgage Loan (a) which has not
been returned by the appropriate recording office or (b) as to which there
is a dispute as to location or status of such Mortgage Loan. Such notice
shall be delivered every 90 days thereafter until the related Mortgage Loan
is returned to the Trustee. Any such substitution pursuant to (a) above or
purchase pursuant to (b) above shall not be effected prior to the delivery
to the Trustee of the Opinion of Counsel required by Section 2.05, if any,
and any substitution pursuant to (a) above shall not be effected prior to the
additional delivery to the Trustee of a Request for Release substantially in
the form of Exhibit N. No substitution is permitted to be made in any
calendar month after the Determination Date for such month. The Purchase
Price for any such Mortgage Loan shall be deposited by the Seller in the
Certificate Account on or prior to the Distribution Account Deposit Date for
the Distribution Date in the month following the month of repurchase and,
upon receipt of such deposit and certification with respect thereto in the
form of Exhibit N hereto, the Trustee shall release the related Mortgage File
to the Seller and shall execute and deliver at the Seller's request such
instruments of transfer or assignment prepared by the Seller, in each case
without recourse, as shall be necessary to vest in the Seller, or a designee,
the Trustee's interest in any Mortgage Loan released pursuant hereto.
The Trustee shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions set forth
herein. The Master Servicer shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File as come into the possession of the
Master Servicer from time to time.
It is understood and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage Loan which does not meet the
requirements of Section 2.01 shall constitute the sole remedy respecting such
defect available to the Trustee, the Depositor and any Certificateholder
against the Seller.
SECTION 2.03. Representations, Warranties and Covenants of the
------------------------------------------------
Seller and the Master Servicer.
------------------------------
(a) INMC, in its capacities as Seller and Master Servicer, hereby
makes the representations and warranties set forth in Schedule II hereto, and
by this reference incorporated herein, to the Depositor and the Trustee, as
of the Closing Date, or if so specified therein, as of the Cut-off Date.
(b) The Seller, in its capacity as Seller, hereby makes the repre-
sentations and warranties set forth in Schedule III hereto, and by this
reference incorporated herein, to the Depositor and the Trustee, as of the
Closing Date, or if so specified therein, as of the Cut-off Date.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(b) that materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan, the party discovering such breach shall give prompt notice thereof to
the other parties. The Seller hereby covenants that within 90 days of the
earlier of its discovery or its receipt of written notice from any party of
a breach of any representation or warranty made pursuant to Section 2.03(b)
which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, it shall cure such breach in all
material respects, and if such breach is not so cured, shall, (i) if such 90
day period expires prior to the second anniversary of the Closing Date,
remove such Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and
---------------------
substitute in its place a Substitute Mortgage Loan, in the manner and subject
to the conditions set forth in this Section 2.03; or (ii) repurchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at the Purchase
Price in the manner set forth below; provided, however, that any such substi
-------- -------
tution pursuant to (i) above shall not be effected prior to the delivery to
the Trustee of the Opinion of Counsel required by Section 2.05, if any, and
a Request for Release substantially in the form of Exhibit N, and the
Mortgage File for any such Substitute Mortgage Loan. The Seller shall
promptly reimburse the Master Servicer and the Trustee for any expenses
reasonably incurred by the Master Servicer or the Trustee in respect of
enforcing the remedies for such breach. With respect to the representations
and warranties described in this Section 2.03 which are made to the best of
the Seller's knowledge, if it is discovered by either the Depositor, the
Seller or the Trustee that the substance of such representation and warranty
is inaccurate and such inaccuracy materially and adversely affects the value
of the related Mortgage Loan or the interests of the Certificateholders
therein, notwithstanding the Seller's lack of knowledge with respect to the
substance of such representation or warranty, such inaccuracy shall be deemed
a breach of the applicable representation or warranty.
With respect to any Substitute Mortgage Loan or Loans, the Seller
shall deliver to the Trustee for the benefit of the Certificateholders the
Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such
other documents and agreements as are required by Section 2.01, with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01.
No substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Substitute Mortgage Loans in the month of substitution shall not be part of
the Trust Fund and will be retained by the Seller on the next succeeding
Distribution Date. For the month of substitution, distributions to
Certificateholders will include the monthly payment due on any Deleted Mort-
gage Loan for such month and thereafter the Seller shall be entitled to
retain all amounts received in respect of such Deleted Mortgage Loan.
The Master Servicer shall amend the Mortgage Loan Schedule for the
benefit of the Certificateholders to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Substitute Mortgage Loan or Loans
and the Master Servicer shall deliver the amended Mortgage Loan Schedule to
the Trustee. Upon such substitution, the Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects, and the
Seller shall be deemed to have made with respect to such Substitute Mortgage
Loan or Loans, as of the date of substitution, the representations and
warranties made pursuant to Section 2.03(b) with respect to such Mortgage
Loan. Upon any such substitution and the deposit to the Certificate Account
of the amount required to be deposited therein in connection with such
substitution as described in the following paragraph, the Trustee shall
release the Mortgage File held for the benefit of the Certificateholders
relating to such Deleted Mortgage Loan to the Seller and shall execute and
deliver at the Seller's direction such instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as shall be necessary
to vest title in the Seller, or its designee, the Trustee's interest in any
Deleted Mortgage Loan substituted for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Substitute Mortgage Loans as of the date of substitution
is less than the aggregate Stated Principal Balance of all such Deleted
Mortgage Loans (after application of the scheduled principal portion of the
monthly payments due in the month of substitution). The amount of such
shortage (the "Substitution Adjustment Amount") plus an amount equal to the
------------------------------
aggregate of any unreimbursed Advances and Servicer Advances with respect to
such Deleted Mortgage Loans shall be deposited into the Certificate Account
by the Seller on or before the Distribution Account Deposit Date for the
Distribution Date in the month succeeding the calendar month during which the
related Mortgage Loan became required to be purchased or replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited in the Certificate
Account pursuant to Section 3.08 on or before the Distribution Account
Deposit Date for the Distribution Date in the month following the month
during which the Seller became obligated hereunder to repurchase or replace
such Mortgage Loan and upon such deposit of the Purchase Price, the delivery
of the Opinion of Counsel required by Section 2.05 and receipt of a Request
for Release in the form of Exhibit N hereto, the Trustee shall release the
related Mortgage File held for the benefit of the Certificateholders to such
Person, and the Trustee shall execute and deliver at such Person's direction
such instruments of transfer or assignment prepared by such Person, in each
case without recourse, as shall be necessary to transfer title from the
Trustee. It is understood and agreed that the obligation under this
Agreement of any Person to cure, repurchase or replace any Mortgage Loan as
to which a breach has occurred and is continuing shall constitute the sole
remedy against such Persons respecting such breach available to
Certificateholders, the Depositor or the Trustee on their behalf.
The representations and warranties made pursuant to this Section
2.03 shall survive delivery of the respective Mortgage Files to the Trustee
for the benefit of the Certificateholders.
SECTION 2.04. Representations and Warranties of the Depositor as
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to the Mortgage Loans.
---------------------
The Depositor hereby represents and warrants to the Trustee with
respect to each Mortgage Loan as of the date hereof or such other date set
forth herein that as of the Closing Date, and following the transfer of the
Mortgage Loans to it by the Seller, the Depositor had good title to the
Mortgage Loans and the Mortgage Notes were subject to no offsets, defenses
or counterclaims.
The Depositor hereby assigns, transfers and conveys to the Trustee
all of its rights with respect to the Mortgage Loans including, without
limitation, the representations and warranties of the Seller made pursuant
to Section 2.03(b), together with all rights of the Depositor to require the
Seller to cure any breach thereof or to repurchase or substitute for any
affected Mortgage Loan in accordance with this Agreement.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the Mortgage Files
to the Trustee. Upon discovery by the Depositor or the Trustee of a breach
of any of the foregoing representations and warranties set forth in this
Section 2.04 (referred to herein as a "breach"), which breach materially and
adversely affects the interest of the Certificateholders, the party
discovering such breach shall give prompt written notice to the others and
to each Rating Agency.
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
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Substitutions and Repurchases.
-----------------------------
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or 2.03 shall be made more than 90 days
after the Closing Date unless the Seller delivers to the Trustee an Opinion
of Counsel, which Opinion of Counsel shall not be at the expense of either
the Trustee or the Trust Fund, addressed to the Trustee, to the effect that
such substitution will not (i) result in the imposition of the tax on
"prohibited transactions" on the Trust Fund or contributions after the
Startup Date, as defined in Sections 860F(a)(2) and 860G(d) of the Code,
respectively or (ii) cause either REMIC hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding.
(b) Upon discovery by the Depositor, the Seller, the Master
Servicer, or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code,
the party discovering such fact shall promptly (and in any event within five
(5) Business Days of discovery) give written notice thereof to the other
parties. In connection therewith, the Trustee shall require the Seller, at
the Seller's option, to either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Substitute Mortgage
Loan for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage
Loan within 90 days of such discovery in the same manner as it would a
Mortgage Loan for a breach of representation or warranty made pursuant to
Section 2.03. The Trustee shall reconvey to the Seller the Mortgage Loan to
be released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.
SECTION 2.06. Execution and Delivery of Certificates.
--------------------------------------
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed
and delivered to or upon the order of the Depositor, the Certificates in
authorized denominations evidencing directly or indirectly the entire
ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund and
exercise the rights referred to above for the benefit of all present and
future Holders of the Certificates and to perform the duties set forth in
this Agreement to the best of its ability, to the end that the interests of
the Holders of the Certificates may be adequately and effectively protected.
SECTION 2.07. REMIC Matters.
-------------
The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests
created hereby. The "Startup Day" for purposes of the REMIC Provisions shall
be the Closing Date. The "tax matters person" with respect to each REMIC
hereunder shall be the Trustee and the Trustee shall hold the Tax Matters
Person Certificate. Each REMIC's fiscal year shall be the calendar year.
SECTION 2.08. Covenants of the Master Servicer.
--------------------------------
The Master Servicer hereby covenants to the Depositor and the
Trustee as follows:
(a) the Master Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and requirements
of the insurer under each Required Insurance Policy; and
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Master Servicer
pursuant to this Agreement will contain any untrue statement of a material
fact or omit to state a material fact necessary to make such information,
certificate, statement or report not misleading.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans.
-----------------------------------------
For and on behalf of the Certificateholders, the Master Servicer
shall service and administer the Mortgage Loans in accordance with the terms
of this Agreement and customary and usual standards of practice of prudent
mortgage loan servicers. In connection with such servicing and
administration, the Master Servicer shall have full power and authority,
acting alone and/or through Servicers as provided in Section 3.02, to do or
cause to be done any and all things that it may deem necessary or desirable
in connection with such servicing and administration, including but not
limited to, the power and authority, subject to the terms hereof, (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 (but only in the manner provided in this
Agreement), (iii) to collect any Insurance Proceeds and other Liquidation
Proceeds, and (iv) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan; provided that
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the Master Servicer shall not take, or permit any Servicer to take, any
action that is inconsistent with or prejudices the interests of the Trust
Fund or the Certificateholders in any Mortgage Loan or the rights and inter-
ests of the Depositor, the Trustee and the Certificateholders under this
Agreement. The Master Servicer shall represent and protect the interests of
the Trust Fund in the same manner as it protects its own interests in
mortgage loans in its own portfolio in any claim, proceeding or litigation
regarding a Mortgage Loan and shall not make or permit any modification,
waiver or amendment of any term of any Mortgage Loan which would cause the
Trust Fund to fail to qualify as a REMIC or result in the imposition of any
tax under Section 860F(a) or Section 860G(d) of the Code. Without limiting
the generality of the foregoing, the Master Servicer, in its own name or in
the name of any Servicer or the Depositor and the Trustee, is hereby
authorized and empowered by the Depositor and the Trustee, when the Master
Servicer or the Servicer, as the case may be, believes it appropriate in its
reasonable judgment, to execute and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans, and
with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Master Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery
by either or both of them as are necessary or appropriate to enable the
Master Servicer to service and administer the Mortgage Loans to the extent
that the Master Servicer is not permitted to execute and deliver such
documents pursuant to the preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Master Servicer.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to Section
3.09, and further as provided in Section 3.11. The costs incurred by the
Master Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balances of the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
-----------------------------------------------
Servicers.
---------
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a Servicer pursuant to a Servicing Agreement; provided,
--------
however, that such subservicing arrangement and the terms of the related
- -------
subservicing agreement must provide for the servicing of such Mortgage Loans
in a manner consistent with the servicing arrangements contemplated
hereunder. Each Servicer of a Mortgage Loan shall be entitled to receive and
retain, as provided in the related Servicing Agreement and in Section 3.17,
the related Servicing Fee from payments of interest received on such Mortgage
Loan after payment of all amounts required to be remitted to the Master
Servicer in respect of such Mortgage Loan. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by the
Master Servicer in servicing the Mortgage Loans include actions taken or to
be taken by a Servicer on behalf of the Master Servicer. Each Servicing
Agreement will be based upon such terms and conditions as are generally
required or permitted by the Seller/Servicer Guide and are not inconsistent
with this Agreement and as the Master Servicer and the Servicer have agreed.
With the approval of the Master Servicer, a Servicer may delegate its
servicing obligations to third-party servicers, but such Servicer will remain
obligated under the related Servicing Agreement. The Master Servicer and
Servicer may enter into amendments to the related Servicing Agreement or a
different form of Servicing Agreement; provided, however, that any such
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amendments or different forms shall be consistent with and not violate the
provisions of either this Agreement or the Seller/Servicer Guide in a manner
which would materially and adversely affect the interests of the
Certificateholders.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect
to the Mortgage Loans that are received by a Servicer regardless of whether
such payments are remitted by the Servicer to the Master Servicer.
(c) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
use its best reasonable efforts to enforce the obligations of each Servicer
under the related Servicing Agreement, to the extent that the non-performance
of any such obligation would have material and adverse effect on a Mortgage
Loan. 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, and
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loan or (ii) from a specific
recovery of costs, expenses or attorneys fees against the party against whom
such enforcement is directed.
SECTION 3.03. Successor Servicers.
-------------------
The Master Servicer shall be entitled to terminate any Servicing
Agreement that may exist in accordance with the terms and conditions of such
Servicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Servicing
- -------- -------
Agreement by the Master Servicer or the Servicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Servicing
Agreement with a successor Servicer which will be bound by the terms of the
related Servicing Agreement. If the Master Servicer or any affiliate of the
Master Servicer acts as servicer, it will not assume liability for the
representations and warranties of the Servicer which it replaces. If the
Master Servicer enters into a Servicing Agreement with a successor Servicer,
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 Master Servicer
may, in the exercise of its business judgment, release the terminated
Servicer from liability for such representations and warranties.
SECTION 3.04. Liability of the Master Servicer.
--------------------------------
Notwithstanding any Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Servicer or references to actions taken through a Servicer or
otherwise, the Master Servicer shall remain obligated and liable to the
Trustee and Certificateholders for the servicing and administering of the
Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Servicing
Agreements or arrangements or by virtue of indemnification from the Servicer
and to the same extent and under the same terms and conditions as if the
Master Servicer alone were servicing and administering the Mortgage Loans.
The Master Servicer shall be entitled to enter into any agreement with a
Servicer or Seller for indemnification of the Master Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. No Contractual Relationship Between Servicers and
-------------------------------------------------
the Trustee.
-----------
Any Servicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Servicer
in its capacity as such and not as an originator shall be deemed to be
between the Servicer and the Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Servicer in its capacity as such except as set forth in Section 3.07.
SECTION 3.06. Rights of the Depositor and the Trustee in Respect
--------------------------------------------------
of the Master Servicer.
----------------------
The Depositor may, but is not obligated to, enforce the obligations
of the Master Servicer hereunder and may, but is not obligated to, perform,
or cause a designee to perform, any defaulted obligation of the Master
Servicer hereunder and in connection with any such defaulted obligation to
exercise the related rights of the Master Servicer hereunder; provided that
--------
the Master Servicer shall not be relieved of any of its obligations hereunder
by virtue of such performance by the Depositor or its designee. Neither the
Trustee nor the Depositor shall have any responsibility or liability for any
action or failure to act by the Master Servicer nor shall the Trustee or the
Depositor be obligated to supervise the performance of the Master Servicer
hereunder or otherwise.
SECTION 3.07. Trustee to Act as Master Servicer.
---------------------------------
In the event that the Master Servicer shall for any reason no
longer be the Master Servicer hereunder (including by reason of an Event of
Default), the Trustee or its successor shall thereupon assume all of the
rights and obligations of the Master Servicer hereunder arising thereafter
(except that the Trustee shall not be (i) liable for losses of the Master
Servicer pursuant to Section 3.12 or any acts or omissions of the predecessor
Master Servicer hereunder), (ii) obligated to make Advances if it is
prohibited from doing so by applicable law, (iii) obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder, including but not
limited to repurchases or substitutions pursuant to Section 2.02 or 2.03,
(iv) responsible for expenses of the Master Servicer pursuant to Section 2.03
or (v) deemed to have made any representations and warranties of the Master
Servicer hereunder. Any such assumption shall be subject to Section 7.02.
If the Master Servicer shall for any reason no longer be the Master Servicer
(including by reason of any Event of Default), the Trustee or its successor
shall succeed to any rights and obligations of the Master Servicer under each
Servicing Agreement. The Trustee or the successor servicer for the Trustee
shall be deemed to have assumed all of the Master Servicer's interest therein
and to have replaced the Master Servicer as a party to any Servicing
Agreement entered into by the Master Servicer as contemplated by Section 3.02
to the same extent as if the Servicing Agreement had been assigned to the
assuming party except that the Master Servicer shall not be relieved of any
liability or obligations under any such Servicing Agreement.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each Servicing Agreement or substitute servicing
agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected or held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the substitute
Servicing Agreement to the assuming party.
SECTION 3.08. Collection of Mortgage Loan Payments; Servicing
-----------------------------------------------
Accounts; Collection Account; Certificate Account;
--------------------------------------------------
Class A-9 Reserve Fund; Distribution Account.
--------------------------------------------
(a) The Master Servicer shall make reasonable efforts in
accordance with the customary and usual standards of practice of prudent
mortgage servicers to collect all payments called for under the terms and
provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charge or any
prepayment charge or penalty interest in connection with the prepayment of
a Mortgage Loan and (ii) extend the due dates for payments due on a Mortgage
Note for a period not greater than 120 days; provided, however, that
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the Master Servicer cannot extend the maturity of any such Mortgage Loan
past the date on which the final payment is due on the latest maturing
Mortgage Loan as of the Cut-off Date. In the event of any such arrangement,
the Master Servicer shall make Advances on the related Mortgage Loan in
accordance with the provisions of Section 4.01 during the scheduled period
in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. The Master Servicer
shall not be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note or
otherwise or against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing the
provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.
(b) In those cases where a Servicer is servicing Mortgage Loans
pursuant to a Servicing Agreement, the Master Servicer shall cause the
Servicer, pursuant to the Servicing Agreement, to establish and maintain one
or more Servicing Accounts, each of which shall be an Eligible Account. The
Servicer will be required under its Servicing Agreement to deposit into the
Servicing Account on a daily basis no later than the Business Day following
receipt, all proceeds of Mortgage Loans received by the Servicer, less its
Servicing Fees and unreimbursed Servicer Advances and expenses, to the extent
permitted by the Servicing Agreement. The Servicer shall not be required to
deposit in the Servicing Account payments or collections in the nature of
prepayment charges or late charges.
(c) The Master Servicer shall establish and maintain a Collection
Account into which the Master Servicer shall deposit or cause to be deposited
on or before each Withdrawal Date payments, collections and Servicer Advances
remitted by Servicers in respect of the Mortgage Loans.
(d) On or before the Withdrawal Date in each calendar month, the
Master Servicer shall cause the Servicer, pursuant to the Servicing
Agreement, to remit to the Master Servicer for deposit in the Collection
Account all funds held in the Servicing Account with respect to each Mortgage
Loan serviced by such Servicer that are required to be remitted to the Master
Servicer. The Servicer will also be required, pursuant to the Servicing
Agreement, to advance on or before each such Withdrawal Date amounts equal
to any Scheduled Payments (net of its Servicing Fees with respect thereto)
not received on any Mortgage Loans by the Servicer (such amount, a "Servicer
Advance"). The Servicer's obligation to advance with respect to each
Mortgage Loan will continue up to and including the first day of the month
following the date on which the related Mortgaged Property is sold at a
foreclosure sale or is acquired by the Trust Fund by deed in lieu of
foreclosure or otherwise. All such Servicer Advances received by the Master
Servicer shall be deposited promptly by it in the Collection Account or the
Certificate Account, as appropriate.
Within five Business Days after the receipt by a Servicer of a
Principal Prepayment in Full or any Liquidation Proceeds or Insurance
Proceeds (not required to be applied to the restoration or repair of the
related Mortgaged Property), the Master Servicer shall cause such Servicer,
pursuant to the related Servicing Agreement, to remit such amounts to the
Master Servicer for deposit in the Collection Account.
(e) The Master Servicer shall establish and maintain a Certificate
Account into which the Master Servicer shall deposit or cause to be deposited
on a daily basis within one Business Day of receipt, except as otherwise
specifically provided herein, the following payments and collections remitted
by Servicers or received by it in respect of Mortgage Loans subsequent to the
Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and the following amounts
required to be deposited hereunder:
(i) all payments on account of principal on the Mortgage
Loans, including Principal Prepayments and the principal component of any
Servicer Advance;
(ii) all payments on account of interest on the Mortgage
Loans, net of the sum of the related Master Servicing Fee and related
Servicing Fee, and the interest component of any Servicer Advance;
(iii) all Insurance Proceeds and Liquidation Proceeds (net of
any related expenses of the related Servicer), other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or released
to the Mortgagor in accordance with the Master Servicer's normal servicing
procedures;
(iv) any amount required to be deposited by the Master
Servicer pursuant to Section 3.08(h) in connection with any losses on
Permitted Investments;
(v) any amounts required to be deposited by the Master
Servicer pursuant to Sections 3.12 and 3.14;
(vi) all Purchase Prices from the Master Servicer or Seller
and all Substitution Adjustment Amounts;
(vii) all Advances made by the Master Servicer pursuant to
Section 4.01; and
(viii) any other amounts required to be deposited hereunder.
In addition, with respect to any Mortgage Loan that is subject to
a buydown agreement, on each Due Date for such Mortgage Loan, in addition to
the monthly payment remitted by the Mortgagor, the Master Servicer shall
cause funds to be deposited into the Certificate Account in an amount
required to cause an amount of interest to be paid with respect to such
Mortgage Loan equal to the amount of interest that has accrued on such
Mortgage Loan from the preceding Due Date at the Mortgage Rate net of the
Master Servicing Fee on such date.
The foregoing requirements for remittance by the Master Servicer
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment penalties,
late payment charges or assumption fees, if collected, need not be remitted
by the Master Servicer. In the event that the Master Servicer shall remit
any amount not required to be remitted, it may at any time withdraw or direct
the institution maintaining the Certificate Account to withdraw such amount
from the Certificate Account, any provision herein to the contrary
notwithstanding. Such withdrawal or direction may be accomplished by
delivering written notice thereof to the Trustee or such other institution
maintaining the Certificate Account which describes the amounts deposited in
error in the Certificate Account. The Master Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this
Section 3.08. All funds deposited in the Certificate Account shall be held
in trust for the Certificateholders until withdrawn in accordance with
Section 3.11.
(f) The Trustee shall establish and maintain the Class A-9 Reserve
Fund which shall be an Eligible Account into which there shall have been
deposited the amount of $24,000 on the Closing Date. No additional funds
will be deposited in either the Reserve Fund after the Closing Date. All
funds deposited in the Class A-9 Reserve Fund and all interest thereon shall
be held in trust for the benefit of the Holders of the Class A-9 Certificates
until withdrawn in accordance with Section 3.11. Lehman Brothers Inc. will
be the beneficial owner of the Class A-9 Reserve Fund for all federal income
tax purposes.
(g) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly
upon receipt, deposit in the Distribution Account and retain therein the
following:
(i) the aggregate amount remitted by the Master Servicer to
the Trustee pursuant to Section 3.11(a);
(ii) any amount deposited by the Master Servicer pursuant to
Section 3.08(h) in connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder which are required
to be deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw
such amount from the Distribution Account, any provision herein to the
contrary notwithstanding. Such direction may be accomplished by delivering
an Officer's Certificate to the Trustee which describes the amounts deposited
in error in the Distribution Account. All funds deposited in the
Distribution Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.11. In no event shall the Trustee
incur liability for withdrawals from the Distribution Account at the
direction of the Master Servicer.
(h) Each institution at which the Certificate Account, the Class
A-9 Reserve Fund or the Distribution Account is maintained shall invest the
funds therein as directed in writing by the Master Servicer in Permitted
Investments, which shall mature not later than (i) in the case of the
Certificate Account or the Class A-9 Reserve Fund, the second Business Day
next preceding the related Distribution Account Deposit Date (except that if
such Permitted Investment is an obligation of the institution that maintains
such account, then such Permitted Investment shall mature not later than the
Business Day next preceding such Distribution Account Deposit Date) and (ii)
in the case of the Distribution Account, the Business Day next preceding the
Distribution Date (except that if such Permitted Investment is an obligation
of the institution that maintains such account, then such Permitted
Investment shall mature not later than such Distribution Date) and, in each
case, shall not be sold or disposed of prior to its maturity. All such
Permitted Investments shall be made in the name of the Trustee, for the
benefit of the Certificateholders. All income and gain (net of any losses)
realized from any such investment of funds on deposit in the Certificate
Account or the Distribution Account shall be for the benefit of the Master
Servicer as servicing compensation and shall be remitted to it monthly as
provided herein. The amount of any realized losses in the Certificate
Account or the Distribution Account incurred in any such account in respect
of any such investments shall promptly be deposited by the Master Servicer
in the Certificate Account or paid to the Trustee for deposit into the
Distribution Account, as applicable. All income or gain (net of any losses)
realized from any such investment of funds on deposit in the Class A-9
Reserve Fund shall be credited to such Class A-9 Reserve Fund. The Trustee
in its fiduciary capacity shall not be liable for the amount of any loss
incurred in respect of any investment or lack of investment of funds held in
the Certificate Account, the Class A-9 Reserve Fund or the Distribution
Account and made in accordance with this Section 3.08.
(i) The Master Servicer shall give notice to the Trustee, the
Seller, each Rating Agency and the Depositor of any proposed change of the
location of the Certificate Account not later than 30 days and not more than
45 days prior to any change thereof. The Trustee shall give notice to the
Master Servicer, the Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Distribution Account not later than
30 days and not more than 45 days prior to any change thereof.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
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Escrow Accounts.
---------------
(a) To the extent required by the related Mortgage Note and not
violative of current law, the Master Servicer shall cause each Servicer to
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances
by the Servicer) for the payment of taxes, assessments, hazard insurance
premiums or comparable items for the account of the Mortgagors. Nothing
herein shall require the Master Servicer or any Servicer to compel a
Mortgagor to establish an Escrow Account in violation of applicable law.
(b) Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium or PUD association dues, or comparable items,
to reimburse the Master Servicer or the related Servicer out of related
collections for any payments made pursuant to Sections 3.12 (with respect to
taxes and assessments and insurance premiums) and 3.13 (with respect to
hazard insurance), to refund to any Mortgagors any sums determined to be
overages, to pay interest, if required by law or the terms of the related
Mortgage or Mortgage Note, to Mortgagors on balances in the Escrow Account
or to clear and terminate the Escrow Account at the termination of this
Agreement in accordance with Section 9.01. The Escrow Accounts shall not be
a part of the Trust Fund.
(c) The Master Servicer shall advance any payments referred to in
Section 3.09(a) that are not timely paid by the Mortgagors or advanced by the
Servicers on the date when the tax, premium or other cost for which such
payment is intended is due, but the Master Servicer shall be required so to
advance only to the extent that such advances, in the good faith judgment of
the Master Servicer, will be recoverable by the Master Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise.
SECTION 3.10. Access to Certain Documentation and Information
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Regarding the Mortgage Loans.
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The Master Servicer shall afford, or shall cause the Servicers to
afford, the Depositor and the Trustee reasonable access to all records and
documentation regarding the Mortgage Loans and all accounts, insurance
information and other matters relating to this Agreement, such access being
afforded without charge, but only upon reasonable request and during normal
business hours at the office designated by the Master Servicer.
Upon reasonable advance notice in writing, the Master Servicer will
provide, or will cause the Servicers to provide, to each Certificateholder
which is a savings and loan association, bank or insurance company certain
reports and reasonable access to information and documentation regarding the
Mortgage Loans sufficient to permit such Certificateholder to comply with
applicable regulations of the OTS or other regulatory authorities with
respect to investment in the Certificates; provided that the Master Servicer
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and any Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Master Servicer or such
Servicer in providing such reports and access.
SECTION 3.11. Permitted Withdrawals from the Certificate Account,
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the Class A-9 Reserve Fund and the Distribution
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Account.
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(a) The Master Servicer may from time to time make withdrawals
from the Certificate Account for the following purposes:
(i) to pay to the Master Servicer or the related Servicer (to
the extent not previously retained), the servicing compensation to which it
is entitled pursuant to Section 3.17, and to pay to the Master Servicer, as
additional master servicing compensation, earnings on or investment income
with respect to funds in or credited to the Certificate Account;
(ii) to reimburse the Master Servicer or the related Servicer
for unreimbursed Advances or Servicer Advances made by it, such right of
reimbursement pursuant to this subclause (ii) being limited to amounts
received on the Mortgage Loan(s) in respect of which any such Advance or
Servicer Advance was made;
(iii) to reimburse the Master Servicer for any Nonrecoverable
Advance previously made;
(iv) to reimburse the Master Servicer for Insured Expenses
from the related Insurance Proceeds;
(v) to reimburse the Master Servicer for (a) unreimbursed
Servicing Advances, the Master Servicer's right to reimbursement pursuant to
this clause (a) with respect to any Mortgage Loan being limited to amounts
received on such Mortgage Loan(s) which represent late recoveries of the
payments for which such advances were made pursuant to Section 3.01 or
Section 3.09 and (b) for unpaid Master Servicing Fees as provided in Section
3.14;
(vi) to pay to the purchaser, with respect to each Mortgage
Loan or property acquired in respect thereof that has been purchased pursuant
to Section 2.02, 2.03 or 3.14, all amounts received thereon after the date
of such purchase;
(vii) to reimburse the Seller, the Master Servicer or the
Depositor for expenses incurred by any of them and reimbursable pursuant to
Section 6.03;
(viii) to withdraw any amount deposited in the Certificate
Account and not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date, to
withdraw an amount equal to the related Available Funds and the Trustee Fee
for such Distribution Date, to the extent on deposit, and remit such amount
to the Trustee for deposit in the Distribution Account; and
(x) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to such subclauses (i),
(ii), (iv), (v) and (vi). Prior to making any withdrawal from the
Certificate Account pursuant to subclause (iii), the Master Servicer shall
deliver to the Trustee an Officer's Certificate of a Servicing Officer
indicating the amount of any previous Advance determined by the Master
Servicer to be a Nonrecoverable Advance and identifying the related Mortgage
Loan(s) and their respective portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account
for distributions to Certificateholders and Financial Security, and deposits
to the Class A-9 Rounding Account, in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn the amount of any taxes that
it is authorized to withhold pursuant to the last paragraph of Section 8.11).
In addition, the Trustee may from time to time make withdrawals from the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related
Distribution Date;
(ii) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds in the
Distribution Account;
(iii) to withdraw and return to the Master Servicer any amount
deposited in the Distribution Account and not required to be deposited
therein; and
(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01.
(c) The Trustee shall from time to time make withdrawals from the
Class A-9 Reserve Fund on behalf of the Trust Fund for the following
purposes:
(A) on or prior to each Distribution Account Deposit Date, to
withdraw from the Class A-9 Reserve Fund an amount equal to the lesser of (a)
any Class A-9 Net Prepayment Interest Shortfall for the related Distribution
Date, and (b) the amount on deposit in the Class A-9 Reserve Fund, and remit
such amount to the Distribution Account for distribution to the Class A-9
Certificateholders on such Distribution Date;
(B) on the earlier of (a) the Distribution Date on which the
Class Certificate Balance of the Class A-9 Certificates is reduced to zero
and (b) the termination of this Agreement pursuant to Section 9.01, to clear
and terminate the Class A-9 Reserve Fund and to pay all amounts on deposit
therein to Lehman Brothers Inc. at the address supplied by it to the Trustee
for such purpose.
SECTION 3.12. Maintenance of Hazard Insurance; Maintenance of
-----------------------------------------------
Primary Insurance Policies.
--------------------------
(a) The Master Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance with extended coverage in an amount that is
at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan or (ii) the greater of (y) the
outstanding principal balance of the Mortgage Loan and (z) an amount such
that the proceeds of such policy shall be sufficient to prevent the Mortgagor
and/or the mortgagee from becoming a co-insurer. Each such policy of
standard hazard insurance shall contain, or have an accompanying endorsement
that contains, a standard mortgagee clause. To the extent it may do so
without breaching the related Servicing Agreement, the Master Servicer shall
replace any Servicer that does not cause such insurance, to the extent it is
available, to be maintained. Any amounts collected by the Master Servicer
under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or amounts released
to the Mortgagor in accordance with the Master Servicer's normal servicing
procedures) shall be deposited in the Certificate Account or the related
Servicing Account, as applicable. Any cost incurred by the Master Servicer
or any Servicer in maintaining any such insurance shall not, for the purpose
of calculating monthly distributions to the Certificateholders or remittances
to the Trustee for their benefit, be added to the principal balance of the
Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so permit.
Such costs shall be recoverable by the Master Servicer out of late payments
by the related Mortgagor or out of Liquidation Proceeds to the extent
permitted by Section 3.11. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage other than pursuant
to such applicable laws and regulations as shall at any time be in force and
as shall require such additional insurance. If the Mortgaged Property is
located at the time of origination of the Mortgage Loan in a federally
designated special flood hazard area and such area is participating in the
national flood insurance program, the Master Servicer shall cause flood
insurance to be maintained with respect to such Mortgage Loan. Such flood
insurance shall be in an amount equal to the least of (i) the original
principal balance of the related Mortgage Loan, (ii) the replacement value
of the improvements which are part of such Mortgaged Property, and (iii) the
maximum amount of such insurance available for the related Mortgaged Property
under the national flood insurance program.
In the event that the Master Servicer shall obtain and maintain a
blanket policy insuring against hazard losses on all of the Mortgage Loans,
it shall conclusively be deemed to have satisfied its obligations as set
forth in the first sentence of this Section 3.12, it being understood and
agreed that such policy may contain a deductible clause on terms
substantially equivalent to those commercially available and maintained by
comparable servicers. If such policy contains a deductible clause, the
Master Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property a policy complying with the first sentence
of this Section 3.12, and there shall have been a loss that would have been
covered by such policy, deposit in the Certificate Account the amount not
otherwise payable under the blanket policy because of such deductible clause.
In connection with its activities as Master Servicer of the Mortgage Loans,
the Master Servicer agrees to present, on behalf of itself, the Depositor,
and the Trustee for the benefit of the Certificateholders, claims under any
such blanket policy.
(b) The Master Servicer shall not take, or permit any Servicer to
take, any action which would result in non-coverage under any applicable
Primary Insurance Policy of any loss which, but for the actions of the Master
Servicer or any Servicer, would have been covered thereunder. The Master
Servicer shall not cancel or refuse to renew any such Primary Insurance
Policy that is in effect at the date of the initial issuance of the Certif-
icates and is required to be kept in force hereunder unless the replacement
Primary Insurance Policy for such canceled or non-renewed policy is
maintained with a Qualified Insurer. The Master Servicer shall not be
required to maintain any Primary Insurance Policy with respect to any
Mortgage Loan with a Loan-to-Value Ratio less than or equal to 80% as of any
date of determination or, based on a new appraisal, the principal balance of
such Mortgage Loan represents 80% or less of the new Appraised Value. The
Master Servicer agrees to effect the timely payment of the premiums on each
Primary Insurance Policy, and such costs not otherwise recoverable shall be
recoverable by the Master Servicer from the related liquidation proceeds.
In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present, or cause the related
Servicer to present, on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Primary Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Insurance Policies respecting
defaulted Mortgage Loans. Any amounts collected by a Servicer or the Master
Servicer under any Primary Insurance Policies shall be deposited in the
Servicing Account, the Collection Account or the Certificate Account, as
applicable.
SECTION 3.13. Enforcement of Due-On-Sale Clauses; Assumption
----------------------------------------------
Agreements.
----------
(a) Except as otherwise provided in this Section 3.13, when any
property subject to a Mortgage has been conveyed by the Mortgagor, the Master
Servicer or the related Servicer shall to the extent that it has knowledge
of such conveyance, enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will
not adversely affect or jeopardize coverage under any Required Insurance
Policy. Notwithstanding the foregoing, neither the Master Servicer nor the
related Servicer is required to exercise such rights with respect to a
Mortgage Loan if the Person to whom the related Mortgaged Property has been
conveyed or is proposed to be conveyed satisfies the terms and conditions
contained in the Mortgage Note and Mortgage related thereto and the consent
of the mortgagee under such Mortgage Note or Mortgage is not otherwise so
required under such Mortgage Note or Mortgage as a condition to such
transfer. In the event that (i) the Master Servicer or the related Servicer
is prohibited by law from enforcing any such due-on-sale clause, (ii)
coverage under any Required Insurance Policy would be adversely affected,
(iii) the Mortgage Note does not include a due-on-sale clause or (iv)
nonenforcement is otherwise permitted hereunder, the Master Servicer is
authorized, subject to Section 3.13(b), to take or enter into an assumption
and modification agreement from or with the person to whom such property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Mortgage Note and, unless prohibited by applicable state law, the
Mortgagor remains liable thereon, provided that the Mortgage Loan shall
--------
continue to be covered (if so covered before the Master Servicer enters such
agreement) by the applicable Required Insurance Policies. The Master Servicer,
subject to Section 3.13(b), is also authorized with the prior approval of the
insurers under any Required Insurance Policies to enter into a substitution of
liability agreement with such Person, pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the Mortgage Note. Notwithstanding the foregoing, the
Master Servicer shall not be deemed to be in default under this Section 3.13
by reason of any transfer or assumption which the Master Servicer reasonably
believes it is restricted by law from preventing, for any reason whatsoever.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.13(a), in any case
in which a Mortgaged Property has been conveyed to a Person by a Mortgagor,
and such Person is to enter into an assumption agreement or modification
agreement or supplement to the Mortgage Note or Mortgage that requires the
signature of the Trustee, or if an instrument of release signed by the
Trustee is required releasing the Mortgagor from liability on the Mortgage
Loan, the Master Servicer shall prepare and deliver or cause to be prepared
and delivered to the Trustee for signature and shall direct, in writing, the
Trustee to execute the assumption agreement with the Person to whom the
Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding
assumptions or the transfer of the Mortgaged Property to such Person. In
connection with any such assumption, no material term of the Mortgage Note
may be changed. In addition, the substitute Mortgagor and the Mortgaged
Property must be acceptable to the Master Servicer in accordance with its
underwriting standards as then in effect. Together with each such
substitution, assumption or other agreement or instrument delivered to the
Trustee for execution by it, the Master Servicer shall deliver an Officer's
Certificate signed by a Servicing Officer stating that the requirements of
this subsection have been met in connection therewith. The Master Servicer
shall notify, or cause the related Servicer to notify, the Trustee that any
such substitution or assumption agreement has been completed by forwarding
to the Trustee the original of such substitution or assumption agreement,
which in the case of the original 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. Any fee collected by the Master Servicer or any Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Master Servicer as additional master servicing compensation.
SECTION 3.14. Realization Upon Defaulted Mortgage Loans;
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Repurchase of Certain Mortgage Loans.
------------------------------------
The Master Servicer shall use reasonable efforts 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.
In connection with such foreclosure or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable, as shall be normal and usual in its general mortgage servicing
activities and as shall meet the requirements of the insurer under any
Required Insurance Policy; provided, however, that with the prior written
-------- -------
consent of Financial Security, the Servicer may enter into, and shall give
the Rating Agencies notice of, a special servicing agreement with an
unaffiliated holder of 100% Percentage Interest of one or more Classes of
Subordinated Certificates or a holder of a class of securities representing
interests in one or more Classes of Subordinated Certificates and provided,
--------
further, that entering into such special servicing agreement shall not result
- -------
in the downgrading or withdrawal of the respective ratings when assigned to
the Certificates. Any such agreement may contain provisions whereby such
holder may instruct the Servicer to commence or delay foreclosure proceedings
with respect to delinquent Mortgage Loans and will contain provisions for the
deposit of cash by the holder that would be available for distribution to
Certificateholders if Liquidation Proceeds are less than they otherwise may
have been had the Servicer acted in accordance with its normal procedures.
Notwithstanding the foregoing, the Master Servicer shall not be required to
expend its own funds in connection with any foreclosure or towards the
restoration of any property unless it shall determine (i) that such
restoration and/or foreclosure will increase the proceeds of liquidation of
the Mortgage Loan after reimbursement to itself of such expenses and (ii)
that such expenses will be recoverable to it through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Certificate Account). The Master Servicer shall be responsible for all other
costs and expenses incurred by it in any such proceedings; provided, however,
-------- -------
that it shall be entitled to reimbursement thereof from the liquidation
proceeds with respect to the related Mortgaged Property, as provided in the
definition of Liquidation Proceeds. If the Master Servicer has knowledge
that a Mortgaged Property which the Master Servicer is contemplating
acquiring in foreclosure or by deed in lieu of foreclosure is located within
a 1 mile radius of any site listed in the Expenditure Plan for the Hazardous
Substance Clean Up Bond Act of 1984 or other site with environmental or
hazardous waste risks known to the Master Servicer, the Master Servicer will,
prior to acquiring the Mortgaged Property, consider such risks and only take
action in accordance with its established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the Certificate-
holders, or its nominee, on behalf of the Certificateholders. The Trustee's
name shall be placed on the title to such REO Property solely as the Trustee
hereunder and not in its individual capacity. The Master Servicer shall
ensure that the title to such REO Property references the Pooling and
Servicing Agreement and the Trustee's capacity hereunder. Pursuant to its
efforts to sell such REO Property, the Master Servicer shall either itself
or through an agent selected by the Master Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Certificateholders for the period prior to the sale of such
REO Property. The Master Servicer shall prepare for and deliver to the
Trustee a statement with respect to each REO Property that has been rented
showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Trustee to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Certificate Account no later
than the close of business on each Determination Date. The Master Servicer
shall perform the tax reporting and withholding required by Sections 1445 and
6050J of the Code with respect to foreclosures and abandonments, the tax
reporting required by Section 6050H of the Code with respect to the receipt
of mortgage interest from individuals and, if required by Section 6050P of
the Code with respect to the cancellation of indebtedness by certain
financial entities, by preparing such tax and information returns as may be
required, in the form required, and delivering the same to the Trustee for
filing.
In the event that the Trust Fund acquires any Mortgaged Property
as aforesaid or otherwise in connection with a default or imminent default
on a Mortgage Loan, the Master Servicer shall dispose of such Mortgaged
Property prior to two years after its acquisition by the Trust Fund unless
the Trustee shall have been supplied with an Opinion of Counsel to the effect
that the holding by the Trust Fund of such Mortgaged Property subsequent to
such two-year period will not result in the imposition of taxes on
"prohibited transactions" on either REMIC as defined in section 860F of the
Code or cause either REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to
hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement,
no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed
to continue to be rented) or otherwise used for the production of income by
or on behalf of the Trust Fund in such a manner or pursuant to any terms that
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or
(ii) subject either REMIC to the imposition of any federal, state or local
income taxes on the income earned from such Mortgaged Property under Section
860G(c) of the Code or otherwise, unless the Master Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of
any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of
bringing such a proceeding. The income earned from the management of any REO
Properties, net of reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such management
and net of unreimbursed Master Servicing Fees, Servicing Fees, Advances,
Servicer Advances and Servicing Advances, shall be applied to the payment of
principal of and interest on the related defaulted Mortgage Loans (with
interest accruing as though such Mortgage Loans were still current and
adjustments, if applicable, to the Mortgage Rate were being made in
accordance with the terms of the Mortgage Note) and all such income shall be
deemed, for all purposes in this Agreement, to be payments on account of
principal and interest on the related Mortgage Notes and shall be deposited
into the Certificate Account. To the extent the net income received during
any calendar month is in excess of the amount attributable to amortizing
principal and accrued interest at the related Mortgage Rate on the related
Mortgage Loan for such calendar month, such excess shall be considered to be
a partial prepayment of principal of the related Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as
any income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Master Servicer or the related Servicer
for any related unreimbursed Servicing Advances, Master Servicing Fees and
Servicing Fees, as applicable; second, to reimburse the Master Servicer or
the related Servicer for any unreimbursed Advances or Servicer Advances, as
applicable, and to reimburse the Certificate Account for any Nonrecoverable
Advances (or portions thereof) that were previously withdrawn by the Master
Servicer pursuant to Section 3.11(a)(iii) that related to such Mortgage Loan;
third, to accrued and unpaid interest (to the extent no Advance or Servicer
Advance has been made for such amount or any such Advance or Servicer Advance
has been reimbursed) on the Mortgage Loan or related REO Property, at the
Adjusted Net Mortgage Rate to the Due Date occurring in the month in which
such amounts are required to be distributed; and fourth, as a recovery of
principal of the Mortgage Loan. Excess Proceeds, if any, from the
liquidation of a Liquidated Mortgage Loan will be retained by the Master
Servicer as additional servicing compensation pursuant to Section 3.17.
The Master Servicer, in its sole discretion, shall have the right
to purchase for its own account from the Trust Fund any Mortgage Loan which
is 91 days or more delinquent at a price equal to the Purchase Price. The
Purchase Price for any Mortgage Loan purchased hereunder shall be deposited
in the Certificate Account and the Trustee, upon receipt of a certificate
from the Master Servicer in the form of Exhibit N hereto, shall release or
cause to be released to the purchaser of such Mortgage Loan the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment prepared by the purchaser of such Mortgage Loan, in each case
without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser
of such Mortgage Loan shall succeed to all the Trustee's right, title and
interest in and to such Mortgage Loan and all security and documents related
thereto. Such assignment shall be an assignment outright and not for
security. The purchaser of such Mortgage Loan shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation
to the Trustee or the Certificateholders with respect thereto.
SECTION 3.15. Trustee to Cooperate; Release of Mortgage Files.
-----------------------------------------------
Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Master Servicer will immediately
notify the Trustee by delivering, or causing to be delivered, a "Request for
Release" substantially in the form of Exhibit N. Upon receipt of such
request, the Trustee shall promptly release the related Mortgage File to the
Master Servicer, and the Trustee shall at the Master Servicer's direction
execute and deliver to the Master Servicer the request for reconveyance, deed
of reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Mortgage in each case provided by the Master
Servicer, together with the Mortgage Note with written evidence of cancella-
tion thereon. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the related
Mortgagor. From time to time and as shall be appropriate for the servicing
or foreclosure of any Mortgage Loan, including for such purpose collection
under any policy of flood insurance, any fidelity bond or errors or omissions
policy, or for the purposes of effecting a partial release of any Mortgaged
Property from the lien of the Mortgage or the making of any corrections to
the Mortgage Note or the Mortgage or any of the other documents included in
the Mortgage File, the Trustee shall, upon delivery to the Trustee of a
Request for Release in the form of Exhibit M signed by a Servicing Officer,
release the Mortgage File to the Master Servicer or, at the Master Servicer's
direction, to the related Servicer. Subject to the further limitations set
forth below, the Master Servicer shall cause the Mortgage File or documents
so released to be returned to the Trustee when the need therefor by the
Master Servicer no longer exists, unless the Mortgage Loan is liquidated and
the proceeds thereof are deposited in the Certificate Account, in which case
the Master Servicer shall deliver to the Trustee a Request for Release in the
form of Exhibit N, signed by a Servicing Officer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the
Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure
or any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to
enforce any other remedies or rights provided by the Mortgage Note or the
Mortgage or otherwise available at law or in equity.
SECTION 3.16. Documents, Records and Funds in Possession of the
-------------------------------------------------
Master Servicer to be Held for the Trustee.
------------------------------------------
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully
to the Trustee for any funds received by the Master Servicer or which
otherwise are collected by the Master Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan. 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, including but not limited to,
any funds on deposit in the Certificate Account, shall be held by the Master
Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions
of this Agreement. The Master Servicer also agrees that it shall not create,
incur or subject any Mortgage File or any funds that are deposited in the
Certificate Account, Distribution Account or any Escrow Account or Servicing
Account, or any funds that otherwise are or may become due or payable to the
Trustee for the benefit of the Certificateholders, to any claim, lien,
security interest, judgment, levy, writ of attachment or other encumbrance,
or assert by legal action or otherwise any claim or right of setoff against
any Mortgage File or any funds collected on, or in connection with, a
Mortgage Loan, except, however, that the Master Servicer shall be entitled
to set off against and deduct from any such funds any amounts that are
properly due and payable to the Master Servicer under this Agreement.
SECTION 3.17. Servicing Compensation.
----------------------
As compensation for its activities hereunder, the Master Servicer
shall be entitled out of each payment of interest on a Mortgage Loan (or
portion thereof) included in the Trust Fund to retain or withdraw from the
Certificate Account an amount equal to the Master Servicing Fee for such
Distribution Date.
Additional master servicing compensation in the form of Excess
Proceeds, prepayment penalties, assumption fees, late payment charges and all
income and gain net of any losses realized from Permitted Investments shall
be retained by the Master Servicer to the extent not required to be deposited
in the Certificate Account pursuant to Section 3.08. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder (including payment of any premiums for hazard
insurance and any Primary Insurance Policy and maintenance of the other forms
of insurance coverage required by this Agreement) and shall not be entitled
to reimbursement therefor except as specifically provided in this Agreement.
As compensation for is activities under its Servicing Agreement,
each Servicer shall be entitled to retain out of each payment of interest on
a Mortgage Loan (or portion thereof) included in the Trust Fund an amount
equal to interest at the applicable Servicing Fee Rate on the Stated
Principal Balance of the related Mortgage Loan for the period covered by such
interest payment.
Additional servicing compensation in the form of prepayment
penalties, assumption fees and late payment charges shall be retained by the
Servicers to the extent not required to be deposited in the Servicing
Accounts pursuant to the related Servicing Agreement. Each Servicer shall
be required to pay all expenses incurred by it in connection with its
servicing activities under its Servicing Agreement (including payment of any
premium for hazard insurance and any Primary Insurance Policy and maintenance
of the other forms of insurance coverage required by this Agreement and its
Servicing Agreement) and shall not be entitled to reimbursement therefor
except as specifically provided in its Servicing Agreement and not
inconsistent with this Agreement.
In the event of any Prepayment Interest Shortfall, the aggregate
Master Servicing Fee for such Distribution Date shall be reduced (but not
below zero) by an amount equal to such Prepayment Interest Shortfall.
SECTION 3.18. Access to Certain Documentation.
-------------------------------
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Holders of Subordinated
Certificates and the examiners and supervisory agents of the OTS, the FDIC
and such other authorities, access to the documentation regarding the
Mortgage Loans required by applicable regulations of the OTS and the FDIC.
Such access shall be afforded without charge, but only upon reasonable and
prior written request and during normal business hours at the offices
designated by the Master Servicer. Nothing in this Section 3.18 shall limit
the obligation of the Master Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the
failure of the Master Servicer or any Servicer to provide access as provided
in this Section 3.18 as a result of such obligation shall not constitute a
breach of this Section 3.18.
SECTION 3.19. Annual Statement as to Compliance.
---------------------------------
The Master Servicer shall deliver to the Depositor and the Trustee
on or before 120 days after the end of the Master Servicer's fiscal year,
commencing with its 1996 fiscal year, an Officer's Certificate stating, as
to the signer thereof, that (i) a review of the activities of the Master
Servicer during the preceding calendar year and of the performance of the
Master Servicer under this Agreement has been made under such officer's
supervision, (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof and (iii) to the best of such
officer's knowledge, each Servicer has fulfilled all its obligations under
its Servicing 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 officer and the nature and status thereof. The Trustee shall forward
a copy of each such statement to each Rating Agency.
SECTION 3.20. Annual Independent Public Accountants' Servicing
------------------------------------------------
Statement; Financial Statements.
-------------------------------
On or before 120 days after the end of the Master Servicer's fiscal
year, commencing with its 1996 fiscal year, the Master Servicer at its
expense shall cause a nationally or regionally recognized firm of independent
public accountants (who may also render other services to the Servicer, the
Seller or any affiliate thereof) which is a member of the American Institute
of Certified Public Accountants to furnish a statement to the Trustee and the
Depositor to the effect that such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans under this Agreement
or of mortgage loans under pooling and servicing agreements substantially
similar to this Agreement (such statement to have attached thereto a schedule
setting forth the pooling and servicing agreements covered thereby) and that,
on the basis of such examination, conducted substantially in compliance with
the Uniform Single Audit Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for FNMA and FHLMC, such servicing has been conducted
in compliance with such pooling and servicing agreements except for such
significant exceptions or errors in records that, in the opinion of such
firm, the Uniform Single Attestation Program for Mortgage Bankers or the
Audit Program for Mortgages serviced for FNMA and FHLMC requires it to
report. In rendering such statement, such firm may rely, as to matters
relating to direct servicing of mortgage loans by Subservicers, upon
comparable statements for examinations conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages serviced for FNMA and FHLMC (rendered within one year
of such statement) of independent public accountants with respect to the
related Subservicer. Copies of such statement shall be provided by the
Trustee to any Certificateholder upon request at the Master Servicer's
expense, provided that such statement is delivered by the Master
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Servicer to the Trustee.
SECTION 3.21. Errors and Omissions Insurance; Fidelity Bonds.
----------------------------------------------
The Master Servicer shall obtain and maintain in force, and shall
cause each Servicer to obtain and maintain in force, (a) a policy or policies
of insurance covering errors and omissions in the performance of its
obligations as Master Servicer hereunder or as Servicer under its Servicing
Agreement, as the case may be, and (b) a fidelity bond in respect of its
officers, employees and agents. Each such policy or policies and bond shall,
together, comply with the requirements from time to time of FNMA or FHLMC for
persons performing servicing for mortgage loans purchased by FNMA or FHLMC.
In the event that any such policy or bond ceases to be in effect, the Master
Servicer shall obtain a comparable replacement policy or bond from an insurer
or issuer meeting the requirements set forth above as of the date of such
replacement.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances.
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The Master Servicer shall determine on or before each Master
Servicer Advance Date whether it is required to make an Advance pursuant to
the definition thereof. If the Master Servicer determines it is required to
make an Advance, it shall, on or before the Master Servicer Advance Date,
either (i) deposit into the Certificate Account an amount equal to the
Advance or (ii) make an appropriate entry in its records relating to the
Certificate Account that any Amount Held for Future Distribution has been
used by the Master Servicer in discharge of its obligation to make any such
Advance. Any funds so applied shall be replaced by the Master Servicer by
deposit in the Certificate Account no later than the close of business on the
next Master Servicer Advance Date. The Master Servicer shall be entitled to
be reimbursed from the Certificate Account for all Advances of its own funds
made pursuant to this Section 4.01 as provided in Section 3.11. The
obligation to make Advances with respect to any Mortgage Loan shall continue
if such Mortgage Loan has been foreclosed or otherwise terminated and the
related Mortgaged Property has not been liquidated. The Master Servicer
shall inform the Trustee of the amount of the Advance to be made on each
Master Servicer Advance Date no later than the second Business Day before the
related Distribution Date.
The Master Servicer shall deliver to the Trustee on the related
Master Servicer Advance Date an Officer's Certificate of a Servicing Officer
indicating the amount of any proposed Advance determined by the Master
Servicer to be a Nonrecoverable Advance.
SECTION 4.02. Priorities of Distribution.
--------------------------
(a) On each Distribution Date, the Trustee shall withdraw the
Available Funds from the Distribution Account and apply such funds to
distributions on the Certificates and to the payment of the Aggregate FSA
Premium, in the following order and priority and, in each case, to the extent
of Available Funds remaining:
(i) as long as no Financial Security Default exists, to
Financial Security, the Aggregate FSA Premium;
(ii) to each interest-bearing Class of Senior Certificates,
an amount allocable to interest equal to the related Class Optimal Interest
Distribution Amount, any shortfall being allocated pro rata among such
Classes in proportion to the amount of the Class Optimal Interest
Distribution Amount that would have been distributed in the absence of such
shortfall;
(iii) (Reserved for distribution of Accrual Amount, if
any.)
(iv) to each Class of Senior Certificates concurrently as
follows:
(x) to the Class PO Certificates, an amount allocable
to principal equal to the PO Formula Principal Amount, up to the outstanding
Class Certificate Balance of the Class PO Certificates;
(y) on each Distribution Date prior to the Senior Credit
Support Depletion Date, the Non-PO Formula Principal Amount, up to the amount
of the Senior Principal Distribution Amount for such Distribution Date will
be distributed as principal to the following Classes of Senior Certificates,
in the following order of priority:
(1) to the Class A-11 Certificates, the Priority
Amount, until the Class Certificate Balance has been reduced to zero;
(2) if such Distribution Date in on or after
September 25, 1999, the lesser of $20,000 and the Senior Principal
Distribution Amount after distributions pursuant to (1) above, to the Class
A-9 Certificates, until the Class Certificate Balance has been reduced to
zero;
(3) concurrently, 68.75% to the Class A-1
Certificates and 31.25% to the Class A-10 Certificates, until the Class
Certificate Balance of the Class A-1 Certificates has been reduced to zero;
(4) concurrently, 85.9375% to the Class A-2
Certificates and 14.0625% to the Class A-10 Certificates, until an aggregate
amount of $16,256,000 has been paid pursuant to this step (iv);
(5) concurrently, 30.890612463% to the Class A-2
Certificates, 64.0545600428% to the Class A-3 Certificates and 5.0548274940%
to the Class A-10 Certificates, until the Class Certificate Balances thereof
have been reduced to zero;
(6) concurrently, 69.6214836867% to the Class A-4
Certificates and 30.3785163133% to the Class A-6 Certificates, until the
Class Certificate Balance of the Class A-4 Certificates has been reduced to
zero;
(7) concurrently, 69.6214836867% to the Class A-5
Certificates and 30.3785163133% to the Class A-6 Certificates, until the
Class Certificate Balances thereof have been reduced to zero;
(8) sequentially to the Class A-7, Class A-R,
Class A-9 and Class A-11 Certificates, in that order, until the respective
Class Certificate Balances thereof have been reduced to zero;
(v) to the Class PO Certificates, any Class PO Deferred
Amount, up to an amount not to exceed the amount calculated pursuant to
clause (A) of the definition of the Subordinated Principal Distribution
Amount actually received or advanced for such Distribution Date (with such
amount to be allocated first from amounts calculated pursuant to (A)(iii) of
the definition of Subordinated Principal Distribution Amount);
(vi) to each Class of Subordinated Certificates, subject to
paragraph (e) below, in the following order of priority:
(A) to the Class B-1 Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(B) to the Class B-1 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(C) to the Class B-2 Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(D) to the Class B-2 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(E) to the Class B-3 Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(F) to the Class B-3 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(G) to the Class B-4 Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(H) to the Class B-4 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(I) to the Class B-5 Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(J) to the Class B-5 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(K) to the Class B-6 Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date; and
(L) to the Class B-6 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero; and
(vii) to the Class A-R Certificates, in respect to the MR
Interest, any remaining funds in the Master REMIC and in respect of the SR
Interest, any remaining funds in the Subsidiary REMIC.
On any Distribution Date, amounts distributed in respect of Class PO Deferred
Amounts will not reduce the Class Certificate Balance of the Class PO
Certificates.
On any Distribution Date, to the extent the Amount Available for
Senior Principal is insufficient to make the full distribution required to
be made pursuant to clause (a)(iv) above, (A) the amount distributable on the
Class PO Certificates in respect of principal shall be equal to the product
of (1) the Amount Available for Senior Principal and (2) a fraction, the
numerator of which is the PO Formula Principal Amount and the denominator of
which is the sum of the PO Formula Principal Amount and the Senior Principal
Distribution Amount and (B) the amount distributable on the Senior
Certificates, other than the Class PO Certificates, in respect of principal
shall be equal to the product of (1) the Amount Available for Senior
Principal and (2) a fraction, the numerator of which is the Senior Principal
Distribution Amount and the denominator of which is the sum of the Senior
Principal Distribution Amount and the PO Formula Principal Amount.
(b) (Reserved for allocation of Accrual Amount, if any.)
(c) On each Distribution Date on or after the Senior Credit
Support Depletion Date, notwithstanding the allocation and priority set forth
in Section 4.02(a)(iv)(y), the portion of Available Funds available to be
distributed to the Senior Certificates specified in such Section will be
distributed among such Classes, pro rata, on the basis of their respective
Class Certificate Balances (prior to making any distributions on such
Distribution Date) and until the Class Certificate Balances thereof are
reduced to zero.
(d) On each Distribution Date, the amount referred to in clause
(i) of the definition of Class Optimal Interest Distribution Amount for such
Distribution Date for each Class of Certificates shall be reduced by (i) the
related Class' pro rata share (based on the Class Optimal Interest
Distribution Amount for each Class before reduction pursuant to this Section
4.02(d)) of Net Prepayment Interest Shortfalls and (ii) the related Class'
Allocable Share of (A) after the Special Hazard Coverage Termination Date,
with respect to each Mortgage Loan that became a Special Hazard Mortgage Loan
during the calendar month preceding the month of such Distribution Date, the
excess of one month's interest at the related Adjusted Net Mortgage Rate on
the Stated Principal Balance of such Mortgage Loan as of the Due Date in such
month over the amount of Liquidation Proceeds applied as interest on such
Mortgage Loan with respect to such month, (B) after the Bankruptcy Coverage
Termination Date, with respect to each Mortgage Loan that became subject to
a Bankruptcy Loss during the calendar month preceding the month of such
Distribution Date, the interest portion of the related Debt Service Reduction
or Deficient Valuation, (C) each Relief Act Reduction incurred during the
calendar month preceding the month of such Distribution Date and (D) after
the Fraud Loss Coverage Termination Date, with respect to each Mortgage Loan
that became a Fraud Loan during the calendar month preceding the month of
such Distribution Date the excess of one month's interest at the related
Adjusted Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the Due Date in such month over the amount of Liquidation Proceeds
applied as interest on such Mortgage Loan with respect to such month.
(e) Notwithstanding the priority and allocation contained in
Section 4.02(a), if, with respect to any Class of Subordinated Certificates,
on any Distribution Date the sum of the related Class Subordination
Percentages of such Class and of all Classes of Subordinated Certificates
which have a higher numerical Class designation than such Class (the
"Applicable Credit Support Percentage") is less than the Original Applicable
Credit Support Percentage for such Class, no distribution of Principal
Prepayments will be made to any such Classes (the "Restricted Classes") and
the amount of such Principal Prepayments otherwise distributable to the
Restricted Classes shall be distributed to the Classes of Subordinated
Certificates having lower numerical Class designations than such Class, pro
rata, based on their respective Class Certificate Balances immediately prior
to such Distribution Date and shall be distributed in the sequential order
set forth in Section 4.02(a)(vi).
(f) On each Distribution Date, the Trustee shall distribute the
amount withdrawn from the Class A-9 Reserve Fund with respect to such
Distribution Date pursuant to Section 3.11(c), to the extent of funds on
deposit in the Class A-9 Reserve Fund and shall apply such funds to
distributions on the Class A-9 Certificates as interest thereon, in the
amount of the Class A-9 Net Prepayment Interest Shortfalls with respect to
such Distribution Date.
(g) On each Distribution Date, Available Funds shall be applied
to distributions on the Subsidiary REMIC Regular Interests, in each case in
an amount sufficient to make the distributions on the respective
Corresponding Classes of Certificates on such Distribution Date in accordance
with the provisions of Section 4.02(a).
SECTION 4.03. Distributions in Reduction of the Class A-9
-------------------------------------------
Certificates.
------------
(a) Except as provided in subclauses (d) and (f) below, on each
Distribution Date on which distributions in reduction of the Class
Certificate Balance of the Class A-9 Certificates are made, such
distributions will be made in the following priority:
(i) any request by the personal representative of a Deceased
Holder or by a surviving tenant by the entirety, by a surviving joint tenant
or by a surviving tenant in common or other Person empowered to act on behalf
of such Deceased Holder upon his or her death, in an amount up to but not
exceeding $100,000 per request; and
(ii) any request by a Living Holder, in an amount up to but
not exceeding $10,000 per request.
Thereafter, distributions will be made as provided in clauses (i)
and (ii) above up to a second $100,000 and $10,000 per request, respectively.
This sequence of priorities will be repeated for each request for principal
distributions made by the Certificate Owners of the Class A-9 Certificates
until all such requests have been honored.
Requests for distributions in reduction of the Certificate Balances
of Class A-9 Certificates presented on behalf of Deceased Holders in
accordance with the provisions of clause (i) above will be accepted in the
order of their receipt by the Depository. Requests for distributions in
reduction of the Certificate Balances of Class A-9 Certificates presented in
accordance with the provisions of clause (ii) above will be accepted in the
order of priority established by the random lot procedures of the Depository
after all requests with respect to such Class presented in accordance with
clause (i) have been honored. All requests for distributions in reduction
of the Certificate Balance of the Class A-9 Certificates with respect to any
Distribution Date shall be made in accordance with Section 4.03(c) below and
must be received by the Depository and forwarded to, and received by, the
Trustee no later than the close of business on the related Record Date.
Requests for distributions which are received by the Depository and forwarded
to the Trustee after the related Record Date and requests, in either case,
for distributions timely received but not accepted with respect to any
Distribution Date, will be treated as requests for distributions in reduction
of the Certificate Balances of the applicable Class A-9 Certificates on the
next succeeding Distribution Date, and each succeeding Distribution Date
thereafter, until each such request is accepted or is withdrawn as provided
in Section 4.03(c). Such requests as are not so withdrawn shall retain their
order of priority without the need for any further action on the part of the
appropriate Certificate Owner of the related Class A-9 Certificate, all in
accordance with the procedures of the Depository and the Trustee. Upon the
transfer of beneficial ownership of any Class A-9 Certificate, any
distribution request previously submitted with respect to such Certificate
will be deemed to have been withdrawn only upon the receipt by the Trustee
of notification of such withdrawal using a form required by the Depository.
Distributions in reduction of the Certificate Balances of Class A-9
Certificates will be applied, in the aggregate, to the Class A-9 Certificates
in an amount equal to the portion of the Available Funds distributable to the
Class A-9 Certificates pursuant to Section 4.02(a)(iv), plus any amounts
available for distribution from the Class A-9 Rounding Account pursuant to
Section 4.03(e), provided that the aggregate distribution in reduction of the
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Class Certificate Balance of the Class A-9 Certificates on any Distribution
Date is made in an integral multiple of $1,000.
(b) A "Deceased Holder" is a Certificate Owner of a Class A-9
Certificate who was living at the time such interest was acquired and whose
authorized personal representative, surviving tenant by the entirety,
surviving joint tenant or surviving tenant in common or other person
empowered to act on behalf of such Certificate Owner upon his or her death,
causes to be furnished to the Trustee a certified copy of the death
certificate of such Certificate Owner and any additional evidence of death
required by and satisfactory to the Trustee and any tax waivers requested by
the Trustee. Class A-9 Certificates beneficially owned by tenants by the
entirety, joint tenants or tenants in common will be considered to be
beneficially owned by a single owner. The death of a tenant by the entirety,
joint tenant or tenant in common will be deemed to be the death of the
Certificate Owner, and the Class A-9 Certificates so beneficially owned will
be eligible for priority with respect to distributions in reduction of the
Class Certificate Balance of the Class A-9 Certificates, subject to the
limitations stated above. Class A-9 Certificates beneficially owned by a
trust will be considered to be beneficially owned by each beneficiary of the
trust to the extent of such beneficiary's beneficial interest therein, but
in no event will a trust's beneficiaries collectively be deemed to be
Certificate Owners of a number of Individual Class A-9 Certificates greater
than the number of Individual Class A-9 Certificates of which such trust is
the beneficial owner. The death of a beneficiary of a trust will be deemed
to be the death of a Certificate Owner of the Class A-9 Certificates
beneficially owned by the trust to the extent of such beneficiary's
beneficial interest in such trust. The death of an individual who was a
tenant by the entirety, joint tenant or tenant in common in a tenancy which
is the beneficiary of a trust will be deemed to be the death of the
beneficiary of the trust. The death of a person who, during his or her
lifetime, was entitled to substantially all of the beneficial ownership
interests in Class A-9 Certificates will be deemed to be the death of the
Certificate Owner of such Class A-9 Certificates regardless of the
registration of ownership of such Class A-9 Certificates, if such beneficial
interest can be established to the satisfaction of the Trustee. Such
beneficial interest will be deemed to exist in typical cases of street name
or nominee ownership, ownership by a trustee, ownership under the Uniform
Gifts to Minors Act and community property or other joint ownership
arrangements between a husband and wife. Beneficial interests shall include
the power to sell, transfer or otherwise dispose of a Class A-9 Certificate
and the right to receive the proceeds therefrom, as well as interest and
distributions in reduction of the Certificate Balances of the Class A-9
Certificates payable with respect thereto. The Trustee shall not be under any
duty to determine independently the occurrence of the death of any deceased
Certificate Owner. The Trustee may rely entirely upon documentation delivered
to it pursuant to Section 4.03(a) in establishing the eligibility of any
Certificate Owner to receive the priority accorded Deceased Holders in
Section 4.03(a).
(c) Requests for distributions in reduction of the Certificate
Balance of a Class A-9 Certificate must be made by delivering a written
request therefor to the Depository Participant or Indirect Participant that
maintains the account evidencing the Certificate Owner's interest in such
Class A-9 Certificate. Such Depository Participant or Indirect Participant
should in turn make the request of the Depository (or, in the case of an
Indirect Participant, such Indirect Participant must notify the related
Depository Participant of such request, which Depository Participant should
make the request of the Depository) on a form required by the Depository and
provided to the Depository Participant. Upon receipt of such request, the
Depository will date and time stamp such request and forward such request to
the Trustee. The Depository may establish such procedures as it deems fair
and equitable to establish the order of receipt or requests for such
distributions received by it on the same day. The Trustee shall not be
liable for any delay in delivery of requests for distributions or withdrawals
of such requests by the Depository, a Depository Participant or any Indirect
Participant.
In the event any requests for distributions in reduction of the
Certificate Balances of Class A-9 Certificates are rejected by the Trustee
for failure to comply with the requirements of this Section 4.03, the Trustee
shall return such requests to the appropriate Depository Participant with a
copy to the Depository with an explanation as to the reason for such
rejection.
The Trustee shall maintain a list of those Depository Participants
representing the Certificate Owners of Class A-9 Certificates that have
submitted requests for distributions in reduction of the Certificate Balances
of such Class A-9 Certificates, together with the order of receipt and the
amounts of such requests. The Trustee shall notify the Depository and the
appropriate Depository Participants as to which requests should be honored
on each Distribution Date. Requests shall be honored by the Depository in
accordance with the procedures, and subject to the priorities and
limitations, described in this Section 4.03. The exact procedures to be
followed by the Trustee and the Depository for purposes of determining such
priorities and limitations shall be those established from time to time by
the Trustee or the Depository, as the case may be. The decisions of the
Trustee and the Depository concerning such matters shall be final and binding
on all affected Persons.
Payments in reduction of the Certificate Balances of Class A-9
Certificates shall be made on the applicable Distribution Date and the
Certificate Balances as to which such payments are made shall cease to bear
interest after the last day of the month preceding the month in which such
Distribution Date occurs.
Any Certificate Owner of a Class A-9 Certificate which has
requested a distribution may withdraw its request by so notifying in writing
the Depository Participant or Indirect Participant that maintains such
Certificate Owner's account. In the event that such account is maintained
by an Indirect Participant, such Indirect Participant must notify the related
Depository Participant which in turn must forward the withdrawal of such
request, on a form required by the Depository, to the Trustee. If such
notice of withdrawal of a request for distribution has not been received by
the Depository and forwarded to the Trustee on or before the Record Date for
the next Distribution Date, the previously made request for distribution will
be irrevocable with respect to the making of distributions in reduction of
the Certificate Balance of such Class A-9 Certificate on such Distribution
Date.
(d) To the extent, if any, that distributions in reduction of the
Class Certificate Balance of Class A-9 Certificates on a Distribution Date
exceed the aggregate Certificate Balances of the Class A-9 Certificates with
respect to which distribution requests have been received by the related
Record Date, as provided in Section 4.03(a) above, distributions in reduction
of the Class Certificate Balance of the Class A-9 Certificates will be made
by mandatory distributions in reduction thereof. The Trustee shall notify
the Depository of the aggregate amount of the mandatory distribution in
reduction of the Class Certificate Balance of the Class A-9 Certificates to
be made on the next Distribution Date. The Depository shall then allocate
such aggregate amount among its Depository Participants on a random lot
basis. Each Depository Participant and, in turn, each Indirect Participant,
will then select, in accordance with its own procedures, Individual Class A-9
Certificates from among those held in its accounts to receive mandatory
distributions in reduction of the Class Certificate Balance of the Class A-9
Certificates, such that the total amount so selected is equal to the
aggregate amount of such mandatory distributions allocated to such Depository
Participant by the Depository and to such Indirect Participant by its related
Depository Participant, as the case may be. Depository Participants and
Indirect Participants which hold Class A-9 Certificates selected for
mandatory distributions in reduction of the Class Certificate Balance are
required to provide notice of such mandatory distributions to the affected
Certificate Owners.
(e) On the Closing Date, the Class A-9 Rounding Account shall be
established with the Trustee and Lehman Brothers Inc. shall cause to be
initially deposited the sum of $1,000 in the Class A-9 Rounding Account. On
each Distribution Date on which a distribution is made in reduction of the
Class Certificate Balance of the Class A-9 Certificates, funds on deposit in
the Class A-9 Rounding Account shall be, to the extent needed, withdrawn by
the Trustee and applied to round upward to an integral multiple of $1,000 the
aggregate distribution in reduction of the Class Certificate Balance to be
made on the Class A-9 Certificates. Rounding of such distribution on the
Class A-9 Certificates shall be accomplished, on the first such Distribution
Date, by withdrawing from the Class A-9 Rounding Account the amount of funds,
if any, needed to round the amount otherwise available for such distribution
in reduction of the Class Certificate Balance of the Class A-9 Certificates
upward to the next integral multiple of $1,000. On each succeeding
Distribution Date on which distributions in reduction of the Class
Certificate Balance of the Class A-9 Certificates are to be made, the
aggregate amount of such distributions allocable to the Class A-9
Certificates shall be applied first to repay any funds withdrawn from the
Class A-9 Rounding Account and not previously repaid, and then the remainder
of such allocable amount, if any, shall be similarly rounded upward and
applied as distributions in reduction of the Class Certificate Balance of the
Class A-9 Certificates; this process shall continue on succeeding
Distribution Dates until the Class Certificate Balance of the Class A-9
Certificates has been reduced to zero. The Class A-9 Rounding Account shall
be an "outside reserve fund" under the REMIC Provisions that is beneficially
owned for all federal income tax purposes by Lehman Brothers Inc. Lehman
Brothers Inc. shall report all income, gain, deduction or loss with respect
thereto. The Trustee shall distribute interest earnings, if any, on amounts
held in the Class A-9 Rounding Account as such interest is earned pursuant
to written instructions from Lehman Brothers Inc. to the Trustee.
Notwithstanding anything herein to the contrary, on the
Distribution Date on which distributions in reduction of the Class
Certificate Balance of the Class A-9 Certificates will reduce the Class
Certificate Balance thereof to zero or in the event that distributions in
reduction of the Class Certificate Balance of the Class A-9 Certificates are
made in accordance with the provisions set forth in Section 4.03(f), an
amount equal to the difference between $1,000 and the sum then held in the
Class A-9 Rounding Account shall be paid from the Available Funds for such
Distribution Date to the Class A-9 Rounding Account. Any funds then on
deposit in such Class A-9 Rounding Account shall be distributed to Lehman
Brothers Inc.
(f) Notwithstanding any provisions herein to the contrary, on each
Distribution Date following the first Distribution Date on or after the
Senior Credit Support Depletion Date, distributions in reduction of the Class
Certificate Balance of the Class A-9 Certificates (including amounts paid in
respect of Realized Losses under the Class A-9 Policy) will be made among the
Holders of the Class A-9 Certificates, pro rata, based on Certificate
Balances, and will not be made in integral multiples of $1,000 or pursuant
to requested distributions or mandatory distributions by random lot.
(g) In the event that Definitive Certificates representing the
Class A-9 Certificates are issued pursuant to Section 5.02(e), an amendment
to this Agreement, which may be approved without the consent of any
Certificateholders, shall establish procedures relating to the manner in
which distributions in reduction of the Class Certificate Balance of the
Class A-9 Certificates are to be made; provided that such procedures shall
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be consistent, to the extent practicable and customary for certificates
similar to the Class A-9 Certificates with the Certificates, with the
provisions of this Section 4.03.
SECTION 4.04. Policy Matters.
--------------
(a) If, on the second Business Day before any Distribution Date,
the Trustee determines that the amount on deposit in the Certificate Account
distributable to the Class A-9 Certificateholders pursuant to Section 4.02
together with any amounts that may be distributable to the Class A-9
Certificateholders from the Class A-9 Reserve Fund will be insufficient to
pay the Guaranteed Distributions on such Distribution Date, the Trustee shall
determine the amount of any such deficiency and shall give notice to
Financial Security and the appropriate Fiscal Agent (as defined in the Class
A-9 Policy), if any, by telephone or telecopy of the amount of such
deficiency, confirmed in writing by the Notice of Claim by 5:00 p.m., New
York City time on such second Business Day. The Trustee's responsibility for
delivering the notice to Financial Security as provided in the preceding
sentence is limited to the availability, timeliness and accuracy of the
information provided by the Master Servicer.
(b) In the event the Trustee receives a certified copy of an order
of the appropriate court that any scheduled payment of principal or interest
on a Class A-9 Certificate has been voided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall (i)
promptly notify Financial Security, as appropriate, and the appropriate
Fiscal Agent, if any, and (ii) comply with the provisions of the Class A-9
Policy to obtain payment by Financial Security, as appropriate, of such
voided scheduled payment. In addition, the Trustee shall mail notice to all
Holders of the Class A-9 Certificates so affected that, in the event that any
such Holder's scheduled payment is so recovered, such Holder will be entitled
to payment pursuant to the terms of the Class A-9 Policy a copy of which
shall be made available to such Holders by the Trustee. The Trustee shall
furnish to Financial Security and the appropriate Fiscal Agent, if any, its
records listing the payments on the affected Class A-9 Certificates, if any,
that have been made by the Trustee and subsequently recovered from the
affected Holders, and the dates on which such payments were made by the
Trustee.
(c) At the time of the execution hereof, and for the purposes
hereof, the Trustee shall establish separate special purpose trust accounts
on behalf of the Trustee for the benefit of Holders of the Class A-9
Certificates (the "Class A-9 Policy Payments Account") over which the Trustee
shall have exclusive control and sole right of withdrawal. The Class A-9
Policy Payments Account shall be Eligible Accounts. The Trustee shall
deposit any amount paid under the Class A-9 Policy into the Class A-9 Policy
Payments Account and distribute such amount only for the purposes of making
the payments to Holders of the Class A-9 Certificates in respect of the
Guaranteed Distributions (or other amounts payable pursuant to clause (b)
above on the Class A-9 Certificates, by Financial Security pursuant to the
Class A-9 Policy) for which the related claim was made under the Class A-9
Policy. Such amounts shall be allocated by the Trustee to Holders of Class
A-9 Certificates affected by such shortfalls in the same manner as principal
and interest payments are to be allocated with respect to such Certificates
pursuant to Section 4.02. It shall not be necessary for such payments to be
made by checks or wire transfers separated from the checks or wire transfers
used to make regular payments hereunder with funds withdrawn from the
Distribution Account. However, any payments made on the Class A-9
Certificates from funds in the Class A-9 Policy Payments Account shall be
noted as provided in subsection (e) below. Funds held in the Class A-9
Policy Payments Account shall not be invested by the Trustee.
(d) Any funds received from Financial Security for deposit into
the Class A-9 Policy Payments Account pursuant to the Class A-9 Policy in
respect of a Distribution Date or otherwise as a result of any claim under
such Class A-9 Policy shall be applied by the Trustee directly to the payment
in full (i) of the Guaranteed Distributions due on such Distribution Date on
the Class A-9 Certificates or (ii) of other amounts payable under the Class
A-9 Policy. Funds received by the Trustee as a result of any claim under the
Class A-9 Policy shall be used solely for payment to the Holders of the Class
A-9 Certificates and may not be applied for any other purpose, including,
without limitation, satisfaction of any costs, expenses or liabilities of the
Trustee, the Master Servicer or the Trust Fund. Any funds remaining in the
Class A-9 Policy Payments Account on the first Business Day after each
Distribution Date shall be remitted promptly to Financial Security pursuant
to the written instruction of Financial Security.
(e) The Trustee shall keep complete and accurate records in
respect of (i) all funds remitted to it by Financial Security and deposited
into the Class A-9 Policy Payments Account and (ii) the allocation of such
funds to (A) payments of interest on and principal in respect of any Class
A-9 Certificates, (B) Realized Losses allocated to the Class A-9 Certificates
and (C) Class A-9 Net Interest Shortfalls allocated to the Class A-9
Certificates. Financial Security shall have the right to inspect such
records at reasonable times during normal business hours upon three Business
Days' prior notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of a Class A-9
Certificate by its acceptance of the Class A-9 Certificate agrees, that,
without the need for any further action on the part of Financial Security or
the Trustee, to the extent Financial Security makes payments, directly or
indirectly, on account of principal of or interest on any Class A-9
Certificates, Financial Security will be fully subrogated to the rights of
the Holders of such Class A-9 Certificates to receive such principal and
interest from the Trust Fund. The Class A-9 Certificateholders, by
acceptance of the Class A-9 Certificates, assign their rights as Holders of
the Class A-9 Certificates to the extent of Financial Security's interest
with respect to amounts paid under the Class A-9 Policy. Anything herein to
the contrary notwithstanding, solely for purposes of determining Financial
Security's rights, as subrogee for payments distributable pursuant to Section
4.02, any payment with respect to distributions to the Class A-9 Certificates
which is made with funds received pursuant to the terms of the Class A-9
Policy shall not be considered payment of the Class A-9 Certificates from
the Trust Fund and shall not result in the distribution or the provision for
the distribution in reduction of the Class Certificate Balance of the Class
A-9 Certificates within the meaning of Article IV.
(g) Upon its becoming aware of the occurrence of an Event of
Default, the Trustee shall promptly notify Financial Security of such Event
of Default.
(h) The Trustee shall promptly notify Financial Security of either
of the following as to which it has actual knowledge: (A) the commencement
of any proceeding by or against the Depositor commenced under the United
States bankruptcy code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding") and
(B) the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer (a "Preference Claim") of
any distribution made with respect to the Class A-9 Certificates as to which
it has actual knowledge. Each Holder of a Class A-9 Certificate, by its
purchase of Class A-9 Certificates, and the Trustee hereby agrees that
Financial Security (so long as no Financial Security Default exists) may at
any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim, including,
without limitation, (i) the direction of any appeal of any order relating to
any Preference Claim and (ii) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without limitation
of the foregoing, Financial Security shall be subrogated to the rights of the
Trustee and each Holder of a Class A-9 Certificate in the conduct of any
Preference Claim, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
(i) The Master Servicer shall designate a Financial Security
Contact Person who shall be available to Financial Security to provide
reasonable access to information regarding the Mortgage Loans. The initial
Financial Security Contact Person is Michael W. Perry.
(j) The Trustee shall surrender the Class A-9 Policy to Financial
Security for cancellation upon the expiration of the terms of such Class A-9
Policy as provided in such Class A-9 Policy.
(k) The Trustee shall send to Financial Security the reports
prepared pursuant to Sections 3.16 and 3.17 and the statements prepared
pursuant to Section 4.06, as well as any other statements or communications
sent to Holders of the Class A-9 Certificates, at the same time such reports,
statements and communications are otherwise sent.
(l) For so long as there is no default by Financial Security under
its obligations under the Class A-9 Policy (a "Financial Security Default"),
Financial Security shall be treated by the Depositor and the Trustee as if
Financial Security were the Holder of all of the Class A-9 Certificates, as
applicable, for the purpose (and solely for the purpose) of the giving of any
consent, the making of any direction or the exercise of any voting or other
control rights otherwise given to the Class A-9 Certificateholders hereunder.
With respect to this Section 4.04, (i) the terms "Receipt" and
"Received" shall mean actual delivery to Financial Security and Financial
Security's Fiscal Agent, if any, prior to 5:00 p.m., New York City time, on
a Business Day; delivery either on a day that is not a Business Day or after
5:00 p.m., New York City time, shall be deemed to be Receipt on the next
succeeding Business Day. If any notice or certificate given under the Class
A-9 Policy by the Trustee is not in proper form or is not properly completed,
executed or delivered, it shall be deemed not to have been Received,
Financial Security or its Fiscal Agent, if any, shall promptly so advise the
Trustee and the Trustee may submit an amended notice and (ii) "Business Day"
means any day other than (A) a Saturday or Sunday or (B) a day on which
banking institutions in the City of New York, New York are authorized or
obligated by law or executive order to be closed.
SECTION 4.05. Allocation of Realized Losses.
-----------------------------
(a) On or prior to each Determination Date, the Trustee shall
determine the total amount of Realized Losses, including Excess Losses, with
respect to the related Distribution Date.
Realized Losses with respect to any Distribution Date shall be
allocated as follows:
(i) the applicable PO Percentage of any Realized Loss,
including any Excess Loss, shall be allocated to the Class PO Certificates
until the Class Certificate Balance thereof is reduced to zero; and
(ii) (A) the applicable Non-PO Percentage of any Realized Loss
(other than an Excess Loss) shall be allocated first, to the Subordinated
-----
Certificates in reverse order of their respective numerical Class designations,
until the respective Class Certificate Balance of each such Class is reduced
to zero and second, to the Senior Certificates (other than the Class PO and
------
Class X Certificates), pro rata, on the basis of their respective Class
Certificate Balances in each case immediately prior to the related Distribution
Date until the respective Class Certificate Balance of each such Class is
reduced to zero, provided, however, that amounts otherwise allocable to the
-------- -------
Class A-6 Certificates will be allocated to the Class A-13 Certificates until
the Class Certificate Balance of the Class A-13 Certificates has been reduced
to zero;
(B) the applicable Non-PO Percentage of any Excess Losses
shall be allocated to the Senior Certificates (other than the Class PO
Certificates) and the Subordinated Certificates then outstanding, pro rata,
on the basis of their respective Class Certificate Balances or, until the
Class Certificate Balances thereof have been reduced to zero.
(b) The Class Certificate Balance of the Class of Subordinated
Certificates then outstanding with the highest numerical Class designation
shall be reduced on each Distribution Date by the sum of (i) the amount of
any payments on the Class PO Certificates in respect of Class PO Deferred
Amounts and (ii) the amount, if any, by which the aggregate of the Class
Certificate Balances of all outstanding Classes of Certificates (after giving
effect to the distribution of principal and the allocation of Realized Losses
and Class PO Deferred Amounts on such Distribution Date) exceeds the Pool
Stated Principal Balance for the following Distribution Date.
(c) Any Realized Loss allocated to a Class of Certificates or any
reduction in the Class Certificate Balance of a Class of Certificates
pursuant to Section 4.05(b) shall be allocated among the Certificates of such
Class in proportion to their respective Certificate Balances.
(d) Any allocation of Realized Losses to a Certificate or to any
Component or any reduction in the Certificate Balance of a Certificate
pursuant to Section 4.05(b) shall be accomplished by reducing the Certificate
Balance or Component Balance thereof, as applicable, immediately following
the distributions made on the related Distribution Date in accordance with
the definition of "Certificate Balance" or "Component Balance," as the case
may be. Any payment under the Class A-9 Policy pursuant to Section 4.04 in
respect of a Realized Loss allocated to the Class A-9 Certificates shall not
result in a further reduction to the Certificate Balances of the Class A-9
Certificates.
(e) Any Realized Loss allocated to the Class A-9 Certificates will
be covered by the Class A-9 Policy.
SECTION 4.06. Monthly Statements to Certificate-
----------------------------------
holders.
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(a) Not later than each Distribution Date, the Trustee shall
prepare and cause to be forwarded by first class mail to each
Certificateholder, the Master Servicer and the Depositor a statement setting
forth with respect to the related distribution:
(i) the amount thereof allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments and Liquidation
Proceeds included therein;
(ii) the amount thereof allocable to interest, any Class
Unpaid Interest Shortfall included in such distribution and any remaining
Class Unpaid Interest Shortfall after giving effect to such distribution;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable to such
Holders if there were sufficient funds available therefor, the amount of the
shortfall and the allocation thereof as between principal and interest;
(iv) the Class Certificate Balance of each Class of
Certificates after giving effect to the distribution of principal on such
Distribution Date;
(v) the Pool Stated Principal Balance for the following
Distribution Date;
(vi) the Senior Percentage and Subordinated Percentage for the
following Distribution Date;
(vii) the amount of the Master Servicing Fees and Servicing
Fees paid to or retained by the Master Servicer and the Servicers (with
respect to the Servicers, in the aggregate) with respect to such Distribution
Date;
(viii) the Pass-Through Rate for each such Class of Certificates
with respect to such Distribution Date;
(ix) the amount of Advances included in the distribution on
such Distribution Date and the aggregate amount of Advances outstanding as
of the close of business on such Distribution Date;
(x) the number and aggregate principal amounts of Mortgage
Loans (A) delinquent (exclusive of Mortgage Loans in foreclosure) (1) 1 to
30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days and (B)
in foreclosure and delinquent (1) 1 to 30 days (2) 31 to 60 days (3) 61 to
90 days and (4) 91 or more days, as of the close of business on the last day
of the calendar month preceding such Distribution Date;
(xi) for each of the preceding 12 calendar months, or all
calendar months since the Cut-off Date, whichever is less, the aggregate
dollar amount of the Scheduled Payments (A) due on all Outstanding Mortgage
Loans on each of the Due Dates in each such month and (B) delinquent 60 days
or more on each of the Due Dates in each such month;
(xii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number and Stated
Principal Balance of such Mortgage Loan as of the close of business on the
Determination Date preceding such Distribution Date and the date of
acquisition thereof;
(xiii) the total number and principal balance of any REO
Properties (and market value, if available) as of the close of business on
the Determination Date preceding such Distribution Date;
(xiv) the Senior Prepayment Percentage for the following
Distribution Date;
(xv) the aggregate amount of Realized Losses incurred during
the preceding calendar month and aggregate Realized Losses through such
Distribution Date;
(xvi) the Special Hazard Loss Coverage Amount, the Fraud Loss
Coverage Amount and the Bankruptcy Loss Coverage Amount, in each case as of
the related Determination Date;
(xvii) the Guaranteed Distributions for such Distribution Date
and amounts in respect of the Guaranteed Distributions paid under the Class
A-9 Policy;
(xviii) the amount of any withdrawal from the Class A-9 Reserve
Fund since the prior Distribution Date; and
(xix) the amount remaining in the Class A-9 Reserve Fund after
taking into account amounts withdrawn from the Class A-9 Reserve Fund for
such Distribution Date.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer.
The Trustee will send a copy of each statement provided pursuant to this
Section 4.06 to each Rating Agency.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i), (a)(ii) and (a)(vii)
of this Section 4.06 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation
of the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Code as from time to time in effect.
SECTION 4.07. Determination of Pass-Through Rates for COFI
--------------------------------------------
Certificates.
____________
The Pass-Through Rate for each Class of COFI Certificates for each
Interest Accrual Period after the initial Interest Accrual Period shall be
determined by the Trustee as provided below on the basis of the Index and the
applicable formulae appearing in footnotes corresponding to the COFI
Certificates in (1) to the table relating to the Certificates in the
Preliminary Statement.
Except as provided below, with respect to each Interest Accrual
Period following the initial Interest Accrual Period, the Trustee shall not
later than two Business Days following the publication of the applicable
Index determine the Pass-Through Rate at which interest shall accrue in
respect of the COFI Certificates during the related Interest Accrual Period.
Except as provided below, the Index to be used in determining the
respective Pass-Through Rates for the COFI Certificates for a particular
Interest Accrual Period shall be COFI for the second calendar month preceding
such Interest Accrual Period. If at the Outside Reference Date for any
Interest Accrual Period, COFI for the second calendar month preceding such
Interest Accrual Period has not been published, the Trustee shall use COFI
for the third calendar month preceding such Interest Accrual Period. If COFI
for neither the second nor third calendar months preceding any Interest
Accrual Period has been published on or before the related Outside Reference
Date, the Index for such Interest Accrual Period and for all subsequent
Interest Accrual Periods shall be the National Cost of Funds Index for the
third calendar month preceding such Interest Accrual Period (or the fourth
preceding calendar month if such National Cost of Funds Index for the third
preceding calendar month has not been published by such Outside Reference
Date). In the event that the National Cost of Funds Index for neither the
third nor fourth calendar months preceding an Interest Accrual Period has
been published on or before the related Outside Reference Date, then for such
Interest Accrual Period and for each succeeding Interest Accrual Period, the
Index shall be LIBOR, determined in the manner set forth below.
On each Interest Determination Date so long as the COFI
Certificates are outstanding and the applicable Index therefor is LIBOR, the
Trustee shall either (i) request each Reference Bank to inform the Trustee
of the quotation offered by its principal London office for making one-month
United States dollar deposits in leading banks in the London interbank
market, as of 11:00 a.m. (London time) on such Interest Determination Date
or (ii) in lieu of making any such request, rely on such Reference Bank
quotations that appear at such time on the Reuters Screen LIBO Page (as
defined in the International Swap Dealers Association Inc. Code of Standard
Wording, Assumptions and Provisions for Swaps, 1986 Edition), to the extent
available.
With respect to any Interest Accrual Period for which the
applicable Index is LIBOR, LIBOR for such Interest Accrual Period will be
established by the Trustee on the related Interest Determination Date as
follows:
(a) If on any Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the next Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounding such
arithmetic mean upwards if necessary to the nearest whole multiple of 1/32%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next Interest
Accrual Period shall be whichever is the higher of (i) LIBOR as determined
on the previous Interest Determination Date or (ii) the Reserve Interest
Rate. The "Reserve Interest Rate" shall be the rate per annum which the
Trustee determines to be either (i) the arithmetic mean (rounded upwards if
necessary to the nearest whole multiple of 1/32%) of the one-month United
States dollar lending rates that New York City banks selected by the Trustee
are quoting, on the relevant Interest Determination Date, to the principal
London offices of at least two of the Reference Banks to which such
quotations are, in the opinion of the Trustee, being so made, or (ii) in the
event that the Trustee can determine no such arithmetic mean, the lowest one-
month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.
From such time as the applicable Index becomes LIBOR until all of
the COFI Certificates are paid in full, the Trustee will at all times retain
at least four Reference Banks for the purposes of determining LIBOR with
respect to each interest Determination Date. The Master Servicer initially
shall designate the Reference Banks. Each "Reference Bank" shall be a
leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market, shall not control, be controlled by, or
be under common control with, the Trustee and shall have an established place
of business in London. If any such Reference Bank should be unwilling or
unable to act as such or if the Master Servicer should terminate its
appointment as Reference Bank, the Trustee shall promptly appoint or cause
to be appointed another Reference Bank. The Trustee shall have no liability
or responsibility to any Person for (i) the selection of any Reference Bank
for purposes of determining LIBOR or (ii) any inability to retain at least
four Reference Banks which is caused by circumstances beyond its reasonable
control.
In determining LIBOR and any Pass-Through Rate for the COFI
Certificates or any Reserve Interest Rate, the Trustee may conclusively rely
and shall be protected in relying upon the offered quotations (whether
written, oral or on the Reuters Screen) from the Reference Banks or the New
York City banks as to LIBOR or the Reserve Interest Rate, as appropriate, in
effect from time to time. The Trustee shall not have any liability or
responsibility to any Person for (i) the Trustee's selection of New York City
banks for purposes of determining any Reserve Interest Rate or (ii) its
inability, following a good-faith reasonable effort, to obtain such
quotations from the Reference Banks or the New York City banks or to
determine such arithmetic mean, all as provided for in this Section 4.07.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be
final, conclusive and binding upon each Holder of a Certificate and the
Trustee.
SECTION 4.08. Determination of Pass-Through Rates for LIBOR
---------------------------------------------
Certificates.
------------
On each Interest Determination Date so long as the LIBOR
Certificates are outstanding, the Trustee shall either (i) request each
Reference Bank to inform the Trustee of the quotation offered by its
principal London office for making one-month United States dollar deposits
to leading banks in the London interbank market, as of 11:00 a.m. (London
time) on such Interest Determination Date or (ii) in lieu of making any such
request, rely on such Reference Bank quotations that appear at such time on
the Reuters Screen LIBO Page (as defined in the International Swap Dealers
Association Inc. Code of Standard Wording, Assumptions and provisions for
Swaps, 1986 Edition), to the extent available.
LIBOR for the next Interest Accrual Period will be established by
the Trustee on each interest Determination Date as follows:
(a) If on any interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the next Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounding such
arithmetic mean upwards if necessary to the nearest whole multiple of 1/32%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next Interest
Accrual Period shall be whichever is the higher of (i) LIBOR as determined
on the previous Interest Determination Date or (ii) the Reserve Interest
Rate. The "Reserve Interest Rate" shall be the rate per annum which the
Trustee determines to be either (i) the arithmetic mean (rounded upwards if
necessary to the nearest whole multiple of 1/32%) of the one-month United
States dollar lending rates that New York City banks selected by the Trustee
are quoting, on the relevant Interest Determination Date, to the principal
London offices of at least two of the Reference Banks to which such
quotations are, in the opinion of the Trustee, being so made, or (ii) in the
event that the Trustee can determine no such arithmetic mean, the lowest one-
month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.
(c) If on any interest Determination Date the trustee is required
but is unable to determine the Reserve Interest Rate in the manner provided
in paragraph (b) above, LIBOR shall be LIBOR as determined on the preceding
Interest Determination Date, or, in the case of the first Interest
Determination Date, the Initial LIBOR Rate.
Until all of the LIBOR Certificates are paid in full, the Trustee
will at all times retain at least four Reference Banks for the purpose of
determining LIBOR with respect to each Interest Determination Date. The
Master Servicer initially shall designate the Reference Banks. Each
"Reference Bank" shall be a leading bank engaged in transactions in
Eurodollar deposits in the international Eurocurrency market, shall not
control, be controlled by, or be under common control with, the Trustee and
shall have an established place of business in London. If any such Reference
Bank should be unwilling or unable to act as such or if the Master Servicer
should terminate its appointment as Reference Bank, the Trustee shall
promptly appoint or cause to be appointed another Reference Bank. The
Trustee shall have no liability or responsibility to any Person for (i) the
selection of any Reference Bank for purposes of determining LIBOR or (ii) any
inability to retain at least four Reference Banks which is caused by
circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trustee on each Interest
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes
corresponding to the LIBOR Certificates in the table relating to the
Certificates in the Preliminary Statement.
In determining LIBOR, any Pass-Through Rate for the LIBOR
Certificates or any Reserve Interest Rate, the Trustee may conclusively rely
and shall be protected in relying upon the offered quotations (whether
written, oral or on the Reuters Screen) from the Reference Banks or the New
York City banks as to LIBOR or the Reserve Interest Rate, as appropriate, in
effect from time to time. The Trustee shall not have any liability or
responsibility to any Person for (i) the Trustee's selection of New York City
banks for purposes of determining any Reserve Interest Rate or (ii) its
inability, following a good-faith reasonable effort, to obtain such
quotations from the Reference Banks or the New York City banks or to
determine such arithmetic mean, all as provided for in this Section 4.08.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be
final, conclusive and binding upon each Holder of a Certificate and the
Trustee.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
----------------
The Certificates shall be substantially in the forms attached
hereto as exhibits. The Certificates shall be issuable in registered form,
in the minimum denominations, integral multiples in excess thereof (except
that one Certificate in each Class may be issued in a different amount which
must be in excess of the applicable minimum denomination) and aggregate
denominations per Class set forth in the Preliminary Statement.
Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either (x)
by wire transfer in immediately available funds to the account of such holder
at a bank or other entity having appropriate facilities therefor, if (i) such
Holder has so notified the Trustee at least five Business Days prior to the
related Record Date and (ii) such Holder shall hold (A) a Notional Amount
Certificate, (B) 100% of the Class Certificate Balance of any Class of
Certificates or (C) Certificates of any Class with aggregate principal
Denominations of not less than $1,000,000 or (y) by check mailed by first
class mail to such Certificateholder at the address of such holder appearing
in the Certificate Register. Payments to Financial Security shall be by wire
transfer of immediately available funds.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the countersignature and delivery of any
such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless countersigned by the Trustee
by manual signature, 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 shall be dated the
date of their countersignature. On the Closing Date, the Trustee shall
countersign the Certificates to be issued at the direction of the Depositor,
or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
SECTION 5.02. Certificate Register; Registration of Transfer and
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Exchange of Certificates.
------------------------
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.06, a Certificate Register for
the Trust Fund in which, subject to the provisions of subsections (b) and (c)
below and 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. Upon surrender for
registration of transfer of any Certificate, the Trustee shall execute and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate, and deliver the Certificates which the Certificate-
holder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the holder thereof or his attorney duly authorized
in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but 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 may be required.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No transfer of a Private Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. In
the event that a transfer is to be made in reliance upon an exemption from
the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
transfer and such Certificateholder's prospective transferee shall each
certify to the Trustee in writing the facts surrounding the transfer in
substantially the form set forth in Exhibit J (the "Transferor Certificate")
and (i) deliver a letter in substantially the form of either Exhibit K (the
"Investment Letter") or Exhibit L (the "Rule 144A Letter") or (ii) there
shall be delivered to the Trustee at the expense of the transferor an Opinion
of Counsel that such transfer may be made pursuant to an exemption from the
Securities Act. The Depositor shall provide to any Holder of a Private
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and
such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee and the Master
Servicer shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information regarding the Certificates, the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably
request to meet its obligation under the preceding sentence. Each Holder of
a Private Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Depositor, the Seller and the Master
Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee (in the event such Certificate is a Private
Certificate or a Residual Certificate, such requirement is satisfied only by
the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit K or Exhibit L), to the effect that such
transferee is not an employee benefit plan or arrangement subject to Section
406 of ERISA or a plan subject to Section 4975 of the Code, nor a person
acting on behalf of any such plan or arrangement nor using the assets of any
such plan or arrangement to effect such transfer, or (ii) if the purchaser
is an insurance company, a representation that the purchaser is an insurance
company which is purchasing such Certificates with funds contained in an
"insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60 or
(iii) in the case of any such ERISA-Restricted Certificate presented for
registration in the name of an employee benefit plan subject to ERISA, or a
plan or arrangement subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or
any other person acting on behalf of any such plan or arrangement or using
such plan's or arrangement's assets, an Opinion of Counsel satisfactory to
the Trustee, which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect that the
purchase or holding of such ERISA-Restricted Certificate will not result in
the assets of the Trust Fund being deemed to be "plan assets" and subject to
the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee to any obligation in addition to those expressly under-
taken in this Agreement or to any liability. For purposes of the preceding
sentence, with respect to an ERISA-Restricted Certificate that is not a
Private Certificate or a Residual Certificate, in the event the
representation letter referred to in the preceding sentence is not furnished,
such representation shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquiror's) acceptance of the ERISA-
Restricted Certificates. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA-Restricted Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without
the delivery to the Trustee of an Opinion of Counsel satisfactory to the
Trustee as described above shall be void and of no effect.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in
fact not permitted by this Section 5.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered by the Trustee in accordance with the foregoing
requirements.
(c) Each Person who has or who acquires any Ownership Interest in
a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following
provisions, and the rights of each Person acquiring any Ownership Interest
in a Residual Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Residual Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
------------------
transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Residual Certificate and (C) not to
Transfer its Ownership Interest in a Residual Certificate or to cause the
Transfer of an Ownership Interest in a Residual Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of this
Section 5.02(c) shall be absolutely null and void and shall vest no rights
in the purported Transferee. If any purported transferee shall become a
Holder of a Residual Certificate in violation of the provisions of this
Section 5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Residual Certificate. The Trustee shall be
under no liability to any Person for any registration of Transfer of a
Residual Certificate that is in fact not permitted by Section 5.02(b) and
this Section 5.02(c) or for making any payments due on such Certificate to
the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit, Transferor Certificate and
either the Rule 144A Letter or the Investment Letter. The Trustee shall be
entitled but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time it became
a Holder or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Residual Certificate at and after
either such time. Any such payments so recovered by the Trustee shall be
paid and delivered by the Trustee to the last preceding Permitted Transferee
of such Certificate.
(v) The Depositor shall use its best efforts to make
available, upon receipt of written request from the Trustee, all information
necessary to compute any tax imposed under Section 860E(e) of the Code as a
result of a Transfer of an Ownership Interest in a Residual Certificate to
any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth
in this Section 5.02(c) shall cease to apply (and the applicable portions of
the legend on a Residual Certificate may be deleted) with respect to
Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trust Fund, the
Trustee, the Seller or the Master Servicer, to the effect that the
elimination of such restrictions will not cause either REMIC hereunder to
fail to qualify as a REMIC at any time that the Certificates are outstanding
or result in the imposition of any tax on the Trust Fund, a Certificateholder
or another Person. Each Person holding or acquiring any Ownership Interest
in a Residual Certificate hereby consents to any amendment of this Agreement
which, based on an Opinion of Counsel furnished to the Trustee, is reasonably
necessary (a) to ensure that the record ownership of, or any beneficial
interest in, a Residual Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Residual Certificate which is held
by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be
at the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall
at all times remain registered in the name of the Depository or its nominee
and at all times: (i) registration of the Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Book-Entry Certificates;
(iii) ownership and transfers of registration of the Book-Entry Certificates
on the books of the Depository shall be governed by applicable rules
established by the Depository; (iv) the Depository may collect its usual and
customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall deal with the Depository, Depository Participants and
indirect participating firms as representatives of the Certificate Owners of
the Book-Entry Certificates for purposes of exercising the rights of holders
under this Agreement, and requests and directions for and votes of such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and
shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and
persons shown on the books of such indirect participating firms as direct or
indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates
shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. 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.
If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository, and (ii) the Trustee or the
Depositor is unable to locate a qualified successor, (y) the Depositor at its
option advises the Trustee in writing that it elects to terminate the book-
entry system through the Depository or (z) after the occurrence of an Event
of Default, Certificate Owners representing at least 51% of the Certificate
Balance of the Book-Entry Certificates together advise the Trustee and the
Depository through the Depository Participants in writing that the
continuation of a book-entry system through the Depository is no longer in
the best interests of the Certificate Owners, the Trustee shall notify all
Certificate Owners, through the Depository, of the occurrence of any such
event and of the availability of definitive, fully-registered Certificates
(the "Definitive Certificates") to Certificate Owners requesting the same.
Upon surrender to the Trustee of the related Class of Certificates by the
Depository, accompanied by the instructions from the Depository for registra-
tion, the Trustee shall issue the Definitive Certificates. Neither the
Master Servicer, the Depositor nor the Trustee shall be liable for any delay
in delivery of such instruction and each may conclusively rely on, and shall
be protected in relying on, such instructions. The Master Servicer shall
provide the Trustee with an adequate inventory of certificates to facilitate
the issuance and transfer of Definitive Certificates. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or
to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder; provided that the
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Trustee shall not by virtue of its assumption of such obligations become
liable to any party for any act or failure to act of the Depository.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
------------------------------------ ------------
If (a) 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 (b) there is delivered to the Master Servicer
and the Trustee such security or indemnity as may be required by them to hold
each of them harmless, then, in the absence of notice to the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee
shall execute, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with 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 replacement
Certificate issued pursuant to this Section 5.03 shall constitute complete
and indefeasible evidence of ownership, 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.
---------------------
The Master Servicer, the Trustee and any agent of 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 as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee shall be affected by any notice to the
contrary.
SECTION 5.05. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses.
---------
If three or more Certificateholders (a) request such information
in writing from the Trustee, (b) state that such Certificateholders desire
to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or Master Servicer shall request such information in writing from
the Trustee, then the Trustee shall, within ten Business Days after the
receipt of such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of such Trust Fund held by the Trustee, if any. The
Depositor and every Certificateholder, by receiving and holding a
Certificate, agree that the Trustee shall not be held accountable by reason
of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Maintenance of Office or Agency.
-------------------------------
The Trustee will maintain or cause to be maintained at its expense
an office or offices or agency or agencies in New York City where
Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its Corporate Trust Office for such
purposes. The Trustee will give prompt written notice to the
Certificateholders of any change in such location of any such office or
agency.
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the
-----------------------------------------------
Master Servicer.
---------------
The Depositor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the
-----------------------------------------------
Master Servicer.
---------------
The Depositor and the Master Servicer will each keep in full effect
its existence, rights and franchises as a corporation under the laws of the
United States or under the laws of one of the states thereof and will each
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 respective duties under this Agreement.
Any Person into which the Depositor or the Master Servicer may be
merged or consolidated, or any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party,
or any person succeeding to the business of the Depositor or the Master
Servicer, shall be the successor of the Depositor or the Master Servicer, as
the case may be, 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
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surviving Person to the Master Servicer shall be qualified to sell mortgage
loans to, and to service mortgage loans on behalf of, FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the
---------------------------------------------
Seller, the Master Servicer and Others.
--------------------------------------
None of the Depositor, the Seller, the Master Servicer or any of
the directors, officers, employees or agents of the Depositor, the Seller or
the Master Servicer shall be under any liability to the Certificateholders
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; provided,
--------
however, that this provision shall not protect the Depositor, the Seller, the
- -------
Master Servicer or any such Person against any breach of representations or
warranties made by it herein or protect the Depositor, the Seller, the Master
Servicer or any such Person from any liability which would otherwise be
imposed by reasons of willful misfeasance, bad faith or gross negligence in
the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Seller, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Seller or 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. The Depositor, the Seller, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Seller or the
Master Servicer shall be indemnified by the Trust Fund and held harmless
against any loss, liability or expense incurred in connection with any audit,
controversy or judicial proceeding relating to a governmental taxing authority
or any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense related to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Seller or the
Master Servicer shall be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its respective duties
hereunder and which in its opinion may involve it in any expense or
liability; provided, however, that any of the Depositor, the Seller or the
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Master Servicer may in its discretion undertake any such action that it may
deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties hereto and interests of the Trustee and 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 Depositor, the Seller and the
Master Servicer shall be entitled to be reimbursed therefor out of the
Certificate Account.
SECTION 6.04. Limitation on Resignation of the Master Servicer.
------------------------------------------------
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (a) upon appointment of a successor
servicer and receipt by the Trustee of a letter from each Rating Agency that
such a resignation and appointment will not result in a downgrading of the
rating of any of the Certificates, without regard to the guaranty provided
by the Class A-9 Policy, in the case of the Class A-9 Certificates, or (b)
upon determination that its duties hereunder are no longer permissible under
applicable law. Any such determination under clause (b) permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor master servicer shall have
assumed the Master Servicer's responsibilities, duties, liabilities and
obligations hereunder.
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to deposit in the
Certificate Account or remit to the Trustee any payment (other than a payment
required to be made under Section 4.01) required to be made under the terms
of this Agreement, which failure shall continue unremedied for five days
after the date upon which written notice of such failure shall have been
given to the Master Servicer by the Trustee or the Depositor or to the Master
Servicer and the Trustee by the Holders of Certificates having not less than
25% of the Voting Rights evidenced by the Certificates; or
(ii) any failure by the Master Servicer to observe or perform
in any material respect any other of the covenants or agreements on the part
of the Master Servicer contained in this Agreement, which failure shall
continue unremedied for a period of 60 days after the date on which written
notice of such failure shall have been given to the Master Servicer by the
Trustee or the Depositor, or to the Master Servicer and the Trustee by the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force undischarged
or unstayed for a period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the appointment of
a receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to the Master
Servicer or all or substantially all of the property of the Master Servicer;
or
(v) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable insolvency
or reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) so long as the Master Servicer is the Seller, any failure
by the Seller to observe or perform in any material respect any other of the
covenants or agreements on the part of the Seller contained in this
Agreement, which failure shall continue unremedied for a period of 60 days
after the date on which written notice of such failure shall have been given
to the Seller by the Trustee or the Depositor, or to the Seller and the
Trustee by the Holders of Certificates evidencing not less than 25% of the
Voting Rights evidenced by the Certificates; or
(vii) any failure of the Master Servicer to make any Advance
in the manner and at the time required to be made pursuant to Section 4.01
which continues unremedied for a period of one Business Day after the date
of such failure.
If an Event of Default described in clauses (i) to (vi) of this
Section 7.01 shall occur, then, and in each and every such case, so long as
such Event of Default shall not have been remedied, the Trustee may, or at
the direction of the Holders of Certificates evidencing not less than 25% of
the Voting Rights evidenced by the Certificates, the Trustee shall by notice
in writing to the Master Servicer (with a copy to each Rating Agency and
Financial Security), terminate all of the rights and obligations of the
Master Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder.
If an Event of Default described in clause (vii) shall occur, the Trustee
shall, by notice in writing to the Master Servicer and the Depositor,
terminate all of the rights and obligations of the Master Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, other
than its rights as a Certificateholder hereunder. On and after the receipt
by the Master Servicer of such written notice, all authority and power of the
Master Servicer hereunder, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee. The Trustee shall
thereupon make any Advance described in clause (vii) subject to Section 3.04.
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. Unless expressly
provided in such written notice, no such termination shall affect any
obligation of the Master Servicer to pay amounts owed pursuant to Article
VIII. The Master Servicer agrees to cooperate with the Trustee in effecting
the termination of the Master Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee of all
cash amounts which shall at the time be credited to the Certificate Account,
or thereafter be received with respect to the Mortgage Loans.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of
any late collection of a Scheduled Payment on a Mortgage Loan which was due
prior to the notice terminating such Master Servicer's rights and obligations
as Master Servicer hereunder and received after such notice, that portion
thereof to which such Master Servicer would have been entitled pursuant to
Sections 3.11(a)(i) through (viii), and any other amounts payable to such
Master Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of
------------------------------
Successor.
---------
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01, the Trustee shall, subject to and to
the extent provided in Section 3.07, be the successor to the Master Servicer
in its capacity as master servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Master Servicer by the terms and provisions hereof and applicable law
including the obligation to make Advances pursuant to Section 4.01. As
compensation therefor, the Trustee shall be entitled to all funds relating
to the Mortgage Loans that the Master Servicer would have been entitled to
charge to the Certificate Account or Distribution Account if the Master
Servicer had continued to act hereunder. Notwithstanding the foregoing, if
the Trustee has become the successor to the Master Servicer in accordance
with Section 7.01, the Trustee may, if it shall be unwilling to so act, or
shall, if it is prohibited by applicable law from making Advances pursuant
to Section 4.01 or if it is otherwise unable to so act, appoint, or petition
a court of competent jurisdiction to appoint, any established mortgage loan
servicing institution the appointment of which does not adversely affect the
then current rating of the Certificates by each Rating Agency without regard
to the Class A-9 Policy, in the case of the Class A-9 Certificates, 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. Any successor to the Master Servicer shall be an institution
which is a FNMA and FHLMC approved seller/servicer in good standing, which
has a net worth of at least $15,000,000, which is willing to service the
Mortgage Loans and which executes and delivers to the Depositor and the
Trustee an agreement accepting such delegation and assignment, containing an
assumption by such Person of the rights, powers, duties, responsibilities,
obligations and liabilities of the Master Servicer (other than liabilities
of the Master Servicer under Section 6.03 incurred prior to termination of
the Master Servicer under Section 7.01), with like effect as if originally
named as a party to this Agreement; provided that each Rating Agency
--------
acknowledges that its rating of the Certificates in effect immediately prior
to such assignment and delegation will not be qualified or reduced, without
regard to the guaranty provided by the Class A-9 Policy, with respect to the
Class A-9 Certificates, as a result of such assignment and delegation. Pending
appointment of a successor to the Master Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall, subject to
Section 3.07, act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements
for the compensation of such successor out of payments on Mortgage Loans as
it and such successor shall agree; provided, however, that no such
-------- -------
compensation shall be in excess of the Master Servicing Fee permitted the
Master Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. Neither the Trustee nor any other successor master
servicer shall be deemed to be in default hereunder by reason of any failure
to make, or any delay in making, any distribution hereunder or any portion
thereof or any failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused by the failure of the
Master Servicer to deliver or provide, or any delay in delivering or
providing, any cash, information, documents or records to it.
Any successor to the Master Servicer as master servicer shall give
notice to the Mortgagors of such change of servicer and shall, during the
term of its service as master servicer, maintain in force the policy or
policies that the Master Servicer is required to maintain pursuant to Section
6.05.
SECTION 7.03. Notification to Certificateholders.
----------------------------------
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Certificateholders notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of the Trustee.
---------------------
The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and
remains uncured, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that are specifically required to be furnished
pursuant to any provision of this Agreement 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
such resolution, certificate, statement, opinion, report, document, order or
other instrument.
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) unless an Event of Default known to the Trustee shall
have occurred and be continuing, 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 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 which it believed in good faith to be genuine
and to have been duly executed by the proper authorities respecting any
matters arising hereunder;
(ii) the Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be finally proven that the Trustee was negligent in
ascertaining the pertinent facts; and
(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 direction of Holders of Certificates evidencing not less
than 25% of the Voting Rights of Certificates relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee under
this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
-------------------------------------
Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond
or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties and the Trustee shall have
no responsibility to ascertain or confirm the genuineness of any signature
of any such party or parties;
(ii) the Trustee may consult with counsel, financial advisers
or accountants and the advice of any such counsel, financial advisers or
accountants and any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such Opinion of
Counsel;
(iii) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(iv) 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 so to do by Holders
of Certificates evidencing not less than 25% of the Voting Rights allocated
to each Class of Certificates;
(v) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, accountants or attorneys;
(vi) the Trustee shall not be required to risk or expend its
own funds or otherwise incur any financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers hereunder
if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not assured to
it;
(vii) the Trustee shall not be liable for any loss on any
investment of funds pursuant to this Agreement (other than as issuer of the
investment security);
(viii) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall have
received written notice thereof; and
(ix) the Trustee shall be under no obligation to exercise any
of the trusts, rights or powers vested in it by 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 satisfactory to
the Trustee against the costs, expenses and liabilities which may be incurred
therein or thereby.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
-----------------------------------------------
Loans.
-----
The recitals contained herein and in the Certificates shall be
taken as the statements of the Depositor or the Seller, as the case may be,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Agreement
or of the Certificates or of any Mortgage Loan or related document other than
with respect to the Trustee's execution and countersignature of the
Certificates. The Trustee shall not be accountable for the use or
application by the Depositor or the Master Servicer of any funds paid to the
Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Certificate Account by the Depositor or
the Master Servicer.
SECTION 8.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
---------------------------
The Trustee, as compensation for its activities hereunder, shall
be entitled to withdraw from the Distribution Account on each Distribution
Date an amount equal to the Trustee Fee for such Distribution Date. The
Trustee and any director, officer, employee or agent of the Trustee shall be
indemnified by the Master Servicer and held harmless against any loss,
liability or expense (including reasonable attorney's fees) (i) incurred in
connection with any claim or legal action relating to (a) this Agreement, (b)
the Certificates, or (c) the performance of any of the Trustee's duties
hereunder, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of any of the
Trustee's duties hereunder and (ii) resulting from any error in any tax or
information return prepared by the Master Servicer. Such indemnity shall
survive the termination of this Agreement or the resignation or removal of
the Trustee hereunder. Without limiting the foregoing, the Master Servicer
covenants and agrees, except as otherwise agreed upon in writing by the
Depositor and the Trustee, and except for any such expense, disbursement or
advance as may arise from the Trustee's negligence, bad faith or willful
misconduct, to pay or reimburse the Trustee, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement with respect to (A) the reasonable
compensation and the expenses and disbursements of its counsel not associated
with the closing of the issuance of the Certificates, (B) the reasonable
compensation, expenses and disbursements of any accountant, engineer or
appraiser that is not regularly employed by the Trustee, to the extent that
the Trustee must engage such persons to perform acts or services hereunder
and (C) printing and engraving expenses in connection with preparing any
Definitive Certificates. Except as otherwise provided herein, the Trustee
shall not be entitled to payment or reimbursement for any routine ongoing
expenses incurred by the Trustee in the ordinary course of its duties as
Trustee, Registrar, Tax Matters Person or Paying Agent hereunder or for any
other expenses.
SECTION 8.06. Eligibility Requirements for the Trustee.
----------------------------------------
The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority and with
a credit rating which would not cause either of the Rating Agencies to reduce
their respective then current ratings of the Certificates (or having provided
such security from time to time as is sufficient to avoid such reduction) as
evidenced in writing by each Rating Agency. If such corporation or
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 8.06 the combined capital and surplus
of such corporation or association shall be deemed to be its 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 8.06, the Trustee shall resign immediately in
the manner and with the effect specified in Section 8.07. The entity serving
as Trustee may have normal banking and trust relationships with the Depositor
and its affiliates or the Master Servicer and its affiliates; provided,
--------
however, that such entity cannot be an affiliate of the Seller, the Depositor
- -------
or the Master Servicer other than the Trustee in its role as successor to the
Master Servicer.
SECTION 8.07. Resignation and Removal of the Trustee.
--------------------------------------
The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice of resignation to the
Depositor, the Master Servicer, each Rating Agency and Financial Security not
less than 60 days before the date specified in such notice, when, subject to
Section 8.08, such resignation is to take effect, and acceptance by a
successor trustee in accordance with Section 8.08 meeting the qualifications
set forth in Section 8.06. If no successor trustee meeting such
qualifications shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice or resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment
of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request thereto by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged as 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, or
a tax is imposed with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund is located and the imposition of such tax would be
avoided by the appointment of a different trustee, then the Depositor or the
Master Servicer may remove the Trustee and appoint a successor trustee by
written instrument, in triplicate, one copy of which shall be delivered to
the Trustee, one copy to the Master Servicer and one copy to the successor
trustee.
The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which shall be
delivered by the successor Trustee to the Master Servicer, one complete set
to the Trustee so removed and one complete set to the successor so appointed.
Notice of any removal of the Trustee shall be given to each Rating Agency and
Financial Security by the successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 8.08.
SECTION 8.08. Successor Trustee.
-----------------
Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Master Servicer an instrument accepting such appointment
hereunder and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as
if originally named as trustee herein. The Depositor, the Master Servicer and
the predecessor trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties, and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 and its appointment
shall not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided
in this Section 8.08, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates. If the Depositor
fails to mail such notice within 10 days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
mailed at the expense of the Depositor.
SECTION 8.09. Merger or Consolidation of the Trustee.
--------------------------------------
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to the business of the Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
--------
eligible under the provisions of Section 8.06 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 8.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust Fund or property securing any Mortgage Note
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 to act as co-trustee
or co-trustees jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Fund, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders,
such title to the Trust Fund or any part thereof, whichever is applicable,
and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Master Servicer and the Trustee
may consider necessary or desirable. If the Master Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and
be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.06
and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) To the extent necessary to effectuate the purposes of
this Section 8.10, all rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the Master Servicer, shall be
conferred or imposed upon and exercised or performed by the Trustee and such
separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately without
the Trustee joining in such act), 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 applicable Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder and such
appointment shall not, and shall not be deemed to, constitute any such
separate trustee or co-trustee as agent of the Trustee;
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee; and
(iv) The Master Servicer, and not the Trustee, shall be liable
for the payment of reasonable compensation, reimbursement and indemnification
to any such separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees,
when and 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 VIII. 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 and a copy thereof given to the Master
Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. Tax Matters.
-----------
It is intended that the assets with respect to which any REMIC
election pertaining to the Trust Fund is to be made, as set forth in the
Preliminary Statement, shall constitute, and that the conduct of matters
relating to such assets shall be such as to qualify such assets as, a "real
estate mortgage investment conduit" as defined in and in accordance with the
REMIC Provisions. In furtherance of such intention, the Trustee covenants
and agrees that it shall act as agent (and the Trustee is hereby appointed
to act as agent) on behalf of any REMIC and that in such capacity it shall:
(a) prepare and file, or cause to be prepared and filed, in a timely manner,
a U.S. Real Estate Mortgage Investment Conduit Income Tax Return (Form 1066
or any successor form adopted by the Internal Revenue Service) and prepare
and file or cause to be prepared and filed with the Internal Revenue Service
and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to any such REMIC, containing such
information and at the times and in the manner as may be required by the Code
or state or local tax laws, regulations, or rules, and furnish or cause to
be furnished to Certificateholders the schedules, statements or information
at such times and in such manner as may be required thereby; (b) within
thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required by
the Code, the name, title, address, and telephone number of the person that
the holders of the Certificates may contact for tax information relating
thereto, together with such additional information as may be required by such
Form, and update such information at the time or times in the manner required
by the Code; (c) make or cause to be made an election that such assets be
treated as a REMIC on the federal tax return for its first taxable year (and,
if necessary, under applicable state law); (d) prepare and forward, or cause
to be prepared and forwarded, to the Certificateholders and to the Internal
Revenue Service and, if necessary, state tax authorities, all information
returns and reports as and when required to be provided to them in accordance
with the REMIC Provisions, including without limitation, the calculation of
any original issue discount using the Prepayment Assumption; (e) provide
information necessary for the computation of tax imposed on the transfer of
a Residual Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is
the record holder of an interest (the reasonable cost of computing and
furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control, conduct matters
relating to such assets at all times that any Certificates are outstanding
so as to maintain the status as a REMIC under the REMIC Provisions; (g) not
knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status; (h) pay, from the sources
specified in the last paragraph of this Section 8.11, the amount of any
federal or state tax, including prohibited transaction taxes as described
below, imposed on such REMIC prior to its termination when and as the same
shall be due and payable (but such obligation shall not prevent the Trustee
or any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings);
(i) ensure that federal, state or local income tax or information returns
shall be signed by the Trustee or such other person as may be required to
sign such returns by the Code or state or local laws, regulations or rules;
(j) maintain records relating to such REMIC, including but not limited to the
income, expenses, assets and liabilities thereof and the fair market value
and adjusted basis of the assets determined at such intervals as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information; and (k) as and when necessary and
appropriate, represent such REMIC in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to any taxable year of
such REMIC, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any tax item of such
REMIC, and otherwise act on behalf of the REMIC in relation to any tax matter
or controversy involving it.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within ten (10) days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes
to the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows
of the Certificates and the Mortgage Loans. Thereafter, the Depositor shall
provide to the Trustee promptly upon written request therefor any such
additional information or data that the Trustee may, from time to time,
reasonably request in order to enable the Trustee to perform its duties as
set forth herein. The Depositor hereby indemnifies the Trustee for any
losses, liabilities, damages, claims or expenses of the Trustee arising from
any errors or miscalculations of the Trustee that result from any failure of
the Depositor to provide, or to cause to be provided, accurate information
or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions"
of such REMIC as defined in Section 860F(a)(2) of the Code, on the "net
income from foreclosure property" of the REMIC as defined in Section 860G(c)
of the Code, on any contribution to the REMIC after the Startup Day pursuant
to Section 860G(d) of the Code, or any other tax is imposed, including,
without limitation, any minimum tax imposed upon the REMIC pursuant to
Sections 23153 and 24874 of the California Revenue and Taxation Code, if not
paid as otherwise provided for herein, such tax shall be paid by (i) the
Trustee, if any such other tax arises out of or results from a breach by the
Trustee of any of its obligations under this Agreement, (ii) the Master
Servicer or the Seller, in the case of any such minimum tax, if such tax
arises out of or results from a breach by the Master Servicer or Seller of
any of their obligations under this Agreement or (iii) the Seller, if any
such tax arises out of or results from the Seller's obligation to repurchase
a Mortgage Loan pursuant to Section 2.02 or 2.03 or (iv) in all other cases,
or in the event that the Trustee, the Master Servicer or the Seller fails to
honor its obligations under the preceding clause (i), (ii) or (iii), any such
tax will be paid with amounts otherwise to be distributed to the
Certificateholders, as provided in Section 3.11(b).
SECTION 8.12. Periodic Filings.
----------------
Pursuant to written instructions from the Depositor, the Trustee
shall prepare, execute and file all periodic reports required under the
Securities Exchange Act of 1934 in conformity with the terms of the relief
granted to the Depositor in CWMBS, Inc. (February 3, 1994), a copy of which
has been supplied to the Trustee by the Issuer. In connection with the
preparation and filing of such periodic reports, the Depositor and the Master
Servicer shall timely provide to the Trustee all material information
available to them which is required to be included in such reports and not
known to them to be in the possession of the Trustee and such other
information as the Trustee reasonably may request from either of them and
otherwise reasonably shall cooperate with the Trustee. The Trustee shall
have no liability with respect to any failure to properly prepare or file
such periodic reports resulting from or relating to the Trustee's inability
or failure to obtain any information not resulting from its own negligence
or willful misconduct.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Purchase of all
-----------------------------------------------
Mortgage Loans.
--------------
Subject to Section 9.03, the obligations and responsibilities of
the Depositor, the Master Servicer and the Trustee created hereby with
respect to the Trust Fund shall terminate upon the earlier of (a) the
purchase by the Master Servicer of all Mortgage Loans (and REO Properties)
remaining in the Trust Fund at the price equal to the sum of (i) 100% of the
Stated Principal Balance of each Mortgage Loan plus one month's accrued
interest thereon at the applicable Adjusted Mortgage Rate and (ii) the lesser
of (x) the appraised value of any REO Property as determined by the higher
of two appraisals completed by two independent appraisers selected by the
Master Servicer at the expense of the Master Servicer and (y) the Stated
Principal Balance of each Mortgage Loan related to any REO Property, in each
case plus accrued and unpaid interest thereon at the applicable Adjusted
Mortgage Rate and (b) the later of (i) the maturity or other liquidation (or
any Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all REO Property and (ii) the distribution
to Certificateholders of all amounts required to be distributed to them
pursuant to this Agreement. No purchase pursuant to clause (a) above is
permitted if it could result in a draw on the Class A-9 Policy unless
Financial Security consents. In no event shall the trusts created hereby
continue beyond the earlier of (i) the expiration of 21 years from the death
of the survivor of the descendants of Joseph P. Kennedy, the late Ambassador
of the United States to the Court of St. James's, living on the date hereof
and (ii) the Latest Possible Maturity Date. The right to purchase all
Mortgage Loans and REO Properties pursuant to clause (a) above shall be
conditioned upon the Pool Stated Principal Balance, at the time of any such
repurchase, aggregating less than ten percent of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans.
SECTION 9.02. Final Distribution on the Certificates.
--------------------------------------
If on any Determination Date, the Master Servicer determines that
there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Certificate Account, the Master
Servicer shall direct the Trustee promptly to send a final distribution
notice to each Certificateholder. If the Master Servicer elects to terminate
the Trust Fund pursuant to clause (a) of Section 9.01, at least 20 days prior
to the date notice is to be mailed to the affected Certificateholders the
Master Servicer shall notify the Depositor and the Trustee of the date the
Master Servicer intends to terminate the Trust Fund and of the applicable
repurchase price of the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their
Certificates for payment of the final distribution and cancellation, shall
be given promptly by the Trustee by letter to Certificateholders mailed not
earlier than the 15th day and not later than the 10th day of the month next
preceding the month of such final distribution. Any such notice shall
specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of Certificates at
the office therein designated, (b) the amount of such final distribution, (c)
the location of the office or agency at which such presentation and surrender
must be made, and (d) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein speci-
fied. The Master Servicer will give such notice to each Rating Agency at the
time such notice is given to Certificateholders.
In the event such notice is given, the Trustee shall cause all
funds on deposit in the Class A-9 Reserve Fund to be distributed to Lehman
Brothers Inc., the beneficial owner of the Class A-9 Reserve Fund, and all
funds on deposit in the Class A-9 Rounding Account to be distributed to
Lehman Brothers Inc., the beneficial owner of the Class A-9 Rounding Account,
at the addresses supplied by Lehman Brothers Inc. to the Trustee for such
purpose, and the Master Servicer shall cause all funds in the Certificate
Account to be remitted to the Trustee for deposit in the Distribution Account
on the Business Day prior to the applicable Distribution Date in an amount
equal to the final distribution in respect of the Certificates. Upon such
final deposit with respect to the Trust Fund and the receipt by the Trustee
of a Request for Release therefor, the Trustee shall promptly release to the
Master Servicer the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to Financial Security and the
Certificateholders of each Class, in each case on the final Distribution Date
and in the order set forth in Section 4.02, (a) in the case of Financial
Security, all amounts required to be distributed to it pursuant to Section
4.02 and (b) in the case of the Certificateholders, in proportion to their
respective Percentage Interests, with respect to Certificateholders of the
same Class, an amount equal to (i) as to each Class of Regular Certificates,
the Certificate Balance thereof plus (a) accrued interest thereon (or on
their Notional Amount, if applicable) in the case of an interest-bearing
Certificate, and (b) any Class PO Deferred Amounts in the case of the Class
PO Certificates allocated to such Certificate and (ii) as to the Residual
Certificates, the amount, if any, which remains on deposit in the
Distribution Account (other than the amounts retained to meet claims) after
application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee
may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds and
other assets which remain a part of the Trust Fund. If within one year after
the second notice all Certificates shall not have been surrendered for
cancellation, the Class A-R Certificateholders shall be entitled to all
unclaimed funds and other assets of the Trust Fund which remain subject
hereto.
SECTION 9.03. Additional Termination Requirements.
-----------------------------------
(a) In the event the Master Servicer exercises its purchase option
as provided in Section 9.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless the Trustee has been
supplied with an Opinion of Counsel, at the expense of the Master Servicer,
to the effect that the failure to comply with the requirements of this
Section 9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" on the Master REMIC or the Subsidiary REMIC as defined in
Section 860F of the Code, or (ii) cause the Master REMIC or the Subsidiary
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(1) Within 90 days prior to the final Distribution Date set
forth in the notice given by the Master Servicer under Section 9.02, the
Master Servicer shall prepare and the Trustee, at the expense of the "tax
matters person", shall adopt a plan of complete liquidation within the
meaning of Section 860F(a)(4) of the Code which, as evidenced by an Opinion
of Counsel (which opinion shall not be an expense of the Trustee, the Tax
Matters Person or the Trust Fund), meets the requirements of a qualified
liquidation; and
(2) Within 90 days after the time of adoption of such a plan
of complete liquidation, the Trustee shall sell all of the assets of the
Trust Fund to the Master Servicer for cash in accordance with Section 9.01.
(b) The Trustee as agent for each REMIC hereby agrees to adopt and
sign such a plan of complete liquidation upon the written request of the
Master Servicer, and the receipt of the Opinion of Counsel referred to in
Section 9.03(a)(1) and to take such other action in connection therewith as
may be reasonably requested by the Master Servicer.
(c) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Master Servicer to prepare and the Trustee to adopt and
sign a plan of complete liquidation.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
---------
This Agreement may be amended from time to time by the Depositor,
the Master Servicer and the Trustee without the consent of any of the
Certificateholders to cure any ambiguity, or to correct or supplement any
provisions herein, or to make such other provisions with respect to matters
or questions arising under this Agreement as shall not be inconsistent with
any other provisions herein; provided that such action shall not, as
--------
evidenced by an Opinion of Counsel (which Opinion of Counsel shall not be an
expense of the Trustee or the Trust Fund), adversely affect in any material
respect the interests of any Certificateholder or Financial Security;
provided, however, that no such Opinion of Counsel shall be required if the
- -------- -------
Person requesting the amendment obtains a letter from each Rating Agency
stating that the amendment would not result in the downgrading or withdrawal
of the respective ratings then assigned to the Certificates, without regard
to the guaranty provided by the Class A-9 Policy; it being understood and
agreed that any such letter in and of itself will not represent a
determination as to the materiality of any such amendment and will represent
a determination only as to the credit issues affecting any such rating. The
Trustee, the Depositor and the Master Servicer also may at any time and from
time to time amend this Agreement without the consent of the
Certificateholders to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or helpful to maintain the qualification
of any REMIC as a REMIC under the Code or to avoid or minimize the risk of
the imposition of any tax on any REMIC pursuant to the Code that would be a
claim at any time prior to the final redemption of the Certificates, provided
--------
that the Trustee has been provided an Opinion of Counsel, which opinion shall
be an expense of the party requesting such opinion but in any case shall not
be an expense of the Trustee or the Trust Fund, to the effect that such
action is necessary or helpful to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent of the
Holders of a Majority in Interest of each Class of Certificates affected
thereby for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
-------- -------
such amendment shall (i) reduce in any manner the amount of, or delay the
timing of, payments required to be distributed on any Certificate without the
consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates
in a manner other than as described in (i), without the consent of the
Holders of Certificates of such Class evidencing, as to such Class,
Percentage Interests aggregating 66%, (iii) reduce the aforesaid percentages
of Certificates the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all such Certificates then
outstanding or (iv) adversely affect in any material respect the rights and
interest of Financial Security without its consent.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, which opinion shall not be an
expense of the Trustee or the Trust Fund, to the effect that such amendment
will not cause the imposition of any tax on any REMIC or the
Certificateholders or cause any REMIC to fail to qualify as a REMIC at any
time that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency and Financial Security.
It shall not be necessary for the consent of Certificateholders
under this Section 10.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. 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.
Nothing in this Agreement shall require the Trustee to enter into
an amendment without receiving an Opinion of Counsel (which Opinion shall not
be an expense of the Trustee or the Trust Fund), satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement
and that all requirements for amending this Agreement have been complied
with; and (ii) either (A) the amendment does not adversely affect in any
material respect the interests of any Certificateholder or (B) the conclusion
set forth in the immediately preceding clause (A) is not required to be
reached pursuant to this Section 10.01.
SECTION 10.02. Recordation of Agreement; Counterparts.
--------------------------------------
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 Master Servicer at its
expense, but only upon direction by the Trustee accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially
affects 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 10.03. Governing Law.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.04. Intention of Parties.
--------------------
It is the express intent of the parties hereto that the conveyance
(i) of the Mortgage Loans by the Seller to the Depositor and (ii) of the
Trust Fund by the Depositor to the Trustee each be, and be construed as, an
absolute sale thereof. It is, further, not the intention of the parties that
such conveyances be deemed a pledge thereof. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Seller or Depositor, as the case may be, or if for any other
reason this Agreement is held or deemed to create a security interest in
either such assets, then (i) this Agreement shall be deemed to be a security
agreement within the meaning of the Uniform Commercial Code of the State of
New York and (ii) the conveyances provided for in this Agreement shall be
deemed to be an assignment and a grant (i) by the Seller to the Depositor or
(ii) by the Depositor to the Trustee, for the benefit of the
Certificateholders, of a security interest in all of the assets transferred,
whether now owned or hereafter acquired.
The Seller and the Depositor for the benefit of the
Certificateholders shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Trust Fund, such security
interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the
term of the Agreement. The Depositor shall arrange for filing any Uniform
Commercial Code continuation statements in connection with any security
interest granted or assigned to the Trustee for the benefit of the
Certificateholders.
SECTION 10.05. Notices.
-------
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency and Financial Security with respect to each of
the following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the
Trustee and the appointment of any successor;
4. The repurchase or substitution of Mortgage Loans pursuant to
Section 2.03; and
5. The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating
Agency and Financial Security copies of the following:
1. Each report to Certificateholders described in Section 4.06;
2. Each annual statement as to compliance described in Section
3.16;
3. Each annual independent public accountants' servicing report
described in Section 3.17; and
4. Any notice of a purchase of a Mortgage Loan pursuant to Section
2.02, 2.03 or 3.11.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (a) in
the case of the Depositor, CWMBS, Inc., 155 North Lake Avenue, Pasadena,
California 91101, Attention: David A. Spector, (b) in the case of the Master
Servicer, Independent National Mortgage Corporation, 35 North Lake Avenue,
Pasadena, California 91101, Attention: Michael W. Perry or such other address
as may be hereafter furnished to the Depositor and the Trustee by the Master
Servicer in writing, (c) in the case of the Trustee, The Bank of New York,
101 Barclay Street, 12E, New York, New York 10286, Attention: Mortgage-Backed
Securities Group Series 1996-J, or such other address as the Trustee may
hereafter furnish to the Depositor or Master Servicer; (d) in the case of
each of the Rating Agencies, the address specified therefor in the definition
corresponding to the name of such Rating Agency and (e) in the case of
Financial Security, Financial Security Assurance Inc., 350 Park Avenue, New
York, New York 10022, Attention: Senior Vice President, Surveillance Dept.,
or such other address as Financial Security may hereafter furnish to the
Depositor, the Master Servicer and the Trustee. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
SECTION 10.06. 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.
SECTION 10.07. Assignment.
----------
Notwithstanding anything to the contrary contained herein, except
as provided in Section 6.02, this Agreement may not be assigned by the Master
Servicer without the prior written consent of the Trustee and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
------------------------------------------
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or
to take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, 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 constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third party by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
herein provided, and unless the Holders of Certificates evidencing not less
than 25% of the Voting Rights evidenced by the Certificates shall also have
made written request to 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,
expenses, and liabilities to be incurred therein or thereby, and 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; it being understood and intended, and being expressly covenanted
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue or by availing itself or themselves of any
provisions of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder or to enforce any right
under this Agreement, except in the manner herein provided and for the common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 10.09. Inspection and Audit Rights.
---------------------------
The Master Servicer agrees that, on reasonable prior notice, it
will permit and will cause each Subservicer to permit any representative of
the Depositor or the Trustee during the Master Servicer's normal business
hours, to examine all the books of account, records, reports and other papers
of the Master Servicer relating to the Mortgage Loans, to make copies and
extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the Depositor or the Trustee and to
discuss its affairs, finances and accounts relating to the Mortgage Loans
with its officers, employees and independent public accountants (and by this
provision the Master Servicer hereby authorizes said accountants to discuss
with such representative such affairs, finances and accounts), all at such
reasonable times and as often as may be reasonably requested. Any out-of-
pocket expense incident to the exercise by the Depositor or the Trustee of
any right under this Section 10.09 shall be borne by the party requesting
such inspection; all other such expenses shall be borne by the Master
Servicer or the related Subservicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
-----------------------------------------
It is the intention of the Depositor that Certificate-holders shall
not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and
shall be deemed fully paid.
* * * * * *
IN WITNESS WHEREOF, the Depositor, the Trustee, the Seller and the
Master Servicer have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first
above written.
CWMBS, INC.
as Depositor
By: /s/ David A. Spector
--------------------------------
Name: David A. Spector
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Jonathan Chayes
--------------------------------
Name: Jonathan Chayes
Title: Assistant Treasurer
INDEPENDENT NATIONAL MORTGAGE
CORPORATION,
as Seller and Master Servicer
By: /s/ Shannon Smith
--------------------------------
Name: Shannon Smith
Title: First Vice President
SCHEDULE I
Mortgage Loan Schedule
(Delivered at Closing to Trustee)
SCHEDULE II
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1996-J
Representations and Warranties of the Seller/Master Servicer
------------------------------------------------------------
Independent National Mortgage Corporation ("INMC") hereby makes the
representations and warranties set forth in this Schedule II to the Depositor
and the Trustee, as of the Closing Date, or if so specified herein, as of the
Cut-off Date. Capitalized terms used but not otherwise defined in this
Schedule II shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") relating to the
above-referenced Series, among INMC, as seller and master servicer, CWMBS,
Inc., as depositor, and The Bank of New York, as trustee.
(1) INMC is duly organized as a Delaware corporation and is
validly existing and in good standing under the laws of the State of Delaware
and is duly authorized and qualified to transact any and all business contem-
plated by the Pooling and Servicing Agreement to be conducted by INMC in any
state in which a Mortgaged Property is located or is otherwise not required
under applicable law to effect such qualification and, in any event, is in
compliance with the doing business laws of any such state, to the extent
necessary to ensure its ability to enforce each Mortgage Loan, to service the
Mortgage Loans in accordance with the terms of the Pooling and Servicing
Agreement and to perform any of its other obligations under the Pooling and
Servicing Agreement in accordance with the terms thereof.
(2) INMC has the full corporate power and authority to sell
and service each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by the Pooling and
Servicing Agreement and has duly authorized by all necessary corporate action
on the part of INMC the execution, delivery and performance of the Pooling
and Servicing Agreement; and the Pooling and Servicing Agreement, assuming
the due authorization, execution and delivery thereof by the other parties
thereto, constitutes a legal, valid and binding obligation of INMC,
enforceable against INMC in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally
and (b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(3) The execution and delivery of the Pooling and Servicing
Agreement by INMC, the sale and servicing of the Mortgage Loans by INMC under
the Pooling and Servicing Agreement, the consummation of any other of the
transactions contemplated by the Pooling and Servicing Agreement, and the
fulfillment of or compliance with the terms thereof are in the ordinary
course of business of INMC and will not (A) result in a material breach of
any term or provision of the charter or by-laws of INMC or (B) materially
conflict with, result in a material breach, violation or acceleration of, or
result in a material default under, the terms of any other material agreement
or instrument to which INMC is a party or by which it may be bound, or (C)
constitute a material violation of any statute, order or regulation
applicable to INMC of any court, regulatory body, administrative agency or
governmental body having jurisdiction over INMC; and INMC is not in breach
or violation of any material indenture or other material agreement or instru-
ment, or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair INMC's
ability to perform or meet any of its obligations under the Pooling and
Servicing Agreement.
(4) Each Servicer is an approved servicer of conventional
mortgage loans for FNMA or FHLMC or is a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to Sections 203 and 211 of the
National Housing Act.
(5) No litigation is pending or, to the best of INMC's
knowledge, threatened against INMC that would materially and adversely affect
the execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of INMC to sell or service the Mortgage Loans or to
perform any of its other obligations under the Pooling and Servicing
Agreement in accordance with the terms thereof.
(6) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by INMC of, or compliance by INMC with, the Pooling and Servicing
Agreement or the consummation of the transactions contemplated thereby, or
if any such consent, approval, authorization or order is required, INMC has
obtained the same.
(7) INMC intends to treat the transfer of the Mortgage Loans
to the Depositor as a sale for all tax, accounting and regulatory purposes.
SCHEDULE III
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1996-J
Representations and Warranties as to the Mortgage Loans
-------------------------------------------------------
Independent National Mortgage Corporation ("INMC") hereby makes the
representations and warranties set forth in this Schedule III to the
Depositor and the Trustee, as of the Closing Date, or if so specified herein,
as of the Cut-off Date. Capitalized terms used but not otherwise defined in
this Schedule III shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") relating to the
above-referenced Series, among INMC, as seller and master servicer, CWMBS,
Inc., as depositor, and The Bank of New York, as trustee.
(1) The information set forth on Schedule I to the Pooling
and Servicing Agreement with respect to each Mortgage Loan is true and
correct in all material respects as of the Closing Date.
(2) As of the Closing Date, all payments due with respect to
each Mortgage Loan prior to the Cut-off Date have been made; and as of the
Cut-off Date, no Mortgage Loan has been contractually delinquent for 30 or
more days during the twelve months prior to the Cut-off Date.
(3) No Mortgage Loan had a Loan-to-Value Ratio at origination
in excess of 95%.
(4) With respect to any Mortgage Loan that is not a
Cooperative Loan, each Mortgage is a valid and enforceable first lien on the
Mortgaged Property subject only to (a) the lien of nondelinquent current real
property taxes and assessments, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date
of recording of such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or specifically
reflected in the appraisal made in connection with the origination of the
related Mortgage Loan, and (c) 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 such Mortgage.
(5) Immediately prior to the assignment of the Mortgage Loans
to the Depositor, the Seller had good title to, and was the sole owner of,
each Mortgage Loan free and clear of any pledge, lien, encumbrance or
security interest and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid offset, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to pay
the unpaid principal of or interest on such Mortgage Note.
(8) There are no mechanics' liens or claims for work, labor
or material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are insured
against by the title insurance policy referred to in item (12) below.
(9) To the best of the Seller's knowledge, each Mortgaged
Property is free of material damage, and is in good repair.
(10) Each Mortgage Loan at origination complied in all
material respects with applicable state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any such
laws.
(11) As of the Closing Date, neither the Seller nor any prior
holder of any Mortgage has modified the Mortgage in any material respect
(except that a Mortgage Loan may have been modified by a written instrument
which has been recorded or submitted for recordation, if necessary, to
protect the interests of the Certificateholders and which has been delivered
to the Trustee); satisfied, cancelled or subordinated such Mortgage in whole
or in part; released the related Mortgaged Property in whole or in part from
the lien of such Mortgage; or executed any instrument of release, cancella-
tion, modification or satisfaction with respect thereto.
(12) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable, in
an amount at least equal to the Cut-off Date Stated Principal Balance of each
such Mortgage Loan or a commitment (binder) to issue the same was effective
on the date of the origination of each Mortgage Loan, each such policy is
valid and remains in full force and effect, and each such policy was issued
by a title insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located and acceptable to FNMA or FHLMC and is in a
form acceptable to FNMA or FHLMC, which policy insures the Seller and
successor owners of indebtedness secured by the insured Mortgage, as to the
first priority lien of the Mortgage subject to the exceptions set forth in
paragraph (4) above; to the best of the Seller's knowledge, no claims have
been made under such mortgage title insurance policy and no prior holder of
the related Mortgage, including the Seller, has done, by act or omission,
anything which would impair the coverage of such mortgage title insurance
policy.
(13) Each Mortgage Loan was originated (within the meaning of
Section 3(a)(41) of the Securities Exchange Act of 1934) by an entity that
satisfied at the time of origination the requirements of Section 3(a)(41) of
the Securities Exchange Act of 1934, as amended.
(14) To the best of the Seller's knowledge, all of the
improvements which were included for the purpose of determining the Appraised
Value of the Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon the Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best of the Seller's knowledge,
all inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect
to the use and occupancy of the same, including but not limited to certifi-
cates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities, unless the lack thereof would not
have a material adverse effect on the value of such Mortgaged Property, and
the Mortgaged Property is lawfully occupied under applicable law.
(16) The Mortgage Note and the related Mortgage are genuine,
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to the Mortgage Note and the
Mortgage had legal capacity to execute the Mortgage Note and the Mortgage and
each Mortgage Note and Mortgage have been duly and properly executed by such
parties.
(17) The proceeds of the Mortgage Loan have been fully
disbursed, 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.
All costs, fees and expenses incurred in making, or closing or recording the
Mortgage Loans were paid.
(18) The related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits
of the security, including, (i) in the case of a Mortgage designated as a
deed of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure.
(19) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the Certif-
icateholders to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage is in substantially
one of the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(21) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary arrangements
for repayment thereof have not been made, and no escrow deposits or payments
of other charges or payments due the Seller have been capitalized under the
Mortgage or the related Mortgage Note.
(22) The origination, underwriting and collection practices
used by the Seller with respect to each Mortgage Loan have been in all
respects legal, prudent and customary in the mortgage lending and servicing
business.
(23) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations.
(24) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature.
(25) Each Mortgage Loan contains a customary "due on sale"
clause.
(26) None of the Mortgage Loans provides for a prepayment
penalty.
(27) Except for ten Mortgage Loans representing 0.91% of the
Cut-off Date Pool Principal Balance, each Mortgage Loan which had a Loan-to-
Value Ratio at origination in excess of 80% is the subject of a Primary
Insurance Policy that insures that portion of the original principal balance
of the related Mortgage Loan at least equal to the product of the original
principal balance thereof and a fraction, the numerator of which is the
excess of the original principal balance of the related Mortgage Loan over
75% of the lesser of the appraised value and selling price of the related
Mortgaged Property and the denominator of which is the original principal
balance of the related Mortgage Loan, plus accrued interest thereon and
related foreclosure expenses. Each such Primary Insurance Policy is issued
by a Qualified Insurer acceptable to each of the Rating Agencies. All
provisions of any such Primary Insurance Policy have been and are being
complied with, any such policy is in full force and effect, and all premiums
due thereunder have been paid. Any Mortgage subject to any such Primary
Insurance Policy obligates the Mortgagor thereunder to maintain such
insurance and to pay all premiums and charges in connection therewith. The
Mortgage Rate for each Mortgage Loan is net of any such insurance premium.
(28) At the Cut-off Date, the improvements upon each Mortgaged
Property are covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage and
coverage for such other hazards as are customary in the area where the
Mortgaged Property is located in an amount which is at least 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) an amount such that the proceeds of such policy
shall be sufficient to prevent the Mortgagor and/or the mortgagee from
becoming a co-insurer. If the Mortgaged Property is a condominium unit, it
is included under the coverage afforded by a blanket policy for the
condominium unit. All such individual insurance policies and all flood
policies referred to in item (29) below contain a standard mortgagee clause
naming the Seller or the original mortgagee, and its successors in interest,
as mortgagee, and the Seller has received no notice that any premiums due and
payable thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance including flood insurance at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance
at the Mortgagor's cost and expense and to seek reimbursement therefor from
the Mortgagor.
(29) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the requirements
of the current guidelines of the Flood Insurance Administration is in effect
with respect to such Mortgaged Property with a generally acceptable carrier
in an amount representing coverage not less than the least of (A) the
original outstanding principal balance of the Mortgage Loan, (B) the minimum
amount required to compensate for damage or loss on a replacement cost basis,
or (C) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973, as amended.
(30) To the best of the Seller's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of any
Mortgaged Property, nor is such a proceeding currently occurring.
(31) There is no material monetary default existing under any
Mortgage or the related Mortgage Note and, to the best of the Seller's
knowledge, there is no material event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration under the Mortgage or the
related Mortgage Note; and the Seller has not waived any default, breach,
violation or event of acceleration.
(32) Other than with respect to Mortgaged Property underlying
a Cooperative Loan, each Mortgaged Property is improved by a one- to four-
family residential dwelling including condominium units and dwelling units
in PUDs, which, to the best of Seller's knowledge, does not include mobile
homes and does not constitute other than real property under state law.
(33) Each Mortgage Loan is being serviced by the Master
Servicer or a Servicer as provided in Section 3.02 of the Pooling and
Servicing Agreement.
(34) There is no obligation on the part of the Seller or any
other party under the terms of the Mortgage or related Mortgage Note to make
payments in addition to those made by the Mortgagor.
(35) Any future advances made prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the Mortgage Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan. The Mortgage Note does not permit or
obligate the Master Servicer to make future advances to the Mortgagor at the
option of the Mortgagor.
(36) There are no defaults in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed, but is not yet due and payable.
Except for (A) payments in the nature of escrow payments, and (B) interest
accruing from the date of the Mortgage Note or date of disbursement of the
Mortgage proceeds, whichever is later, to the day which precedes by one month
the Due Date of the first installment of principal and interest, including
without limitation taxes and insurance payments, the Seller has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment of
any amount required by the Mortgage.
(37) Each Mortgage Loan was underwritten in all material
respects in accordance with the Seller's underwriting guidelines as set forth
in the Prospectus Supplement.
(38) Prior to the approval of the Mortgage Loan application,
an appraisal of the related Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, 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; such appraisal is in a form acceptable to
FNMA or FHLMC.
(39) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan; of six the Mortgage Loans
are subject to buydown or similar arrangements.
(40) Any leasehold estate securing a Mortgage Loan has a term
of not less than five years in excess of the term of the related Mortgage
Loan.
(41) All of the Mortgage Loans have a payment date on or
before the Due Date in the month of the first Distribution Date.
(42) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
(43) No more than 0.67% (by aggregate Stated Principal
Balance) of the Mortgage Loans are Cooperative Loans.
(44) Each Cooperative Loan is secured by a valid, subsisting
and enforceable perfected first lien and security interest in the related
Mortgaged Property, subject only to (i) the rights of the Cooperative
Corporation to collect Maintenance and assessments from the Mortgagor, (ii)
the lien of the Blanket Mortgage, if any, on the Cooperative Property and of
real property taxes, water and sewer charges, rents and assessments on the
Cooperative Property not yet due and payable, and (iii) other matters to
which like Cooperative Units are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by the
Security Agreement or the use, enjoyment, value or marketability of the
Cooperative Unit. Each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to create or
preserve the perfection and priority of the first priority lien and security
interest in the Coop Shares and Proprietary Lease has been timely and
properly made. Any security agreement, chattel mortgage or equivalent
document related to the Cooperative Loan and delivered to the Sponsor or its
designee establishes in the Seller a valid and subsisting perfected first
lien on and security interest in the property described therein, and the
Seller has full right to sell and assign the same.
(45) Each Cooperative Corporation qualifies as a "cooperative
housing corporation" as defined in Section 216 of the Code.
SCHEDULE IV
Planned Balance Schedules
(Not applicable)
EXHIBIT A
(FORM OF SENIOR CERTIFICATE)
(UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 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 IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHO-
RIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.)
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, AS AMENDED (THE "CODE").
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates
of this Class : $
CUSIP :
CWMBS, INC.
Mortgage Pass-Through Certificates, Series 199_-_
Class (________)
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional mortgage loans (the "Mortgage
Loans") secured by first liens on one- to four-family residential properties
CWMBS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Seller, the Master Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the
Mortgage Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that is the registered
--------------------------------
owner of the Percentage Interest evidenced by this Certificate (obtained by
dividing the denomination of this Certificate by the aggregate Initial
Certificate Balances of all Certificates of the Class to which this
Certificate belongs) in certain monthly distributions with respect to a Trust
Fund consisting primarily of the Mortgage Loans deposited by CWMBS, Inc. (the
"Depositor"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement")
among the Depositor, Independent National Mortgage Corporation, as seller (in
such capacity, the "Seller") and as master servicer (in such capacity, the
"Master Servicer"), and The Bank of New York, as trustee (the "Trustee").
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned 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 the acceptance hereof
assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________, 19__
THE BANK OF NEW YORK,
as Trustee
By ______________________
Countersigned:
By ___________________________
Authorized Signatory of
THE BANK OF NEW YORK,
as Trustee
EXHIBIT B
(FORM OF SUBORDINATED CERTIFICATE)
(UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 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 IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHO-
RIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.)
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, AS AMENDED (THE "CODE").
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES
AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
(THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSE OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES UNDER THE CODE
TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS , 199 .
----------- -
THE INITIAL PER ANNUM RATE OF INTEREST ON THIS CERTIFICATE IS %.
----
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF PREPAYMENT OF
% PER ANNUM (THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN
- ----
ISSUED WITH $ OF OID PER $1,000 OF THE ORIGINAL PRINCIPAL AMOUNT
-----------
OF THIS CERTIFICATE; THE ANNUAL YIELD TO MATURITY OF THIS CERTIFICATE FOR
PURPOSES OF COMPUTING THE ACCRUAL OF OID IS APPROXIMATELY %
----------
(COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD IS $ PER $1,000 OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS
------
CERTIFICATE COMPUTED USING THE MONTHLY YIELD AND DAILY COMPOUNDING DURING THE
SHORT ACCRUAL PERIOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE. THE
ACTUAL YIELD TO MATURITY MAY DIFFER FROM THAT SET FORTH ABOVE, AND THE ACCRUAL
OF OID WILL BE ADJUSTED, IN ACCORDANCE WITH SECTION 1272(a)(6) OF THE CODE, TO
TAKE INTO ACCOUNT EVENTS WHICH HAVE OCCURRED DURING ANY ACCRUAL PERIOD. THE
PREPAYMENT ASSUMPTION IS INTENDED TO BE THE PREPAYMENT ASSUMPTION REFERRED TO
IN SECTION 1272(a)(6)(B)(iii) OF THE CODE.)
(THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.)
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE TRANSFEREE REPRESENTS TO THE TRUSTEE THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR, IF
SUCH TRANSFEROR IS AN INSURANCE COMPANY, A REPRESENTATION IN ACCORDANCE WITH
THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN, OR DELIVERS TO THE
TRUSTEE AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE
AGREEMENT REFERRED TO HEREIN. (SUCH REPRESENTATION SHALL BE DEEMED TO HAVE
BEEN MADE TO THE TRUSTEE BY THE TRANSFEREE'S ACCEPTANCE OF A CERTIFICATE OF
THIS CLASS AND BY A BENEFICIAL OWNER'S ACCEPTANCE OF ITS INTEREST IN A
CERTIFICATE OF THIS CLASS.) NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF
NO EFFECT.
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates
of this Class : $
CWMBS, INC.
Mortgage Pass-Through Certificates, Series 199_-_
Class (___)
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional loans (the "Mortgage Loans")
secured by first liens on one- to four-family residential properties
CWMBS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Seller, the Master Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the
Mortgage Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that is the registered
---------------------------------
owner of the Percentage Interest evidenced by this Certificate (obtained by
dividing the denomination of this Certificate by the aggregate Initial
Certificate Balances of the denominations of all Certificates of the Class
to which this Certificate belongs) in certain monthly distributions with
respect to a Trust Fund consisting primarily of the Mortgage Loans deposited
by CWMBS, Inc. (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement") among the Depositor, Independent National Mortgage
Corporation, as seller (in such capacity, the "Seller"), and as master
servicer (in such capacity, the "Master Servicer"), and The Bank of New York,
as trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned 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 the acceptance hereof assents and by which such
Holder is bound.
(No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that
a transfer is to be made in reliance upon an exemption from the Securities
Act and such laws, in order to assure compliance with the Securities Act and
such laws, the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee
in writing the facts surrounding the transfer. In the event that such a
transfer is to be made within three years from the date of the initial
issuance of Certificates pursuant hereto, there shall also be delivered
(except in the case of a transfer pursuant to Rule 144A of the Securities
Act) to the Trustee an Opinion of Counsel that such transfer may be made
pursuant to an exemption from the Securities Act and such state securities
laws, which Opinion of Counsel shall not be obtained at the expense of the
Trustee, the Seller, the Master Servicer or the Depositor. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify
the Trustee and the Depositor against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.)
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation (letter) from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee or the Master Servicer, (ii)
if the purchaser is an insurance company, a representation that the purchaser
is an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-
60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60 or (iii) in the case of any such Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on
behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the Master Servicer to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust Fund being deemed to
be "plan assets" and subject to the prohibited transaction provisions of
ERISA and the Code and will not subject the Trustee to any obligation in
addition to those undertaken in the Agreement, which Opinion of Counsel shall
not be an expense of the Trustee or the Master Servicer. (Such
representation shall be deemed to have been made to the Trustee by the
Transferee's acceptance of a Certificate of this Class and by a beneficial
owner's acceptance of its interest in a Certificate of this
Class.)Notwithstanding anything else to the contrary herein, any purported
transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no
effect.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________, 19__
THE BANK OF NEW YORK,
as Trustee
By ______________________
Countersigned:
By ___________________________
Authorized Signatory of
THE BANK OF NEW YORK,
as Trustee
EXHIBIT C
(FORM OF RESIDUAL CERTIFICATE)
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, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
(THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST"
ISSUED UNDER THE POOLING AND SERVICING AGREEMENT REFERRED TO BELOW AND MAY
NOT BE TRANSFERRED TO ANY PERSON EXCEPT IN CONNECTION WITH THE ASSUMPTION BY
THE TRANSFEREE OF THE DUTIES OF THE SERVICER UNDER SUCH AGREEMENT.)
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN
SUBJECT TO SECTION 4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS
CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
Certificate No. :
Cut-off Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates of
this Class : $
CUSIP :
CWMBS, INC.
Mortgage Pass-Through Certificates, Series 199_-_
evidencing the distributions allocable to the Class A-R
Certificates with respect to a Trust Fund consisting primarily of a pool of
conventional loans (the "Mortgage Loans") secured by first liens on one- to
four-family residential properties
CWMBS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Seller, the Master Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the
Mortgage Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that is the registered
--------------------------------
owner of the Percentage Interest (obtained by dividing the denomination of
this Certificate by the aggregate Initial Certificate Balances of the
denominations of all Certificates of the Class to which this Certificate
belongs) in certain monthly distributions with respect to a Trust Fund
consisting of the Mortgage Loans deposited by CWMBS, Inc. (the "Depositor").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement
dated as of the Cut-off Date specified above (the "Agreement") among the
Depositor, Independent National Mortgage Corporation, as seller (in such
capacity, the "Seller") and as master servicer (in such capacity, the "Master
Servicer"), and The Bank of New York, as trustee (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the
meanings assigned 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 the acceptance hereof
assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust
Fund will be made only upon presentment and surrender of this Class A-R
Certificate at the Corporate Trust Office or the office or agency maintained
by the Trustee in New York, New York.
No transfer of a Class A-R Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to
the Trustee, to the effect that such transferee is not an employee benefit
plan subject to Section 406 of ERISA or Section 4975 of the Code, nor a
person acting on behalf of any such plan, which representation letter shall
not be an expense of the Trustee or the Master Servicer, or (ii) in the case
of any such Class A-R Certificate presented for registration in the name of
an employee benefit plan subject to ERISA, or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan, an Opinion of
Counsel satisfactory to the Trustee and the Master Servicer to the effect
that the purchase or holding of such Class A-R Certificate will not result
in the assets of the Trust Fund being deemed to be "plan assets" and subject
to the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee or the Master Servicer to any obligation in addition to
those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee or the Master Servicer. Notwithstanding anything else
to the contrary herein, any purported transfer of a Class A-R Certificate to
or on behalf of an employee benefit plan subject to ERISA or to the Code
without the opinion of counsel satisfactory to the Trustee as described above
shall be void and of no effect.
Each Holder of this Class A-R Certificate will be deemed to have agreed
to be bound by the restrictions of the Agreement, including but not limited
to the restrictions that (i) each person holding or acquiring any Ownership
Interest in this Class A-R Certificate must be a Permitted Transferee, (ii)
no Ownership Interest in this Class A-R Certificate may be transferred
without delivery to the Trustee of (a) a transfer affidavit of the proposed
transferee and (b) a transfer certificate of the transferor, each of such
documents to be in the form described in the Agreement, (iii) each person
holding or acquiring any Ownership Interest in this Class A-R Certificate
must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Class A-R
Certificate must agree not to transfer an Ownership Interest in this Class
A-R Certificate if it has actual knowledge that the proposed transferee is
not a Permitted Transferee and (v) any attempted or purported transfer of any
Ownership Interest in this Class A-R Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________, 19__
THE BANK OF NEW YORK,
as Trustee
By ______________________
Countersigned:
By ___________________________
Authorized Signatory of
THE BANK OF NEW YORK,
as Trustee
EXHIBIT D
(FORM OF NOTIONAL AMOUNT 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, AS AMENDED (THE "CODE").)
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE AND IS NOT ENTITLED TO ANY
DISTRIBUTIONS IN RESPECT OF PRINCIPAL.
(THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSE OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES UNDER THE CODE
TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS __________, 199_.
THE INITIAL PER ANNUM RATE OF INTEREST ON THIS CERTIFICATE IS ____%. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF PREPAYMENT OF ____% PER
ANNUM (THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH
$__________ OF OID ON THE INITIAL POOL STATED PRINCIPAL BALANCE; THE ANNUAL
YIELD TO MATURITY OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING THE ACCRUAL
OF OID IS APPROXIMATELY ____% (COMPOUNDED MONTHLY); THE AMOUNT OF OID
ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD IS $__________ ON THE INITIAL
POOL STATED PRINCIPAL BALANCE; AND THE METHOD USED TO CALCULATE THE ANNUAL
YIELD TO MATURITY AND THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD IS THE EXACT METHOD AS DEFINED IN PROPOSED TREASURY REGULATIONS. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED
ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE. THE ACTUAL YIELD TO
MATURITY MAY DIFFER FROM THAT SET FORTH ABOVE, AND THE ACCRUAL OF OID WILL
BE ADJUSTED, IN ACCORDANCE WITH SECTION 1272(a)(6) OF THE CODE, TO TAKE INTO
ACCOUNT EVENTS WHICH HAVE OCCURRED DURING ANY ACCRUAL PERIOD. THE PREPAYMENT
ASSUMPTION IS INTENDED TO BE THE PREPAYMENT ASSUMPTION REFERRED TO IN SECTION
1272(a)(6)(B)(iii) OF THE CODE.)
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Notional Amount
of this Certificate
("Denomination") :
Initial Notional Amount
of all Certificates
of this Class :
CUSIP :
CWMBS, INC.
Mortgage Pass-Through Certificates, Series 199_-_
evidencing the distributions allocable to the Class X Certificates
with respect to a Trust Fund consisting primarily of a pool of conventional
loans (the "Mortgage Loans") secured by first liens on one- to four-family
residential properties
CWMBS, Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Seller, the Master Servicer or
the Trustee referred to below or any of their respective affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that is the registered owner of the Percentage Interest
evidenced by this Certificate specified above in certain monthly
distributions with respect to a Trust Fund consisting primarily of the
Mortgage Loans deposited by CWMBS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of Cut-off
Date specified above (the "Agreement") among the Depositor, Independent
National Mortgage Corporation, as seller (in such capacity, the "Seller") and
as master servicer (in such capacity, the "Master Servicer"), and The Bank
of New York, as trustee (the "Trustee"). To the extent not defined herein,
the capitalized terms used herein have the meanings assigned 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 the acceptance hereof assents and by which such
Holder is bound.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________, 19__
THE BANK OF NEW YORK,
as Trustee
By ______________________
Countersigned:
By ___________________________
Authorized Signatory of
THE BANK OF NEW YORK,
as Trustee
EXHIBIT E
(Form of Reverse of Certificates)
CWMBS, INC.
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as CWMBS, Inc. Mortgage Pass-Through Certificates, of the Series
specified on the face hereof (herein collectively called the "Certificates"),
and representing a beneficial ownership interest in the Trust Fund created
by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the Certificate-
holders 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 thereby, and the
rights, duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified on the face hereof, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is the last Business Day of the month
next preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder
shall satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the Corporate Trust Office
or such other location specified in the notice to Certificateholders of such
final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer and the Trustee with the consent
of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. 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 exchange therefor or in
lieu hereof whether or not notation of such consent is made upon this Cer-
tificate. 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 in the Certificate
Register of the Trustee upon surrender of this Certificate for registration
of transfer at the Corporate Trust Office or the office or agency maintained
by the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the holder hereof or such holder's attorney duly authorized
in writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Seller and the Trustee and any
agent of the Depositor or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither
the Depositor, the Trustee, nor any such agent shall be affected by any
notice to the contrary.
On any Distribution Date on which the Pool Stated Principal Balance is
less than 10% of the Cut-off Date Pool Principal Balance, the Master Servicer
will have the option to repurchase, in whole, from the Trust Fund all
remaining Mortgage Loans and all property acquired in respect of the Mortgage
Loans at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the later of
the maturity or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan remaining in the Trust Fund or the disposition of all
property in respect thereof and the distribution to Certificateholders of all
amounts required to be distributed pursuant to the Agreement. In no event,
however, will the trust created by the Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
living at the date of the Agreement of a certain person named in the
Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
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)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee 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
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.
EXHIBIT F
(RESERVED)
EXHIBIT G
FORM OF INITIAL CERTIFICATION OF TRUSTEE
(date)
(Depositor)
(Master Servicer)
(Seller)
_____________________
_____________________
Re: Pooling and Servicing Agreement among CWMBS, Inc., as
Depositor, Independent National Mortgage Corporation,
as Seller and Master Servicer, and The Bank of New York,
as Trustee, Mortgage Pass-Through Certificates,
Series 199 -
-------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned,
as Trustee, hereby certifies that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan listed in the attached
schedule), it has received:
(i) the original Mortgage Note, endorsed as provided in the following
form: "Pay to the order of ________, without recourse"; and
(ii) a duly executed assignment of the Mortgage (which may be included
in a blanket assignment or assignments); provided, however, that it has
received no assignment with respect to any Mortgage for which the related
Mortgaged Property is located in the Commonwealth of Puerto Rico.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the Pooling and Servicing Agreement. The Trustee makes no representations
as to: (i) the validity, legality, sufficiency, enforceability or
genuineness of any of the documents contained in each Mortgage File of any
of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
(date)
(Depositor)
(Master Servicer)
(Seller)
_____________________
_____________________
Re: Pooling and Servicing Agreement among CWMBS, Inc., as
Depositor, Independent National Mortgage Corporation,
as Seller and Master Servicer, and The Bank of New York,
as Trustee, Mortgage Pass-Through Certificates, Series
199 -
--------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned,
as Trustee, hereby certifies that as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attached Document Exception Report) it has received:
(i) The original Mortgage Note, endorsed in the form provided in
Section 2.01(c) of the Pooling and Servicing Agreement, with all intervening
endorsements showing a complete chain of endorsement from the originator to
the Seller.
(ii) The original recorded Mortgage.
(iii) A duly executed assignment of the Mortgage in the form provided in
Section 2.01(c) of the Pooling and Servicing Agreement; provided, however,
that it has received no assignment with respect to any Mortgage for which the
related Mortgaged Property is located in the Commonwealth of Puerto Rico, or,
if the Depositor has certified or the Trustee otherwise knows that the
related Mortgage has not been returned from the applicable recording office,
a copy of the assignment of the Mortgage (excluding information to be
provided by the recording office).
(iv) The original or duplicate original recorded assignment or
assignments of the Mortgage showing a complete chain of assignment from the
originator to the Seller.
(v) The original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to
such Mortgage Loan, and (b) the information set forth in items (i), (ii),
(iii), (iv), (vi) and (xi) of the definition of the "Mortgage Loan Schedule"
in Section 1.01 of the Pooling and Servicing Agreement accurately reflects
information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the Pooling and Servicing Agreement. The Trustee makes no representations
as to: (i) the validity, legality, sufficiency, enforceability or
genuineness of any of the documents contained in each Mortgage File of any
of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such
Mortgage Loan. Notwithstanding anything herein to the contrary, the Trustee
has made no determination and makes no representations as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the
party so endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note or (ii) any assignment is in recordable form or sufficient to
effect the assignment of and transfer to the assignee thereof, under the
Mortgage to which the assignment relates.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE BANK OF NEW YORK,
as Trustee
By :
----------------------------
Name:
---------------------------
Title:
--------------------------
EXHIBIT I
TRANSFER AFFIDAVIT
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 199_-_
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of , the proposed
--------------------
Transferee of an Ownership Interest in a Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Series, by and among CWMBS,
Inc., as depositor (the "Depositor"), Independent National Mortgage
Corporation, as seller and master servicer and The Bank of New York, as
Trustee. Capitalized terms used, but not defined herein or in Exhibit 1
hereto, shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf
of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring
its Ownership Interest in the Certificate either (i) for its own account or
(ii) as nominee, trustee or agent for another Person and has attached hereto
an affidavit from such Person in substantially the same form as this
affidavit. The Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or,
if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an
affidavit that such subsequent Transferee is a Permitted Transferee and, at
the time of Transfer, such Person does not have actual knowledge that the
affidavit is false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound
by and to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee
understands and agrees that any breach of any of the representations included
herein shall render the Transfer to the Transferee contemplated hereby null
and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will
not Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in
the form set forth as Exhibit J to the Agreement (a "Transferor Certificate")
to the effect that such Transferee has no actual knowledge that the Person
to which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is .
------------
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, and the
Transferee is not acting on behalf of such a plan.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this day of , 19 .
----- ------------------ --
---------------------------------
Print Name of Transferee
By:
------------------------------
Name:
Title:
(Corporate Seal)
ATTEST:
- ---------------------------
(Assistant) Secretary
Personally appeared before me the above-named , known or
-------------
proved to me to be the same person who executed the foregoing instrument and
to be the of the Transferee, and acknowledged that he
--------------------
executed the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this day of , 19 .
----- --------- --
------------------------------
NOTARY PUBLIC
My Commission expires the day of
----
, 19 .
--
EXHIBIT 1
to EXHIBIT I
Certain Definitions
-------------------
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee": Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing,
(iii) an organization (except certain farmers' cooperatives described in Code
Section 521) which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Code Section 511 on unrelated business taxable
income) on any excess inclusions (as defined in Code Section 860E(c)(1)) with
respect to any Class A-R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(c), (v) a Person that is
not a citizen or resident of the United States, a corporation, partnership,
or other entity created or organized in or under the laws of the United
States or any political subdivision thereof, or an estate or trust whose
income from sources without the United States is includible in gross income
for federal income tax purposes regardless of its connection with the conduct
of a trade or business within the United States, and (vi) any other Person
so designated by the Trustee based upon an Opinion of Counsel that the
Transfer of an Ownership Interest in a Class A-R Certificate to such Person
may cause the Trust Fund to fail to qualify as a REMIC at any time that
certain Certificates are Outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Code
Section 7701 or successor provisions. A corporation will not be treated as
an instrumentality of the United States or of any State or political
subdivision thereof if all of its activities are subject to tax, and, with
the exception of the FHLMC, a majority of its board of directors is not
selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political
subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
EXHIBIT 2
to EXHIBIT I
Section 5.02(c) of the Agreement
--------------------------------
(c) Each Person who has or who acquires any Ownership Interest in
a Class A-R Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following
provisions, and the rights of each Person acquiring any Ownership Interest
in a Class A-R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class A-R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class A-R Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Class A-R Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class A-R Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership Interest
in a Class A-R Certificate, (B) to obtain a Transfer Affidavit from any
Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Class A-R Certificate and (C) not to
Transfer its Ownership Interest in a Class A-R Certificate or to cause the
Transfer of an Ownership Interest in a Class A-R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class A-R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Class A-R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class A-R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class A-R
Certificate that is in fact not permitted by Section 5.02(b) and this Section
5.02(c) or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered after
receipt of the related Transfer Affidavit, Transferor Certificate and either
the Rule 144A Letter or the Investment Letter. The Trustee shall be entitled
but not obligated to recover from any Holder of a Class A-R Certificate that
was in fact not a Permitted Transferee at the time it became a Holder or, at
such subsequent time as it became other than a Permitted Transferee, all
payments made on such Class A-R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and delivered by
the Trustee to the last preceding Permitted Transferee of such Certificate.
(v) The Depositor shall use its best efforts to make available,
upon receipt of written request from the Trustee, all information necessary
to compute any tax imposed under Section 860E(e) of the Code as a result of
a Transfer of an Ownership Interest in a Class A-R Certificate to any Holder
who is not a Permitted Transferee.
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE
__________, 199__
CWMBS, Inc.
155 North Lake Avenue
Pasadena, CA 91101
Attention: David A. Spector
The Bank of New York
101 Barclay Street, 12W
New York, NY 10286
Attention: Mortgage-Backed
Securities Group Series 199 -
Re: CWMBS, Inc. Mortgage Pass-Through Certificates,
Series 199 -, Class
----------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being
disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner
that would be deemed, or taken any other action which would result in, a
violation of Section 5 of the Act and (c) to the extent we are disposing of
a Class A-R Certificate, we have no knowledge the Transferee is not a
Permitted Transferee.
Very truly yours,
___________________________
Print Name of Transferor
By:
--------------------------
Authorized Officer
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
__________, 199__
CWMBS, Inc.
155 North Lake Avenue
Pasadena, CA 91101
Attention: David A. Spector
The Bank of New York
101 Barclay Street, 12W
New York, NY 10286
Attention: Mortgage-Backed
Securities Group Series 199 -
Re: CWMBS, Inc. Mortgage Pass-Through Certificates,
Series 199 - , Class
-----------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act,
and have such knowledge and experience in financial and business matters that
we are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and
all matters relating thereto or any additional information deemed necessary
to our decision to purchase the Certificates, (d) we are not an employee
benefit plan that is subject to the Employee Retirement Income Security Act
of 1974, as amended, or a plan or arrangement that is subject to Section 4975
of the Internal Revenue Code of 1986, as amended, nor are we acting on behalf
of any such plan or arrangement nor are we using the assets of any such plan
or arrangement to effect such acquisition, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with
clause (g) below), (f) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, or taken any
other action which would result in a violation of Section 5 of the Act, and
(g) we will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has
executed and delivered to you a certificate to substantially the same effect
as this certificate, and (3) the purchaser or transferee has otherwise
complied with any conditions for transfer set forth in the Pooling and
Servicing Agreement.
Very truly yours,
________________________
Print Name of Transferee
By:
--------------------------
Authorized Officer
EXHIBIT L
FORM OF RULE 144A LETTER
____________, 199__
CWMBS, Inc.
155 North Lake Avenue
Pasadena, CA 91101
Attention: David A. Spector
The Bank of New York
101 Barclay Street, 12W
New York, NY 10286
Attention: Mortgage-Backed
Securities Group Series 199 -
Re: CWMBS, Inc. Mortgage Pass-Through Certificates,
Series 199 - , Class
-----------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b)
we have such knowledge and experience in financial and business matters that
we are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and
all matters relating thereto or any additional information deemed necessary
to our decision to purchase the Certificates, (d) we are not an employee
benefit plan that is subject to the Employee Retirement Income Security Act
of 1974, as amended, or a plan or arrangement that is subject to Section 4975
of the Internal Revenue Code of 1986, as amended, nor are we acting on behalf
of any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such acquisition, (e) we have not, nor has anyone
acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates
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, that would constitute a distribution of the
Certificates under the Securities Act or that would render the disposition
of the Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are
aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged
or transferred only (i) to 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 on Rule 144A, or (ii) pursuant
to another exemption from registration under the Securities Act.
ANNEX 1 TO EXHIBIT L
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
(For Transferees Other Than Registered Investment Companies)
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer
owned and/or invested on a discretionary basis $ /F1/ in
------------
securities (except for the excluded securities referred to below) as of the
end of the Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A and (ii) the Buyer satisfies the criteria in the
category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
----------------
bank, savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
----
organized under the laws of any State, territory or the District of Columbia,
the business of which is substantially confined to banking and is supervised
by the State or territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited net worth of
at least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
----------------------------------
___ Savings and Loan. The Buyer (a) is a savings and loan
----------------
association, building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined by a
State or Federal authority having supervision over any such institutions or
is a foreign savings and loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is attached hereto.
----------------------------------
/F1/ Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that
case, Buyer must own and/or invest on a discretionary basis
at least $10,000,000 in securities.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
-------------
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
-----------------
primary and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is subject
to supervision by the insurance commissioner or a similar official or agency
of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
-------------------
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the benefit
of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
----------
meaning of Title I of the Employee Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
------------------
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is 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.
___ Business Development Company. Buyer is a business development
----------------------------
company as defined in Section 202(a)(22) of the Investment Advisors Act of
1940.
3. The term "securities" as used herein does not include (i)
---------- ----------------
securities of issuers that are affiliated with the Buyer, (ii) securities
that are part of an unsold allotment to or subscription by the Buyer, if the
Buyer is a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned
but subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used
the cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph, except (i) where the Buyer
reports its securities holdings in its financial statements on the basis of
their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Buyer may have included securities
owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in
accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule
144A.
6. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
------------------------------
Print Name of Buyer
By:
---------------------------
Name:
Title:
Date:
-------------------------
ANNEX 2 TO EXHIBIT L
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
(For Transferees That are Registered Investment Companies)
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is
a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because Buyer is part
of a Family of Investment Companies (as defined below), is such an officer
of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act
of 1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment Companies,
the cost of such securities was used, except (i) where the Buyer or the
Buyer's Family of Investment Companies reports its securities holdings in its
financial statements on the basis of their market value, and (ii) no current
information with respect to the cost of those securities has been published.
If clause (ii) in the preceding sentence applies, the securities may be
valued at market.
___ The Buyer owned $ in securities (other than the
------------
excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule
144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $ in securities (other than
---------
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule
144A).
3. The term "Family of Investment Companies" as used herein means
------------------------------
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue
of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
----------
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed
by the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii)
currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on
Rule 144A. In addition, the Buyer will only purchase for the Buyer's own
account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to
which this certification relates of any changes in the information and
conclusions herein. Until such notice is given, the Buyer's purchase of the
Certificates will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
------------------------------
Print Name of Buyer or Adviser
By:
---------------------------
Name:
Title:
IF AN ADVISER:
------------------------------
Print Name of Buyer
Date:
-------------------------
EXHIBIT M
REQUEST FOR RELEASE
(for Trustee)
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 199_-_
Loan Information
- ----------------
Name of Mortgagor:
------------------------------
Servicer
Loan No.:
------------------------------
Trustee
- -------
Name:
------------------------------
Address:
------------------------------
------------------------------
Trustee
Mortgage File No.:
------------------------------
The undersigned Master Servicer hereby acknowledges that it has received
from The Bank of New York, as Trustee for the Holders of Mortgage Pass-
Through Certificates, of the above-referenced Series, the documents referred
to below (the "Documents"). All capitalized terms not otherwise defined in
this Request for Release shall have the meanings given them in the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement") relating to
the above-referenced Series among the Trustee, Independent National Mortgage
Corporation, as Seller and Master Servicer and CWMBS, Inc., as Depositor.
( ) Mortgage Note dated , 19 , in the original principal sum
------------ --
of $ , made by . payable to, or endorsed to
---------- ------------------
the order of, the Trustee.
( ) Mortgage recorded on as instrument no.
----------------- ____
in the County Recorder's Office of the County
---------------
of , State of in book/reel/docket
----------------- ---------------
of official records at page/image .
--------------------
( ) Deed of Trust recorded on as instrument no.
------------------
in the County Recorder's Office of the County of
-----------------
, State of in book/reel/docket
------------------ ----------------
of official records at page/image .
--------------- ---------------
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
as instrument no. in the County Recorder's
--------------- -------------
Office of the County of , State of
---------- --------------------
in book/reel/docket of official records at
---------------
page/image .
---------------
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( )
----------------------------------------------
( )
----------------------------------------------
( )
----------------------------------------------
( )
----------------------------------------------
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the
Servicer assert or seek to assert any claims or rights of setoff to or
against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the Documents
has been liquidated and the proceeds thereof have been remitted to the
Certificate Account and except as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds
of proceeds, coming into the possession or control of the Master Servicer
shall at all times be earmarked for the account of the Trustee, and the
Master Servicer shall keep the Documents and any proceeds separate and
distinct from all other property in the Master Servicer's possession, custody
or control.
INDEPENDENT NATIONAL MORTGAGE
CORPORATION
By
------------------------
Its
------------------------
Date: , 19
----------------- --
EXHIBIT N
REQUEST FOR RELEASE OF DOCUMENTS
To: The Bank of New York Attn: Mortgage Custody
Services
Re: The Pooling & Servicing Agreement dated _______ among Independent
National Mortgage Corporation as Master Servicer, Inc, CWMBS, Inc. and The
Bank of New York as Trustee
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Trustee for CWMBS, Inc., we request the release of the Mortgage Loan File for
the Mortgage Loan(s) described below, for the reason indicated.
FT Account#: Pool #:
Mortgagor's Name, Address and Zip Code:
- --------------------------------------
Mortgage Loan Number:
- --------------------
Reason for Requesting Documents (check one)
- -------------------------------
_______1. Mortgage Loan paid in full (INMC hereby certifies that all amounts
have been received.)
_______2. Mortgage Loan Liquidated (INMC hereby certifies that all proceeds
of foreclosure, insurance, or other liquidation have been finally received.)
_______3. Mortgage Loan in Foreclosure.
_______4. Other (explain): ____________________________________
If item 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as an additional documents in your possession relating to
the above-specified Mortgage Loan. If item 3 or 4 is checked, upon return
of all of the above documents to you as Trustee, please acknowledge your
receipt by signing in the space indicated below, and returning this form.
INDEPENDENT NATIONAL MORTGAGE 35 North Lake Ave.- MS 8-13
CORPORATION Pasadena, CA 91101
By:________________________
Name:______________________
Title:____________________
Date:______________________
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGEMENT OF RECEIPT
By:________________________
Name:______________________
Title:____________________
Date:______________________
EXHIBIT 99.2
------------
FINANCIAL GUARANTY
INSURANCE POLICY
Trust: As described in Endorsement No. 1 Policy No.: 50499-N
Certificates: $20,000,000 Original Principal Date of Issuance: 8/29/96
Amount, CWMBS, Inc., Mortgage
Pass-Through Certificates,
Series 1996-J, Class A-9
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
the Trustee for the benefit of each Holder, subject only to the terms of this
Policy (which includes each endorsement hereto), the full and complete
payment of Guaranteed Distributions with respect to the Certificates of the
Trust referred to above.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided
in whole or in part as a preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be made
following receipt by Financial Security of notice as described in Endorsement
No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder
to the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated
on the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the
Certificate. "Trustee", "Guaranteed Distributions" and "Term of this Policy"
shall have the meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in
respect of this Policy are nonrefundable for any reason whatsoever. This
Policy may not be canceled or revoked during the Term of this Policy. An
acceleration payment shall not be due under this Policy unless such
acceleration is at the sole option of Financial Security. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE
76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Russell Brewer
------------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
Form 101NY (5/89)
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing Agreement dated
as of August 1, 1996 among CWMBS, Inc., as Depositor, Independent National
Mortgage Corporation, as Master Servicer, and The Bank of New York, as
Trustee.
POLICY NO.: 50499-N
CERTIFICATES: $20,000,000 Original Principal Amount, CWMBS, Inc., Mortgage
Pass-Through Certificates, Series 1996-J, Class A-9
DATE OF ISSUANCE: August 29, 1996
1. Definitions. For all purposes of this Policy, the terms specified
-----------
below shall have the meanings or constructions provided below. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
provided in the Pooling and Servicing Agreement unless the context shall
otherwise require.
"Business Day" means any day other than (i) a Saturday or a Sunday, or
------------
(ii) a day on which banking institutions in the City of New York, New York,
or the State of California or the city in which the Corporate Trust Office
of the Trustee is located are authorized or obligated by law or executive
order to be closed.
"Guaranteed Distributions" has the meaning assigned to it in the Pooling
------------------------
and Servicing Agreement, in accordance with the original terms of the Class
A-9 Certificates without regard to any amendment or modification of the
Securities or the Pooling and Servicing Agreement except amendments or
modifications to which FSA has given its prior written consent. Guaranteed
Distributions shall not include, nor shall coverage be provided under this
Policy in respect of, any taxes, withholding or other charge imposed by any
governmental authority due in connection with the payment of any Guaranteed
Distribution to a Holder.
"Policy" means this Financial Guaranty Insurance Policy and includes
------
each endorsement thereto.
"Pooling and Servicing Agreement" means the Pooling and Servicing
-------------------------------
Agreement dated as of August 1, 1996 among CWMBS, Inc., Independent National
Mortgage Corporation and The Bank of New York.
"Receipt" and "Received" mean actual delivery to Financial Security and
------- --------
to the Fiscal Agency (as defined below), if any, at or prior to 5:00 p.m.,
New York City time, on a Business Day; delivery either on a day that is not
a Business Day, or after 5:00 p.m., New York City time, shall be deemed to
be Received on the next succeeding Business Day. If any notice or
certificate given hereunder by the Trustee is not in proper form or is not
properly completed, executed or delivered, it shall be deemed not to have
been Received, and Financial Security or its Fiscal Agent shall promptly so
advise the Trustee and the Trustee may submit an amended notice.
"Term of This Policy" means the period from and including the Date of
-------------------
Issuance to and including the date on which (i) the Class Certificate Balance
of Class A-9 is zero, (ii) any period during which any payment on the Class
A-9 Certificates could have been avoided in whole or in part as a preference
payment under applicable bankruptcy, insolvency, receivership or similar law
has expired, and (iii) if any proceedings requisite to avoidance as a
preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and non-appealable order in resolution of each such proceeding
has been entered.
"Trustee" means The Bank of New York in its capacity as Trustee under
-------
the Pooling and Servicing Agreement and any successor in such capacity.
2. Notices and Conditions to Payment in Respect of Guaranteed
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Distributions. Following Receipt by Financial Security of a notice and
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certificate from the Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in
respect of Guaranteed Distributions out of the funds of Financial Security
on the later to occur of (a) 12:00 noon, New York City time, on the second
Business Day following such Receipt; and (b) 12:00 noon, New York City time,
on the Distribution Date to which such claim relates. Payments due hereunder
in respect of Guaranteed Distributions will be disbursed by wire transfer of
immediately available funds to the Policy Payments Account established
pursuant to the Pooling and Servicing Agreement or, if no such Policy
Payments Account has been established, to the Trustee.
Financial Security shall be entitled to pay any amount hereunder in
respect of Guaranteed Distributions, whether or not any notice and
certificate shall have been Received by Financial Security as provided above.
Financial Security's obligations hereunder in respect of Guaranteed
Distributions shall be discharged to the extent funds are disbursed by
Financial Security as provided herein whether or not such funds are properly
applied by the Trustee.
3. Notices and Conditions to Payment in Respect of Guaranteed
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Distributions Avoided as Preference Payments. If any Guaranteed Distribution
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is avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of
the funds of Financial Security on the later of (a) the date when due to be
paid pursuant to the Order referred to below or (b) the first to occur of (i)
the fourth Business Day following Receipt by Financial Security from the
Trustee of (A) a certified copy of the order of the court or other
governmental body which exercised jurisdiction to the effect that the
relevant Class A-9 Certificateholder is required to return principal or
interest distributed with respect to the Class A-9 Certificate during the
Term of this Policy because such distributions were avoidable as preference
payments under applicable bankruptcy law (the "Order"), (B) a certificate of
the relevant Class A-9 Certificateholder that the Order has been entered and
is not subject to any stay and (C) an assignment duly executed and delivered
by the relevant Class A-9 Certificateholder, in such form as is reasonably
required by Financial Security and provided to the relevant Class A-9
Certificateholder by Financial Security, irrevocably assigning to Financial
Security all rights and claims of the relevant Class A-9 Certificateholder
relating to or arising under the Class A-9 Certificate against the debtor
which made such preference payment or otherwise with respect to such
preference payment or (ii) the date of Receipt by Financial Security from the
Trustee of the items referred to in clauses (A), (B) and (C) above if, at
least four Business Days prior to such date of Receipt, Financial Security
shall have received written notice from the Trustee that such items were to
be delivered on such date and such date was specified in such notice. Such
payment shall be disbursed to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy named in the Order and not to the Trustee or any
Class A-9 Certificateholder directly (unless a Class A-9 Certificateholder
has previously paid such amount to the receiver, conservator, debtor-in-
possession or trustee in bankruptcy named in the Order, in which case such
payment shall be disbursed to the Trustee for distribution to such Class A-9
Certificateholder upon proof of such payment reasonably satisfactory to
Financial Security). In connection with the foregoing, Financial Security
shall have the rights provided pursuant to Section 4.04(f) of the Pooling and
Servicing Agreement.
4. Governing Law. This Policy shall be governed by and construed in
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accordance with the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy,
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Financial Security may appoint a fiscal agent (the "Fiscal Agent") for
purposes of this Policy by written notice to the Trustee at the notice
address specified in the Pooling and Servicing Agreement specifying the name
and notice address of the Fiscal Agent. From and after the date of receipt
of such notice by the Trustee, (i) copies of all notices and documents
required to be delivered to Financial Security pursuant to this Policy shall
be simultaneously delivered to the Fiscal Agent and to Financial Security and
shall not be deemed Received until Received by both and (ii) all payments
required to be made by Financial Security under this Policy may be made
directly by Financial Security or by the Fiscal Agent on behalf of Financial
Security. The Fiscal Agent is the agent of Financial Security only and the
Fiscal Agent shall in no event be liable to any Holder for any acts of the
Fiscal Agent or any failure of Financial Security to deposit, or cause to be
deposited, sufficient funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by applicable
------------------
law, Financial Security agrees not to assert, and hereby waives, for the
benefit of each Holder, all rights (whether by counterclaim, setoff or
otherwise) and defenses (including, without limitation, the defense of
fraud), whether acquired by subrogation, assignment or otherwise, to the
extent that such rights and defenses may be available to Financial Security
to avoid payment of its obligations under this Policy in accordance with the
Express Provisions of this Policy.
7. Notices. All notices to be given hereunder shall be in writing
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(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security
as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President
- Surveillance Department
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
8. Priorities. In the event any term or provision of the face of this
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Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not
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covered by the Property/Casualty Insurance Security Fund specified in Article
76 of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage
by the California Insurance Guaranty Association, established pursuant to
Article 14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance
Code.
10. Surrender of Policy. The Holder shall surrender this Policy to
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Financial Security for cancellation upon expiration of the Term of this
Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Russell Brewer
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Authorized Officer
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
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Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of The Bank of New York (the
"Trustee"), hereby certifies to Financial Security Assurance Inc. ("Financial
Security"), with reference to Financial Guaranty Insurance Policy No. 50499-N
dated August 29, 1996 (the "Policy") issued by Financial Security in respect
of the CWMBS, Inc., Mortgage Pass-Through Certificates, Series 1996-J that:
(i) The Trustee is the Trustee under the Pooling and Servicing
Agreement for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Certificate Account and available for distribution to the
Holders of the Class A-9 Certificates (the "Certificates") pursuant to the
Pooling and Servicing Agreement will be $___________ (the "Shortfall") less
than the Guaranteed Distributions with respect to the Distribution Date.
(iii) The Trustee is making a claim under the Policy for the
Shortfall to be applied to distributions of principal or interest or both
with respect to the Certificates.
(iv) The Trustee agrees that, following receipt of funds from
Financial Security, it shall (a) hold such amounts in trust and apply the
same directly to the payment of Guaranteed Distributions on the Certificates
when due; (b) not apply such funds for any other purpose; (c) not commingle
such funds with other funds held by the Trustee; and (d) maintain an accurate
record of such payments with respect to each Certificate and the
corresponding claim on the Policy and proceeds thereof and, if the
Certificate is required to be surrendered for such payment, shall stamp on
each such Certificate the legend "$(insert applicable amount) paid by
Financial Security and the balance hereof has been cancelled and reissued"
and then shall deliver such Certificate to Financial Security.
(v) The Trustee, on behalf of the Class A-9 Certificateholders,
hereby assigns to Financial Security the rights of the Class A-9
Certificateholders with respect to the Trust Fund to the extent of any
payments under the Policy, including, without limitation, any amounts due to
the Class A-9 Certificateholders in respect of securities law violations
arising from the offer and sale of the Trust Fund. The foregoing assignment
is in addition to, and not in limitation of, rights of subrogation otherwise
available to Financial Security in respect of such payments. The Trustee
shall take such action and deliver such instruments as may be reasonably
requested or required by Financial Security to effectuate the purpose or
provisions of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the Class A-9
Certificateholders, hereby appoints Financial Security as agent and attorney-
in-fact for the Trustee and each such Class A-9 Certificateholder in any
legal proceeding with respect to the Trust Fund. The Trustee hereby agrees
that Financial Security may at any time during the continuation of any
proceeding by or against the Issuer under the United States Bankruptcy Code
or any other applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (an "Insolvency Proceeding") direct all matters relating to
such Insolvency Proceeding, including without limitation, (A) all matters
relating to any claim in connection with an Insolvency Proceeding seeking the
avoidance as a preferential transfer of any payment with respect to the Trust
Fund (a "Preference Claim"), (B) the direction of any appeal of any order
relating to any Preference Claim at the expense of Financial Security but
subject to reimbursement as provided in the Letter Agreement and (C) the
posting of any surety, supersedeas or performance bond pending any such
appeal. In addition, the Trustee hereby agrees that Financial Security shall
be subrogated to, and the Trustee on its behalf and on behalf of each Class
A-9 Certificateholder, hereby delegates and assigns, to the fullest extent
permitted by law, the rights of the Trustee and each Class A-9
Certificateholder in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding or
action with respect to any court order issued in connection with any such
Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to the
Policy Payments Account.
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the
meanings provided in the Policy.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
of Claim and Certificate as of the _________ day of
___________________________, __________.
THE BANK OF NEW YORK
By:
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Title:
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For Financial Security or Fiscal Agent Use Only
Wire transfer sent ____________________ by
_______________________________________
Confirmation Number ________________________________________________________
