______________________________________________________________________
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) January 1, 1997
CWMBS, INC. (as depositor under the Pooling and Servicing
Agreement, dated as of January 1, 1997, providing for the
issuance of the CWMBS, INC., Mortgage Pass-Through
Certificates, Series 1997-1).
CWMBS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 33-84910 95-4449516
- ---------------------------- ------------ ------------------
(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.
- ---- ------------
On January 1, 1997, CWMBS, Inc. (the "Company") entered into a Pooling
and Servicing Agreement dated as of January 1, 1997 (the "Pooling and
Servicing Agreement"), by and among the Company, as depositor, Countrywide
Home Loans, Inc. ("CHL"), 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 1997-1. 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. ("FSA") on January 30, 1997 in
connection with the Certificates, Class A-4, the Financial Guaranty
Insurance Policy issued by FSA on January 30, 1997 in connection with the
Certificates, Class A-11, the Financial Guaranty Insurance Policy issued by
FSA on January 30, 1997 in connection with the Certificates, Class A-12, the
Financial Guaranty Insurance Policy issued by FSA on January 30, 1997 in
connection with the Certificates, Class A-13 (the "FSA Policies"). The FSA
Policies are annexed hereto as Exhibits 99.2, 99.3, 99.4 and 99.5,
respectively.
Item 7. Financial Statements, Pro Forma Financial
- ---- -----------------------------------------
Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1. The Pooling and Servicing Agreement, dated as of January 1,
1997, by and among the Company, CHL and the Trustee.
99.2. Finanical Guaranty Insurance Policy issued on January 30, 1997
by FSA in connection with the Certificates, Class A-4.
99.3. Finanical Guaranty Insurance Policy issued on January 30, 1997
by FSA in connection with the Certificates, Class A-11.
99.4. Finanical Guaranty Insurance Policy issued on January 30, 1997
by FSA in connection with the Certificates, Class A-12.
99.5. Finanical Guaranty Insurance Policy issued on January 30, 1997
by FSA in connection with the Certificates, Class A-13.
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
------------------------
David A. Spector
Vice President
Dated: January 31, 1997
Exhibit Index
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Exhibit Page
- ------- ----
99.1. Pooling and Servicing Agreement,
dated as of January 1, 1997, by
and among, the Company, CHL
and the Trustee. 6
99.2. Finanical Guaranty Insurance
Policy issued on January 30,
1997 by FSA in connection with
the Certificates, Class A-4.
99.3. Finanical Guaranty Insurance
Policy issued on January 30,
1997 by FSA in connection with
the Certificates, Class A-11.
99.4. Finanical Guaranty Insurance
Policy issued on January 30,
1997 by FSA in connection with
the Certificates, Class A-12.
99.5. Finanical Guaranty Insurance
Policy issued on January 30,
1997 by FSA in connection with
the Certificates, Class A-13.
EXHIBIT 99.1
------------
Execution Copy
CWMBS, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller and Master Servicer
and
THE BANK OF NEW YORK,
Trustee
___________________________________
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1997
__________________________________
MORTGAGE PASS-THROUGH CERTIFICATES, Series 1997-1
TABLE OF CONTENTS
Page
----
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
Aggregate FSA Premium . . . . . . . . . . . . . . . . . . . . . . . I-1
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Allocable Share . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
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-2
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
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-3
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Register . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificateholder or Holder . . . . . . . . . . . . . . . . . . . . I-4
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Class A-4 Net Interest Shortfall . . . . . . . . . . . . . . . . . . I-4
Class A-4 Net Prepayment Interest Shortfall . . . . . . . . . . . . I-4
Class A-4 Policy . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Class A-4 Policy Payments Account . . . . . . . . . . . . . . . . . I-4
Class A-4 Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . I-4
Class A-4 Rounding Account . . . . . . . . . . . . . . . . . . . . . I-5
Class A-6 Percentage . . . . . . . . . . . . . . . . . . . . . . . . I-5
Class A-6 Prepayment Percentage . . . . . . . . . . . . . . . . . . I-5
Class A-6 Principal Distribution Amount . . . . . . . . . . . . . . I-5
Class A-6 Step Down Conditions . . . . . . . . . . . . . . . . . . . I-6
Class A-11 Net Interest Shortfall . . . . . . . . . . . . . . . . . I-6
Class A-11 Net Prepayment Interest Shortfall . . . . . . . . . . . . I-6
Class A-11 Policy . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Class A-11 Policy Payments Account . . . . . . . . . . . . . . . . . I-6
Class A-11 Reserve Fund . . . . . . . . . . . . . . . . . . . . . . I-6
Class A-11 Rounding Account . . . . . . . . . . . . . . . . . . . . I-6
Class A-12 Net Interest Shortfall . . . . . . . . . . . . . . . . . I-7
Class A-12 Net Prepayment Interest Shortfall . . . . . . . . . . . . I-7
Class A-12 Policy . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Class A-12 Policy Payments Account . . . . . . . . . . . . . . . . . I-7
Class A-12 Reserve Fund . . . . . . . . . . . . . . . . . . . . . . I-7
Class A-12 Rounding Account . . . . . . . . . . . . . . . . . . . . I-7
Class A-13 Net Interest Shortfall . . . . . . . . . . . . . . . . . I-7
Class A-13 Net Prepayment Interest Shortfall . . . . . . . . . . . . I-8
Class A-13 Policy . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Class A-13 Policy Payments Account . . . . . . . . . . . . . . . . . I-8
Class A-13 Reserve Fund . . . . . . . . . . . . . . . . . . . . . . I-8
Class A-13 Rounding Account . . . . . . . . . . . . . . . . . . . . I-8
Class Certificate Balance . . . . . . . . . . . . . . . . . . . . . I-8
Class Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . I-8
Class Optimal Interest Distribution Amount . . . . . . . . . . . . . I-8
Class PO Deferred Amount . . . . . . . . . . . . . . . . . . . . . . I-9
Class Subordination Percentage . . . . . . . . . . . . . . . . . . . I-9
Class Unpaid Interest Amounts . . . . . . . . . . . . . . . . . . . I-9
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
COFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
COFI Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Combined Prepayment Percentage . . . . . . . . . . . . . . . . . . . I-9
Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Component Balance . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Component Certificates . . . . . . . . . . . . . . . . . . . . . . . I-9
Cooperative Corporation . . . . . . . . . . . . . . . . . . . . . . I-9
Coop Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Cooperative Loan . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Cooperative Property . . . . . . . . . . . . . . . . . . . . . . . I-10
Cooperative Unit . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . I-10
Corresponding Classes of Certificates . . . . . . . . . . . . . . I-10
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Cut-off Date Pool Principal Balance . . . . . . . . . . . . . . . I-10
Cut-off Date Principal Balance . . . . . . . . . . . . . . . . . . I-10
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . I-10
Defective Mortgage Loan . . . . . . . . . . . . . . . . . . . . . I-10
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . I-10
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . I-10
Delay Certificates . . . . . . . . . . . . . . . . . . . . . . . . I-10
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . I-11
Denomination . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Depository Participant . . . . . . . . . . . . . . . . . . . . . . I-11
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . I-11
Discount Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . I-11
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . I-11
Distribution Account Deposit Date . . . . . . . . . . . . . . . . I-11
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . I-11
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Duff & Phelps . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . I-12
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
ERISA-Restricted Certificate . . . . . . . . . . . . . . . . . . . I-12
Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Excess Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Excess Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Expense Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Financial Security . . . . . . . . . . . . . . . . . . . . . . . . I-13
Financial Security Contact Person . . . . . . . . . . . . . . . . I-13
Financial Security Default . . . . . . . . . . . . . . . . . . . . I-13
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Flood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Fraud Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Fraud Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Fraud Loss Coverage Amount . . . . . . . . . . . . . . . . . . . . I-13
Fraud Loss Coverage Termination Date . . . . . . . . . . . . . . . I-13
FSA Premium: . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Guaranteed Distributions . . . . . . . . . . . . . . . . . . . . . I-14
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Indirect Participant . . . . . . . . . . . . . . . . . . . . . . . I-14
Individual Class A-4 Certificate . . . . . . . . . . . . . . . . . I-14
Individual Class A-11 Certificate . . . . . . . . . . . . . . . . I-14
Individual Class A-12 Certificate . . . . . . . . . . . . . . . . I-14
Individual Class A-13 Certificate . . . . . . . . . . . . . . . . I-14
Initial Bankruptcy Coverage Amount . . . . . . . . . . . . . . . . I-14
Initial Component Balance . . . . . . . . . . . . . . . . . . . . I-14
Initial LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . I-14
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . I-14
Insured Expenses . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . I-15
Interest Determination Date . . . . . . . . . . . . . . . . . . . I-15
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Latest Possible Maturity Date . . . . . . . . . . . . . . . . . . I-15
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
LIBOR Certificates . . . . . . . . . . . . . . . . . . . . . . . . I-15
Liquidated Mortgage Loan . . . . . . . . . . . . . . . . . . . . . I-15
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . I-15
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . I-15
Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Majority in Interest . . . . . . . . . . . . . . . . . . . . . . . I-15
Master REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Master Servicer Advance Date . . . . . . . . . . . . . . . . . . . I-16
Master Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . I-16
Master Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . I-16
Monthly Statement . . . . . . . . . . . . . . . . . . . . . . . . I-16
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
National Cost of Funds Index . . . . . . . . . . . . . . . . . . . I-17
Net Prepayment Interest Shortfalls . . . . . . . . . . . . . . . . I-18
Non-Delay Certificates . . . . . . . . . . . . . . . . . . . . . . I-18
Non-Discount Mortgage Loan . . . . . . . . . . . . . . . . . . . . I-18
Non-PO Formula Principal Amount . . . . . . . . . . . . . . . . . I-18
Non-PO Percentage . . . . . . . . . . . . . . . . . . . . . . . . I-18
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-19
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-21
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Physical Certificate . . . . . . . . . . . . . . . . . . . . . . . I-22
Planned Balance . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Planned Principal Classes . . . . . . . . . . . . . . . . . . . . I-22
PO Formula Principal Amount . . . . . . . . . . . . . . . . . . . I-22
PO Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-23
Policy Payments Accounts . . . . . . . . . . . . . . . . . . . . . I-23
Pool Stated Principal Balance . . . . . . . . . . . . . . . . . . I-23
Prepayment Interest Excess . . . . . . . . . . . . . . . . . . . . I-23
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . I-23
Prepayment Period . . . . . . . . . . . . . . . . . . . . . . . . I-23
Primary Insurance Policy . . . . . . . . . . . . . . . . . . . . . I-23
Primary Planned Principal Classes . . . . . . . . . . . . . . . . I-23
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . I-23
Principal Prepayment in Full . . . . . . . . . . . . . . . . . . . I-23
Private Certificate . . . . . . . . . . . . . . . . . . . . . . . I-23
Pro Rata Share . . . . . . . . . . . . . . . . . . . . . . . . . . I-23
Proprietary Lease . . . . . . . . . . . . . . . . . . . . . . . . I-24
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . I-24
PUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Qualified Insurer . . . . . . . . . . . . . . . . . . . . . . . . I-24
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Recognition Agreement . . . . . . . . . . . . . . . . . . . . . . I-25
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Reference Bank . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Refinancing Mortgage Loan . . . . . . . . . . . . . . . . . . . . I-25
Regular Certificates . . . . . . . . . . . . . . . . . . . . . . . I-25
Relief Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Relief Act Reductions . . . . . . . . . . . . . . . . . . . . . . I-25
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
REMIC Change of Law . . . . . . . . . . . . . . . . . . . . . . . I-25
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . I-25
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Request for Release . . . . . . . . . . . . . . . . . . . . . . . I-26
Required Coupon . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . I-26
Residual Certificates . . . . . . . . . . . . . . . . . . . . . . I-26
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . I-26
Restricted Classes . . . . . . . . . . . . . . . . . . . . . . . . I-26
Scheduled Balances . . . . . . . . . . . . . . . . . . . . . . . . I-26
Scheduled Classes . . . . . . . . . . . . . . . . . . . . . . . . I-26
Scheduled Payment . . . . . . . . . . . . . . . . . . . . . . . . I-26
Scheduled Principal Distribution Amount . . . . . . . . . . . . . I-26
Secondary Planned Principal Clauses . . . . . . . . . . . . . . . I-26
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . I-26
Senior Credit Support Depletion Date . . . . . . . . . . . . . . . I-26
Senior Percentage . . . . . . . . . . . . . . . . . . . . . . . . I-26
Senior Prepayment Percentage . . . . . . . . . . . . . . . . . . . I-27
Senior Principal Distribution Amount . . . . . . . . . . . . . . . I-27
Senior Step Down Conditions . . . . . . . . . . . . . . . . . . . I-27
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . I-27
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . I-28
Special Hazard Coverage Termination Date . . . . . . . . . . . . . I-28
Special Hazard Loss . . . . . . . . . . . . . . . . . . . . . . . I-28
Special Hazard Loss Coverage Amount . . . . . . . . . . . . . . . I-29
Special Hazard Mortgage Loan . . . . . . . . . . . . . . . . . . . I-29
SR Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
S&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Startup Day . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . I-29
Streamlined Documentation Mortgage Loan . . . . . . . . . . . . . I-29
Subordinated Certificates . . . . . . . . . . . . . . . . . . . . I-29
Subordinated Percentage . . . . . . . . . . . . . . . . . . . . . I-29
Subordinated Prepayment Percentage . . . . . . . . . . . . . . . . I-29
Subordinated Principal Distribution Amount . . . . . . . . . . . . I-30
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Subsidiary REMIC . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Subsidiary REMIC Interest . . . . . . . . . . . . . . . . . . . . I-30
Subsidiary REMIC Regular Interest . . . . . . . . . . . . . . . . I-30
Substitute Mortgage Loan . . . . . . . . . . . . . . . . . . . . . I-30
Substitution Adjustment Amount . . . . . . . . . . . . . . . . . . I-30
Support Classes . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Targeted Balance . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Targeted Principal Classes . . . . . . . . . . . . . . . . . . . . I-30
Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . . . I-31
Tax Matters Person Certificate . . . . . . . . . . . . . . . . . . I-31
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Trigger Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Trustee Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Trustee Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Unscheduled Principal Distribution Amount . . . . . . . . . . . . I-31
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . II-1
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans . . . . II-3
SECTION 2.03. Representations, Warranties and Covenants of the
Seller and Master Servicer . . . . . . . . . . . . II-5
SECTION 2.04. Representations and Warranties of the Depositor
as to the Mortgage Loans . . . . . . . . . . . II-7
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions . . . . . . . . . . . . . . . . . . . II-7
SECTION 2.06. Execution and Delivery of Certificates . . . . . . II-8
SECTION 2.07. REMIC Matters . . . . . . . . . . . . . . . . . . . II-8
SECTION 2.08. Covenants of the Master Servicer . . . . . . . . . II-8
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. Rights of the Depositor and the Trustee in Respect
of the Master Servicer . . . . . . . . . . . . . . III-2
SECTION 3.04. Trustee to Act as Master Servicer . . . . . . . . . III-2
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate
Account; Class A-4 Reserve Fund, Class A-11 Reserve
Fund, Class A-12 Reserve Fund and Class A-13 Reserve
Fund; Distribution Account . . . . . . . . . . . . III-3
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts . . . . . . . . . . . . . . . . . . III-6
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans . . . . . . . . . . . III-6
SECTION 3.08. Permitted Withdrawals from the Certificate Account,
the Class A-4 Reserve Fund, the Class A-11 Reserve
Fund, the Class A-12 Reserve Fund, the Class A-13
Reserve Fund and Distribution Account . . . . . . . III-7
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies . . . . . . . . . . . . III-9
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption
Agreements . . . . . . . . . . . . . . . . . . . III-11
SECTION 3.11. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans . . . . . . III-12
SECTION 3.12. Trustee to Cooperate; Release of Mortgage Files . III-14
SECTION 3.13. Documents Records and Funds in Possession of Master
Servicer to be Held for the Trustee . . . . . . . III-15
SECTION 3.14. Servicing Compensation . . . . . . . . . . . . . III-15
SECTION 3.15. Access to Certain Documentation . . . . . . . . . III-16
SECTION 3.16. Annual Statement as to Compliance . . . . . . . . III-16
SECTION 3.17. Annual Independent Public Accountants' Servicing
Statement; Financial Statements . . . . . . . . . III-16
SECTION 3.18. Errors and Omissions Insurance; Fidelity Bonds . III-17
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. Distributions . . . . . . . . . . . . . . . . . . . IV-10
SECTION 4.04. Allocation of Realized Losses . . . . . . . . . . . . .
SECTION 4.05. Policy Matters . . . . . . . . . . . . . . . . . . IV-11
SECTION 4.06. Monthly Statements to Certificateholders . . . . . IV-14
SECTION 4.07. Determination of Pass-Through Rates for COFI
Certificates . . . . . . . . . . . . . . . . . . . IV-16
SECTION 4.08. Determination of Pass-Through Rates for LIBOR
Certificates . . . . . . . . . . . . . . . . . . . IV-18
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates . . . . . . . . . . . . . . . . . . V-1
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates . . . . . . . . . . . . . . V-1
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates . . V-5
SECTION 5.04. Persons Deemed Owners . . . . . . . . . . . . . . . . V-6
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . V-6
SECTION 5.06. Maintenance of Office or Agency . . . . . . . . . . . V-6
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 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-2
SECTION 7.03. Notification to Certificateholders . . . . . . . . VII-3
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of 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-3
SECTION 8.06. Eligibility Requirements for Trustee . . . . . . VIII-3
SECTION 8.07. Resignation and Removal of Trustee . . . . . . . VIII-4
SECTION 8.08. Successor Trustee . . . . . . . . . . . . . . . . VIII-5
SECTION 8.09. Merger or Consolidation of Trustee . . . . . . . VIII-5
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee . . VIII-5
SECTION 8.11. Tax Matters . . . . . . . . . . . . . . . . . . . VIII-7
SECTION 8.12. Periodic Filings. . . . . . . . . . . . . . . . . VIII-8
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-2
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-2
SECTION 10.04. Intention of Parties . . . . . . . . . . . . . . . . X-2
SECTION 10.05. Notices . . . . . . . . . . . . . . . . . . . . . . . X-3
SECTION 10.06. Severability of Provisions . . . . . . . . . . . . . X-4
SECTION 10.07. Assignment . . . . . . . . . . . . . . . . . . . . . X-4
SECTION 10.08. Limitation on Rights of Certificateholders . . . . . X-4
SECTION 10.09. Inspection and Audit Rights . . . . . . . . . . . . . X-5
SECTION 10.10. Certificates Nonassessable and Fully Paid . . . . . . X-5
Exhibit A: Form of Senior Certificate
(excluding Notional Amount Certificates) . . . . . . . A-1
Exhibit B: Form of Subordinated Certificate . . . . . . . . . . B-1
Exhibit C: Form of Class A-R 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 Certificates . . . . . . . . . . . . G-1
Exhibit H: Form of Final Certification of Trustee . . . . . . . H-1
Exhibit I: 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: Request for Release (for Trustee) . . . . . . . . . . M-1
Exhibit N: Request for Release (Mortgage Loan)
Paid in Full, Repurchased and Replaced) . . . . . . N-1
Exhibit O: Form of Financial Guaranty Insurance Policy . . . . . O-1
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
Schedule IV: Planned Balance Schedules . . . . . . . . . . . . S-IV-1
THIS POOLING AND SERVICING AGREEMENT, dated as of January 1, 1997,
among CWMBS, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York 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
Initial Class Multiples
Certificate Pass-Through Minimum in Excess of
Balance Rate Denomination Minimum
<S> <C> <C> <C> <C>
Class A-1 $121,196,482.00 7.25% $25,000 $1,000
Class A-2 $27,630,075.00 (1) $25,000 $1,000
Class A-3 (2) (1) $25,000(3) $1,000(3)
Class A-4 $8,500,000.00 7.40% $1,000 $1,000
Class A-5 15,855,000.00 7.50% $1,000 $1,000
Class A-6 $ 30,293,121.00 7.50% $25,000 $1,000
Class A-7 $ 9,925,000.00 7.50% $1,000 $1,000
Class A-8 $6,375,000.00 7.50% $1,000 $1,000
Class A-9 $22,483,962.00 7.25% $25,000 $1,000
Class A-10 $ 22,100,000.00 7.25% $25,000 $1,000
Class A-11 $8,918,000.00 7.45% $1,000 $1,000
Class A-12 $6,000,000.00 7.50% $1,000 $1,000
Class A-13 $5,500,000.00 7.50% $1,000 $1,000
Class PO $1,016,326.00 (4) $25,000 $1,000
Class X (2) (5) $25,000(3) $1,000(3)
Class A-R(6) $100.00 7.50% $100 N/A
Class M $8,316,729.00 7.50% $25,000 $1,000
Class B-1 $3,780,331.00 7.50% $25,000 $1,000
Class B-2 $1,512,132.00 7.50% $25,000 $1,000
Class B-3 $907,279.00 7.50% $100,000 $1,000
Class B-4 $1,058,492.00 7.50% $100,000 $1,000
Class B-5 $1,058,496.00 7.50% $100,000 $1,000
</TABLE>
_____________________
(1) (1) The Class A-2 and Class A-3 Certificates will bear interest during
the initial Interest Accrual Period at the applicable Initial Pass-
Through Rate set forth below, and will bear interest during each
Interest Accrual Period thereafter, subject to the applicable Maximum
and Minimum Pass-Through Rates, at the per annum rate determined as
described below:
<TABLE>
<CAPTION> Formula for Calculation of Pass-
Initial Pass-Through Maximum/Minimum Pass-Through Through Rate
Class Rate Rate
<S> <C> <C> <C>
A-2 5.975% 9.00%/0.60% LIBOR + 60 basis points
A-3 3.025% 8.40%/0.00% 8.40% - LIBOR
</TABLE>
(2) The Class A-3 and Class X Certificates will be Notional Amount
Certificates, will have no principal balance and will bear interest on
their respective Notional Amounts (initially, $27,630,075 and
$226,293,619, respectively).
(3) Minimum Denomination is based on the Notional Amount of such Class.
(4) The Class PO Certificates will be Principal Only Certificates and will
not bear interest.
(5) The Pass-Through Rate for the Class X Certificates for any Distribution
Date will be equal to the excess of (a) the average of the Adjusted Net
Mortgage Rates of the Non-Discount Mortgage Loans, weighted on the basis
of their respective Stated Principal Balances over (b) 7.50% per annum.
The Pass-Through Rate of the Class X Certificates for the first
Distribution Date is 0.4186%.
(6) The Class A-R Certificates will represent the beneficial ownership of
the SR Interest (described in the table below) and the MR Interest. The
initial principal balance and interest rate applicable to the MR
Interest shall be equal to the initial Class Certificate Balance and
Pass-Through Rate, respectively, of the Class A-R Certificates.
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 or Components(1)
Subsidiary REMIC Initial Principal Allocation Allocation
Interest Balance Interest Rate of Principal of Interest
<S> <C> <C> <C>
1 $121,196,482.00 7.25% A-1 A-1
2 $27,630,075.00 9.00% A-2 A-2, A-3(2)
3 $8,500,000.00 7.40% A-4 A-4
4 $15,855,000.00 7.50% A-5 A-5
5 $ 30,293,000.00 7.50% A-6 A-6
6 $ 9,925,000.00 7.50% A-7 A-7
7 $6,375,000.00 7.50% A-8 A-8
8 $22,483,962.00 7.25% A-9 A-9
9 $ 22,100,000.00 7.25% A-10 A-10
10 $ 8,918,000.00 7.45% A-11 A-11
11 $ 6,000,000.00 7.50% A-12 A-12
12 $ 5,500,000.00 7.50% A-13 A-13
13 $ 8,316,729.00 7.50% M M
14 $ 3,780,331.00 7.50% B-1 B-1
15 $ 1,512,132.00 7.50% B-2 B-2
16 $ 907,279.00 7.50% B-3 B-3
17 $ 1,058,492.00 7.50% B-4 B-4
18 $ 1,058,469.00 7.50% B-5 B-5
19 $1,016,326.00 (3) PO __
20 (4) (5) __ X
21 $100.00 7.50% MR(6) MR(6)
SR (7) (7) A-R A-R
</TABLE>
______________________
(1) The amount of principal and, except in the case of Subsidiary REMIC
Interest 19, interest allocable from a Subsidiary REMIC Regular Interest
to its Corresponding Class of Certificates on any Distribution Date
shall be 100%.
(2) Interest on Subsidiary REMIC Regular Interest 2 will be allocated to the
Class A-2 Certificates and the Class A-3 Certificates on a pro rata
basis in accordance with their respective Pass-Through Rates.
(3) Subsidiary REMIC Regular Interest 19 will be a principal only Subsidiary
REMIC Regular Interest and will not bear interest.
(4) The Notional Amount of Subsidiary REMIC Interest 20 with respect to any
Distribution Date will be equal to the Notional Amount of the Class X
Certificates with respect to such Distribution Date.
(5) The Interest Rate for Subsidiary REMIC Interest 20 for any Distribution
Date will be equal to the Pass-Through Rate applicable to the Class X
Certificates with respect to such Distribution Date.
(6) The beneficial ownership of the MR Interest and the SR Interest is
represented by the Class A-R Certificates.
(7) 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.
Component Certificates . . None.
Components . . . . . . For purposes of calculating distributions, the
Component Certificates will be comprised of
multiple payment components having the
designations, Initial Component Balances and
Pass-Through Rates set forth below:
Designation Initial Component 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 and Class X Certificates, Residual
Certificates and Subordinated Certificates.
Floating Rate Certificates. Class A-2 Certificates.
Inverse Floating Rate
Certificates . . . . . Class A-3 Certificates.
COFI Certificates. . . . None.
LIBOR Certificates . . . Class A-2 and Class A-3 Certificates.
Non-Delay Certificates . . Class A-2 and Class A-3 Certificates.
Notional Amount
Certificates . . . . . Class A-3 and Class X Certificates.
Offered Certificates . . All Classes of Certificates other than the
Private Certificates.
Physical Certificates . . Class X and Class PO Certificates and the
Private and Residual Certificates.
Planned Principal Classes . None.
Primary Planned Principal
Classes . . . . . . . None.
Principal Only
Certificates . . . . . Class PO Certificates.
Private Certificates . . Class B-3, Class B-4 and Class B-5
Certificates.
Rating Agencies . . . . S&P and Moody's.
Regular Certificates . . All Classes of Certificates, other than the
Residual Certificates.
Residual Certificates . . Class A-R Certificates.
Scheduled Principal
Classes . . . . . . . None.
Secondary Planned Principal
Class . . . . . . . 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 A-12,
Class A-13, Class PO, Class X and Class A-R
Certificates.
Subordinated Certificates . Class M, Class B-1, Class B-2, Class B-3, Class
B-4 and Class B-5 Certificates.
Support Classes . . . . None.
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
-------------------------------
IIPreliminary Statement.
Accrual Amount: With respect to any Class of Accrual
--------------
IIICertificates 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)(i).
Accrual Certificates: As specified in the Preliminary
--------------------
IVStatement.
Accrual Termination Date: Not applicable.
------------------------
Adjusted Mortgage Rate: As to each Mortgage Loan, and at any
----------------------
VItime, the per annum rate equal to the Mortgage Rate less the Master
Servicing Fee Rate.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, and at
--------------------------
VIIany 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, 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
-------
VIIIwith 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 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.
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.
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)).
Amount Available for Senior Principal: As to any Distribution
-------------------------------------
XVDate, 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
-----------------------------------
XVIDate, the aggregate amount held in the Certificate Account at the close of
business on the related Determination Date on account of (i) Principal
Prepayments received during the related Prepayment Period 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 other than a Streamlined
Documentation Mortgage Loan, the value of the Mortgaged Property based upon
the appraisal made-at the time of the origination of such Refinancing
Mortgage Loan; and (iii) with respect to a Streamlined Documentation Mortgage
Loan, (a) if the loan-to-value ratio with respect to the Original Mortgage
Loan at the time of the origination thereof was 60% or less, the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of the Original Mortgage Loan and (b) if the loan-to-value ratio with respect
to the Original Mortgage Loan at the time of the origination thereof was
greater than 60%, the value of the Mortgaged Property based upon the
appraisal (which may be a drive-by appraisal) made at the time of the
origination of such Streamlined Documentation 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
3.08(a) and amounts permitted to be withdrawn from the Distribution Account
pursuant to clauses (i)-(iii) inclusive of Section 3.08(b), (b) the amount of
the related Advance and (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.
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-4 Policy,
the Class A-11 Policy, the Class A-12 Policy or the Class A-13 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 3.05
with a depository institution in the name of the Master Servicer for the
benefit of the Trustee on behalf of Certificateholders and designated
"Countrywide Home Loans, Inc. in trust for the registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates Series 1997-1."
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 4.03 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 hereof.
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-4 Net Interest Shortfall: As to any Distribution Date,
--------------------------------
the amount of the reduction of the Class Optimal Interest Distribution
Amount for the Class A-4 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-4 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-4 Certificates for such
Distribution Date pursuant to Section 4.02(d) in respect of Net Prepayment
Interest Shortfall.
Class A-4 Policy: The irrevocable Financial Guaranty Insurance
----------------
Policy, No. 50554A-N, including any endorsements thereto, issued by
Financial Security with respect to the Class A-4 Certificates, in the form
attached hereto as Exhibit O.
Class A-4 Policy Payments Account: The separate Eligible
---------------------------------
Account created and maintained by the Trustee pursuant to Section
4.05(c) in the name of the Trustee for the benefit of the Class A-4
Certificateholders and designated "The Bank of New York in trust for
registered holders of CWMBS, Inc. Mortgage Pass-Through Certificates, Series
1997-1, Class A-4". Funds in the Class A-4 Policy Payments Account shall be
held in trust for the Class A-4 Certificateholders for the uses and purposes
set forth in this Agreement.
Class A-4 Reserve Fund: The separate Eligible Account created
----------------------
and maintained by the Trustee pursuant to Section 3.05(c)
with a depository institution in the name of the Trustee for the benefit
of the Certificateholders specified in Section 3.05(c) and designated "The
Bank of New York Class A-4 Reserve Fund in trust for registered holders of
CWMBS, Inc. Mortgage Pass-Through Certificates, Series 1997-1, Class A-4".
The Class A-4 Reserve Fund will not be a part of the Trust Fund and, for all
federal income tax purposes, will be beneficially owned by Donaldson, Lufkin
& Jenrette Securities Corporation.
Class A-4 Rounding Account: The separate Eligible Account
--------------------------
established and maintained by the Trustee pursuant to Section 4.03A(a) in
the name of the Trustee for the benefit of the Class A-4 Certificateholders
and designated "The Bank of New York in trust for registered holders of
CWMBS, Inc. Mortgage Pass-Through Certificates, Series 1997-1, Class A-4".
Funds in the Rounding Account shall be held in trust for the Class A-4
Certificateholders for the uses and purposes set forth in this Agreement.
The Class A-4 Rounding Account will not be a part of the Trust Fund and, for
all federal income tax purposes, will be beneficially owned by Donaldson,
Lufkin & Jenrette Securities Corporation.
Class A-6 Percentage: As to any Distribution Date, the
--------------------
percentage equivalent of a fraction the numerator of which is the Class
Certificate Balance of the Class A-6 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.
Class A-6 Prepayment Percentage: As to any Distribution Date
-------------------------------
occurring prior to the Trigger Date, the product of (i) a fraction,
expressed as a percentage, the numerator of which is the Class Certificate
Balance of the Class A-6 Certificates immediately prior to such Distribution
Date and the denominator of which is the aggregate of the Class Certificate
Balances of the Class A-6 Certificates and the Subordinated Certificates
immediately prior to such Distribution Date and (ii) the Combined Prepayment
Percentage. As to any Distribution Date occurring on or after the Trigger
Date, the Class A-6 Prepayment Percentage will equal: 100%, if such
Distribution Date occurs during the five years beginning on the first
Distribution Date; the Class A-6 Percentage plus 70% of the Subordinated
Percentage for such Distribution Date for any Distribution Date in the first
year following the fifth anniversary of the first Distribution Date; the
Class A-6 Percentage plus 60% of the Subordinated Percentage for such
Distribution Date for any Distribution Date in the second year following the
fifth anniversary of the first Distribution Date; the Class A-6 Percentage
plus 40% of the Subordinated Percentage for such Distribution Date for any
Distribution Date in the third year following the fifth anniversary of the
first Distribution Date; the Class A-6 Percentage plus 20% of the
Subordinated Percentage for such Distribution Date for any Distribution Date
in the fourth year following the fifth anniversary of the first Distribution
Date; and the Class A-6 Percentage for such Distribution Date for any
Distribution Date thereafter; provided, however, that if the Class A-6
Percentage exceeds the initial Class A-6 Percentage on and after the Trigger
Date, the Class A-6 Prepayment Percentage will once again equal 100%.
Notwithstanding the foregoing, no decrease in the Class A-6 Prepayment
Percentage will occur after the Trigger Date if, as of the first Distribution
Date as to which any such decrease applies, either of the Class A-6 Step Down
Conditions occurs.
Class A-6 Principal Distribution Amount: As to any Distribution
---------------------------------------
Date, the sum of (i) the Class A-6 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 Class A-6 Percentage of the applicable Non-PO Percentage of
the Stated Principal Balance of such Mortgage Loan and (y) either (A) the
Class A-6 Prepayment Percentage, if the Class A-6 Prepayment Percentage is
greater than 0%, or if the Class A-6 Prepayment Percentage equals 0%, the
percentage obtained by dividing the Class A-6 Percentage by the sum of the
Senior Percentage and the Class A-6 Percentage or (B), if an Excess Loss was
sustained with respect to such Liquidated Mortgage Loan during such preceding
calendar month, the Class A-6 Percentage of the applicable Non-PO Percentage
of the amount of the Liquidation Proceeds allocable to principal and (iii)
the Class A-6 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.
Class A-6 Step Down Conditions: As of the first Distribution
------------------------------
Date as to which any decrease in the Class A-6 Prepayment Percentage
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 do not 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.
Class A-11 Net Interest Shortfall: As to any Distribution Date,
---------------------------------
the amount of the reduction of the Class Optimal Interest Distribution
Amount for the Class A-11 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-11 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-11 Certificates for such
Distribution Date pursuant to Section 4.02(d) in respect of Net Prepayment
Interest Shortfall.
Class A-11 Policy: The irrevocable Financial Guaranty Insurance
-----------------
Policy, No. 50554B-N , including any endorsements thereto, issued by
Financial Security with respect to the Class A-11 Certificates, in the form
attached hereto as Exhibit O.
Class A-11 Policy Payments Account: The separate Eligible
----------------------------------
Account created and maintained by the Trustee pursuant to Section
4.05(c) in the name of the Trustee for the benefit of the Class A-11
Certificateholders and designated "The Bank of New York in trust for
registered holders of CWMBS, Inc. Mortgage Pass-Through Certificates, Series
1997-1, Class A-11". Funds in the Class A-11 Policy Payments Account shall
be held in trust for the Class A-11 Certificateholders for the uses and
purposes set forth in this Agreement.
Class A-11 Reserve Fund: The separate Eligible Account created
-----------------------
and maintained by the Trustee pursuant to Section 3.05(c) with a
depository institution in the name of the Trustee for the benefit of the
Certificateholders specified in Section 3.05(c) and designated "The Bank of
New York Class A-11 Reserve Fund in trust for registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates, Series 1997-1, Class A-11". The
Class A-11 Reserve Fund will not be a part of the Trust Fund and, for all
federal income tax purposes, will be beneficially owned by Donaldson, Lufkin
& Jenrette Securities Corporation.
Class A-11 Rounding Account: The separate Eligible Account
---------------------------
established and maintained by the Trustee pursuant to Section 4.03B(a)
in the name of the Trustee for the benefit of the Class A-11
Certificateholders and designated "The Bank of New York in trust for
registered holders of CWMBS, Inc. Mortgage Pass-Through Certificates, Series
1997-1, Class A-11". Funds in the Class A-11 Rounding Account shall be held
in trust for the Class A-11 Certificateholders for the uses and purposes set
forth in this Agreement. The Class A-11 Rounding Account will not be a part
of the Trust Fund and, for all federal income tax purposes, will be
beneficially owned by Donaldson, Lufkin & Jenrette Securities Corporation.
Class A-12 Net Interest Shortfall: As to any Distribution Date,
---------------------------------
the amount of the reduction of the Class Optimal Interest Distribution Amount
for the Class A-12 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-12 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-12 Certificates for such
Distribution Date pursuant to Section 4.02(d) in respect of Net Prepayment
Interest Shortfall.
Class A-12 Policy: The irrevocable Financial Guaranty Insurance
-----------------
Policy, No. 50554C-N, including any endorsements thereto, issued by
Financial Security with respect to the Class A-12 Certificates, in the form
attached hereto as Exhibit O.
Class A-12 Policy Payments Account: The separate Eligible
----------------------------------
Account created and maintained by the Trustee pursuant to Section
4.05(c) in the name of the Trustee for the benefit of the Class A-12
Certificateholders and designated "The Bank of New York in trust for
registered holders of CWMBS, Inc. Mortgage Pass-Through Certificates, Series
1997-1, Class A-12". Funds in the Class A-12 Policy Payments Account shall
be held in trust for the Class A-12 Certificateholders for the uses and
purposes set forth in this Agreement.
Class A-12 Reserve Fund: The separate Eligible Account created
-----------------------
and maintained by the Trustee pursuant to Section 3.05(c) with a
depository institution in the name of the Trustee for the benefit of the
Certificateholders specified in Section 3.05(c) and designated "The Bank of
New York Class A-12 Reserve Fund in trust for registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates, Series 1997-1, Class A-12". The
Class A-12 Reserve Fund will not be a part of the Trust Fund and, for all
federal income tax purposes, will be beneficially owned by Donaldson, Lufkin
& Jenrette Securities Corporation.
Class A-12 Rounding Account: The separate Eligible Account
---------------------------
established and maintained by the Trustee pursuant to Section
4.03C(a) in the name of the Trustee for the benefit of the Class A-12
Certificateholders and designated "The Bank of New York in trust for
registered holders of CWMBS, Inc. Mortgage Pass-Through Certificates, Series
1997-1, Class A-12". Funds in the Class A-12 Rounding Account shall be held
in trust for the Class A-12 Certificateholders for the uses and purposes set
forth in this Agreement. The Class A-12 Rounding Account will not be a part
of the Trust Fund and, for all federal income tax purposes, will be
beneficially owned by Donaldson, Lufkin & Jenrette Securities Corporation.
Class A-13 Net Interest Shortfall: As to any Distribution Date,
---------------------------------
the amount of the reduction of the Class Optimal Interest
Distribution Amount for the Class A-13 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-13 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-13 Certificates for such
Distribution Date pursuant to Section 4.02(d) in respect of Net Prepayment
Interest Shortfall.
Class A-13 Policy: The irrevocable Financial Guaranty Insurance
-----------------
Policy, No. 50554D-N, including any endorsements thereto, issued by
Financial Security with respect to the Class A-13 Certificates, in the form
attached hereto as Exhibit O.
Class A-13 Policy Payments Account: The separate Eligible
----------------------------------
Account created and maintained by the Trustee pursuant to Section
4.05(c) in the name of the Trustee for the benefit of the Class A-13
Certificateholders and designated "The Bank of New York in trust for
registered holders of CWMBS, Inc. Mortgage Pass-Through Certificates, Series
1997-1, Class A-13". Funds in the Class A-13 Policy Payments Account shall
be held in trust for the Class A-13 Certificateholders for the uses and
purposes set forth in this Agreement.
Class A-13 Reserve Fund: The separate Eligible Account created
-----------------------
and maintained by the Trustee pursuant to Section 3.05(c) with a
depository institution in the name of the Trustee for the benefit of the
Certificateholders specified in Section 3.05(c) and designated "The Bank of
New York Class A-13 Reserve Fund in trust for registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates, Series 1997-1, Class A-13". The
Class A-13 Reserve Fund will not be a part of the Trust Fund and, for all
federal income tax purposes, will be beneficially owned by Donaldson, Lufkin
& Jenrette Securities Corporation.
Class A-13 Rounding Account: The separate Eligible Account
---------------------------
established and maintained by the Trustee pursuant to Section
4.03D(a) in the name of the Trustee for the benefit of the Class A-13
Certificateholders and designated "The Bank of New York in trust for
registered holders of CWMBS, Inc. Mortgage Pass-Through Certificates, Series
1997-1, Class A-13". Funds in the Class A-13 Rounding Account shall be held
in trust for the Class A-13 Certificateholders for the uses and purposes set
forth in this Agreement. The Class A-13 Rounding Account will not be a part
of the Trust Fund and, for all federal income tax purposes, will be
beneficially owned by Donaldson, Lufkin & Jenrette Securities Corporation.
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 or, with respect to any
interest bearing Component, any Component thereof, 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,
Component Balance or Notional Amount, as applicable, subject to reduction as
provided in Section 4.02(d) and (ii) any Class Unpaid Interest Amounts for
such Class or Component.
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 Certificates 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
quotient (expressed as a percentage) of (a) the Class Certificate Balance of
such Class of Certificates immediately prior to such Distribution Date
divided by (b) the aggregate of the Class Certificate Balances immediately
prior to such Distribution Date of all Classes of Certificates.
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: January 30, 1997.
------------
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.
-----------------
Combined Prepayment Percentage: As to any Distribution Date, the
------------------------------
difference between 100% and the Senior Prepayment Percentage for such
date.
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 1997-1, 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 or
Components appearing opposite such Subsidiary REMIC Regular Interest in the
Preliminary Statement.
Cut-off Date: January 1, 1997.
------------
Cut-off Date Pool Principal Balance: $302,426,525.73.
-----------------------------------
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.
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(b) hereof.
---------------------
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 22nd day
------------------
of each month or if such 22nd day is not a Business Day the next
preceding Business Day; provided, however, that if such 22nd day or such
-------- -------
Business Day, whichever is applicable, is less than two Business Days
prior to the related Distribution Date, the Determination Date shall be the
first Business Day which is two Business Days preceding such Distribution
Date.
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 3.05 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 1997-1." 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 February 1997.
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, 17 State Street, 12th Floor, New York, New York 10004, 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) 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
(to the limits established by the FDIC) 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 (a) the trust department of a
federal or state chartered depository institution or (b) a 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 3.06(a) hereof.
Event of Default: As defined in Section 7.01 hereof.
----------------
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
3.08(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 Rate: As to each Mortgage Loan, the sum of the related
------------
Master Servicing Fee Rate and the 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 4.05(i).
Financial Security Default: As defined in Section 4.05(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.
Flood: The widespread flooding that occured in the Northwestern
-----
United States in late 1996 and early 1997.
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,
--------------------------
$6,053,487.35 subject to reduction from time to time, by the amount
of Fraud Losses allocated to the Certificates. In addition, on each
anniversary of the Cut-off Date, the Fraud Loss Coverage Amount will be
reduced as follows: (a) on the first, 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 Stated 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 (b) 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 and the
-----------
Policies an amount equal to the sum of (i) 1/12th of the product of
(a) the Class Certificate Balance of the Class A-4 Certificates as of such
Distribution Date (prior to giving effect to any distributions thereon on
such Distribution Date) and (b) 0.10%, and (ii) 1/12th of the product of (a)
the Class Certificate Balance of the Class A-11 Certificates as of such
Distribution Date (prior to giving effect to any distribution thereon on such
Distribution Date) and (b) 0.05%.
Guaranteed Distributions: With respect to any Distribution
------------------------
Date, (i) the Class Optimal Interest Distribution Amount for the
Class A-4, Class A-11, Class A-12 or Class A-13 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-4 Net Interest Shortfall, Class A-11 Net Interest Shortfall, Class A-12 Net
Interest Shortfall or Class A-13 Net Interest Shortfall that is not covered
by the Class A-4 Reserve Fund, the Class A-11 Reserve Fund, the Class A-12
Reserve Fund or the Class A-13 Reserve Fund, (ii) the amount of any Realized
Loss, including any Excess Loss, allocated to the Class A-4, Class A-11,
Class A-12 or Class A-13 Certificates on such Distribution Date and (iii)
the Class Certificate Balances of the Class A-4, Class A-11, Class A-12 or
Class A-13 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 4.05 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-4 Certificate: Any Class A-4 Certificate
--------------------------------
with a $1,000 Certificate Balance.
Individual Class A-11 Certificate: Any Class A-11 Certificate
---------------------------------
with a $1,000 Certificate Balance.
Individual Class A-12 Certificate: Any Class A-12 Certificate
---------------------------------
with a $1,000 Certificate Balance.
Individual Class A-13 Certificate: Any Class A-13 Certificate
---------------------------------
with a $1,000 Certificate Balance.
Initial Bankruptcy Coverage Amount: $100,000.
----------------------------------
Initial Component Balance: As specified in the Preliminary
-------------------------
Statement.
Initial LIBOR Rate: 5.375%.
------------------
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 any 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.
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
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 determined (in accordance with
this Agreement) 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.
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: Countrywide Home Loans, Inc., a New York
---------------
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 payable out of each full payment of
interest received on such Mortgage Loan and equal to one-twelfth of the
Master Servicing Fee Rate multiplied by the Stated Principal Balance of such
Mortgage Loan as of the Due Date in the month of such Distribution Date
(prior to giving effect to any Scheduled Payments due on such Mortgage Loan
on such Due Date), subject to reduction as provided in Section 3.14.
Master Servicing Fee Rate: With respect to each Mortgage Loan,
-------------------------
0.25% per annum.
Monthly Statement: The statement delivered to the
-----------------
Certificateholders pursuant to Section 4.04.
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 hereof 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 de
minimis PUD, (c) a condominium unit or PUD (other than a de minimis
PUD), (d) a two- to four-unit residential property or (e) a
Cooperative Unit;
(xi) the Mortgage Rate;
(xii) the purpose for the Mortgage Loan;
(xiii) the type of documentation program pursuant to which the
Mortgage Loan was originated, and
(xiv) the Master Servicing Fee for the Mortgage Loan.
Such schedule shall also set forth the total of the amounts
described under (iv) and (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, net of any interest premium charged by the
mortgagee to obtain or maintain any Primary Insurance Policy.
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.
National Cost of Funds Index: The National Monthly Median Cost
----------------------------
of Funds Ratio to SAIF-Insured Institutions published by the Office
of Thrift Supervision.
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
one-half of the aggregate 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 the 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
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 previously
----------------------
made or proposed to be made by the Master Servicer that, in the good
faith judgment of the Master 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 4.05(a), which shall be in the form attached to the applicable
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). With respect to any Distribution Date
and the Class A-3 Certificates, an amount equal to the Class Certificate
Balance of the Class A-2 Certificates on such Distribution Date prior to
giving effect to any distributions to be made on such 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) hereof.
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 M 5.50%
Class B-1 2.75%
Class B-2 1.50%
Class B-3 1.00%
Class B-4 0.70%
Class B-5 0.35%
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 or Component, 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 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 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 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 rating then assigned to the Certificates by
either 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 containing, at the time of
the issuance of such agreements, such terms and conditions as will
not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by either 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 rating then assigned to the
Certificates by either Rating Agency, 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 if Fitch or Duff &
Phelps is a Rating Agency and has not rated the portfolio, the
highest rating assigned by Moody's) 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 rating then assigned to the
Certificates by either Rating Agency, without regard to the
guaranty provided by the Policies, as evidenced by a signed writing
delivered by each Rating Agency;
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)(l) 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 United States 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 subdivision 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, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Physical Certificate: 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
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 month preceding the calendar
month of such Distribution Date, the amount of Liquidation Proceeds allocable
to principal received during the month preceding the month of such
Distribution Date with respect to such Mortgage Loan and (f)
all 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%.
Policies: Collectively, the Class A-4 Policy, the Class A-11
--------
Policy, the Class A-12 Policy and the Class A-13 Policy.
Policy Payments Accounts: Collectively, the Class A-4 Policy
------------------------
Payments Account the Class A-11 Policy Payments Account, the Class
A-12 Policy Payments Account and the Class A-13 Policy Payments Account.
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 Excess: As to any Principal Prepayment
--------------------------
received by the Master Servicer from the first day through the
fifteenth day of any calendar month (other than the calendar month in which
the Cut-off Date occurs), all amounts paid by the related Mortgagor in
respect of interest on such Principal Prepayment. All Prepayment Interest
Excess shall be paid to the Master Servicer as additional master servicing
compensation.
Prepayment Interest Shortfall: As to any Distribution Date,
-----------------------------
Mortgage Loan and Principal Prepayment received on or after the
sixteenth day of the month preceding the month of such Distribution Date (or,
in the case of the first Distribution Date, on or after the Cut-off Date) and
on or before the last day of the month preceding the month of such
Distribution Date, the amount, if any, by which one month's interest at the
related Mortgage Rate, net of the Master Servicing Fee Rate, on such
Principal Prepayment exceeds the amount of interest paid in connection with
such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period from
-----------------
the 16th day of the calendar month preceding the month of such
Distribution Date (or, in the case of the first Distribution Date, from the
Cut-off Date) through the 15th of the month of such Distribution Date.
Primary Insurance Policy: Each policy of primary
------------------------
mortgage guaranty insurance or any replacement policy therefor with
respect to any Mortgage Loan.
Primary Planned Principal Classes: 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.
Private Certificate: 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 January
---------------------
23, 1997 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 hereof
or purchased at the option of the Master Servicer pursuant to Section 3.11,
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 applicable 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-approved mortgage insurer and 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 any 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 category of a Rating Agency shall mean
such rating category without giving effect to any modifiers. For purposes of
Section 10.05(b), the addresses for notices to each Rating Agency shall be
(i) Standard & Poor's Ratings Group, 26 Broadway, 15th Floor, New York, New
York 10004, Attention: Mortgage Surveillance Monitoring, and (ii) Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: Residential Pass-Through Monitoring, or such other address as
either such Rating Agency may hereafter furnish to the Depositor and the
Master Servicer.
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 Distribution Date occurs.
Reference Bank: As defined in Section 4.05.
--------------
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: 7.50% 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).
------------------
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 Amount: Not applicable.
---------------------------------------
Secondary Planned Principal Clauses: As specified in the
-----------------------------------
Preliminary Statement.
Securities Act: The Securities Act of 1933, as amended.
--------------
Seller: Countrywide Home Loans, Inc., a New York corporation,
------
and its successors and assigns, in its capacity as seller of the
Mortgage Loans to the Depositor.
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 A-6 and 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 sum of the Class A-6
Percentage and the Subordinated Percentage for such Distribution Date; for
any Distribution Date in the second year thereafter, the Senior Percentage
plus 60% of the sum of the Class A-6 Percentage and the Subordinated
Percentage for such Distribution Date; for any Distribution Date in the third
year thereafter, the Senior Percentage plus 40% of the sum of the Class A-6
Percentage and the Subordinated Percentage for such Distribution Date; for
any Distribution Date in the fourth year thereafter, the Senior Percentage
plus 20% of the sum of the Class A-6 Percentage and the Subordinated
Percentage for such Distribution Date; and for any Distribution Date
thereafter, the Senior Percentage for such Distribution Date (unless on any
Distribution Date 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 unless
one of the Senior Step Down Conditions is satisfied.
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 each 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, if the Senior Prepayment Percentage is less
than 100%, or, if the Senior Prepayment Percentage equals 100%, the
percentage obtained by dividing the Senior Percentage by the sum of the
Senior Percentage and the Class A-6 Percentage or (B), or (B) if an Excess
Loss was sustained with respect to such Liquidated Mortgage Loan during such
prior 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 of "Non-PO Formula Principal
Amount" for such Distribution Date.
Senior Step Down Conditions: As of the first Distribution Date
---------------------------
as to which any decrease in the Senior Prepayment Percentage
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 on such Distribution Date, does not equal or exceed 50% or (ii)
cumulative Realized Losses with respect to the Mortgage Loans do not 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.
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) any expenses reimbursable to the Master Servicer
pursuant to Section 3.11 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 3.09.
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.
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 3.09 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, $3,026,743.80. 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.
S&P: Standard & Poor's Ratings Group, a division of McGraw-Hill
---
Inc. 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.
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.
Streamlined Documentation Mortgage Loan: Any Mortgage
---------------------------------------
Loan originated pursuant to the Seller's Streamlined Loan
Documentation Program then in effect.
Subordinated Certificates: As specified in the Preliminary
-------------------------
Statement.
Subordinated Percentage: As to any Distribution Date, 100%
-----------------------
minus the sum of the Senior Percentage and the Class A-6 Percentage
for such Distribution Date.
Subordinated Prepayment Percentage: As to any Distribution
----------------------------------
Date, the Combined Prepayment Percentage minus the Class A-6
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 allocated to principal
received with respect thereto remaining after application thereof pursuant to
clause (ii) of the definition of Senior Principal Distribution Amount and
clause (ii) of the definition of Class A-6 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 whom the Master Servicer has
-----------
contracted for the servicing of all or a portion of the Mortgage
Loans pursuant to Section 3.02 hereof.
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 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 hereof.
Substitution Adjustment Amount: The meaning ascribed to such
------------------------------
term pursuant to Section 2.03.
Support Classes: As specified in the Preliminary Statement.
---------------
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.
Trigger Date: Any Distribution Date on which the Class
------------
Certificate Balance of each Class of Senior Certificates, other than
the Class A-6 and Class PO Certificates, has been reduced to zero.
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.
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 to the extent not
applied in computing the Cut-off Date Principal Balance thereof; (ii) the
Policies, (iii) the Certificate Account, the Distribution Account and the
Policy Payments Accounts, and all amounts deposited therein pursuant to the
applicable provisions of this Agreement; (iv) property that secured a
Mortgage Loan and has been acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise; and (v) all proceeds of the conversion, voluntary
or involuntary, of any of the foregoing. The Class A-4 Reserve Fund, Class
A-11 Reserve Fund, Class A-12 Reserve Fund, Class A-13 Reserve Fund, Class A-
4 Rounding Account, Class A-11 Rounding Account, Class A-12 Rounding Account
and Class A-13 Rounding Account will not be a part of the Trust Fund.
Unscheduled Principal Distribution Amount: Not applicable.
-----------------------------------------
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.
ARTICLE LXI
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
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(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 Seller shall
deposit into the Distribution Account on or before the Distribution Account
Deposit Date relating to the first Distribution Date, an amount equal to one
month's interest at the related Adjusted 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-4 Policy, Class A-11 Policy, Class
A-12 Policy and Class A-13 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:
4. (a) (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); provided that for no more than ten
Mortgage Loans the Seller may deliver a lost note
affidavit in lieu of the lost original Mortgage Note.
(ii) except as provided below, the original recorded Mortgage
or a copy of such Mortgage certified by the Seller 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
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(b)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;
(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 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, no later than 120 days following the Closing Date; provided, however,
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 and 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
recording in the appropriate public office for real property records 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 assignments of 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 receipt thereof
and that 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
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 hereof.
SECTION 2.05. Acceptance by 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, instruments,
certificates or other papers to determine that the same are genuine,
enforceable or appropriate for the represented purpose or that they have
actually been recorded 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 hereof, 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 above shall constitute the sole remedy
respecting such defect available to the Trustee, the Depositor and any
Certificateholder against the Seller.
SECTION 2.09. Representations, Warranties and Covenants of the
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Seller and Master Servicer.
--------------------------
Countrywide Home Loans, Inc., 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.
The Seller, in its capacity as Seller, hereby makes the
representations 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.
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; 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 substitution 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 hereof, if any, and any such
substitution pursuant to (i) 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 and the Mortgage File for any such Substitute Mortgage
Loan. In connection with any obligation of the Seller to repurchase or
substitute an affected Mortgage Loan pursuant to this Section 2.03 as a
result of material damage to the related Mortgaged Property attributable to
the Flood, the Seller agrees to use its best efforts to effect a substitution
of such affected Mortgage Loan pursuant to clause (i) above. 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 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 (j) (k)(A)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
Mortgage 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 with respect
to such Deleted Mortgage Loans shall be deposited in 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 3.05 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 2.011. Representations and Warranties of the Depositor as 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) hereof, 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 2.015. Delivery of Opinion of Counsel in Connection with
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Substitutions.
- -------------
Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or Section 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 the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding.
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 2.017. 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 2.021. 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 2.023. 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 LXII
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 Subservicers as provided in Section 3.02 hereof,
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
the Master Servicer shall not 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 interests 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 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 the Depositor and the Trustee, is hereby
authorized and empowered by the Depositor and the Trustee, when the Master
Servicer 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
3.06, and further as provided in Section 3.08. 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 3.06. Subservicing; Enforcement of the Obligations of
-----------------------------------------------
Servicers.
- ---------
The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a Subservicer pursuant to a subservicing agreement;
provided, however, that such subservicing arrangement and the terms of the
- -------- -------
(d)related subservicing agreement must provide for the servicing of
such Mortgage Loans in a manner consistent with the servicing arrangements
contemplated hereunder. 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
Subservicer on behalf of the Master Servicer. Notwithstanding the provisions
of any subservicing agreement, any of the provisions of this Agreement
relating to agreements or arrangements between the Master Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Master Servicer shall remain obligated and liable to the Depositor, the
Trustee and the Certificateholders for the servicing and administration of
the Mortgage Loans in accordance with the provisions of this Agreement
without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from
the Subservicer and to the same extent and under the same terms and
conditions as if the Master Servicer alone were servicing and administering
the Mortgage Loans. All actions of each Subservicer performed pursuant to
the related subservicing agreement shall be performed as an agent of the
Master Servicer with the same force and effect as if performed directly by
the Master Servicer.
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 Subservicer regardless
of whether such payments are remitted by the Subservicer to the Master
Servicer.
SECTION 3.08. 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 3.010. 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 3.09 hereof 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 of Mortgage Loans pursuant to
Section 2.02 or 2.03 hereof, (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 hereof. 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 subservicing
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 subservicing agreement or substitute
subservicing agreement and the Mortgage Loans then being serviced thereunder
and an (a)accounting of amounts collected or held by it and otherwise use
its best efforts to effect the orderly and efficient transfer of the
substitute subservicing agreement to the assuming party.
SECTION 3.014. Collection of Mortgage Loan Payments; Certificate
-------------------------------------------------
Account; Class A-4 Reserve Fund, Class A-11
- -------------------------------------------
Reserve Fund, Class A-12 Reserve Fund and Class
- -----------------------------------------------
A-13 Reserve Fund; Distribution Account.
- ---------------------------------------
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 180 days; provided, however,
-------- -------
that 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.
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 Subservicers 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; all payments on account of interest
on the Mortgage Loans, net of the related Master Servicing Fee;
(ii) all Insurance Proceeds and Liquidation Proceeds, 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;
(iii) any amount required to be deposited by the Master Servicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments;
(iv) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.09(b), 3.09(d), and in respect of net
monthly rental income from REO Property pursuant to Section 3.11 hereof;
(v) all Substitution Adjustment Amounts;
(vi) all Advances made by the Master Servicer pursuant to Section
4.01; and
(vii) 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
related 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. All funds deposited in the Certificate Account shall be held
in trust for the Certificateholders until withdrawn in accordance with
Section 3.08.
The Trustee shall establish and maintain the Class A-4 Reserve
Fund, Class A-11 Reserve Fund, Class A-12 Reserve Fund and Class A-13 Reserve
Fund which shall be Eligible Accounts into which there shall have been
deposited the amounts of $1,080, $2,140, $1,070 and $1,150, respectively, on
the Closing Date. No additional funds will be deposited in the Class A-4
Reserve Fund, Class A-11 Reserve Fund, Class A-12 Reserve Fund or Class A-13
Reserve Fund after the Closing Date. All funds deposited in the Class A-4
Reserve Fund, Class A-11 Reserve Fund, Class A-12 Reserve Fund and Class A-13
Reserve Fund and all interest thereon shall be held in trust for the benefit
of the Holders of the Class A-4, Class A-11, Class A-12 or Class A-13
Certificates, respectively, until withdrawn in accordance with Section 3.08.
Donaldson, Lufkin & Jenrette Securities Corporation will be the beneficial
owner of the Class A-4 Reserve Fund, Class A-11 Reserve Fund, Class A-12
Reserve Fund and Class A-13 Reserve Fund for all federal income tax purposes.
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:
the aggregate amount remitted by the Master Servicer to the
Trustee pursuant to Section 3.08(a)(ix);
any amount deposited by the Master Servicer pursuant to
Section 3.05(d) in connection with any losses on Permitted Investments;
and
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 3.08. In no event shall the Trustee
incur liability for withdrawals from the Distribution Account at the
direction of the Master Servicer.
Each institution at which the Certificate Account, the Class A-4
Reserve Fund, the Class A-11 Reserve Fund, the Class A-12 Reserve Fund,
the Class A-13 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, the Class A-4 Reserve Fund, the Class A-11 Reserve
Fund, the Class A-12 Reserve Fund or the Class A-13 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 fund or 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-4
Reserve Fund, the Class A-11 Reserve Fund, the Class A-12 Reserve Fund or
the Class A-13 Reserve Fund, as applicable, shall be credited to such Class
A-4 Reserve Fund, Class A-11 Reserve Fund, Class A-12 Reserve Fund or Class
A-13 Reserve Fund, respectively. 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-4
Reserve Fund, the Class A-11 Reserve Fund, the Class A-12 Reserve Fund, the
Class A-13 Reserve Fund or the Distribution Account and made in accordance
with this Section 3.05.
(j) 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 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 prior to any change thereof.
SECTION 3.016. Collection of Taxes,
--------------------
Assessments and Similar
-----------------------
Items; Escrow Accounts.
----------------------
To the extent required by the related Mortgage Note and not
violative of current law, the Master Servicer shall 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 Master
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 to compel a Mortgagor to establish an Escrow
Account in violation of applicable law.
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 out of related collections for any payments
made pursuant to Sections 3.01 hereof (with respect to taxes and assessments
and insurance premiums) and 3.09 hereof (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 hereof. The Escrow Accounts shall not be a part
of the Trust Fund.
The Master Servicer shall advance any payments referred to in
Section 3.06(a) that are not timely paid by the Mortgagors 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 3.018. Access to Certain Documentation and Information
-----------------------------------------------
Regarding the Mortgage Loans.
- ----------------------------
The Master Servicer shall 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 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 shall be entitled to be
reimbursed by each such Certificateholder for actual expenses incurred by the
Master Servicer in providing such reports and access.
SECTION 3.022. Permitted Withdrawals from the Certificate
------------------------------------------
Account, the Class A-4 Reserve Fund, the Class A
- ------------------------------------------------
Reserve Fund, the Class A-12 Reserve Fund, the
- -----------------------------------------------
Class A-13 Reserve Fund and Distribution Account.
- ------------------------------------------------
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 (to the extent not previously
retained by the Master Servicer) the servicing compensation to which it
is entitled pursuant to Section 3.14, and to pay to the Master Servicer,
as additional servicing compensation, earnings on or investment income
with respect to funds in or credited to the Certificate Account;
(ii) to reimburse the Master Servicer for unreimbursed 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 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 3.06 and (b) for unpaid Master
Servicing Fees as provided in Section 3.11 hereof;
(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 3.11, all amounts received thereon after
the date of such purchase;
(ix) to reimburse the Seller, the Master Servicer or the Depositor
for expenses incurred by any of them and reimbursable pursuant to
Section 6.03 hereof;
(x) to withdraw any amount deposited in the Certificate Account
and not required to be deposited therein;
(xi) 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 and remit such amount to the Trustee for
deposit in the Distribution Account; and
(xii) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
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
Loans(s), and their respective portions of such Nonrecoverable Advance.
(d) The Trustee shall withdraw funds from the Distribution Account
for distributions to Certificateholders and Financial Security, and for
deposits to the Class A-4 Rounding Account, the Class A-11 Rounding Account,
the Class A-12 Rounding Account and the Class A-13 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 hereof.
(e) The Trustee shall from time to time make withdrawals from the
Class A-4 Reserve Fund, Class A-11 Reserve Fund, Class A-12 Reserve Fund or
Class A-13 Reserve Fund on behalf of the Trust Fund for the following
purposes:
(i) on or prior to each Distribution Account Deposit Date, to
withdraw from the Class A-4 Reserve Fund an amount equal to the lesser of (a)
any Class A-4 Net Prepayment Interest Shortfall for the related Distribution
Date, and (b) the amount on deposit in the Class A-4 Reserve Fund, and remit
such amount to the Distribution Account for distribution to the Class A-4
Certificateholders on such Distribution Date;
(ii) on or prior to each Distribution Account Deposit Date, to
withdraw from the Class A-11 Reserve Fund an amount equal to the lesser of
(a) any Class A-11 Net Prepayment Interest Shortfall for the related
Distribution Date, and (b) the amount on deposit in the Class A-11 Reserve
Fund, and remit such amount to the Distribution Account for distribution to
the Class A-11 Certificateholders on such Distribution Date;
(iii) on or prior to each Distribution Account Deposit Date,
to withdraw from the Class A-12 Reserve Fund an amount equal to the lesser of
(a) any Class A-12 Net Prepayment Interest Shortfall for the related
Distribution Date, and (b) the amount on deposit in the Class A-12 Reserve
Fund, and remit such amount to the Distribution Account for distribution to
the Class A-12 Certificateholders on such Distribution Date;
(iv) on or prior to each Distribution Account Deposit Date, to
withdraw from the Class A-13 Reserve Fund an amount equal to the lesser of
(a) any Class A-13 Net Prepayment Interest Shortfall for the related
Distribution Date, and (b) the amount on deposit in the Class A-13 Reserve
Fund, and remit such amount to the Distribution Account for distribution to
the Class A-13 Certificateholders on such Distribution Date;
(v) on the earlier of (a) the Distribution Date on which the
Class Certificate Balance of the Class A-4 Certificates is reduced to zero
and (b) the termination of this Agreement pursuant to Section 9.01, to clear
and terminate the Class A-4 Reserve Fund and to pay all amounts on deposit
therein to Donaldson, Lufkin & Jenrette Securities
Corporation at the address supplied by it to the Trustee for such purpose;
(viii) on the earlier of (a) the Distribution Date on which
the Class Certificate Balance of the Class A-11 Certificates is reduced to
zero and (b) the termination of this Agreement pursuant to Section 9.01, to
clear and terminate the Class A-11 Reserve Fund and to pay all amounts on
deposit therein to Donaldson, Lufkin & Jenrette Securities Corporation at the
address supplied by it to the Trustee for such purpose;
(ix) on the earlier of (a) the Distribution Date on which the
Class Certificate Balance of the Class A-12 Certificates is reduced to zero
and (b) the termination of this Agreement pursuant to Section 9.01, to clear
and terminate the Class A-12 Reserve Fund and to pay all amounts on deposit
therein to Donaldson, Lufkin & Jenrette Securities Corporation at the address
supplied by it to the Trustee for such purpose; and
(x) on the earlier of (a) the Distribution Date on which the
Class Certificate Balance of the Class A-13 Certificates is reduced to zero
and (b) the termination of this Agreement pursuant to Section 9.01, to clear
and terminate the Class A-13 Reserve Fund and to pay all amounts on deposit
therein to Donaldson, Lufkin & Jenrette Securities Corporation at the address
supplied by it to the Trustee for such purpose.
SECTION 3.024. Maintenance of Hazard Insurance; Maintenance of
-----------------------------------------------
Primary Insurance Policies.
- -------------------------
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. 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. Any
cost incurred by the Master 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 3.08 hereof. 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.
(f) 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, 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, 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.
(g) The Master Servicer shall not 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, 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 Certificates 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
(h)
(i) (A)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.
(j) In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present on behalf of itself,
the Trustee and 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 the Master
Servicer under any Primary Insurance Policies shall be deposited in the
Certificate Account.
SECTION 3.26. Enforcement of Due-on-Sale Clauses; Assumption
----------------------------------------------
Agreements.
- ----------
Except as otherwise provided in this Section, when any
property subject to a Mortgage has been conveyed by the Mortgagor, the Master
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, the Master Servicer is not 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 the Master Servicer is prohibited by law
from enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is
otherwise permitted hereunder, the Master Servicer is authorized, subject to
Section 3.10(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 3.10(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 by reason of any transfer or assumption which the Master
Servicer reasonably believes it is restricted by law from preventing,
for any reason whatsoever.
(f) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.10(a) hereof, 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 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 for entering into an assumption or substitution of
liability agreement will be retained by the Master Servicer as additional
servicing compensation.
SECTION 3.28. Realization Upon Defaulted Mortgage Loans;
------------------------------------------
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 and as shall be normal and usual in its
general mortgage servicing activities and meet the requirements of the
insurer under any Required Insurance Policy; provided, however, that
-------- -------
the Master Servicer shall not be required to expend its own
funds in connection with any foreclosure or towards the restoration of any
property unless it 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
Certificateholders, 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 thereunder.
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 any tax reporting 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" of any REMIC hereunder as defined in section 860F of the Code
or cause any REMIC hereunder 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 any REMIC hereunder 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, 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 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 for any related
unreimbursed Servicing Advances and Master Servicing Fees; second, to
reimburse the Master Servicer for any unreimbursed Advances; third, to
reimburse the Certificate Account for any Nonrecoverable Advances (or
portions thereof) that were previously withdrawn by the Master Servicer
pursuant to Section 3.08(a)(iii) that related to such Mortgage Loan; fourth,
to accrued and unpaid interest (to the extent no Advance has been made for
such amount or any such 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 fifth, 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 3.14.
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 3.32. 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
cancellation 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. 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 3.36. Documents Records and Funds in Possession of
--------------------------------------------
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 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 3.38. Servicing Compensation.
----------------------
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or withdraw from the Certificate Account an
amount equal to the Master Servicing Fee for each Mortgage Loan, provided
that the aggregate Master Servicing Fee with respect to any Distribution Date
shall be reduced (i) by an amount equal to the aggregate of the Prepayment
Interest Shortfalls, if any, with respect to such Distribution Date, but not
below an amount equal to one-half of the aggregate Master Servicing Fee for
such Distribution Date before reduction thereof in respect of such Prepayment
Interest Shortfalls, and (ii) with respect to the first Distribution Date, an
amount equal to any amount to be deposited into the Distribution Account by
the Depositor pursuant to Section 2.01(a) and not so deposited.
Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties,
(a)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 3.05 hereof. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
master 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.
SECTION 3.42. 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 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 to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
SECTION 3.44. 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 1997 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 and (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. The Trustee shall forward a
copy of each such statement to each Rating Agency.
SECTION 3.46. 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 1997 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
Master 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 Attestation
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 such statement is
delivered by the Master Servicer to the Trustee.
SECTION 3.50. Errors and Omissions Insurance; Fidelity Bonds.
----------------------------------------------
The Master Servicer shall for so long as it acts as master servicer
under this Agreement, 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 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 LXIII
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 as provided in Section 3.08. 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 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 4.03. Priorities of Distribution.
--------------------------
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) 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 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)
(iv)
(v) (Reserved for distribution of Accrual Amount, if any.)
(vi) 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 follows:
(A) to the Class A-R Certificates until the Class
Certificate Balance thereof has been reduced to zero;
(B) concurrently, 62.6628182514% to the Class A-1
Certificates, 23.0514670197% to the Class A-10
Certificates, and 14.28571417289% to the Class A-2
Certificates, until the Class Certificate Balance of the
Class A-10 Certificates has been reduced to $14,960,333;
(C) concurrently, (a) 62.6628182514% to the Class A-
1 Certificates, (b) 23.0514670197% to the Class A-9 and
Class A-10 Certificates, as follows: (1) 88.9257862356%
to the Class A-9 Certificates and (2) 11.0742137644% to
the Class A-10 Certificates, and (c) 14.28571417289% to
the Class A-2 Certificates, until the Class Certificate
Balance of the Class A-9 Certificates has been reduced to
zero;
(D) concurrently, 62.6628182514% to the Class A-1
Certificates, 23.0514670197% to the Class A-10
Certificates and 14.28571417289% to the Class A-2
Certificates until the Class Certificate Balances thereof
have been reduced to zero;
(E) to the Class A-7 Certificates, until the Class
Certificate Balance thereof has been reduced to zero;
(F) concurrently, 42.8571428571% to the
Class A-8 Certificates and 57.1428571429% to
the Class A-4 Certificates, until the Class
Certificate Balances thereof have been reduced to
zero;
(G) concurrently, 43.7101976677% to the Class A-5
Certificates and 56.2898023323% to the Class A-12
Certificates, until the Class Certificate Balance of the
Class A-12 Certificates has been reduced to zero;
(H) concurrently, 43.7101976677% to the Class A-5
Certificates and 56.2898023323% to the Class A-13
Certificates, until the Class Certificate Balance of the
Class A-13 Certificates has been reduced to zero; and
(I) concurrently, 43.7101976677% to the Class A-5
Certificates and 56.2898023323% to the Class A-11
Certificates, until the Class Certificate Balances
thereof have been reduced to zero.
(z) on each Distribution Date prior to the Senior Credit
Support Depletion Date, the Non-PO Formula Principal Amount,
up to the amount of the Class A-6 Principal Distribution
Amount for such Distribution Date, will be distributed as
principal to the Class A-6 Certificates until the Class
Certificate Balance thereof has been reduced to zero.
(ix) 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)(i) and (ii) then (iii) of the
definition of Subordinated Principal Distribution Amount);
(x) to each Class of Subordinated Certificates, subject to
paragraph (e) below, in the following order of priority:
(A) to the Class M Certificates, an amount
allocable to interest equal to the Class Optimal
Interest Distribution Amount for such Distribution
Date;
(B) to the Class M 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-1 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-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;
(E) 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;
(F) 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;
(G) to the Class B-3 Certificates, an amount
allocable to interest equal to the amount of the Class
Optimal Interest Distribution Amount for such Class for
such Distribution Date;
(H) 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 has been reduced to zero;
(I) to the Class B-4 Certificates, an amount
allocable to interest equal to the amount of the Class
Optimal Interest Distribution Amount for such Class for
such Distribution Date;
(J) 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 has been reduced to zero;
(K) 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; and
(L) 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.
(xiii) 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 (iii)(x) 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, the Senior Principal
Distribution Amount and the Class A-6 Principal Distribution Amount and (B)
the amount distributable on the Senior Certificates, other than the Class A-6
and 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,
the Class A-6 Principal Distribution Amount and the PO Formula Principal
Amount and (C) the amount distributable on the Class A-6 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 Class A-6 Principal Distribution Amount and the denominator of which is
the sum of the Senior Principal Distribution Amount, the Class A-6 Principal
Distribution Amount and the PO Formula Principal Amount.
(Reserved for allocation of Accrual Amount, if any.)
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) and (z), the portion of
Available Funds available to be distributed as principal of the Senior
Certificates (other than the Class PO Certificates) shall be distributed
concurrently, as principal, on such Classes, pro rata, on the basis of their
respective Class Certificate Balances, until the Class Certificate Balances
thereof are reduced to zero.
On each Distribution Date, the amount referred to in clause
(i) of the definition of Class Optimal Interest Distribution Amount for each
Class of Certificates for such Distribution Date shall be reduced by (i) the
related Class' pro rata share of Net Prepayment Interest Shortfalls based on
such Class' Class Optimal Interest Distribution Amount for such Distribution
Date without taking into account such 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 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.
Notwithstanding the priority and allocation contained in
Section 4.02(a)(v), 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 any 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
provided in Section 4.02(a)(v).
On each Distribution Date, the Trustee shall distribute the
amount withdrawn from the Class A-4 Reserve Fund, the Class A-11 Reserve
Fund, the Class A-12 Reserve Fund and the Class A-13 Reserve Fund, as
appropriate, with respect to such Distribution Date pursuant to Section
3.08(c), to the extent of funds on deposit in the Class A-4 Reserve Fund, the
Class A-11 Reserve Fund, the Class A-12 Reserve Fund and the Class A-13
Reserve Fund, as appropriate, and shall apply such funds to distributions on
the Class A-4 Certificates, the Class A-11 Certificates, the Class A-12
Certificates and the Class A-13 Certificates, respectively, as interest
thereon, in the amount of the Class A-4 Net Prepayment Interest Shortfalls,
the Class A-11 Net Prepayment Interest Shortfalls, the Class A-12 Net
Prepayment Interest Shortfalls and the Class A-13 Net Prepayment Interest
Shortfalls, respectively, with respect to such Distribution Date.
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 4.03A. Distributions in Reduction of the Class A-4
-------------------------------------------
Certificates.
- ------------
On the Closing Date, the Class A-4 Rounding Account shall be
established with the Trustee and Donaldson, Lufkin & Jenrette Securities
Corporation shall cause to be initially deposited the sum of $1,000 in the
Class A-4 Rounding Account. On each Distribution Date on which a
distribution is made in reduction of the Class Certificate Balance of the
Class A-4 Certificates, funds on deposit in the Class A-4 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-4
Certificates. Rounding of such distribution on the Class A-4 Certificates
shall be accomplished, on the first such Distribution Date, by withdrawing
from the Class A-4 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-4 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-4 Certificates are to be made, the aggregate amount of such
distributions allocable to the Class A-4 Certificates shall be applied first
to repay any funds withdrawn from the Class A-4 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-4 Certificates; this process
shall continue on succeeding Distribution Dates until the Class Certificate
Balance of the Class A-4 Certificates has been reduced to zero. The Class A-
4 Rounding Account shall be an "outside reserve fund" under the REMIC
Provisions that is beneficially owned for all federal income tax purposes by
Donaldson, Lufkin & Jenrette Securities Corporation. Donaldson, Lufkin &
Jenrette Securities Corporation 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-4 Rounding Account as such interest is
earned pursuant to written instructions from Donaldson, Lufkin & Jenrette
Securities Corporation 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-4 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-4 Certificates are
made in accordance with the provisions set forth in Section 4.03A(b), an
amount equal to the difference between $1,000 and the sum then held in the
Rounding Account shall be paid from the Available Funds for such Distribution
Date to the Rounding Account. Any funds then on deposit in such Class A-4
Rounding Account shall be distributed to Donaldson, Lufkin & Jenrette
Securities Corporation.
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-4 Certificates (including amounts paid in
respect of Realized Losses under the Class A-4 Policy) will be made among the
Holders of the Class A-4 Certificates pro rata, based on Certificate
Balances, and will not be made in integral multiples of $1,000.
In the event that Definitive Certificates representing the
Class A-4 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-4 Certificates are to be made; provided that such procedures
--------
shall be consistent, to the extent practicable and customary for
certificates similar to the Class A-4 Certificates, with the
provisions of this Section 4.03A.
SECTION 4.03B. Distributions in Reduction of the Class A-11
--------------------------------------------
Certificates.
- ------------
On the Closing Date, the Class A-11 Rounding Account shall be
established with the Trustee and Donaldson, Lufkin & Jenrette Securities
Corporation shall cause to be initially deposited the sum of $1,000 in the
Class A-11 Rounding Account. On each Distribution Date on which a
distribution is made in reduction of the Class Certificate Balance of the
Class A-11 Certificates, funds on deposit in the Class A-11 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-11
Certificates. Rounding of such distribution on the Class A-11 Certificates
shall be accomplished, on the first such Distribution Date, by withdrawing
from the Class A-11 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-11 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-11 Certificates are to be made, the aggregate amount of such
distributions allocable to the Class A-11 Certificates shall be applied first
to repay any funds withdrawn from the Class A-11 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-11 Certificates; this process
shall continue on succeeding Distribution Dates until the Class Certificate
Balance of the Class A-11 Certificates has been reduced to zero. The Class
A-11 Rounding Account shall be an "outside reserve fund" under the REMIC
Provisions that is beneficially owned for all federal income tax purposes by
Donaldson, Lufkin & Jenrette Securities Corporation. Donaldson, Lufkin &
Jenrette Securities Corporation 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-11 Rounding Account as such interest
is earned pursuant to written instructions from Donaldson, Lufkin & Jenrette
Securities Corporation 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-11 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-11 Certificates are
made in accordance with the provisions set forth in Section 4.03B(b), an
amount equal to the difference between $1,000 and the sum then held in the
Rounding Account shall be paid from the Available Funds for such
Distribution Date to the Rounding Account. Any funds then on deposit in such
Class A-11 Rounding Account shall be distributed to Donaldson, Lufkin &
Jenrette Securities Corporation.
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-11 Certificates (including amounts paid in
respect of Realized Losses under the Class A-11 Policy) will be made among
the Holders of the Class A-11 Certificates pro rata, based on Certificate
Balances, and will not be made in integral multiples of $1,000.
In the event that Definitive Certificates representing the
Class A-11 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-11 Certificates are to be made; provided that such procedures
--------
shall be consistent, to the extent practicable and customary for
certificates similar to the Class A-11 Certificates, with the provisions of
this Section 4.03B.
SECTION 4.03C. Distributions in Reduction of the Class A-12
--------------------------------------------
Certificates.
- ------------
On the Closing Date, the Class A-12 Rounding Account shall be
established with the Trustee and Donaldson, Lufkin & Jenrette Securities
Corporation shall cause to be initially deposited the sum of $1,000 in the
Class A-12 Rounding Account. On each Distribution Date on which a
distribution is made in reduction of the Class Certificate Balance of the
Class A-12 Certificates, funds on deposit in the Class A-12 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-12
Certificates. Rounding of such distribution on the Class A-12 Certificates
shall be accomplished, on the first such Distribution Date, by withdrawing
from the Class A-12 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-12 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-12 Certificates are to be made, the aggregate amount
of such distributions allocable to the Class A-12 Certificates shall be
applied first to repay any funds withdrawn from the Class A-12 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-12
Certificates; this process shall continue on succeeding Distribution Dates
until the Class Certificate Balance of the Class A-12 Certificates has been
reduced to zero. The Class A-12 Rounding Account shall be an "outside
reserve fund" under the REMIC Provisions that is beneficially owned for all
federal income tax purposes by Donaldson, Lufkin & Jenrette Securities
Corporation. Donaldson, Lufkin & Jenrette Securities Corporation 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-12
Rounding Account as such interest is earned pursuant to written instructions
from Donaldson, Lufkin & Jenrette Securities Corporation 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-12 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-12 Certificates are
made in accordance with the provisions set forth in Section 4.03C(b), an
amount equal to the difference between $1,000 and the sum then held in the
Rounding Account shall be paid from the Available Funds for such Distribution
Date to the Rounding Account. Any funds then on deposit in such Class A-12
Rounding Account shall be distributed to Donaldson, Lufkin & Jenrette
Securities Corporation.
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-12 Certificates (including amounts paid in
respect of Realized Losses under the Class A-12 Policy) will be made among
the Holders of the Class A-12 Certificates pro rata, based on Certificate
Balances, and will not be made in integral multiples of $1,000.
In the event that Definitive Certificates representing the
Class A-12 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-12 Certificates are to be made; provided that such procedures
--------
shall be consistent, to the extent practicable and customary for
certificates similar to the Class A-12 Certificates, with
the provisions of this Section 4.03C.
SECTION 4.03D. Distributions in Reduction of the Class A-13
--------------------------------------------
Certificates.
- ------------
On the Closing Date, the Class A-13 Rounding Account shall be
established with the Trustee and Donaldson, Lufkin & Jenrette Securities
Corporation shall cause to be initially deposited the sum of $1,000 in the
Class A-13 Rounding Account. On each Distribution Date on which a
distribution is made in reduction of the Class Certificate Balance of the
Class A-13 Certificates, funds on deposit in the Class A-13 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-13
Certificates. Rounding of such distribution on the Class A-13 Certificates
shall be accomplished, on the first such Distribution Date, by withdrawing
from the Class A-13 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-13 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-13 Certificates are to be made, the aggregate amount of such
distributions allocable to the Class A-13 Certificates shall be applied first
to repay any funds withdrawn from the Class A-13 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-13 Certificates; this process
shall continue on succeeding Distribution Dates until the Class Certificate
Balance of the Class A-13 Certificates has been reduced to zero. The Class
A-13 Rounding Account shall be an "outside reserve fund" under the REMIC
Provisions that is beneficially owned for all federal income tax purposes by
Donaldson, Lufkin & Jenrette Securities Corporation. Donaldson, Lufkin &
Jenrette Securities Corporation 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-13 Rounding Account as such interest
is earned pursuant to written instructions from Donaldson, Lufkin & Jenrette
Securities Corporation 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-13 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-13 Certificates are
made in accordance with the provisions set forth in Section 4.03D(b), an
amount equal to the difference between $1,000 and the sum then held in the
Rounding Account shall be paid from the Available Funds for such Distribution
Date to the Rounding Account. Any funds then on deposit in such Class A-13
Rounding Account shall be distributed to Donaldson, Lufkin & Jenrette
Securities Corporation.
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-13 Certificates (including amounts paid in
respect of Realized Losses under the Class A-13 Policy) will be made among
the Holders of the Class A-13 Certificates pro rata, based on Certificate
Balances, and will not be made in integral multiples of $1,000.
In the event that Definitive Certificates representing the
Class A-13 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-13 Certificates are to be made; provided that such procedures
--------
shall be consistent, to the extent practicable and customary for
certificates similar to the Class A-13 Certificates, with the provisions of
this Section 4.03D.
SECTION 4.04 Allocation of Realized Losses.
-----------------------------
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. For purposes of allocating losses
to the Subordinated Certificates, the Class M Certificates will be deemed to
have a lower numerical class designation, and to be of a higher relative
payment priority, than each other Class of Subordinated Certificates.
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) (1) 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 (beginning with the Class of Subordinated Certificates then
outstanding with the highest numerical Class designation) until the
respective Class Certificate Balance of each such Class is reduced to
zero, and second to the Senior Certificates (other than the Notional
Amount Certificates and the Class PO Certificates), pro rata on the basis
of their respective Class Certificate Balances immediately prior to
the related Distribution Date until the Class Certificate Balances
thereof have been reduced to zero;
(1) the applicable Non-PO Percentage of any Excess Losses shall be
allocated to the Senior Certificates (other than the Notional Amount
Certificates and the Class PO Certificates) and the Subordinated
Certificates then outstanding, pro rata, on the basis of their
respective Class Certificate Balances.
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 (i) by the amount of any payments
on the Class PO Certificates in respect of Class PO Deferred Amounts and (ii)
by 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.
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 4.04(a) above shall be allocated among the Certificates
of such Class in proportion to their respective Certificate Balances.
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 4.04(a) above 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 Policies pursuant to
Section 4.05 in respect of a Realized Loss allocated to the Class A-4, Class
A-11, Class A-12 or Class A-13 Certificates shall not result in a further
reduction to the Certificate Balances of the Class A-4, Class A-11, Class A-
12 or Class A-13 Certificates.
Any Realized Loss allocated to the Class A-4, Class A-11,
Class A-12 or Class A-13 Certificates will be covered
by the Class A-4 Policy, Class A-11 Policy, Class A-12 Policy or Class A-
13 Policy, respectively.
SECTION 4.05 Policy Matters.
--------------
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-4, Class A-11, Class A-12 or Class A-13
Certificateholders pursuant to Section 4.02 together with any amounts that
may be distributable to the Class A-4, Class A-11, Class A-12 and the Class
A-13 Certificateholders from the Class A-4, Class A-11, Class A-12 and the
Class A-13 Reserve Fund, as appropriate, 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
appropriate 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.
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-4, Class A-11, Class A-12 or Class A-13 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-4 Policy, the Class A-11 Policy, the Class A-12
Policy or the Class A-13 Policy, as appropriate, 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-4,
Class A-11, Class A-12 or Class A-13 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-4 Policy,
the Class A-11 Policy, the Class A-12 Policy or the Class A-13 Policy, as
appropriate, 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-4, Class A-11, Class A-12 or Class A-13 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.
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-4, Class A-11, Class A-12 or Class A-13 Certificates
(the "Class A-4 Policy Payments Account", the "Class A-11 Policy Payments
Account", the "Class A-12 Policy Payments Account" and the "Class A-13 Policy
Payments Account", respectively) over which the Trustee shall have exclusive
control and sole right of withdrawal. The Policy Payments Accounts shall be
Eligible Accounts. The Trustee shall deposit any amount paid under the Class
A-4 Policy, the Class A-11 Policy, the Class A-12 Policy or the Class A-13
Policy into the Class A-4 Policy Payments Account, the Class A-11 Policy
Payments Account, the Class A-12 Policy Payments Account or the Class A-13
Policy Payments Account, as appropriate, and distribute such amount only for
the purposes of making the payments to Holders of the Class A-4, Class A-11,
Class A-12 or Class A-13 Certificates, as appropriate, in respect of the
Guaranteed Distributions (or other amounts payable pursuant to clause (b)
above on the Class A-4, Class A-11, Class A-12 or Class A-13 Certificates, as
appropriate, by Financial Security pursuant to the Class A-4 Policy, the
Class A-11 Policy, the Class A-12 Policy or the Class A-13 Policy, as
appropriate) for which the related claim was made under the respective
Policy. Such amounts shall be allocated by the Trustee to Holders of Class
A-4, Class A-11, Class A-12 or Class A-13 Certificates, as appropriate,
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-4, Class A-11, Class A-12
or Class A-13 Certificates from funds in the Class A-4 Policy Payments
Account, the Class A-11 Policy Payments Account, the Class A-12 Policy
Payments Account or the Class A-13 Policy Payments Account, as appropriate,
shall be noted as provided in subsection (e) below. Funds held in the Policy
Payments Accounts shall not be invested by the Trustee.
Any funds received from Financial Security for deposit into
the appropriate Policy Payments Account pursuant to the respective Policy in
respect of a Distribution Date or otherwise as a result of any claim under
such 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-4, Class A-11, Class A-12 or Class A-13 Certificates, as appropriate,
or (ii) of other amounts payable under the respective Policy. Funds received
by the Trustee as a result of any claim under the Class A-4 Policy, the Class
A-11 Policy, the Class A-12 Policy or the Class A-13 Policy shall be used
solely for payment to the Holders of the Class A-4, Class A-11, Class A-12 or
Class A-13 Certificates, respectively, 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 a 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.
The Trustee shall keep complete and accurate records in
respect of (i) all funds remitted to it by Financial Security and deposited
into the appropriate Policy Payments Account and (ii) the allocation of such
funds to (A) payments of interest on and principal in respect of any Class A-
4, Class A-11, Class A-12 or Class A-13 Certificates, (B) Realized Losses
allocated to the Class A-4, Class A-11, Class A-12 or Class A-13 Certificates
and (C) Class A-4 Net Interest Shortfalls, Class A-11 Net Interest
Shortfalls, Class A-12 Net Interest Shortfalls and Class A-13 Net Interest
Shortfalls allocated to the Class A-4, Class A-11, Class A-12 and Class A-13
Certificates, respectively. 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.
The Trustee acknowledges, and each Holder of a Class A-4,
Class A-11, Class A-12 or Class A-13 Certificate by its acceptance of the
Class A-4, Class A-11, Class A-12 or Class A-13 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-4, Class A-
11, Class A-12 or Class A-13 Certificates, as applicable, Financial Security
will be fully subrogated to the rights of the Holders of such Class A-4,
Class A-11, Class A-12 or Class A-13 Certificates to receive such principal
and interest from the Trust Fund. The Class A-4, Class A-11, Class A-12 or
Class A-13 Certificateholders, by acceptance of the Class A-4, Class A-11,
Class A-12 or Class A-13 Certificates, assign their rights as Holders of the
Class A-4, Class A-11, Class A-12 or Class A-13 Certificates to the extent of
Financial Security's interest with respect to amounts paid under the
Policies. 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-4, Class A-11, Class A-12 or Class A-13
Certificates which is made with funds received pursuant to the terms of the
Class A-4 Policy, the Class A-11 Policy, the Class A-12 Policy or the Class
A-13 Policy, as appropriate, shall not be considered payment of the Class A-
4, Class A-11, Class A-12 or Class A-13 Certificates, as appropriate, 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-4, Class A-11, Class A-12 or Class A-13 Certificates within the meaning
of Article IV.
Upon its becoming aware of the occurrence of an Event of
Default, the Trustee shall promptly notify Financial Security of such Event
of Default.
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-4, Class A-11, Class A-12 or
Class A-13 Certificates as to which it has actual knowledge. Each Holder of
a Class A-4, Class A-11, Class A-12 or Class A-13 Certificate, by its
purchase of Class A-4, Class A-11, Class A-12 or Class A-13 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-4, Class
A-11, Class A-12 and Class A-13 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.
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 David A. Spector.
The Trustee shall surrender the Class A-4 Policy, Class A-11
Policy, Class A-12 Policy and Class A-13 Policy, as appropriate, to Financial
Security for cancellation upon the expiration of the respective terms of such
Policies as provided in such Policies.
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-4, Class A-11, Class A-12 or Class A-13
Certificates, in each case at the same time such reports, statements and
communications are otherwise sent.
For so long as there is no default by Financial Security under
its obligations under the Class A-4 Policy, Class A-11 Policy, Class A-12
Policy or Class A-13 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-4, Class A-11, Class A-12 or
Class A-13 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-4, Class A-11, Class A-12 or Class A-13 Certificateholders hereunder.
With respect to this Section 4.05, (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
Policies 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 4.06 Monthly Statements to Certificateholders.
----------------------------------------
(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;
(i) the Class Certificate Balance of each Class of
Certificates after giving effect to the distribution of principal
on such Distribution Date;
(ii) the Pool Stated Principal Balance for the following
Distribution Date;
(iii) the Senior Percentage, Class A-6 Percentage and
Subordinated Percentage for the following Distribution Date;
(iv) the amount of the Master Servicing Fees paid to or
retained by the Master Servicer with respect to such Distribution
Date;
(v) the Pass-Through Rate for each such Class of Certificates
with respect to such Distribution Date;
(vi) 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;
(vii) 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;
(viii) 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;
(ix) 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;
(x) the Senior Prepayment Percentage and Class A-6 Prepayment
Percentage for the following Distribution Date;
(i) the aggregate amount of Realized Losses incurred during
the preceding calendar month;
(ii) 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;
(iii) the Guaranteed Distributions for such Distribution
Date and amounts in respect of the Guaranteed Distributions paid
under the applicable Policy;
(iv) the amount of any withdrawal from the Class A-4 Reserve
Fund, Class A-11 Reserve Fund, Class A-12 Reserve Fund or Class A-
13 Reserve Fund, as appropriate, since the prior Distribution Date;
and
(v) the amount remaining in the Class A-4 Reserve Fund, Class
A-11 Reserve Fund, Class A-12 Reserve Fund or Class A-13 Reserve
Fund after taking into account amounts withdrawn from the Class A-4
Reserve Fund, Class A-11 Reserve Fund, Class A-12 Reserve Fund or
Class A-13 Reserve Fund for such Distribution Date.
(a) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability,
timeliness and accuracy of the information provided by the Master Servicer.
The Trustee will send a copy of each statement provided pursuant to this
Section 4.04 to each Rating Agency.
(b) On or before the fifth Business Day following the end of each
Prepayment Period (but in no event later than the third Business Day prior to
the related Distribution Date), the Master Servicer shall deliver to the
Trustee (which delivery may be by electronic data transmission) a report in
substantially the form set forth as Schedule V hereto.
(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 4.04 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 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 4.05.
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 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.
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 4.06.
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 hereof 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 when 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 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 5.05. Certificate Register; Registration of Transfer
----------------------------------------------
and Exchange of Certificates.
- ----------------------------
The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.06 hereof, 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.
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 forms 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 regis-
tration 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, 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 or arrangement 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, (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
undertaken 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, in the event the representation letter referred
to in the preceding sentence is not so 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.
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:
(ii) 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.
(iii) 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
------------------
(iv) owner or the proposed transferee in the form attached
hereto as Exhibit I.
(v) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (A) to obtain
(vii) 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.
(viii) 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 Trans-
fer 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.
(ix) 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 any 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 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
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 5.09. 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 save
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 5.014. 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 5.016. 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 5.018. 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 6.03. 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 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 6.05. 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 -------- -------
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 6.09. Limitation on Resignation of 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 Policies, 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 hereof) 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
(vi) 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
(vii) 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
(viii) 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 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) hereof 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) hereof subject to
Section 3.04 hereof. 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 3.08(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 7.03. Trustee to Act; Appointment of Successor.
----------------------------------------
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof, the Trustee shall, subject to
and to the extent provided in Section 3.04, 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 hereof, 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 hereof 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 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, and which is willing
to service the Mortgage Loans and executes and delivers to the Depositor and
the Trustee an agreement accepting such delegation and assignment, which
contains 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 hereof 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; and provided
further 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 Policies, 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 3.04 hereof, 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 here-
under, 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 7.07. 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 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 authori-
ties 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 8.05. 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
(vi) either directly or by or through agents,
accountants or attorneys;
(viii) 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;
(ix) 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);
(x) 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
(xi) 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 8.07. 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 counter-signature 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 8.011. 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 8.013. 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) in connection with 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 8.015. Eligibility Requirements for 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 super-vision 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).
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 hereof. 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 Master Servicer
other than the Trustee in its role as successor to the Master Servicer.
SECTION 8.019. Resignation and Removal of 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 and the Master Servicer and 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 appoint-
ment 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 hereof 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 instrument shall be
delivered to the Trustee, one copy of which shall be delivered 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
instruments 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 hereof.
SECTION 8.023. Successor Trustee.
-----------------
Any successor trustee appointed as provided in Section 8.07 hereof
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 hereof 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 8.025. Merger or Consolidation of 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 hereof 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 8.29. 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;
(iv) 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;
(v) The Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee; and
(vi) 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 8.31. Tax Matters.
-----------
It is intended that the assets with respect to which any REMIC
election 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 such 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 elections 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 any 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 any 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 any 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 any such REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of any such REMIC, and otherwise act on behalf of any such 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 the 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, in the case of any such minimum tax, or 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, (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 clauses (i),(ii) or (iii), any such
tax will be paid with amounts otherwise to be distributed to the
Certificateholders, as provided in Section 3.08(b).
SECTION 8.35. 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 any of the Policies unless Financial Security
consents to such purchase. 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 9.03. 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 no 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-4 Reserve Fund, the Class A-11 Reserve Fund,
the Class A-12 Reserve Fund and the Class A-13 Reserve Fund, as appropriate,
to be distributed to Donaldson, Lufkin & Jenrette Securities Corproation, the
beneficial owner of the Class A-4 Reserve Fund, the Class A-11 Reserve Fund,
the Class A-12 Reserve Fund and the Class A-13 Reserve Fund, and all funds on
deposit in the Class A-4 Rounding Account, the Class A-11 Rounding Account,
the Class A-12 Rounding Account and the Class A-13 Rounding Account, as
appropriate, to be distributed to Donaldson, Lufkin & Jenrette Securities
Corporation, the beneficial owner of the Class A-4 Rounding Account, the
Class A-11 Rounding Account, the Class A-12 Rounding Account and the Class A-
13 Rounding Account, at the addresses supplied by Donaldson, Lufkin &
Jenrette Securities Corporation 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 the order set forth in Section 4.02
hereof, on the final Distribution Date, (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, 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 9.07. 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 any REMIC as defined in section 860F of the Code, or (ii)
cause any 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
or the Tax Matters Person), 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 any 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 the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders 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 Policies; 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 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 10.08. 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 10.012. 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 10.014. Intention of Parties.
--------------------
It is the express intent of the parties hereto that the conveyance
of the Trust Fund by the Depositor to the Trustee be, and be construed as, an
absolute sale thereof to the Trustee. It is, further, not the intention of
the parties that such conveyance be deemed a pledge thereof by the Depositor
to the Trustee. However, in the event that, notwithstanding the intent of
the parties, such assets are held to be the property of the Depositor, or if
for any other reason this Agreement is held or deemed to create a security
interest in 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 conveyance provided for in this Agreement
shall be deemed to be an assignment and a grant by the Depositor to the
Trustee, for the benefit of the Certificateholders, of a security interest in
all of the assets that constitute the Trust Fund, whether now owned or
hereafter acquired.
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 Certificateholder.
SECTION 10.018. 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 4.04;
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, Countrywide Home Loans, Inc., 155 North Lake Avenue, Pasadena,
California 91101, Attention: Kevin W. Bartlett 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 1997-1, or such other address as the Trustee may
hereafter furnish to the Depositor or Master Servicer, (d) in the case 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 10.020. 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 10.022. 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 10.024. 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
(a) 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 10.028. 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 10.30. 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: ---------------------
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By: ----------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.,
as Seller and Master Servicer
By: -------------------
Name:
Title:
SCHEDULE I
Mortgage Loan Schedule
(Delivered at Closing to Trustee)
SCHEDULE II
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1997-1
Representations and Warranties of the Seller/Master Servicer
------------------------------------------------------------
Countrywide Home Loans, Inc. ("Countrywide") 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 Countrywide, as seller and master servicer,
CWMBS, Inc., as depositor, and The Bank of New York, as trustee.
Countrywide is duly organized as a New York corporation
and is validly existing and in good standing under the laws of the State
of New York and is duly authorized and qualified to transact any and all
business contemplated by the Pooling and Servicing Agreement to be
conducted by Countrywide 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.
Countrywide 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 Countrywide 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 Countrywide, enforceable
against Countrywide in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency, morato-
rium, 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.
The execution and delivery of the Pooling and Servicing
Agreement by Countrywide, the sale and servicing of the Mortgage Loans
by Countrywide 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
Countrywide and will not (A) result in a material breach of any term or
provision of the charter or by-laws of Countrywide 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 Countrywide is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to Countrywide of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Countrywide; and Countrywide is not in breach or
violation of any material indenture or other material agreement or
instrument, 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 Countrywide's ability to perform or meet any of its obligations
under the Pooling and Servicing Agreement.
Countrywide is an approved servicer of conventional
mortgage loans for FNMA or FHLMC and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and
211 of the National Housing Act.
No litigation is pending or, to the best of Countrywide's
knowledge, threatened, against Countrywide that would materially and
adversely affect the execution, delivery or enforceability of the
Pooling and Servicing Agreement or the ability of Countrywide 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.
No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by Countrywide of, or compliance by Countrywide 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, Countrywide has obtained the same.
Countrywide intends to treat the transfer of the Mortgage
Loans to the Depositor as a sale of the Mortgage Loans for all tax,
accounting and regulatory purposes.
SCHEDULE III
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1997-1
Representations and Warranties as to the Mortgage Loans
-------------------------------------------------------
Countrywide Home Loans, Inc. ("Countrywide") 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 Countrywide, 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) Each Mortgage is a valid and enforceable first lien on
the Mortgaged Property subject only to (a) the lien of non delinquent
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 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 the
original or a copy of 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,
cancellation, 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 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 certificates 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
Certificateholders 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) 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 principal balance thereof that
exceeds the amount equal to 75% of the Appraised Value of the related
Mortgaged Property. Each such Primary Insurance Policy is issued by a
Qualified Insurer. 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
either the Mortgagor or the mortgagee 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 occurring, pending or threatened for the total or
partial condemnation of the Mortgaged Property.
(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) 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 cooperatives or mobile homes and does not constitute other than
real property under state law.
(33) Each Mortgage Loan is being serviced by the Master
Servicer.
(34) 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.
(35) 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 Master Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds
by a party other than the Mortgagor,
(36) 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) Other than with respect to any Streamlined Documentation
Mortgage Loan as to which the loan-to-value ratio of the related
Original Mortgage Loan was less than 60% at the time of the origination
of such Original Mortgage Loan, 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 and FHLMC.
(39) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan, no more than eight of
the Mortgage Loans are subject to a buydown or similar arrangement.
(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) The Mortgage Loans were selected from among the
outstanding fixed-rate one- to four-family mortgage loans in
Countrywide's portfolio at the Closing Date as to which the represen-
tations and warranties made as to the Mortgage Loans set forth in this
Schedule III can be made. Such selection was not made in a manner that
would adversely affect the interests of Certificateholders.
(42) Except for two Mortgage Loans, each Mortgage Loan has
a payment date on or before the Due Date in the month of the first
Distribution Date.
(43) With respect to any Mortgage Loan as to which an
affidavit has been delivered to the Trustee certifying that the original
Mortgage Note is a Lost Mortgage Note, if such Mortgage Loan is
subsequently in default, the enforcement of such Mortgage Loan or of the
related Mortgage by or on behalf of the Trustee will not be materially
adversely affected by the absence of the original Mortgage Note. A
"Lost Mortgage Note" is a Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
(44) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
SCHEDULE IV
PRINCIPAL BALANCE SCHEDULES
SCHEDULE V
Form of Monthly Master Servicer Report
<TABLE>
<CAPTION>
LOAN LEVEL REPORTING SYSTEM
DATABASE STRUCTURE
(MONTH, YEAR)
Field Number Field Name Field Type Field Width Dec
<S> <C> <C> <C> <C>
1 INVNUM Numeric 4
2 INVBLK Numeric 4
3 INACNU Character 8
4 BEGSCH Numeric 15 2
5 SCHPRN Numeric 13 2
6 TADPRN Numeric 11 2
7 LIQEPB Numeric 11 2
8 ACTCOD Numeric 11
9 ACTDAT Numeric 4
10 INTPMT Numeric 8
11 PRNPMT Numeric 13 2
12 ENDSCH Numeric 13 2
13 SCHNOT Numeric 13 2
14 SCHPAS Numeric 7 3
15 PRINPT Numeric 7 3
16 PRIBAL Numeric 11 2
17 LPIDTE Numeric 13 2
18 DELPRN Numeric 7
19 PPDPRN Numeric 11 2
20 DELPRN Numeric 11 2
21 NXTCHG Numeric 8
22 ARMNOT Numeric 7 3
23 ARMPAS Numeric 7 3
24 ARMPMT Numeric 11 2
25 ZZTYPE Character 2
26 ISSUID Character 1
27 KEYNAME Character 8
TOTAL 240
Suggested Format: DBASE file
Modem transmission
</TABLE>
COUNTRYWIDE HOME LOANS, INC.
LOAN LEVEL REPORTING SYSTEM
INVESTOR NUMBER:
CHART TO GO HERE
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 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 AUTHORIZED
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 regis-
--------------------------------
tered 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, Countrywide Home Loans, Inc., 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 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 AUTHORIZED
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
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 regis-
---------------------------------
tered 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, Countrywide Home Loans, Inc., 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 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 regis-
--------------------------------
tered owner of the Percentage Interest (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 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, Countrywide Home Loans,
Inc., 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 -
- ---
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
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 regis-
--------------------------------
tered 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, Countrywide Home Loans, Inc., 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(Reserved)
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 aggregate Cut-off Date Principal Balances of the
Mortgage Loans, 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:
.
- ----------------------------------------------------------------
Date:
- ---------------------------------------
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.
STATE OF )
) ss.:
COUNTY OF )
On the day of , 19 before me, a notary public
-- -------------- --
in and for said State, personally appeared ,
known to me who, being by me
-------------------------------- duly sworn,
did depose and say that he executed the foregoing instrument.
- ------------------------------
Notary Public
(Notarial Seal)
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, Countrywide
Home Loans, Inc., 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 schedule) it has received:
(i) the original Mortgage Note endorsed 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).
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, Countrywide
Home Loans, Inc., 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, 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.
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:
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"), Countrywide Home Loans, Inc., 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.
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.
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.
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.)
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.
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.
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.
The Transferee's taxpayer identification number is .
------------
The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
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.
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 United States 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
--------------------------------
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.
(vii) 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
_____________________
Date
CWMBS, Inc.
155 North Lake Avenue
Pasadena, California 91101
Attention: David A. Spector
The Bank of New York
101 Barclay Street, 12E
New York, New York 10286
Attention: Mortgage-Backed Securities Group
Series 1997-
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)
___________________________
Date
CWMBS, Inc.
155 North Lake Avenue
Pasadena, California 91101
Attention: David A. Spector
The Bank of New York
101 Barclay Street, 12E
New York, New York 10286
Attention: Mortgage-Backed Securities Group
Series 1997-
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 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
________________________
Date
CWMBS, Inc.
155 North Lake Avenue
Pasadena, California 91101
Attention: David A. Spector
The Bank of New York
101 Barclay Street, 12E
New York, New York 10286
Attention: Mortgage-Backed Securities Group
Series 1997-
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 are we 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 either at least $100,000 in
securities or, if Buyer is a dealer, Buyer must own and/or invest on a
discretionary basis at least $10,000,000 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.
___ 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.
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) secu-
rities owned but subject to a repurchase agreement and (viii) currency,
interest rate and commodity swaps.
For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the 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.
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.
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:
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.
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
---------
te 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 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).
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.
The Buyer is familiar with Rule 144A and under-stands 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.
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, Countrywide Home Loans, Inc.,
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
----------------
( ) 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.
COUNTRYWIDE HOME LOANS, INC.
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 Countrywide
Home Loans, Inc., as Seller and as Master Servicer, 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 (Countrywide Home Loans, Inc. hereby
certifies that all amounts have been received.)
2. Mortgage Loan Liquidated (Countrywide Home Loans, Inc. 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 any 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.
COUNTRYWIDE HOME LOANS, INC.
155 North Lake Ave.
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.: 50554A-N
Certificates: $8,500,000 Original Principal Amount, Date of Issuance: 1/30/97
CWMBS, Inc., Mortgage Pass-Through Certificates,
Series 1997-1, Class A-4
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 January 1, 1997 among CWMBS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Master Servicer, and The Bank of New York, as
Trustee.
POLICY NO.: 50554A-N
CERTIFICATES: $8,500,000 Original Principal Amount, CWMBS, Inc., Mortgage
Pass-Through Certificates, Series 1997-1, Class A-4
DATE OF ISSUANCE: January 30, 1997
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-4 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 January 1, 1997 among CWMBS, Inc., Countrywide Home
Loans, Inc. 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-4 is zero, (ii) any period during which any payment on the Class
A-4 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
----------------------------------------------------------
Distributions. Following Receipt by Financial Security of a notice and
- -------------
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
----------------------------------------------------------
Distributions Avoided as Preference Payments. If any Guaranteed Distribution
- --------------------------------------------
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-4 Certificateholder is required to return principal or
interest distributed with respect to the Class A-4 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-4 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-4 Certificateholder, in such form as is reasonably
required by Financial Security and provided to the relevant Class A-4
Certificateholder by Financial Security, irrevocably assigning to Financial
Security all rights and claims of the relevant Class A-4 Certificateholder
relating to or arising under the Class A-4 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-4 Certificateholder directly (unless a Class A-4 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-4
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
-------------
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,
------------
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
-------
(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
----------
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
----------------------------------------
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
-------------------
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
----------------------------------------
Authorized Officer
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
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. 50554A-
N dated January 30, 1997 (the "Policy") issued by Financial Security in
respect of the CWMBS, Inc., Mortgage Pass-Through Certificates, Series 1997-1
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-4 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-4 Certificateholders,
hereby assigns to Financial Security the rights of the Class A-4
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-4 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-4
Certificateholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trustee and each such Class A-4
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-4 Certificateholder, hereby delegates and
assigns, to the fullest extent permitted by law, the rights of the
Trustee and each Class A-4 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: _______________________________
Title: _____________________________
____________________________________________________________________________
For Financial Security or Fiscal Agent Use Only
Wire transfer sent _________________________ by
_______________________________________________
Confirmation Number
_______________________________________________
EXHIBIT 99.3
------------
FINANCIAL GUARANTY
INSURANCE POLICY
Trust: As described in Endorsement No. 1 Policy No.: 50554B-N
Certificates: $8,918,000 Original Principal Amount, Date of Issuance: 1/30/97
CWMBS, Inc., Mortgage Pass-Through Certificates,
Series 1997-1, Class A-11
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 January 1, 1997 among CWMBS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Master Servicer, and The Bank of New York, as
Trustee.
POLICY NO.: 50554B-N
CERTIFICATES: $8,918,000 Original Principal Amount, CWMBS, Inc., Mortgage
Pass-Through Certificates, Series 1997-1, Class A-11
DATE OF ISSUANCE: January 30, 1997
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-11 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 January 1, 1997 among CWMBS, Inc., Countrywide Home
Loans, Inc. 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-11 is zero, (ii) any period during which any payment on the Class
A-11 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
----------------------------------------------------------
Distributions. Following Receipt by Financial Security of a notice and
- -------------
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
----------------------------------------------------------
Distributions Avoided as Preference Payments. If any Guaranteed Distribution
- --------------------------------------------
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-11 Certificateholder is required to return principal or
interest distributed with respect to the Class A-11 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-11 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-11 Certificateholder, in such form as is reasonably
required by Financial Security and provided to the relevant Class A-11
Certificateholder by Financial Security, irrevocably assigning to Financial
Security all rights and claims of the relevant Class A-11 Certificateholder
relating to or arising under the Class A-11 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-11 Certificateholder directly (unless a Class A-11 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-11
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
-------------
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,
------------
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
-------
(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
----------
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
----------------------------------------
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
-------------------
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
----------------------------------------
Authorized Officer
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
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. 50554B-
N dated January 30, 1997 (the "Policy") issued by Financial Security in
respect of the CWMBS, Inc., Mortgage Pass-Through Certificates, Series 1997-1
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-11 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-11 Certificateholders,
hereby assigns to Financial Security the rights of the Class A-11
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-11 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-11
Certificateholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trustee and each such Class A-11
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-11 Certificateholder, hereby delegates and
assigns, to the fullest extent permitted by law, the rights of the
Trustee and each Class A-11 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: ______________________________
Title: ____________________________
_____________________________________________________________________________
For Financial Security or Fiscal Agent Use Only
Wire transfer sent ____________________ by
__________________________________________
Confirmation Number
__________________________________________
EXHIBIT 99.4
------------
FINANCIAL GUARANTY
INSURANCE POLICY
Trust: As described in Endorsement No. 1 Policy No.: 50554C-N
Certificates: $6,000,000 Original Principal Amount, Date of Issuance: 1/30/97
CWMBS, Inc., Mortgage Pass-Through Certificates,
Series 1997-1, Class A-12
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 January 1, 1997 among CWMBS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Master Servicer, and The Bank of New York, as
Trustee.
POLICY NO.: 50554C-N
CERTIFICATES: $6,000,000 Original Principal Amount, CWMBS, Inc., Mortgage
Pass-Through Certificates, Series 1997-1, Class A-12
DATE OF ISSUANCE: January 30, 1997
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-12 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 January 1, 1997 among CWMBS, Inc., Countrywide Home
Loans, Inc. 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-12 is zero, (ii) any period during which any payment on the Class
A-12 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
----------------------------------------------------------
Distributions. Following Receipt by Financial Security of a notice and
- -------------
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
----------------------------------------------------------
Distributions Avoided as Preference Payments. If any Guaranteed Distribution
- --------------------------------------------
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-12 Certificateholder is required to return principal or
interest distributed with respect to the Class A-12 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-12 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-12 Certificateholder, in such form as is reasonably
required by Financial Security and provided to the relevant Class A-12
Certificateholder by Financial Security, irrevocably assigning to Financial
Security all rights and claims of the relevant Class A-12 Certificateholder
relating to or arising under the Class A-12 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-12 Certificateholder directly (unless a Class A-12 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-12
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
-------------
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,
------------
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
-------
(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
----------
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
----------------------------------------
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
-------------------
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
----------------------------------------
Authorized Officer
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
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. 50554C-
N dated January 30, 1997 (the "Policy") issued by Financial Security in
respect of the CWMBS, Inc., Mortgage Pass-Through Certificates, Series 1997-1
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-12 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-12 Certificateholders,
hereby assigns to Financial Security the rights of the Class A-12
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-12 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-12
Certificateholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trustee and each such Class A-12
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-12 Certificateholder, hereby delegates and
assigns, to the fullest extent permitted by law, the rights of the
Trustee and each Class A-12 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.
<PAGE>
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: ______________________________
Title: ____________________________
___________________________________________________________________________
For Financial Security or Fiscal Agent Use Only
Wire transfer sent ____________________ by
_______________________________________
Confirmation Number
________________________________________________________
EXHIBIT 99.5
------------
FINANCIAL GUARANTY
INSURANCE POLICY
Trust: As described in Endorsement No. 1 Policy No.: 50554D-N
Certificates: $5,500,000 Original Principal Amount, Date of Issuance: 1/30/97
CWMBS, Inc., Mortgage Pass-Through Certificates,
Series 1997-1, Class A-13
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 January 1, 1997 among CWMBS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Master Servicer, and The Bank of New York, as
Trustee.
POLICY NO.: 50554D-N
CERTIFICATES: $5,500,000 Original Principal Amount, CWMBS, Inc., Mortgage
Pass-Through Certificates, Series 1997-1, Class A-13
DATE OF ISSUANCE: January 30, 1997
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-13 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 January 1, 1997 among CWMBS, Inc., Countrywide Home
Loans, Inc. 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-13 is zero, (ii) any period during which any payment on the Class
A-13 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
----------------------------------------------------------
Distributions. Following Receipt by Financial Security of a notice and
- -------------
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
----------------------------------------------------------
Distributions Avoided as Preference Payments. If any Guaranteed Distribution
- --------------------------------------------
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-13 Certificateholder is required to return principal or
interest distributed with respect to the Class A-13 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-13 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-13 Certificateholder, in such form as is reasonably
required by Financial Security and provided to the relevant Class A-13
Certificateholder by Financial Security, irrevocably assigning to Financial
Security all rights and claims of the relevant Class A-13 Certificateholder
relating to or arising under the Class A-13 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-13 Certificateholder directly (unless a Class A-13 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-13
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
-------------
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,
------------
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
-------
(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
----------
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
----------------------------------------
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
-------------------
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
----------------------------------------
Authorized Officer
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
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. 50554D-
N dated January 30, 1997 (the "Policy") issued by Financial Security in
respect of the CWMBS, Inc., Mortgage Pass-Through Certificates, Series 1997-1
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-13 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-13 Certificateholders,
hereby assigns to Financial Security the rights of the Class A-13
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-13 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-13
Certificateholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trustee and each such Class A-13
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-13 Certificateholder, hereby delegates and
assigns, to the fullest extent permitted by law, the rights of the
Trustee and each Class A-13 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: ______________________________
Title: ___________________________
__________________________________________________________________________
For Financial Security or Fiscal Agent Use Only
Wire transfer sent ____________________ by
_______________________________________
Confirmation Number
________________________________________________________
