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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported): February 26, 1999
CWMBS, INC. (as depositor under the Pooling and Servicing
Agreement, dated as of February 1, 1999, providing for the
issuance of the CWMBS, INC., Residential Asset
Securitization Trust 1999-A3 Mortgage Pass-Through
Certificates, Series 1999-C).
CWMBS, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-53861 95-4449516
- --------------------------- -------------- ---------------------
State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4500 Park Granada
Calabasas, California 91302
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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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<PAGE>
Item 5. Other Events.
On February 26, 1999, CWMBS, Inc. (the "Company") entered into a
Pooling and Servicing Agreement dated as of February 1, 1999 (the "Pooling and
Servicing Agreement"), by and among the Company, as depositor, IndyMac, Inc.
("IndyMac"), as seller, PNC Mortgage Securities Corp. ("PNC"), 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
1999-C (the "Certificates"). The Pooling and Servicing Agreement is annexed
hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Not applicable.
Not applicable.
Exhibits:
99.1. Pooling and Servicing Agreement, dated as of February 1, 1999,
by and among the Company, IndyMac, PNC and the Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CWMBS, INC.
By: /s/ Celia Coulter
--------------------------
Celia Coulter
Vice President
Dated: October 29, 1999
<PAGE>
Exhibit Index
Exhibit Page
- ------- ------
99.1. Pooling and Servicing Agreement, dated as of February 1, 1999,
by and among, the Company, IndyMac, PNC and the Trustee 5
EXHIBIT 99.1
<PAGE>
EXECUTION COPY
CWMBS, INC.,
Depositor
INDYMAC, INC.,
Seller
PNC MORTGAGE SECURITIES CORP.,
Master Servicer
and
THE BANK OF NEW YORK,
Trustee
-------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 1999
-------------------------------------
RESIDENTIAL ASSET SECURITIZATION TRUST 1999-A3
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C
<PAGE>
Table of Contents
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.................................1
Section 2.02. Acceptance by the Trustee of the Mortgage Loans..............4
Section 2.03. Representations, Warranties and Covenants of the
Seller and the Master Servicer...............................5
Section 2.04. Representations and Warranties of the Depositor as
to the Mortgage Loans.......................................7
Section 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases................................8
Section 2.06. Execution and Delivery of Certificates.......................8
Section 2.07. REMIC Matters................................................8
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Master Servicer to Service Mortgage Loans....................1
Section 3.02. Subservicing; Enforcement of the Obligations of
Servicers....................................................2
Section 3.03. Successor Servicers..........................................2
Section 3.04. Liability of the Master Servicer.............................3
Section 3.05. No Contractual Relationship Between Servicers and
the Trustee..................................................3
Section 3.06. Rights of the Depositor and the Trustee in Respect
of the Master Servicer.......................................3
Section 3.07. Trustee to Act as Master Servicer............................4
Section 3.08. Collection of Mortgage Loan Payments; Custodial
Accounts; Investment Account; Distribution Account...........4
Section 3.09. Collection of Taxes, Assessments and Similar
Items; Escrow Accounts.......................................8
Section 3.10. Access to Certain Documentation and Information
Regarding the Mortgage Loans.................................8
Section 3.11. Permitted Withdrawals from the Investment Account,
and the Distribution Account.................................9
Section 3.12. Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies..................................10
Section 3.13. Enforcement of Due-On-Sale Clauses; Assumption
Agreements..................................................12
Section 3.14. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans........................13
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.............16
Section 3.16. Documents, Records and Funds in Possession of the
Master Servicer to be Held for the Trustee..................17
Section 3.17. Servicing Compensation......................................18
Section 3.18. Annual Statement as to Compliance...........................18
Section 3.19. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.............................19
Section 3.20. Errors and Omissions Insurance; Fidelity Bonds..............19
ARTICLE IV
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01. Advances.....................................................1
Section 4.02. Priorities of Distribution...................................1
Section 4.03. Indemnification..............................................4
Section 4.04. [Reserved]...................................................4
Section 4.05. Allocation of Realized Losses................................4
Section 4.06. Monthly Statements to Certificateholders.....................5
Section 4.07. Determination of Pass-Through Rates for
COFI Certificates............................................7
Section 4.08. Determination of Pass-Through Rates for LIBOR
Certificates.................................................9
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.............................................1
Section 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates.....................................1
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates............6
Section 5.04. Persons Deemed Owners........................................6
Section 5.05. Access to List of Certificateholders' Names and
Addresses....................................................6
Section 5.06. Maintenance of Office or Agency..............................7
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicer..............................................1
Section 6.02. Merger or Consolidation of the Depositor or the
Master Servicer..............................................1
Section 6.03. Limitation on Liability of the Depositor, the Seller,
the Master Servicer and Others...............................1
Section 6.04. Limitation on Resignation of the Master Servicer.............2
ARTICLE VII
DEFAULT
Section 7.01. Events of Default............................................1
Section 1.02. Trustee to Act; Appointment of Successor.....................2
Section 1.03. Notification to Certificateholders...........................3
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of the Trustee........................................1
Section 8.02. Certain Matters Affecting the Trustee........................2
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans........3
Section 8.04. Trustee May Own Certificates.................................3
Section 8.05. Trustee's Fees and Expenses..................................3
Section 8.06. Eligibility Requirements for the Trustee.....................4
Section 8.07. Resignation and Removal of the Trustee.......................4
Section 8.08. Successor Trustee............................................5
Section 8.09. Merger or Consolidation of the Trustee.......................5
Section 8.10. Appointment of Co-Trustee or Separate Trustee................5
Section 8.11. Tax Matters..................................................7
Section 8.12. Periodic Filings.............................................9
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Liquidation or Purchase of all
Mortgage Loans...............................................1
Section 9.02. Final Distribution on the Certificates.......................1
Section 9.03. Additional Termination Requirements..........................2
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment....................................................1
Section 10.02. Recordation of Agreement; Counterparts.......................2
Section 10.03. Governing Law................................................2
Section 10.04. Intention of Parties.........................................3
Section 10.05. Notices......................................................3
Section 10.06. Severability of Provisions...................................4
Section 10.07. Assignment...................................................4
Section 10.08. Limitation on Rights of Certificateholders...................4
Section 10.09. Inspection and Audit Rights..................................5
Section 10.10. Certificates Nonassessable and Fully Paid....................5
SCHEDULES
Schedule I: Mortgage Loan Schedule...................................S-I-1
Schedule II: Representations and Warranties of the Seller............S-II-1
Schedule III: Representations and Warranties as to the Mortgage
Loans..................................................S-III-1
Schedule IV: Representations and Warranties of the Master
Servicer................................................S-IV-1
EXHIBITS
Exhibit A: Form of Senior Certificate.................................A-1
Exhibit B: Form of Subordinated Certificate...........................B-1
Exhibit C: Form of Residual Certificate...............................C-1
Exhibit D: Form of Notional Amount Certificate........................D-1
Exhibit E: Form of Reverse of Certificates............................E-1
Exhibit F: Form of Servicing Agreement................................F-1
Exhibit G: Form of Initial Certification of Trustee...................G-1
Exhibit H: Form of Final Certification of Trustee.....................H-1
Exhibit I: Form of Transfer Affidavit.................................I-1
Exhibit J: Form of Transferor Certificate.............................J-1
Exhibit K: Form of Investment Letter (Non-Rule 144A)..................K-1
Exhibit L Form of Rule 144A Letter...................................L-1
Exhibit M: Form of Request for Release (for Trustee)..................M-1
Exhibit N: Form of Request for Release (Mortgage Loan Paid in
Full, Repurchased and Released)...........................N-1
Exhibit O: [Reserved].................................................O-1
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of February 1, 1999,
among CWMBS, INC., a Delaware corporation, as depositor (the "Depositor"),
INDYMAC, INC. ("IndyMac"), a Delaware corporation, as seller (the "Seller"),
PNC MORTGAGE SECURITIES CORP., a Delaware corporation, as master servicer (the
"Master Servicer"), and THE BANK OF NEW YORK, a New York banking corporation,
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 a single REMIC. The Certificates will
represent the entire beneficial ownership interest in the Trust Fund. The
Regular Certificates will represent the "regular interests" in the Trust Fund
and the Residual Certificates will represent the single "residual interest" in
the Trust Fund. 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).
<PAGE>
Integral
Class Multiples
Certificate Pass-Through Minimum in Excess
Balance Rate Denomination of Minimum
----------- ------------ ------------ ----------
Class A-1 $138,815,712.00 7.00% $25,000 $1,000
Class PO $256,947.00 (3) $25,000 $1,000
Class X (1) (4) $25,000(2) $1,000(2)
Class A-R $100.00 7.00% $100 N/A
Class B-1 $6,013,957.00 7.00% $25,000 $1,000
Class B-2 $1,503,489.00 7.00% $25,000 $1,000
Class B-3 $1,127,617.00 7.00% $25,000 $1,000
Class B-4 $1,353,141.00 7.00% $100,000 $1,000
Class B-5 $601,395.00 7.00% $100,000 $1,000
Class B-6 $676,571.88 7.00% $100,000 $1,000
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(1) The Class X Certificates will be Notional Amount Certificates, will have
no principal balance and will bear interest on their Notional Amount
(initially, $139,430,716).
(2) The minimum denomination is based on the Notional Amount.
(3) The Class PO Certificates will be Principal Only Certificates and will
not bear interest.
(4) The Pass-Through Rate for the Class X Certificates for any Distribution
Date will be equal to the excess of (a) the weighted average of the
Adjusted Net Mortgage Rates of the Non-Discount Mortgage Loans over (b)
7.00% per annum. The Pass-Through Rate for the Class X Certificates for
the first Distribution Date is approximately 0.481%.
<PAGE>
Set forth below are designations of Classes of Certificates to the categories
used herein:
Accretion Directed
Certificates.......................... None.
Accrual Certificates.................... None.
Book-Entry Certificates................. All Classes of Certificates other
than the Physical Certificates.
COFI Certificates....................... None.
Component Certificates.................. None.
Components.............................. For purposes of calculating
distributions of principal and/or
interest, the Component
Certificates, if any, will be
comprised of multiple payment
components having the designations,
Initial Component Balances or
Notional Amounts and Pass-Through
Rates set forth below:
<TABLE>
<CAPTION>
Initial
Component
Designation Notional Amount Pass-Through Rate
----------- --------------- -----------------
<S> <C> <C> <C>
N/A N/A N/A
</TABLE>
Delay Certificates...................... All interest-bearing Classes of
Certificates other than the
Non-Delay Certificates, if any.
ERISA-Restricted
Certificates.......................... Residual Certificates and
Subordinated Certificates.
Floating Rate Certificates.............. None.
Inverse Floating Rate
Certificates.......................... None.
LIBOR Certificates...................... None.
Non-Delay Certificates.................. None.
Notional Amount Certificates............ Class X Certificates.
Offered Certificates.................... All Classes of Certificates other
than the Private Certificates.
Physical Certificates................... Class A-R Certificates and Private
Certificates.
Planned Principal Classes............... None.
Primary Planned Principal
Classes............................... None.
Principal Only Certificates............. Class PO Certificates.
Private Certificates.................... Class B-4, Class B-5 and Class B-6
Certificates.
Rating Agencies......................... S&P and Duff & Phelps.
Regular Certificates.................... All Classes of Certificates other
than the Class A-R Certificates.
Residual Certificates................... Class A-R Certificates.
Scheduled Principal Classes............. None.
Secondary Planned
Principal Classes.................. None.
Senior Certificates..................... Class A-1, Class PO, Class X and
Class A-R Certificates.
Subordinated Certificates............... Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class B-6
Certificates.
Targeted Principal Classes.............. None.
With respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions herein
relating solely to such designations shall be of no force or effect, and any
calculations herein incorporating references to such designations shall be
interpreted without reference to such designations and amounts. Defined terms
and provisions herein relating to statistical rating agencies not designated
above as Rating Agencies shall be of no force or effect.
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accretion Directed Certificates: As specified in the Preliminary
-------------------------------
Statement.
Accrual Amount: Not applicable.
--------------
Accrual Certificates: As specified in the Preliminary Statement.
--------------------
Accrual Termination Date: Not applicable.
------------------------
Adjusted Mortgage Rate: As to each Mortgage Loan and at any time,
----------------------
the per annum rate equal to the Mortgage Rate less the sum of the Master
Servicing Fee Rate and the related Servicing Fee Rate.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, and at any
--------------------------
time, the per annum rate equal to the Mortgage Rate less the related Expense
Rate. For purposes of determining whether any Substitute Mortgage Loan is a
Discount Mortgage Loan or a Non-Discount Mortgage Loan and for purposes of
calculating the applicable PO Percentage and applicable Non-PO Percentage,
each Substitute Mortgage Loan shall be deemed to have an Adjusted Net Mortgage
Rate equal to the Adjusted Net Mortgage Rate of the Deleted Mortgage Loan for
which it is substituted.
Advance: The payment required to be made by the Master Servicer with
-------
respect to any Distribution Date pursuant to Section 4.01, the amount of any
such payment being equal to the aggregate of payments of principal and
interest (net of the Master Servicing Fee and the applicable Servicing Fee and
net of any net income in the case of any REO Property) on the Mortgage Loans
that were due on the related Due Date and not received as of the close of
business on the related Determination Date, less the aggregate amount of any
such delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced.
Agreement: This Pooling and Servicing Agreement and all amendments
---------
or supplements hereto.
Allocable Share: As to any Distribution Date and any Mortgage Loan
---------------
(i) with respect to the Class X Certificates, (a) the ratio that (x) the
excess, if any, of the Adjusted Net Mortgage Rate with respect to such
Mortgage Loan over the Required Coupon bears to (y) such Adjusted Net Mortgage
Rate or (b) if the Adjusted Net Mortgage Rate with respect to such Mortgage
Loan does not exceed the Required Coupon, zero, (ii) with respect to the Class
PO Certificates, zero and (iii) with respect to each other Class of
Certificates the product of (a) the lesser of (I) the ratio that the Required
Coupon bears to such Adjusted Net Mortgage Rate and (II) one, multiplied by
(b) the ratio that the amount calculated with respect to such Distribution
Date for such Class pursuant to clause (i) of the definition of Class Optimal
Interest Distribution Amount (without giving effect to any reduction of such
amount pursuant to Section 4.02(d)) bears to the amount calculated with
respect to such Distribution Date for each Class of Certificates pursuant to
clause (i) of the definition of Class Optimal Interest Distribution Amount
(without giving effect to any reduction of such amount pursuant to Section
4.02(d)).
Amount Available for Senior Principal: As to any Distribution Date
-------------------------------------
Available Funds for such Distribution Date, reduced by the aggregate amount
distributable (or allocable to the Accrual Amount, if applicable) on such
Distribution Date in respect of interest on the Senior Certificates pursuant
to Section 4.02(a)(i).
Amount Held for Future Distribution: As to any Distribution Date,
-----------------------------------
the aggregate amount held in the Investment Account at the close of business
on the related Determination Date on account of (i) Principal Prepayments and
Liquidation Proceeds received in the month of such Distribution Date and (ii)
all Scheduled Payments due after the related Due Date.
Applicable Credit Support Percentage: As defined in Section 4.02(e).
------------------------------------
Appraised Value: With respect to any Mortgage Loan, the Appraised
---------------
Value of the related Mortgaged Property shall be: (i) with respect to a
Mortgage Loan other than a Refinancing Mortgage Loan, the lesser of (a) the
value of the Mortgaged Property based upon the appraisal made at the time of
the origination of such Mortgage Loan and (b) the sales price of the Mortgaged
Property at the time of the origination of such Mortgage Loan; (ii) with
respect to a Refinancing Mortgage Loan, the value of the Mortgaged Property
based upon the appraisal made at the time of the origination of such
Refinancing Mortgage Loan.
Available Funds: As to any Distribution Date, the sum of (a) the
---------------
aggregate amount held in the Investment 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 Investment Account
pursuant to clauses (i) - (viii), inclusive, of Section 3.11(a) and amounts
permitted to be withdrawn from the Distribution Account pursuant to clauses
(i) - (iii), inclusive, of Section 3.11(b), (b) the amount of the related
Advance, (c) in connection with Defective Mortgage Loans, as applicable, the
aggregate of the Purchase Prices and Substitution Adjustment Amounts deposited
on the related Distribution Account Deposit Date and (d) any amount deposited
on the related Distribution Account Deposit Date pursuant to Section 3.12.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, as
---------------
amended.
Bankruptcy Coverage Termination Date: The point in time at which the
------------------------------------
Bankruptcy Loss Coverage Amount is reduced to zero.
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
---------------
Valuation or Debt Service Reduction; provided, however, that a Bankruptcy Loss
-------- -------
shall not be deemed a Bankruptcy Loss hereunder so long as the Master Servicer
has notified the Trustee in writing that the Master Servicer is diligently
pursuing any remedies that may exist in connection with the related Mortgage
Loan and either (A) the related Mortgage Loan is not in default with regard to
payments due thereunder or (B) delinquent payments of principal and interest
under the related Mortgage Loan and any related escrow payments in respect of
such Mortgage Loan are being advanced on a current basis by the Master
Servicer, in either case without giving effect to any Debt Service Reduction
or Deficient Valuation.
Bankruptcy Loss Coverage Amount: As of any Determination Date, the
-------------------------------
Bankruptcy Loss Coverage Amount shall equal the Initial Bankruptcy Coverage
Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated
to the Certificates since the Cut-off Date and (ii) any permissible reductions
in the Bankruptcy Loss Coverage Amount as evidenced by a letter of each Rating
Agency to the Trustee to the effect that any such reduction will not result in
a downgrading of the then current ratings assigned to the Classes of
Certificates rated by it.
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,
Chicago, Illinois, 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.
Buydown Agreement: An agreement between a Person and a Mortgagor
-----------------
pursuant to which the Person has provided a Buydown Fund.
Buydown Fund: A fund provided by the originator of a Mortgage Loan
------------
or another Person for a Buydown Loan that provides an amount sufficient to
subsidize regularly scheduled principal and interest payments due on the
Buydown Loan for a period. Buydown Funds may be (i) funded at the par values
of future payment subsidies or (ii) funded in an amount less than the par
values of future payment subsidies, and determined by discounting the par
values at the rate of interest accruing on the funded amounts, in which case
they will be deposited in an account bearing interest. Buydown Funds may be
held in a separate Buydown Fund Account or may be held in a Custodial Account
for P&I or a Custodial Account for Reserves and monitored by a Servicer.
Buydown Fund Account: A separate Eligible Account or Accounts
--------------------
maintained pursuant to Section 3.08 (c).
Buydown Loan: A Mortgage Loan for which the Mortgage Rate has been
------------
subsidized through a Buydown Fund provided at the time of its origination.
Certificate: Any one of the Certificates executed by the Trustee in
-----------
substantially the forms attached hereto as exhibits.
Certificate Balance: With respect to any Certificate at any date,
-------------------
the maximum dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the Denomination thereof (A)
minus the sum of (i) all distributions of principal previously made with
respect thereto and (ii) all Realized Losses allocated thereto and, in the
case of any Subordinated Certificates, all other reductions in Certificate
Balance previously allocated thereto pursuant to Section 4.05 and (B) in the
case of any Class of Accrual Certificates, increased by the Accrual Amount
added to the Class Certificate Balance of such Class prior to such date.
Certificate Owner: With respect to a Book-Entry Certificate, the
-----------------
Person who is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
--------------------
5.02.
Certificateholder or Holder: The person in whose name a Certificate
---------------------------
is registered in the Certificate Register, except that, solely for the purpose
of giving any consent pursuant to this Agreement, any Certificate registered
in the name of the Depositor or any affiliate of the Depositor shall be deemed
not to be Outstanding and the Percentage Interest evidenced thereby shall not
be taken into account in determining whether the requisite amount of
Percentage Interests necessary to effect such consent has been obtained;
provided, however, that if any such Person (including the Depositor) owns 100%
- -------- -------
of the Percentage Interests evidenced by a Class of Certificates, such
Certificates shall be deemed to be Outstanding for purposes of any provision
hereof that requires the consent of the Holders of Certificates of a
particular Class as a condition to the taking of any action hereunder.
Class: All Certificates bearing the same class designation as set
-----
forth in the Preliminary Statement.
Class Certificate Balance: With respect to any Class and as to any
-------------------------
date of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class Interest Shortfall: As to any Distribution Date and Class, the
------------------------
amount by which the amount described in clause (i) of the definition of Class
Optimal Interest Distribution Amount for such Class exceeds the amount of
interest actually distributed on such Class on such Distribution Date pursuant
to such clause (i).
Class Optimal Interest Distribution Amount: With respect to any
------------------------------------------
Distribution Date and interest-bearing Class, the sum of (i) one month's
interest accrued during the related Interest Accrual Period at the
Pass-Through Rate for such Class, on the related Class Certificate Balance or
Notional Amount, as applicable, subject to reduction pursuant to Section
4.02(d), and (ii) any Class Unpaid Interest Amounts for such Class.
Class PO Deferred Amount: As to any Distribution Date, the aggregate
------------------------
of the applicable PO Percentage of each Realized Loss, other than any Excess
Loss, to be allocated to the Class PO Certificates on such Distribution Date
on or prior to the Senior Credit Support Depletion Date or previously
allocated to the Class PO 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 fraction (expressed as a
percentage) the numerator of which is the Class Certificate Balance of such
Class of Subordinated Certificates immediately prior to such Distribution Date
and the denominator of which is the aggregate of the Class Certificate
Balances of all Classes of Certificates immediately prior to such Distribution
Date.
Class Unpaid Interest Amounts: As to any Distribution Date and Class
-----------------------------
of interest-bearing Certificates, the amount by which the aggregate Class
Interest Shortfalls for such Class on prior Distribution Dates exceeds the
amount distributed on such Class on prior Distribution Dates pursuant to
clause (ii) of the definition of Class Optimal Interest Distribution Amount.
Closing Date: February 26, 1999.
------------
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.
-----------------
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.
Component Notional Amount: Not applicable.
-------------------------
Cooperative Loan: Any Mortgage Loan secured by Cooperative 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 Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a 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 1999-C), facsimile no. (212) 815-4135 and which is the address to which
notices to and correspondence with the Trustee should be directed.
Custodial Account for P&I: The Eligible Account maintained by each
-------------------------
Servicer pursuant to its Servicing Agreement as the custodial account for
principal and interest and caused by the Master Servicer to be maintained
pursuant to Section 3.08(b). Any amount that is at any time held in an account
that ceases to be an Eligible Account shall be withdrawn promptly and remitted
to the Investment Account.
Custodial Account for Reserves: The Eligible Account maintained by
------------------------------
each Servicer pursuant to its Servicing Agreement as the custodial account for
reserves and caused by the Master Servicer to be maintained pursuant to
Section 3.08(b). Any amount that is at any time held in an account that ceases
to be an Eligible Account shall be withdrawn promptly and remitted to the
Investment Account.
Cut-off Date: February 1, 1999.
------------
Cut-off Date Pool Principal Balance: $150,348,930.___.
-----------------------------------
Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
------------------------------
Principal Balance thereof as of the close of business on the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
----------------------
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of
principal.
Debt Service Reduction Mortgage Loan: Any Mortgage Loan that became
------------------------------------
the subject of a Debt Service Reduction.
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(d).
---------------------
Delinquent: A Mortgage Loan is "Delinquent" if any regularly
----------
scheduled monthly payment due thereon is not made by the close of business on
the day such monthly payment is due. A Mortgage Loan is "30 days Delinquent"
if such monthly payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
monthly payment was due. The determination of whether a Mortgage Loan is "60
days Delinquent", "90 days Delinquent", etc. shall be made in like manner.
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(a)(5) of the Uniform Commercial Code
of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the 18th day of
------------------
each month or if such 18th day is not a Business Day the next succeeding
Business Day; provided, however, that if such next succeeding Business Day is
less than two Business Days prior to the related Distribution Date, then the
Determination Date shall be the next Business Day preceding the 18th day of
such month.
Discount Mortgage Loan: Any Mortgage Loan with an Adjusted Net
----------------------
Mortgage Rate that is less than the Required Coupon.
Distribution Account: The separate Eligible Account created and
--------------------
maintained by the Trustee pursuant to Section 3.08(f) in the name of the
Trustee for the benefit of the Certificateholders and designated "The Bank of
New York in trust for registered holders of CWMBS, Inc. Mortgage Pass-Through
Certificates, Series 1999-C." Funds deposited in the Distribution Account
(exclusive of the Master Servicing Fee) 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, 2:30
---------------------------------
P.M. Central 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 March 1999.
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 Co., 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 Co., 55 E. Monroe Street, 38th
Floor, Chicago, Illinois 60603, Attention: MBS Monitoring, or such other
address as Duff & Phelps may hereafter furnish to the Depositor and the Master
Servicer.
Eligible Account: Any of (i) an account or accounts maintained with
----------------
a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of a
holding company, the debt obligations of such holding company, but only if
Moody's is not a Rating Agency) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein, or (ii) an
account or accounts in a depository institution or trust company in which such
accounts are insured by the FDIC or the SAIF (to the limits established by the
FDIC or the SAIF) and the uninsured deposits in which accounts are otherwise
secured such that, as evidenced by an Opinion of Counsel delivered to the
Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in
which such account is maintained, or (iii) a trust account or accounts
maintained with the trust department of a federal or state chartered
depository institution or trust company, acting in its fiduciary capacity or
(iv) any other account acceptable to each Rating Agency. Eligible Accounts may
bear interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
-----
amended.
ERISA-Restricted Certificate: As specified in the Preliminary
----------------------------
Statement.
Escrow Account: The Eligible Account or Accounts established and
--------------
maintained pursuant to Section 3.09(a).
Event of Default: As defined in Section 7.01.
----------------
Excess Loss: The amount of any (i) Fraud Loss realized after the
-----------
Fraud Loss Coverage Termination Date, (ii) Special Hazard Loss realized after
the Special Hazard Coverage Termination Date or (iii) Bankruptcy Loss realized
after the Bankruptcy Coverage Termination Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
---------------
amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage
Loan received in the calendar month in which such Mortgage Loan became a
Liquidated Mortgage Loan, net of any amounts previously reimbursed to the
Master Servicer as Nonrecoverable Advance(s) with respect to such Mortgage
Loan pursuant to Section 3.11(a)(iii), exceeds (i) the unpaid principal
balance of such Liquidated Mortgage Loan as of the Due Date in the month in
which such Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued
interest at the Mortgage Rate from the Due Date as to which interest was last
paid or advanced (and not reimbursed) to Certificateholders up to the Due Date
applicable to the Distribution Date immediately following the calendar month
during which such liquidation occurred.
Expense Fees: As to each Mortgage Loan, the sum of the related
------------
Servicing Fee, Master Servicing Fee, and Trustee Fee.
Expense Rate: As to each Mortgage Loan, the sum of the related
------------
Servicing Fee Rate, Master Servicing Fee Rate and Trustee Fee Rate.
FDIC: The Federal Deposit Insurance Corporation, or any successor
----
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
-----
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery and Enforcement
------
Act of 1989.
Fitch: Fitch IBCA, Inc., 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 IBCA, Inc.,
One State Street Plaza, New York, New York 10004, Attention: Residential
Mortgage Surveillance Group, or such other address as Fitch may hereafter
furnish to the Depositor and the Master Servicer.
FNMA: The Federal National Mortgage Association, a federally
----
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Fraud Loan: A Liquidated Mortgage Loan as to which a Fraud Loss has
----------
occurred.
Fraud Losses: Realized Losses on Mortgage Loans as to which a loss
------------
is sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a
loss by reason of the denial of coverage under any related Primary Insurance
Policy because of such fraud, dishonesty or misrepresentation.
Fraud Loss Coverage Amount: As of the Closing Date, $3,006,979.00
--------------------------
subject to reduction from time to time, by the amount of Fraud Losses
allocated to the Certificates. On each anniversary of the Cut-off Date, the
Fraud Loss Coverage Amount will be reduced as follows: (a) on the first,
second, third and fourth anniversaries of the Cut-off Date, to an amount equal
to the lesser of (i) 1% of the then current Pool Principal Balance and (ii)
the excess of the Fraud Loss Coverage Amount as of the preceding anniversary
of the Cut-off Date (or, in the case of the first such anniversary, as of the
Cut-off Date) over the cumulative amount of Fraud Losses allocated to the
Certificates since such preceding anniversary or the Cut-off Date, as the case
may be, 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.
Index: With respect to any Interest Accrual Period for the COFI
-----
Certificates, the then applicable index used by the Trustee pursuant to
Section 4.07 to determine the applicable Pass-Through Rate for such Interest
Accrual Period for the COFI Certificates.
Indirect Participant: A broker, dealer, bank or other financial
--------------------
institution or other Person that clears through or maintains a custodial
relationship with a Depository Participant.
Initial Bankruptcy Loss Coverage Amount: $100,000.00.
---------------------------------------
Initial Component Balance: As specified in the Preliminary
-------------------------
Statement.
Initial LIBOR Rate: Not applicable.
------------------
Insurance Policy: With respect to any Mortgage Loan included in the
----------------
Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect, including any replacement policy or policies for any
Insurance Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to any
------------------
Insurance Policy, in each case other than any amount included in such
Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any
----------------
other insurance policy with respect to the Mortgage Loans.
Interest Accrual Period: With respect to each Class of Delay
-----------------------
Certificates and any Distribution Date, the calendar month prior to the month
of such Distribution Date. With respect to each Class of Non-Delay
Certificates 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.
Investment Account: The commingled Eligible Account or Accounts
------------------
(which shall be commingled only with investment accounts related to series of
pass-through certificates with a class of certificates which has a rating
equal to the highest rating assigned to any Class of Certificates by a Rating
Agency) created and maintained by the Master Servicer pursuant to Section
3.08(e) in the trust department of the Investment Depository bearing a
designation acceptable to the Rating Agencies, but only as to the contents of
that account that are attributable to the Mortgage Loans.
Investment Depository: The Chase Manhattan Bank, New York, New York
---------------------
or another bank or trust company designated from time to time by the Master
Servicer in writing to the Trustee and the Depositor, and acceptable to the
Rating Agencies.
Last Scheduled Distribution Date: The Distribution Date in the month
--------------------------------
immediately following the month of the latest scheduled maturity date for any
of the Mortgage Loans.
Latest Possible Maturity Date: The Distribution Date following the
-----------------------------
third anniversary of the scheduled maturity date of the Mortgage Loan having
the latest scheduled maturity date as of the Cut-off Date.
LIBOR: The London interbank offered rate for one-month United States
-----
dollar deposits calculated in the manner described in Section 4.08.
LIBOR Certificates: As specified in the Preliminary Statement.
------------------
Liquidated Mortgage Loan: With respect to any Distribution Date, a
------------------------
defaulted Mortgage Loan (including any REO Property) which was liquidated in
the calendar month preceding the month of such Distribution Date and as to
which the Master Servicer has certified (in accordance with this 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.
Lost Mortgage Note: Any Mortgage Note the original of which was
------------------
permanently lost or destroyed and has not been replaced.
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 Servicer: PNC Mortgage Securities Corp., a Delaware
---------------
corporation, and its successors and assigns, in its capacity as master
servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date, 2:30 P.M.
----------------------------
Central time on the Business Day immediately preceding such Distribution Date.
Master Servicing Fee: As to each Mortgage Loan and any Distribution
--------------------
Date, an amount equal to one month's interest at the related Master Servicing
Fee Rate on the Stated Principal Balance of such Mortgage Loan or, in the
event of any payment of interest which accompanies a Principal Prepayment in
Full, interest at the Master Servicing Fee Rate on the Stated Principal
Balance of such Mortgage Loan for the period covered by such payment of
interest, subject to reduction as provided in Section 3.17.
Master Servicing Fee Rate: With respect to each Mortgage Loan,
-------------------------
0.030% per annum.
Modified Mortgage Loan: Any Mortgage Loan which the Master Servicer
----------------------
has modified pursuant to Section 3.14(c).
Monthly Statement: The statement delivered to the Certificateholders
-----------------
pursuant to Section 4.06.
Moody's: Moody's Investors Service, Inc., or any successor thereto.
-------
If Moody's is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 10.05(b) the address for notices to Moody's shall be
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: Residential Pass-Through Monitoring, or such other address as
Moody's may hereafter furnish to the Depositor or the Master Servicer.
Mortgage: The mortgage, deed of trust or other instrument creating a
--------
first lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
-------------
pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned
--------------
to the Trustee pursuant to the provisions hereof as from time to time are held
as a part of the Trust Fund (including any REO Property), the mortgage loans
so held being identified in the Mortgage Loan Schedule, notwithstanding
foreclosure or other acquisition of title of the related Mortgaged Property.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
----------------------
time amended by the Master Servicer to reflect the addition of Substitute
Mortgage Loans and the deletion of Deleted Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, attached hereto as
Schedule I, setting forth the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name and the street address of the Mortgaged
Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Cut-off Date Principal Balance;
(vi) the first payment date of the Mortgage Loan;
(vii) the Scheduled Payment in effect as of the Cut-off Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling is either (a)
a detached single family dwelling, (b) a dwelling in a PUD, (c) a
condominium unit, (d) a two- to four-unit residential property, or (e) a
Cooperative Unit;
(xi) the Mortgage Rate;
(xii) the Servicing Fee Rate and the Master Servicing Fee Rate;
(xiii) the purpose for the Mortgage Loan; and
(xiv) the type of documentation program pursuant to which the
Mortgage Loan was originated.
Such schedule shall also set forth the total of the amounts described under
(v) above for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
-------------
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
-------------
from time to time.
Mortgaged Property: The underlying property securing a Mortgage
------------------
Loan, which, with respect to a Cooperative Loan, is the related Cooperative
Shares and Proprietary Lease.
Mortgagor: The obligor(s) on a Mortgage Note.
---------
Net Prepayment Interest Shortfalls: As to any Distribution Date, the
----------------------------------
amount by which the aggregate of Prepayment Interest Shortfalls during the
related Prepayment Period exceeds an amount equal to the 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) all monthly payments of
principal due on each Mortgage Loan on the related Distribution Date, (b) the
principal portion of the purchase price of each Mortgage Loan that was
repurchased by the Seller pursuant to this Agreement as of such Distribution
Date, (c) the Substitution Adjustment Amount in connection with any Deleted
Mortgage Loan received with respect to such Distribution Date, (d) any
Insurance Proceeds or Liquidation Proceeds allocable to recoveries of
principal of Mortgage Loans that are not yet Liquidated Mortgage Loans
received during the calendar month preceding the month of such Distribution
Date, (e) with respect to each Mortgage Loan that became a Liquidated Mortgage
Loan during the calendar month preceding the month of such Distribution Date,
the amount of Liquidation Proceeds allocable to principal received with
respect to such Mortgage Loan, and (f) all partial and full Principal
Prepayments received during the related Prepayment Period.
Non-PO Percentage: As to any Discount Mortgage Loan, a fraction
-----------------
(expressed as a percentage) the numerator of which is the Adjusted Net
Mortgage Rate of such Discount Mortgage Loan and the denominator of which is
the Required Coupon. As to any Non-Discount Mortgage Loan, 100%.
Nonrecoverable Advance: Any portion of an Advance or Servicer
----------------------
Advance previously made or proposed to be made by the Master Servicer or the
related Servicer, as the case may be, that, in the good faith judgment of the
Master Servicer or such Servicer, will not be ultimately recoverable by the
Master Servicer from the related Mortgagor, related Liquidation Proceeds or
otherwise.
Notice of 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 the Class X Certificates and any
---------------
Distribution Date, the aggregate of the Stated Principal Balances of the
Non-Discount Mortgage Loans as of the Due Date in the month preceding the
month of such Distribution 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, (ii) signed by the Chairman of the Board, the
President, a Vice President (however denominated), or the Treasurer of the
Master Servicer, or (iii) if provided for in this Agreement, signed by a
Servicing Officer, as the case may be, and delivered to the Depositor and the
Trustee, as the case may be, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
------------------
for the Depositor or the Master Servicer, including in-house counsel,
reasonably acceptable to the Trustee; provided, however, that with respect to
-------- -------
the interpretation or application of the REMIC Provisions, such counsel must
(i) in fact be independent of the Depositor and the Master Servicer, (ii) not
have any direct financial interest in the Depositor or the Master Servicer or
in any affiliate of either, and (iii) not be connected with the Depositor or
the Master Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Optional Termination: The termination of the trust created hereunder
--------------------
in connection with the purchase of the Mortgage Loans pursuant to Section
9.01(a).
Original Applicable Credit Support Percentage: With respect to each
---------------------------------------------
of the following Classes of Subordinated Certificates, the corresponding
percentage described below, as of the Closing Date:
Class B-1 7.50%
Class B-2 3.50%
Class B-3 2.50%
Class B-4 1.75%
Class B-5 0.85%
Class B-6 0.45%
Original Mortgage Loan: The Mortgage Loan refinanced in connection
----------------------
with the origination of a Refinancing Mortgage Loan.
Original Subordinated Principal Balance: The aggregate of the Class
---------------------------------------
Certificate Balances of the Subordinated Certificates as of the Closing Date.
OTS: The Office of Thrift Supervision.
---
Outside Reference Date: As to any Interest Accrual Period for the
----------------------
COFI Certificates, the close of business on the tenth day thereof.
Outstanding: With respect to the Certificates as of any date of
-----------
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
-------------------------
a Stated Principal Balance greater than zero which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.
Ownership Interest: As to any Residual Certificate, any ownership
------------------
interest in such Certificate including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial.
Pass-Through Rate: For any interest-bearing Class of Certificates,
-----------------
the per annum rate set forth or calculated in the manner described in the
Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage interest
-------------------
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Permitted Investments: At any time, any one or more of the following
---------------------
obligations and securities:
(i) obligations of the United States or any agency or
instrumentality thereof, provided that such obligations are backed by the
--------
full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency, or such lower rating as will
not result in the downgrading or withdrawal of the ratings then assigned
to the Certificates by the Rating Agencies, as evidenced by a signed
writing delivered by each Rating Agency;
(iii) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each Rating
Agency, or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by the Rating
Agencies, as evidenced by a signed writing delivered by each Rating
Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or long-term
--------
unsecured debt obligations of such depository institution or trust
company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if Moody's is not a Rating
Agency) are then rated one of the two highest long-term and the highest
short-term ratings of each Rating Agency for such securities, or such
lower ratings as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by the Rating Agencies, as
evidenced by a signed writing delivered by each Rating Agency;
(v) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation acceptable to the Rating Agencies
at the time of the issuance of such agreements, as evidenced by a signed
writing delivered by each Rating Agency;
(vii) repurchase obligations with respect to any security described
in clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal) described
in clause (iv) above;
(viii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof
which, at the time of such investment, have one of the two highest
ratings of each Rating Agency (except if the Rating Agency is Moody's
such rating shall be the highest commercial paper rating of Moody's for
any such securities), or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency;
(ix) units of taxable money-market funds (which may be 12b-1 funds,
as contemplated under the rules promulgated by the Securities and
Exchange Commission under the Investment Company Act of 1940), which
funds have the highest rating available for money market funds from the
Rating Agencies or which have been designated in writing by the Rating
Agencies as Permitted Investments; and
(x) such other investments bearing interest or sold at a discount
acceptable to each Rating Agency as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by the Rating
Agencies, as evidenced by a signed writing delivered by each Rating
Agency;
provided that no such instrument shall be a Permitted Investment if such
- --------
instrument evidences the right to receive interest only payments with respect
to the obligations underlying such instrument.
Permitted Transferee: Any person other than (i) the United States,
--------------------
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International Organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization (except certain farmers' cooperatives described in section 521 of
the Code) which is exempt from tax imposed by Chapter 1 of the Code (including
the tax imposed by section 511 of the Code on unrelated business taxable
income) on any excess inclusions (as defined in section 860E(c)(1) of the
Code) with respect to any Residual Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (v) a
Person that is not a citizen or resident of the United States, a corporation,
partnership, or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust
whose income from sources without the United States is includible in gross
income for federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States unless such Person has
furnished the transferor and the Trustee with a duly completed Internal
Revenue Service Form 4224, and (vi) any other Person so designated by the
Depositor based upon an Opinion of Counsel that the Transfer of an Ownership
Interest in a Residual Certificate to such Person may cause the REMIC
hereunder to fail to qualify as a REMIC at any time that the Certificates are
outstanding. The terms "United States," "State" and "International
Organization" shall have the meanings set forth in section 7701 of the Code or
successor provisions. A corporation will not be treated as an instrumentality
of the United States or of any State or political 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, limited liability company, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Physical Certificates: As specified in the Preliminary Statement.
---------------------
Planned Balance: Not applicable.
---------------
Planned Principal Classes: As specified in the Preliminary
-------------------------
Statement.
PO Formula Principal Amount: As to any Distribution Date, the sum of
---------------------------
the applicable PO Percentage of (a) the principal portion of each Scheduled
Payment (without giving effect, prior to the Bankruptcy Coverage Termination
Date, to any reductions thereof caused by any Debt Service Reductions or
Deficient Valuations) due on each Mortgage Loan on the related Due Date, (b)
the Stated Principal Balance of each Mortgage Loan that was repurchased by the
Seller or the Master Servicer pursuant to this Agreement as of such
Distribution Date, (c) the Substitution Adjustment Amount in connection with
any Deleted Mortgage Loan received with respect to such Distribution Date, (d)
any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of
principal of Mortgage Loans that are not yet Liquidated Mortgage Loans
received during the calendar month preceding the month of such Distribution
Date, (e) with respect to each Mortgage Loan that became a Liquidated Mortgage
Loan during the calendar month preceding the month of such Distribution Date,
the amount of Liquidation Proceeds allocable to principal received with
respect to such Mortgage Loan during the calendar month preceding the month of
such Distribution Date with respect to such Mortgage Loan and (f) all partial
and full Principal Prepayments on Mortgage Loans received during the related
Prepayment Period; provided, however, that if a Bankruptcy Loss that is an
Excess Loss is sustained with respect to a Discount Mortgage Loan that is not
a Liquidated Mortgage Loan, the PO Formula Principal Amount will be reduced on
the related Distribution Date by the applicable PO Percentage of the principal
portion of such Bankruptcy Loss.
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.
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%.
Prepayment Interest Shortfall: As to any Distribution Date, Mortgage
-----------------------------
Loan and Principal Prepayment, the amount, if any, by which one month's
interest at the related Mortgage Rate (net of the related Master Servicing
Fee) on such Principal Prepayment exceeds the amount of interest paid in
connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the calendar month
-----------------
preceding the month of such Distribution Date.
Primary Insurance Policy: Each policy of primary mortgage guaranty
------------------------
insurance or any replacement policy therefor with respect to any Mortgage
Loan.
Principal Only Certificates: As specified in the Preliminary
---------------------------
Statement.
Principal Prepayment: Any payment of principal on a Mortgage Loan
--------------------
(including the Purchase Price of any Modified Mortgage Loan purchased pursuant
to Section 3.14(c)) 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 or made pursuant to Section 3.14(c) of the entire principal balance
of a Mortgage Loan.
Private Certificates: As specified in the Preliminary Statement.
--------------------
Pro Rata Share: As to any Distribution Date, the Subordinated
--------------
Principal Distribution Amount and any Class of Subordinated Certificates, the
portion of the Subordinated Principal Distribution Amount allocable to such
Class, equal to the product of the Subordinated Principal Distribution Amount
on such Distribution Date and a fraction, the numerator of which is the
related Class Certificate Balance thereof and the denominator of which is the
aggregate of the Class Certificate Balances of the Subordinated Certificates.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
-----------------
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus Supplement: The Prospectus Supplement dated February 24,
---------------------
1999 relating to the Offered Certificates.
PUD: Planned Unit Development.
---
Purchase Price: With respect to any Modified Mortgage Loan or any
--------------
Mortgage Loan required to be purchased by the Seller pursuant to Section 2.02
or 2.03 or purchased at the option of the Master Servicer pursuant to Section
3.14(b), 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; provided, however, that if such Mortgage Loan is a
Modified Mortgage Loan, the interest component of the Purchase Price shall be
computed (i) on the basis of the applicable Adjusted Mortgage Rate before
giving effect to the related modification and (ii) from the date to which
interest was last paid to the date on which such Modified Mortgage Loan is
assigned to the Master Servicer pursuant to Section 3.14(c).
Qualified Insurer: A mortgage guaranty insurance company duly
-----------------
qualified as such under the laws of the state of its principal place of
business and each state having jurisdiction over such insurer in connection
with the insurance policy issued by such insurer, duly authorized and licensed
in such states to transact a mortgage guaranty insurance business in such
states and to write the insurance provided by the insurance policy issued by
it, approved as a FNMA- or FHLMC-approved mortgage insurer or having a claims
paying ability rating of at least "AA" or equivalent rating by a nationally
recognized statistical rating organization. Any replacement insurer with
respect to a Mortgage Loan must have at least as high a claims paying ability
rating as the insurer it replaces had on the Closing Date.
Rating Agency: Each of the Rating Agencies specified in the
-------------
Preliminary Statement. If either such organization or a successor is no longer
in existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, as is designated by the
Depositor, notice of which designation shall be given to the Trustee.
References herein to a given rating or rating category of a Rating Agency
shall mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Mortgage Loan, an
-------------
amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the Adjusted Net Mortgage Rate from the Due
Date as to which interest was last paid or advanced (and not reimbursed) to
Certificateholders up to the Due Date in the month in which Liquidation
Proceeds are required to be distributed on the Stated Principal Balance of
such Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation
Proceeds, if any, received during the month in which such liquidation
occurred, to the extent applied as recoveries of interest at the Adjusted Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect
to each Mortgage Loan which has become the subject of a Deficient Valuation,
if the principal amount due under the related Mortgage Note has been reduced,
the difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation. With respect to each
Mortgage Loan which has become the subject of a Debt Service Reduction and any
Distribution Date, the amount, if any, by which the principal portion of the
related Scheduled Payment has been reduced.
Recognition Agreement: With respect to any Cooperative Loan, an
---------------------
agreement between the Cooperative Corporation and the originator of such
Mortgage Loan which establishes the rights of such originator in the
Cooperative Property.
Record Date: With respect to any Distribution Date, the close of
-----------
business on the last Business Day of the month preceding the month in which
such applicable Distribution Date occurs.
Reference Bank: As defined in Section 4.08.
--------------
Refinancing Mortgage Loan: Any Mortgage Loan originated in
-------------------------
connection with the refinancing of an existing mortgage loan.
Regular Certificates: As specified in the Preliminary Statement.
--------------------
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
----------
amended.
Relief Act Reductions: With respect to any Distribution Date and any
---------------------
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Mortgage Loan for the most recently ended calendar month
is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.
REMIC: A "real estate mortgage investment conduit" within the
-----
meaning of section 860D of the Code.
REMIC Change of Law: Any proposed, temporary or final regulation,
-------------------
revenue ruling, revenue procedure or other official announcement or
interpretation relating to REMICs and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating
----------------
to real estate mortgage investment conduits, which appear at sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REO Property: A Mortgaged Property acquired by the Trust Fund
------------
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Request for Release: The Request for Release submitted by the Master
-------------------
Servicer to the Trustee, substantially in the form of Exhibits M and N, as
appropriate.
Required Coupon: 7.00% per annum.
---------------
Required Insurance Policy: With respect to any Mortgage Loan, any
-------------------------
insurance policy that is required to be maintained from time to time under
this Agreement.
Residual Certificates: As specified in the Preliminary Statement.
---------------------
Responsible Officer: When used with respect to the Trustee, any Vice
-------------------
President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Restricted Classes: As defined in Section 4.02(e).
------------------
SAIF: The Savings Association Insurance Fund, or any successor
----
thereto.
S&P: Standard & Poor's, a division of The McGraw-Hill Companies 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, 26 Broadway, 15th Floor, New York, New York 10004, Attention:
Mortgage Surveillance Monitoring, or such other address as S&P may hereafter
furnish to the Depositor and the Master Servicer.
Scheduled Balances: Not applicable.
------------------
Scheduled Classes: As specified in the Preliminary Statement.
-----------------
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan
-----------------
due on any Due Date allocable to principal and/or interest on such Mortgage
Loan which, unless otherwise specified herein, shall give effect to any
related Debt Service Reduction and any Deficient Valuation that affects the
amount of the monthly payment due on such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
--------------
Security Agreement: With respect to any Cooperative Loan, the
------------------
agreement between the owner of the related Cooperative Shares and the
originator of the related Mortgage Note, which defines the terms of the
security interest in such Cooperative Shares and the related Proprietary
Lease.
Seller: IndyMac, Inc., a Delaware corporation, and its successors
------
and assigns, in its capacity as seller of the Mortgage Loans to the Depositor.
Seller/Servicer Guide: The PNC Mortgage Securities Corp. Servicing
---------------------
Guide for its mortgage loan purchase and conduit servicing program and all
amendments and supplements to it.
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 Depletion Date: The Distribution Date on which the Class
---------------------
Certificate Balance of the Senior Certificates has been reduced to zero.
Senior Percentage: As to any Distribution Date, the percentage
-----------------
equivalent of a fraction the numerator of which is the aggregate of the Class
Certificate Balances of each Class of Senior Certificates (other than the
Class PO Certificates) as of such date and the denominator of which is the
aggregate of the Class Certificate Balances of all Classes of Certificates
(other than the Class PO Certificates) as of such date.
Senior Prepayment Percentage: As to any Distribution Date during the
----------------------------
five years beginning on the first Distribution Date, 100%. The Senior
Prepayment Percentage for any Distribution Date occurring on or after the
fifth anniversary of the first Distribution Date will, except as provided
herein, be as follows: for any Distribution Date in the first year thereafter,
the Senior Percentage plus 70% of the Subordinated Percentage for such
Distribution Date; for any Distribution Date in the second year thereafter,
the Senior Percentage plus 60% of the Subordinated Percentage for such
Distribution Date; for any Distribution Date in the third year thereafter, the
Senior Percentage plus 40% of the Subordinated Percentage for such
Distribution Date; for any Distribution Date in the fourth year thereafter,
the Senior Percentage plus 20% of the Subordinated Percentage for such
Distribution Date; and for any Distribution Date thereafter, the Senior
Percentage for such Distribution Date (unless on any of the foregoing
Distribution Dates the Senior Percentage exceeds the initial Senior
Percentage, in which case such Senior Prepayment Percentage for such
Distribution Date will once again equal 100%). Notwithstanding the foregoing,
no decrease in the Senior Prepayment Percentage will occur if, as of the first
Distribution Date as to which any such decrease applies more than an average
of 2% of the dollar amount of all monthly payments on the Mortgage Loans in
the Mortgage Pool, due in each of the preceding twelve months were delinquent
60 days or more (including for this purpose any such Mortgage Loans in
foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust Fund) or (ii) cumulative Realized
Losses with respect to the Mortgage Loans in the Mortgage Pool, exceed (a)
with respect to the Distribution Date on the fifth anniversary of the first
Distribution Date, 30% of the Original Subordinated Principal Balance, (b)
with respect to the Distribution Date on the sixth anniversary of the first
Distribution Date, 35% of the Original Subordinated Principal Balance, (c)
with respect to the Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the Original Subordinated Principal Balance, (d)
with respect to the Distribution Date on the eighth anniversary of the first
Distribution Date, 45% of the Original Subordinated Principal Balance and (e)
with respect to the Distribution Date on the ninth anniversary of the first
Distribution Date, 50% of the Original Subordinated Principal Balance.
Senior Principal Distribution Amount: As to any Distribution Date,
------------------------------------
the sum of (i) the Senior Percentage of the applicable Non-PO Percentage of
all amounts described in clauses (a) through (d) of the definition of "Non-PO
Formula Principal Amount" for such Distribution Date, (ii) with respect to
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, 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; provided,
however that if a Bankruptcy Loss that is an Excess Loss is sustained with
respect to a Mortgage Loan that is not a Liquidated Mortgage Loan, the Senior
Principal Distribution Amount will be reduced on the related Distribution Date
by the Senior Percentage of the applicable Non-PO Percentage of the principal
portion of such Bankruptcy Loss.
Servicer: Any person with which the Master Servicer has entered into
--------
a Servicing Agreement for the servicing of all or a portion of the Mortgage
Loans pursuant to Section 3.02.
Servicer Advance: The meaning ascribed to such term in Section
----------------
3.08(d).
Servicing 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 (a)
the preservation, restoration and protection of a Mortgaged Property, (b)
expenses reimbursable to the Master Servicer pursuant to Section 3.14 and any
enforcement or judicial proceedings, including foreclosures, (c) the
management and liquidation of any REO Property and (d) compliance with the
obligations under Section 3.12.
Servicing Agreement: (a) The contract (including the PNC Mortgage
-------------------
Securities Corp. Selling Guide and PNC Mortgage Securities Corp. Servicing
Guide to the extent incorporated by reference in it) between the Master
Servicer and a Person relating to the servicing of mortgage loans as provided
in Section 3.02 substantially in the form of Exhibit F, as it may be amended
or modified from time to time, and (b) any other similar contract providing
substantially similar rights as those provided by the form of contract
attached as Exhibit F. No amendment or modification of a Servicing Agreement
may materially adversely affect the interests of Certificateholders.
Servicing Fee: As to each Mortgage Loan and any Distribution Date,
-------------
an amount equal to one month's interest at the applicable Servicing Fee Rate
on the Stated Principal Balance of such Mortgage Loan.
Servicing Fee Rate: With respect to any Mortgage Loan, the per annum
------------------
rate set forth in the Mortgage Loan Schedule for such Mortgage Loan.
Servicing Officer: Any officer of the Master Servicer involved in,
-----------------
or responsible for, the administration and servicing of the Mortgage Loans
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee by the Master Servicer on the Closing Date pursuant
to this Agreement, as such list may from time to time be amended.
Servicing Standard: That degree of skill and care exercised by the
------------------
Master Servicer with respect to mortgage loans comparable to the Mortgage
Loans serviced by the Master Servicer for itself or others.
Special Hazard Coverage Termination Date: The point in time at which
----------------------------------------
the Special Hazard Loss Coverage Amount is reduced to zero.
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged
-------------------
Property on account of direct physical loss, but not including (i) any loss of
a type covered by a hazard insurance policy or a flood insurance policy
required to be maintained with respect to such Mortgaged Property pursuant to
Section 3.10 to the extent of the amount of such loss covered thereby, or (ii)
any loss caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the
Trustee, the Master Servicer or any of their agents or employees (without
regard to any portion of the loss not covered by any errors and omissions
policy);
(c) errors in design, faulty workmanship or faulty materials, unless
the collapse of the property or a part thereof ensues and then only for
the ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or radioactive
or chemical contamination, all whether controlled or uncontrolled, and
whether such loss be direct or indirect, proximate or remote or be in
whole or in part caused by, contributed to or aggravated by a peril
covered by the definition of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war, including
action in hindering, combating or defending against an actual, impending
or expected attack:
1. by any government or sovereign power, de jure or de facto,
-- ---- -- -----
or by any authority maintaining or using military, naval or air
forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any
government or public authority, or risks of contraband or illegal
transportation or trade.
Special Hazard Loss Coverage Amount: With respect to the first
-----------------------------------
Distribution Date, $1,503,489.00. 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.
Startup Day: The Closing Date.
-----------
Stated Principal Balance: As to any Mortgage Loan and Due Date, the
------------------------
unpaid principal balance of such Mortgage Loan as of such Due Date as
specified in the amortization schedule at the time relating thereto (before
any adjustment to such amortization schedule by reason of any moratorium or
similar waiver or grace period) after giving effect to any previous partial
Principal Prepayments and Liquidation Proceeds allocable to principal (other
than with respect to any Liquidated Mortgage Loan) and to the payment of
principal due on such Due Date and irrespective of any delinquency in payment
by the related Mortgagor.
Subordinated Certificates: As specified in the Preliminary
-------------------------
Statement.
Subordinated Percentage: As to any Distribution, 100% minus the
-----------------------
Senior Percentage for such Distribution Date.
Subordinated Prepayment Percentage: As to any Distribution, 100%
----------------------------------
minus the Senior Prepayment Percentage for such Distribution Date.
Subordinated Principal Distribution Amount: With respect to any
------------------------------------------
Distribution Date, (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", with respect to
such Mortgage Loans for such Distribution Date, (ii) with respect to each such
Mortgage Loan that became a Liquidated Mortgage Loan during the calendar month
preceding the month of such Distribution Date, the Liquidation Proceeds
allocable to principal received with respect to such Mortgage Loan after
application of such amounts pursuant to clause (ii) of the definition of
Senior Principal Distribution Amount and (iii) the Subordinated Prepayment
Percentage of the applicable Non-PO Percentage of 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 to the Class PO Certificates on such Distribution
Date. Any such payment in respect of Class PO Deferred Amounts will be
deducted first from the amounts described in clauses (i) and (ii) above and
then from clause (iii) above.
Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller
------------------------
for a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit M,
(i) have a Stated Principal Balance, after deduction of the principal portion
of the Scheduled Payment due in the month of substitution, not in excess of,
and not more than 10% less than, the Stated Principal Balance of the Deleted
Mortgage Loan; (ii) be accruing interest (net of the related Servicing Fee) at
a rate no lower than and not more than 1% per annum higher than, that of the
Deleted Mortgage Loan; (iii) have a Loan-to-Value Ratio no higher than that of
the Deleted Mortgage Loan; (iv) have a remaining term to maturity no greater
than (and not more than one year less than that of) the Deleted Mortgage Loan;
(v) not be a Cooperative Loan unless the Deleted Mortgage Loan was a
Cooperative Loan and (vi) comply with each representation and warranty set
forth in Section 2.03.
Substitution Adjustment Amount: The meaning ascribed to such term
------------------------------
pursuant to Section 2.03.
Targeted Balance: Not applicable.
----------------
Targeted Principal Classes: As specified in the Preliminary
--------------------------
Statement.
Tax Matters Person: The person designated as the "tax matters
------------------
person" in the manner provided under Treasury regulation ss. 1.860F-4(d) and
temporary Treasury regulation ss. 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 $0.05.
Transfer: Any direct or indirect transfer or sale of any Ownership
--------
Interest in a Residual Certificate.
Trust Fund: The corpus of the trust created hereunder consisting of
----------
(i) the Mortgage Loans and all interest and principal received on or with
respect thereto after the Cut-off Date, other than (x) in respect of the
Mortgage Loans (other than the Mortgage Loans listed on Schedule V hereto),
such amounts as were due on or before the Cut-off Date and (y) in respect of
the Mortgage Loans listed on Schedule V hereto, such amounts as were due on or
before March 1, 1999; (ii) any assets held by the Trustee (or its duly
appointed agent) in the Investment Account and the Distribution Account and
all amounts deposited in them pursuant to the applicable provisions of this
Agreement (except amounts representing the Master Servicing Fee); (iii)
property that secured a Mortgage Loan and has been acquired by foreclosure,
deed-in-lieu of foreclosure or otherwise; and (iv) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing.
Trustee: The Bank of New York and its successors and, if a successor
-------
trustee is appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to
-----------
one-twelfth of the Trustee Fee Rate multiplied by the Pool Stated Principal
Balance with respect to such Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the per annum
----------------
rate agreed upon in writing on or prior to the Closing Date by the Trustee and
the Depositor.
Voting Rights: The portion of the voting rights of all of the
-------------
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to each Class of
Notional Amount Certificates, if any (such Voting Rights to be allocated among
the holders of Certificates of each such Class in accordance with their
respective Percentage Interests), and (b) the remaining Voting Rights (or 100%
of the Voting Rights if there is no Class of Notional Amount Certificates)
shall be allocated among Holders of the remaining Classes of Certificates in
proportion to the Certificate Balances of their respective Certificates on
such date.
Withdrawal Date: Any day during the period beginning on the 18th day
---------------
of the month of the related Distribution Date (or if that day is not a
Business Day, the immediately preceding Business Day) and ending on the last
Business Day before the 21st day of the month of the related Distribution
Date. The "related Due Date" for any Withdrawal Date is the Due Date in the
month of the applicable Distribution Date.
<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
----------------------------
(a) The Seller, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Depositor, without recourse, all the right, title and interest of the Seller
in and to the Mortgage Loans, including all interest and principal received or
receivable by the Seller on or with respect to the Mortgage Loans after the
Cut-off Date and all interest and principal payments on the Mortgage Loans
received prior to the Cut-off Date in respect of installments of interest and
principal due thereafter, but not including (x) in respect of the Mortgage
Loans (other than the Mortgage Loans listed on Schedule V hereto), payments of
principal and interest due and payable on or before the Cut-off Date and (y)
in respect of the Mortgage Loans listed on Schedule V hereto, payments of
principal and interest due and payable on or before March 1, 1999. 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 the first Distribution Account Deposit Date an amount equal to one
month's interest at the related Adjusted Net Mortgage Rate on the Cut-off Date
Principal Balance of such Mortgage Loan. If the Seller shall fail to deposit
such amount by the first Distribution Account Deposit Date, the Trustee shall
deposit such amount.
(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.
(c) In connection with the transfer and assignment set forth in
clause (b) above, the Depositor has delivered or caused to be delivered to the
Trustee for the benefit of the Certificateholders the following documents or
instruments with respect to each Mortgage Loan so assigned:
(i) (A) 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 the Mortgage Note (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); or
(B) with respect to any Lost Mortgage Note, a lost note
affidavit from the Seller stating that the original Mortgage Note
was lost or destroyed, together with a copy of such Mortgage Note;
(ii) except as provided below, the original recorded Mortgage or a
copy of such Mortgage certified by the Seller (or, in the case of a Mortgage
for which the related Mortgaged Property is located in the Commonwealth of
Puerto Rico, a copy of such Mortgage certified by the applicable notary) as
being a true and complete copy of the Mortgage;
(iii) a duly executed assignment of the Mortgage (which may be
included in a blanket assignment or assignments), together with, except as
provided below, all interim recorded assignments of such mortgage (each such
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which the assignment relates); provided that, if the
--------
related Mortgage has not been returned from the applicable public recording
office, such assignment of the Mortgage may exclude the information to be
provided by the recording office; provided, further that such assignment of
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Mortgage need not be delivered in the case of a Mortgage for which the related
Mortgage Property is located in the Commonwealth of Puerto Rico.
(iv) the original or copies of each Buydown Agreement, 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 Cooperative 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 Cooperative Shares and the Proprietary Lease; and
(G) Executed UCC-3 financing statements or other appropriate
UCC financing statements required by state law, evidencing a complete and
unbroken line from the mortgagee to the Trustee with evidence of recording
thereon (or in a form suitable for recordation).
In the event that in connection with any Mortgage Loan the Depositor
cannot deliver (a) the original recorded Mortgage, (b) all interim recorded
assignments or (c) the lender's title policy (together with all riders
thereto) satisfying the requirements of clause (ii), (iii) or (v) above,
respectively, concurrently with the execution and delivery hereof because such
document or documents have not been returned from the applicable public
recording office in the case of clause (ii) or (iii) above, or because the
title policy has not been delivered to either the Master Servicer or the
Depositor by the applicable title insurer in the case of clause (v) above, the
Depositor shall promptly deliver to the Trustee, in the case of clause (ii) or
(iii) above, such original Mortgage or such interim assignment, as the case
may be, with evidence of recording indicated thereon upon receipt thereof from
the public recording office, or a copy thereof, certified, if appropriate, by
the relevant recording office, but in no event shall any such delivery of the
original Mortgage Loan and each such interim assignment or a copy thereof,
certified, if appropriate, by the relevant recording office, be made later
than one year following the Closing Date, or, in the case of clause (v) above,
later than 120 days following the Closing Date; provided, however, that in the
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event the Depositor is unable to deliver by such date each Mortgage and each
such interim assignment by reason of the fact that any such documents have not
been returned by the appropriate recording office, or, in the case of each
such interim assignment, because the related Mortgage has not been returned by
the appropriate recording office, the Depositor shall deliver such documents
to the Trustee as promptly as possible upon receipt thereof and, in any event,
within 720 days following the Closing Date. The Depositor shall forward or
cause to be forwarded to the Trustee (a) from time to time additional original
documents evidencing an assumption or modification of a Mortgage Loan and (b)
any other documents required to be delivered by the Depositor or the Master
Servicer to the Trustee. In the event that the original Mortgage is not
delivered and in connection with the payment in full of the related Mortgage
Loan the public recording office requires the presentation of a "lost
instruments affidavit and indemnity" or any equivalent document, because only
a copy of the Mortgage can be delivered with the instrument of satisfaction or
reconveyance, the Master Servicer shall execute and deliver or cause to be
executed and delivered such a document to the public recording office. In the
case where a public recording office retains the original recorded Mortgage or
in the case where a Mortgage is lost after recordation in a public recording
office, the Seller shall deliver to the Trustee a copy of such Mortgage
certified by such public recording office to be a true and complete copy of
the original recorded Mortgage.
As promptly as practicable subsequent to such transfer and
assignment, and in any event, within thirty (30) days thereafter, the Trustee
shall (i) affix the Trustee's name to each assignment of Mortgage, as the
assignee thereof, (ii) cause such assignment to be in proper form for
recording in the appropriate public office for real property records within
thirty (30) days after receipt thereof and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignment of a Mortgage as to which the Trustee has not received the
information required to prepare such assignment in recordable form, the
Trustee's obligation to do so and to deliver the same for such recording shall
be as soon as practicable after receipt of such information and in any event
within thirty (30) days after the receipt thereof, and the Trustee need not
cause to be recorded any assignment which relates to a Mortgage Loan (a) the
Mortgaged Property and Mortgage File relating to which are located in
California or (b) in any other jurisdiction (including Puerto Rico) under the
laws of which, as evidenced by an Opinion of Counsel delivered by the Seller
(at the Seller's expense) to the Trustee, the recordation of such assignment
is not necessary to protect the Trustee's and the Certificateholders' interest
in the related Mortgage Loan.
In the case of Mortgage Loans that have been prepaid in full as of
the Closing Date, the Depositor, in lieu of delivering the above documents to
the Trustee, will deposit in the Investment Account the portion of such
payment that is required to be deposited in the Investment Account pursuant to
Section 3.08.
(d) The Seller intends to treat the transfer of the Mortgage Loans
to the Depositor as a sale for all tax, accounting and regulatory purposes.
Section 2.02. Acceptance by the Trustee of the Mortgage Loans.
-----------------------------------------------
The Trustee acknowledges receipt of the documents identified in the
Initial Certification in the form annexed hereto as Exhibit G and declares
that it holds and will hold such documents and the other documents delivered
to it constituting the Mortgage Files, and that it holds or will hold such
other assets as are included in the Trust Fund, in trust for the exclusive use
and benefit of all present and future Certificateholders. The Trustee
acknowledges that it will maintain possession of the Mortgage Notes in the
State of California, unless otherwise permitted by the Rating Agencies.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Master Servicer and the Seller an Initial Certification in the
form annexed hereto as Exhibit G. Based on its review and examination, and
only as to the documents identified in such Initial Certification, the Trustee
acknowledges that such documents appear regular on their face and relate to
such Mortgage Loan. The Trustee shall be under no duty or obligation to
inspect, review or examine said documents, 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
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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
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substitution or purchase occur more than 540 days from the Closing Date,
except that if the substitution or purchase of a Mortgage Loan pursuant to
this provision is required by reason of a delay in delivery of any documents
by the appropriate recording office, and there is a dispute between either the
Master Servicer or the Seller and the Trustee over the location or status of
the recorded document, then such substitution or purchase shall occur within
720 days from the Closing Date. The Trustee shall deliver written notice to
each Rating Agency within 270 days from the Closing Date indicating each
Mortgage Loan (a) which has not been returned by the appropriate recording
office or (b) as to which there is a dispute as to location or status of such
Mortgage Loan. Such notice shall be delivered every 90 days thereafter until
the related Mortgage Loan is returned to the Trustee. Any such substitution
pursuant to (a) above or purchase pursuant to (b) above shall not be effected
prior to the delivery to the Trustee of the Opinion of Counsel required by
Section 2.05, if any, and any substitution pursuant to (a) above shall not be
effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit N. No substitution is permitted
to be made in any calendar month after the Determination Date for such month.
The Purchase Price for any such Mortgage Loan shall be delivered by the Seller
to the Master Servicer for deposit in the Investment 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 Seller shall promptly deliver to the Master Servicer, and 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 Seller or
the Master Servicer from time to time.
It is understood and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage Loan which does not meet the
requirements of Section 2.01 shall constitute the sole remedy respecting such
defect available to the Trustee, the Depositor and any Certificateholder
against the Seller.
Section 2.03. Representations, Warranties and Covenants of the Seller and
-----------------------------------------------------------
the Master Servicer.
-------------------
(a) IndyMac, in its capacity as Seller, hereby makes the
representations and warranties set forth in Schedule II hereto, and by this
reference incorporated herein, to the Depositor and the Trustee, as of the
Closing Date, or if so specified therein, as of the Cut-off Date.
(b) The Seller, in its capacity as Seller, hereby makes the
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.
(c) The Master Servicer, in its capacity as Master Servicer, hereby
makes the representations and warranties set forth in Schedule IV 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.
(d) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(b) that materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan, the party discovering such breach shall give prompt notice thereof to
the other parties. The Seller hereby covenants that within 90 days of the
earlier of its discovery or its receipt of written notice from any party of a
breach of any representation or warranty made pursuant to Section 2.03(b)
which materially and adversely affects the interests of the Certificateholders
in any Mortgage Loan, it shall cure such breach in all material respects, and
if such breach is not so cured, shall, (i) if such 90 day period expires prior
to the second anniversary of the Closing Date, remove such Mortgage Loan (a
"Deleted Mortgage Loan") from the Trust Fund and substitute in its place a
---------------------
Substitute Mortgage Loan, in the manner and subject to the conditions set
forth in this Section 2.03; or (ii) repurchase the affected Mortgage Loan or
Mortgage Loans from the Trustee at the Purchase Price in the manner set forth
below; provided, however, that any such substitution pursuant to (i) above
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shall not be effected prior to the delivery to the Trustee of the Opinion of
Counsel required by Section 2.05, if any, and a Request for Release
substantially in the form of Exhibit N, and the Mortgage File for any such
Substitute Mortgage Loan; and provided, further, that, anything to the
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contrary herein notwithstanding, Seller shall have no obligation to cure any
such breach or to repurchase or substitute for such affected Mortgage Loan if
the substance of such breach constitutes fraud in the origination of such
affected Mortgage Loan and the Seller, at the time of such origination and on
the Closing Date, did not have actual knowledge of such fraud. 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 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 Investment 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
shall provide to the Seller any information requested by the Seller to permit
it to, and the Seller shall, determine the amount (if any) by which the
aggregate principal balance of all such Substitute Mortgage Loans as of the
date of substitution is less than the aggregate Stated Principal Balance of
all such Deleted Mortgage Loans (after application of the scheduled principal
portion of the monthly payments due in the month of substitution). The amount
of such shortage (the "Substitution Adjustment Amount") plus an amount equal
------------------------------
to the aggregate of any unreimbursed Advances and Servicer Advances with
respect to such Deleted Mortgage Loans shall be deposited into the Investment
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 Investment Account
pursuant to Section 3.08 on or before the Distribution Account Deposit Date
for the Distribution Date in the month following the month during which the
Seller became obligated hereunder to repurchase or replace such Mortgage Loan
and upon such deposit of the Purchase Price, the delivery of the Opinion of
Counsel required by Section 2.05 and receipt of a Request for Release in the
form of Exhibit N hereto, the Trustee shall release the related Mortgage File
held for the benefit of the Certificateholders to such Person, and the Trustee
shall execute and deliver at such Person's direction such instruments of
transfer or assignment prepared by such Person, in each case without recourse,
as shall be necessary to transfer title from the Trustee. It is understood and
agreed that the obligation under this Agreement of any Person to cure,
repurchase or replace any Mortgage Loan as to which a breach has occurred and
is continuing shall constitute the sole remedy against such Persons respecting
such breach available to Certificateholders, the Depositor or the Trustee on
their behalf.
The representations and warranties made pursuant to this Section
2.03 shall survive delivery of the respective Mortgage Files to the Trustee
for the benefit of the Certificateholders.
Section 2.04. Representations and Warranties of the Depositor as to the
---------------------------------------------------------
Mortgage Loans.
--------------
The Depositor hereby represents and warrants to the Trustee with
respect to each Mortgage Loan as of the date hereof or such other date set
forth herein that as of the Closing Date, and following the transfer of the
Mortgage Loans to it by the Seller, the Depositor had good title to the
Mortgage Loans and the Mortgage Notes were subject to no offsets, defenses or
counterclaims.
The Depositor hereby assigns, transfers and conveys to the Trustee
all of its rights with respect to the Mortgage Loans including, without
limitation, the representations and warranties of the Seller made pursuant to
Section 2.03(b), together with all rights of the Depositor to require the
Seller to cure any breach thereof or to repurchase or substitute for any
affected Mortgage Loan in accordance with this Agreement.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the Mortgage Files to
the Trustee.
Section 2.05. Delivery of Opinion of Counsel in Connection with
-------------------------------------------------
Substitutions and Repurchases.
-----------------------------
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or 2.03 shall be made more than 90 days
after the Closing Date unless the Seller delivers to the Trustee an Opinion of
Counsel, which Opinion of Counsel shall not be at the expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect that such
substitution will not (i) result in the imposition of the tax on "prohibited
transactions" on the Trust Fund or contributions after the Startup Date, as
defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause the REMIC hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
(b) Upon discovery by the Depositor, the Seller, the Master
Servicer, or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the
party discovering such fact shall promptly (and in any event within five (5)
Business Days of discovery) give written notice thereof to the other parties.
In connection therewith, the Trustee shall require the Seller, at the Seller's
option, to either (i) substitute, if the conditions in Section 2.03(d) with
respect to substitutions are satisfied, a Substitute Mortgage Loan for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within
90 days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty made pursuant to Section 2.03. The
Trustee shall reconvey to the Seller the Mortgage Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would a
Mortgage Loan repurchased for breach of a representation or warranty contained
in Section 2.03.
Section 2.06. Execution and Delivery of Certificates.
--------------------------------------
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed
and delivered to or upon the order of the Depositor, the Certificates in
authorized denominations evidencing directly or indirectly the entire
ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund and
exercise the rights referred to above for the benefit of all present and
future Holders of the Certificates and to perform the duties set forth in this
Agreement to the best of its ability, to the end that the interests of the
Holders of the Certificates may be adequately and effectively protected.
Section 2.07. REMIC Matters.
-------------
The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests
created hereby. The "Startup Day" for purposes of the REMIC Provisions shall
be the Closing Date. The "tax matters person" with respect to the REMIC
hereunder shall be the Trustee and the Trustee shall hold the Tax Matters
Person Certificate. The REMIC's fiscal year shall be the calendar year.
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicer to Service Mortgage Loans.
-----------------------------------------
For and on behalf of the Certificateholders, the Master Servicer
shall service and administer the Mortgage Loans in accordance with the terms
of this Agreement and the Servicing Standard. In connection with such
servicing and administration, the Master Servicer shall have full power and
authority, acting alone and/or through Servicers as provided in Section 3.02,
to do or cause to be done any and all things that it may deem necessary or
desirable in connection with such servicing and administration, including but
not limited to, the power and authority, subject to the terms hereof, (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages (but only in the manner provided in this
Agreement), (iii) to collect any Insurance Proceeds and other Liquidation
Proceeds, and (iv) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan. The Master
Servicer shall not make or permit any modification, waiver or amendment of any
term of any Mortgage Loan which would cause the REMIC to fail to qualify as a
REMIC or result in the imposition of any tax under Section 860F(a) or Section
860G(d) of the Code. Without limiting the generality of the foregoing, the
Master Servicer, in its own name or in the name of any Servicer or the
Depositor and the Trustee, is hereby authorized and empowered by the Depositor
and the Trustee, when the Master Servicer or the Servicer, as the case may be,
believes it appropriate in its reasonable judgment, to execute and deliver, on
behalf of the Trustee, the Depositor, the Certificateholders or any of them,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to
the Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. The Master Servicer shall prepare and
deliver to the Depositor and/or the Trustee such documents requiring execution
and delivery by either or both of them as are necessary or appropriate to
enable the Master Servicer to service and administer the Mortgage Loans to the
extent that the Master Servicer is not permitted to execute and deliver such
documents pursuant to the preceding sentence. Upon receipt of such documents,
the Depositor and/or the Trustee shall execute such documents and deliver them
to the Master Servicer.
In accordance with and to the extent of the Servicing Standard, the
Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further
as provided in Section 3.11. The costs incurred by the Master Servicer, if
any, in effecting the timely payments of taxes and assessments on the
Mortgaged Properties and related insurance premiums shall not, for the purpose
of calculating monthly distributions to the Certificateholders, be added to
the Stated Principal Balances of the related Mortgage Loans, notwithstanding
that the terms of such Mortgage Loans so permit.
Section 3.02. Subservicing; Enforcement of the Obligations of Servicers.
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(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a Servicer pursuant to a Servicing Agreement; provided,
--------
however, that such subservicing arrangement and the terms of the related
- -------
subservicing agreement must provide for the servicing of such Mortgage Loans
in a manner consistent with the servicing arrangements contemplated hereunder.
Each Servicer of a Mortgage Loan shall be entitled to receive and retain, as
provided in the related Servicing Agreement and in Section 3.17, the related
Servicing Fee from payments of interest received on such Mortgage Loan after
payment of all amounts required to be remitted to the Master Servicer in
respect of such Mortgage Loan. Unless the context otherwise requires,
references in this Agreement to actions taken or to be taken by the Master
Servicer in servicing the Mortgage Loans include actions taken or to be taken
by a Servicer on behalf of the Master Servicer. Each Servicing Agreement will
be based upon such terms and conditions as are generally required or permitted
by the Seller/Servicer Guide and are not inconsistent with this Agreement and
as the Master Servicer and the Servicer have agreed. With the approval of the
Master Servicer, a Servicer may delegate its servicing obligations to
third-party servicers, but such Servicer will remain obligated under the
related Servicing Agreement. The Master Servicer and Servicer may enter into
amendments to the related Servicing Agreement or a different form of Servicing
Agreement; provided, however, that any such amendments or different forms
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shall be consistent with and not violate the provisions of either this
Agreement or the Seller/Servicer Guide in a manner which would materially and
adversely affect the interests of the Certificateholders.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect
to the Mortgage Loans that are received by a Servicer regardless of whether
such payments are remitted by the Servicer to the Master Servicer.
(c) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
commercially reasonable efforts to enforce the obligations of each Servicer
under the related Servicing Agreement, to the extent that the non-performance
of any such obligation would have material and adverse effect on a Mortgage
Loan. Such enforcement, including, without limitation, the legal prosecution
of claims, termination of Servicing Agreements and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Master Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Master
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loan or (ii) from a specific recovery of
costs, expenses or attorneys fees against the party against whom such
enforcement is directed.
Section 3.03. Successor Servicers.
-------------------
The Master Servicer shall be entitled to terminate any Servicing
Agreement that may exist in accordance with the terms and conditions of such
Servicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Servicing Agreement
- -------- -------
by the Master Servicer or the Servicer, the Master Servicer shall either act
as servicer of the related Mortgage Loan or enter into a Servicing Agreement
with a successor Servicer which will be bound by the terms of the related
Servicing Agreement. If the Master Servicer or any affiliate of the Master
Servicer acts as servicer, it will not assume liability for the
representations and warranties of the Servicer which it replaces. If the
Master Servicer enters into a Servicing Agreement with a successor Servicer,
the Master Servicer shall use commercially reasonable efforts to have the
successor Servicer assume liability for the representations and warranties
made by the terminated Servicer in respect of the related Mortgage Loans and,
in the event of any such assumption by the successor Servicer, the Master
Servicer may, in the exercise of its business judgment, release the terminated
Servicer from liability for such representations and warranties.
Section 3.04. Liability of the Master Servicer.
--------------------------------
Notwithstanding any Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Servicer or references to actions taken through a Servicer or
otherwise, the Master Servicer shall remain obligated and liable to the
Trustee and Certificateholders for the servicing and administering of the
Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Servicing
Agreements or arrangements or by virtue of indemnification from the Servicer
and to the same extent and under the same terms and conditions as if the
Master Servicer alone were servicing and administering the Mortgage Loans. The
Master Servicer shall be entitled to enter into any agreement with a Servicer
or Seller for indemnification of the Master Servicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Section 3.05. No Contractual Relationship Between Servicers and the
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Trustee.
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Any Servicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Servicer and the Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Servicer in its capacity as such except as set forth in Section 3.07.
Section 3.06. Rights of the Depositor and the Trustee in Respect of the
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Master Servicer.
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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
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Servicer shall not be relieved of any of its obligations hereunder by virtue
of such performance by the Depositor or its designee. Neither the Trustee nor
the Depositor shall have any responsibility or liability for any action or
failure to act by the Master Servicer nor shall the Trustee or the Depositor
be obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
Section 3.07. Trustee to Act as Master Servicer.
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In the event that the Master Servicer shall for any reason no longer
be the Master Servicer hereunder (including by reason of an Event of Default),
the Trustee or its successor shall thereupon assume all of the rights and
obligations of the Master Servicer hereunder arising thereafter (except that
the Trustee shall not be (i) liable for losses of the Master Servicer pursuant
to Section 3.12 or any acts or omissions of the predecessor Master Servicer
hereunder), (ii) obligated to make Advances if it is prohibited from doing so
by applicable law, (iii) obligated to effectuate repurchases or substitutions
of Mortgage Loans hereunder, including but not limited to repurchases or
substitutions pursuant to Section 2.02 or 2.03, (iv) responsible for expenses
of the Master Servicer pursuant to Section 2.03 or (v) deemed to have made any
representations and warranties of the Master Servicer hereunder. Any such
assumption shall be subject to Section 7.02. If the Master Servicer shall for
any reason no longer be the Master Servicer (including by reason of any Event
of Default), the Trustee or its successor shall succeed to any rights and
obligations of the Master Servicer under each Servicing Agreement. The Trustee
or the successor servicer for the Trustee shall be deemed to have assumed all
of the Master Servicer's interest therein and to have replaced the Master
Servicer as a party to any Servicing Agreement entered into by the Master
Servicer as contemplated by Section 3.02 to the same extent as if the
Servicing Agreement had been assigned to the assuming party except that the
Master Servicer shall not be relieved of any liability or obligations under
any such Servicing Agreement.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each Servicing Agreement or substitute servicing
agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected or held by it and otherwise use commercially
reasonable efforts to effect the orderly and efficient transfer of the
substitute Servicing Agreement to the assuming party.
Section 3.08. Collection of Mortgage Loan Payments; Custodial Accounts;
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Investment Account; Distribution Account.
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(a) In accordance with and to the extent of the Servicing Standard,
the Master Servicer shall make commercially 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 from the first day it first became Delinquent; provided,
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however, that the Master Servicer cannot extend the maturity of any such
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Mortgage Loan past the date on which the final payment is due on the latest
maturing Mortgage Loan as of the Cut-off Date. In the event of any such
arrangement, the Master Servicer shall make Advances on the related Mortgage
Loan in accordance with the provisions of Section 4.01 during the scheduled
period in accordance with the amortization schedule of such Mortgage Loan
without modification thereof by reason of such arrangements. The Master
Servicer shall not be required to institute or join in litigation with respect
to collection of any payment (whether under a Mortgage, Mortgage Note or
otherwise or against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing the provision
of the Mortgage or other instrument pursuant to which such payment is required
is prohibited by applicable law.
(b) In those cases where a Servicer is servicing Mortgage Loans
pursuant to a Servicing Agreement, the Master Servicer shall cause the
Servicer, pursuant to the Servicing Agreement, to establish and maintain one
or more Custodial Accounts for P&I and Custodial Accounts for Reserves, each
of which shall be an Eligible Account. The Servicer will be required under its
Servicing Agreement to deposit into the Custodial Account for P&I or the
Custodial Account for Reserves on a daily basis no later than the Business Day
following receipt, all proceeds of Mortgage Loans received by the Servicer,
less its Servicing Fees and unreimbursed Servicer Advances and expenses to the
extent permitted by the Servicing Agreement. Proceeds received for individual
Mortgage Loans from any title, hazard, or FHA insurance policy, VA guaranty,
Primary Insurance Policy or other insurance policy covering the Mortgage Loans
shall be deposited first in the Custodial Account for Reserves if required for
the restoration or repair of the related Mortgaged Property. Proceeds from
those insurance policies not deposited in the Custodial Account for Reserves
shall be deposited in the Custodial Account for P&I and shall be applied to
the balances of the related Mortgage Loans as payments of interest and
principal. The Servicer shall not be required to deposit in the Custodial
Account for P&I or the Custodial Account for Reserves payments or collections
in the nature of prepayment charges or late charges. The Master Servicer is
hereby authorized to make withdrawals from and to issue drafts against the
Custodial Accounts for P&I and the Custodial Accounts for Reserves for the
purposes required or permitted by this Agreement. Each Custodial Account for
P&I and each Custodial Account for Reserves shall bear a designation clearly
showing the respective interests of the applicable Servicer, as trustee, and
of the Master Servicer, in substantially one of the following forms:
(i) With respect to the Custodial Account for P&I: (i)
[Servicer's Name], as agent, trustee and/or bailee of principal and interest
custodial account for PNC Mortgage Securities Corp., its successors and
assigns, for various owners of interests in PNC Mortgage Securities Corp.
mortgage-backed pools or (ii) [Servicer's Name] in trust for PNC Mortgage
Securities Corp.;
(ii) With respect to the Custodial Account for Reserves: (i)
[Servicer's Name], as agent, trustee and/or bailee of taxes and insurance
custodial account for PNC Mortgage Securities Corp., its successors and
assigns for various mortgagors and/or various owners of interests in PNC
Mortgage Securities Corp. mortgage-backed pools or (ii) [Servicer's Name] in
trust for PNC Mortgage Securities Corp. and various Mortgagors.
(c) The Master Servicer shall establish and maintain, or cause the
Servicers to establish and maintain, Buydown Fund Accounts into which the
Master Servicer and the Servicers, as applicable, shall deposit the Buydown
Funds.
(d) On or before the Withdrawal Date in each calendar month, the
Master Servicer shall cause the Servicer, pursuant to the Servicing Agreement,
to remit to the Master Servicer for deposit in the Investment Account all
funds held in the Custodial Account for P&I with respect to each Mortgage Loan
serviced by such Servicer that are required to be remitted to the Master
Servicer. The Servicer will also be required, pursuant to the Servicing
Agreement, to advance on or before each such Withdrawal Date amounts equal to
any Scheduled Payments (net of its Servicing Fees with respect thereto) not
received on any Mortgage Loans by the Servicer (such amount, a "Servicer
Advance"). The Servicer's obligation to advance with respect to each Mortgage
Loan will continue up to and including the first day of the month following
the date on which the related Mortgaged Property is sold at a foreclosure sale
or is acquired by the Trust Fund by deed in lieu of foreclosure or otherwise.
All such Servicer Advances received by the Master Servicer shall be deposited
promptly by it in the Investment Account.
Within five Business Days after the receipt by a Servicer of a
Principal Prepayment in Full or any Liquidation Proceeds or Insurance Proceeds
(not required to be applied to the restoration or repair of the related
Mortgaged Property), the Master Servicer shall cause such Servicer, pursuant
to the related Servicing Agreement, to remit such amounts to the Master
Servicer for deposit in the Investment Account.
(e) The Master Servicer shall establish and maintain an Investment
Account into which the Master Servicer shall deposit on a daily basis within
one Business Day of receipt, except as otherwise specifically provided herein,
the following payments and collections received by it in respect of Mortgage
Loans, and into which the Master Servicer shall transfer from the Custodial
Accounts for P&I, the Custodial Accounts for Reserves, and the Buydown Fund
Accounts, as appropriate, the following payments and collections deposited
into them by Servicers, subsequent to the Cut-off Date (other than in respect
of principal and interest due on the Mortgage Loans on or before the Cut-off
Date) and the following amounts required to be deposited hereunder:
(i) all payments on account of principal on the Mortgage Loans,
including Principal Prepayments and the principal component of any Servicer
Advance;
(ii) all payments on account of interest on the Mortgage Loans,
net of the sum of the related Master Servicing Fee and related Servicing Fee,
and the interest component of any Servicer Advance;
(iii) all Insurance Proceeds and Liquidation Proceeds (net of
any related expenses of the related Servicer), other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or released to
the Mortgagor in accordance with the Master Servicer's normal servicing
procedures;
(iv) any amount required to be deposited by the Master Servicer
pursuant to Section 3.08(g) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Master Servicer
pursuant to Sections 3.12 and 3.14;
(vi) all Purchase Prices from the Master Servicer or Seller and
all Substitution Adjustment Amounts;
(vii) all Advances made by the Master Servicer pursuant to
Section 4.01; and
(viii) any other amounts required to be deposited hereunder.
In addition, with respect to any Mortgage Loan that is subject to a
Buydown Agreement, on each Due Date for such Mortgage Loan, in addition to the
monthly payment remitted by the Mortgagor, the Master Servicer shall cause
funds to be transferred from the related Buydown Fund Account into the
Investment Account in an amount required to cause an amount of interest to be
paid with respect to such Mortgage Loan equal to the amount of interest that
has accrued on such Mortgage Loan from the preceding Due Date at the Mortgage
Rate net of the Master Servicing Fee on such date.
The foregoing requirements for remittance by the Master Servicer
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment penalties,
late payment charges or assumption fees, if collected, need not be remitted by
the Master Servicer. In the event that the Master Servicer shall remit any
amount not required to be remitted, it may at any time withdraw or direct the
institution maintaining the Investment Account to withdraw such amount from
the Investment 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 Investment
Account which describes the amounts deposited in error in the Investment
Account. The Master Servicer shall maintain adequate records with respect to
all withdrawals made pursuant to this Section 3.08. All funds deposited in the
Investment Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 3.11.
At its option, the Master Servicer may invest funds withdrawn from
the Custodial Accounts for P&I, as well as any Buydown Funds, Insurance
Proceeds and Liquidation Proceeds previously received by the Master Servicer
for its own account and at its own risk, during any period before their
deposit in the Distribution Account. Those funds shall immediately be
deposited by the Master Servicer with the Investment Depository in the
Investment Account for investment only as set forth in this Section 3.08. The
Master Servicer shall bear any losses incurred on any investments made with
the funds and shall be entitled to retain all gains realized on the
investments as additional servicing compensation. Not later than the Business
Day before the Distribution Date the Master Servicer shall deposit the funds,
net of any gains, in the Distribution Account.
(f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Master Servicer to the
Trustee pursuant to Section 3.11(a);
(ii) any amount deposited by the Master Servicer pursuant to
Section 3.08(g) in connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder which are required
to be deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw
such amount from the Distribution Account, any provision herein to the
contrary notwithstanding. Such direction may be accomplished by delivering an
Officer's Certificate to the Trustee which describes the amounts deposited in
error in the Distribution Account. All funds deposited in the Distribution
Account shall be held by the Trustee in trust for the Certificateholders until
disbursed in accordance with this Agreement or withdrawn in accordance with
Section 3.11. In no event shall the Trustee incur liability for withdrawals
from the Distribution Account at the direction of the Master Servicer.
(g) Each institution at which the Investment Account 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 the Business Day next preceding the related Distribution
Account Deposit Date in the case of the Investment Account or the Business Day
next preceding the Distribution Date in the case of the Distribution Account
(except that if such Permitted Investment is an obligation of the institution
that maintains such account, then such Permitted Investment shall mature not
later than such Distribution Account Deposit Date or Distribution Date, as the
case may be) 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
Investment 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 Investment
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
Investment Account or paid to the Trustee for deposit into the Distribution
Account, as applicable.
(h) 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 Investment Account not later than 30 days and not more than 45
days prior to any change thereof. The Trustee shall give notice to the Master
Servicer, the Seller, each Rating Agency and the Depositor of any proposed
change of the location of the Distribution Account not later than 30 days and
not more than 45 days prior to any change thereof.
Section 3.09. Collection of Taxes, Assessments and Similar Items; Escrow
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Accounts.
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(a) To the extent required by the related Mortgage Note and not
violative of current law, the Master Servicer shall cause each Servicer to
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Master Servicer or any Servicer to compel a Mortgagor to establish
an Escrow Account in violation of applicable law.
(b) Withdrawals of amounts so collected from the Escrow Accounts may
be made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to
reimburse the Master Servicer or the related Servicer out of related
collections for any payments made pursuant to Sections 3.12 (with respect to
taxes and assessments and insurance premiums) and 3.13 (with respect to hazard
insurance), to refund to any Mortgagors any sums determined to be overages, to
pay interest, if required by law or the terms of the related Mortgage or
Mortgage Note, to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement in
accordance with Section 9.01. The Escrow Accounts shall not be a part of the
Trust Fund.
(c) The Master Servicer shall advance any payments referred to in
Section 3.09(a) that are not timely paid by the Mortgagors or advanced by the
Servicers on the date when the tax, premium or other cost for which such
payment is intended is due, but the Master Servicer shall be required so to
advance only to the extent that such advances, in the good faith judgment of
the Master Servicer, will be recoverable by the Master Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise.
Section 3.10. Access to Certain Documentation and Information Regarding
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the Mortgage Loans.
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The Master Servicer shall afford, or shall cause the Servicers to
afford, the Depositor and the Trustee reasonable access to all records and
documentation regarding the Mortgage Loans and all accounts, insurance
information and other matters relating to this Agreement, such access being
afforded without charge, but only upon reasonable request and during normal
business hours at the office designated by the Master Servicer.
Upon reasonable advance notice in writing, the Master Servicer will
provide, or will cause the Servicers to provide, to each Certificateholder
which is a savings and loan association, bank or insurance company certain
reports and reasonable access to information and documentation regarding the
Mortgage Loans sufficient to permit such Certificateholder to comply with
applicable regulations of the OTS or other regulatory authorities with respect
to investment in the Certificates; provided that the Master Servicer and any
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Servicer shall be entitled to be reimbursed by each such Certificateholder for
actual expenses incurred by the Master Servicer or such Servicer in providing
such reports and access.
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 only upon reasonable and prior written request and during
normal business hours at the offices designated by the Master Servicer. Unless
prohibited by applicable laws or regulations, the Master Servicer and any
Servicer shall be entitled to be reimbursed by the related Certificateholders
for actual expenses incurred by the Master Servicer or such Servicer in
providing such access. Nothing in this Section 3.10 shall limit the obligation
of the Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the Master Servicer or
any Servicer to provide access as provided in this Section 3.10 as a result of
such obligation shall not constitute a breach of this Section 3.10.
Section 3.11. Permitted Withdrawals from the Investment Account and the
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Distribution Account.
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(a) The Master Servicer may from time to time make withdrawals from
the Investment Account for the following purposes:
(i) to pay to the Master Servicer or the related Servicer (to
the extent not previously retained), the servicing compensation to which it is
entitled pursuant to Section 3.17, and to pay to the Master Servicer, as
additional master servicing compensation, earnings on or investment income
with respect to funds in or credited to the Investment Account;
(ii) to reimburse the Master Servicer or the related Servicer
for unreimbursed Advances or Servicer Advances made by it, such right of
reimbursement pursuant to this subclause (ii) being limited to amounts
received on the Mortgage Loan(s) in respect of which any such Advance or
Servicer Advance was made;
(iii) to reimburse the Master Servicer or the related 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 or the related Servicer
for (A) unreimbursed Servicing Advances, the right to reimbursement pursuant
to this clause (v)(A) with respect to any Mortgage Loan being limited to
amounts received on such Mortgage Loan(s) which represent late recoveries of
the payments for which such advances were made pursuant to Section 3.01 or
Section 3.09 and (B) for unpaid Master Servicing Fees as provided in Section
3.14;
(vi) to pay to the purchaser, with respect to each Mortgage
Loan or property acquired in respect thereof that has been purchased pursuant
to Section 2.02, 2.03, 3.14(a), 3.14(b) or 3.14(c), all amounts received
thereon after the date of such purchase;
(vii) to pay itself reinvestment earnings deposited or earned
in the Investment Account to which it is entitled and to reimburse the Seller,
the Master Servicer or the Depositor for expenses incurred by any of them and
reimbursable pursuant to Section 6.03;
(viii) to withdraw any amount deposited in the Investment
Account and not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date, to
withdraw an amount equal to the related Available Funds and the Trustee Fee
for such Distribution Date, to the extent on deposit, and remit such amount to
the Trustee for deposit in the Distribution Account; and
(x) to clear and terminate the Investment Account upon
termination of this Agreement pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Investment Account pursuant to such subclauses (i), (ii),
(iv), (v) and (vi). Prior to making any withdrawal from the Investment Account
pursuant to subclause (iii), the Master Servicer shall deliver to the Trustee
an Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loan(s) and their respective
portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account
for distributions to Certificateholders in the manner specified in this
Agreement (and to withhold from the amounts so withdrawn the amount of any
taxes that it is authorized to withhold pursuant to the last paragraph of
Section 8.11). In addition, the Trustee may from time to time make withdrawals
from the Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related
Distribution Date;
(ii) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds in the
Distribution Account;
(iii) to withdraw and return to the Master Servicer any amount
deposited in the Distribution Account and not required to be deposited
therein; and
(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01.
(c) The Master Servicer (or the applicable Servicer, if it maintains
a Buydown Fund Account) is authorized to make withdrawals from the Buydown
Fund Account or Custodial Account for P&I established by any Servicer under
its supervision of the following amounts of Buydown Funds:
(i) To deposit each month in the Investment Account the amount
necessary to supplement payments received on Buydown Loans;
(ii) Upon a Principal Prepayment in Full of any Mortgage Loan
having a related Buydown Fund, to apply amounts remaining in Buydown Fund
Accounts to reduce the required amount of the Principal Prepayment in Full
(or, if the Mortgagor has made a Principal Prepayment in Full, to refund the
remaining Buydown Fund amounts to the Person entitled to them);
(iii) Upon a foreclosure or liquidation of any Mortgage Loan
having a Buydown Fund, to deposit remaining Buydown Fund amounts in the
Investment Account as Liquidation Proceeds; and
(iv) To clear and terminate the portion of any account
representing Buydown Funds following termination of this Agreement pursuant to
Section 9.01.
Section 3.12. Maintenance of Hazard Insurance; Maintenance of Primary
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Insurance Policies.
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(a) The Master Servicer shall cause to be maintained, for each
Mortgage Loan (other than a Cooperative Loan), hazard insurance with extended
coverage in an amount that is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan or (ii) the
greater of (y) the outstanding principal balance of the Mortgage Loan and (z)
an amount such that the proceeds of such policy shall be sufficient to prevent
the Mortgagor and/or the mortgagee from becoming a co-insurer. Each such
policy of standard hazard insurance shall contain, or have an accompanying
endorsement that contains, a standard mortgagee clause. To the extent it may
do so without breaching the related Servicing Agreement, the Master Servicer
shall replace any Servicer that does not cause such insurance, to the extent
it is available, to be maintained. Any amounts collected by the Master
Servicer under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or amounts released to
the Mortgagor in accordance with the Master Servicer's normal servicing
procedures) shall be deposited in the Investment Account or the related
Custodial Account for P&I, as applicable. Any cost incurred by the Master
Servicer or any Servicer in maintaining any such insurance shall not, for the
purpose of calculating monthly distributions to the Certificateholders or
remittances to the Trustee for their benefit, be added to the principal
balance of the Mortgage Loan, notwithstanding that the terms of the Mortgage
Loan so permit. Such costs shall be recoverable by the Master Servicer out of
late payments by the related Mortgagor or out of Liquidation Proceeds to the
extent permitted by Section 3.11. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage other than pursuant
to such applicable laws and regulations as shall at any time be in force and
as shall require such additional insurance. If the Mortgaged Property is
located at the time of origination of the Mortgage Loan in a federally
designated special flood hazard area and such area is participating in the
national flood insurance program, the Master Servicer shall cause flood
insurance to be maintained with respect to such Mortgage Loan. Such flood
insurance shall be in an amount equal to the least of (i) the original
principal balance of the related Mortgage Loan, (ii) the replacement value of
the improvements which are part of such Mortgaged Property, and (iii) the
maximum amount of such insurance available for the related Mortgaged Property
under the national flood insurance program.
In the event that the Master Servicer shall obtain and maintain a
blanket policy insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of this Section 3.12, it being understood and agreed that
such policy may contain a deductible clause on terms substantially equivalent
to those commercially available and maintained by comparable servicers. If
such policy contains a deductible clause, the Master Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property a policy complying with the first sentence of this Section 3.12, and
there shall have been a loss that would have been covered by such policy,
deposit in the Investment Account the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as Master Servicer of the Mortgage Loans, the Master Servicer
agrees to present, on behalf of itself, the Depositor, and the Trustee for the
benefit of the Certificateholders, claims under any such blanket policy.
(b) The Master Servicer shall not take, or permit any Servicer to
take, any action which would result in non-coverage under any applicable
Primary Insurance Policy of any loss which, but for the actions of the Master
Servicer or any Servicer, would have been covered thereunder. The Master
Servicer shall not cancel or refuse to renew any such Primary Insurance Policy
that is in effect at the date of the initial issuance of the 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 (i) with respect to any Mortgage Loan with a
Loan-to-Value Ratio less than or equal to 80% as of any date of determination
or, based on a new appraisal, the principal balance of such Mortgage Loan
represents 80% or less of the new Appraised Value or (ii) if maintaining such
Primary Insurance Policy is prohibited by applicable law. The Master Servicer
agrees, to the extent permitted by applicable law, to effect the timely
payment of the premiums on each Primary Insurance Policy, and such costs not
otherwise recoverable shall be recoverable by the Master Servicer from the
related liquidation proceeds.
In connection with its activities as Master Servicer of the Mortgage
Loans, the Master Servicer agrees to present, or cause the related Servicer to
present, on behalf of itself, the Trustee and the Certificateholders, claims
to the insurer under any Primary Insurance Policies and, in this regard, to
take such commercially reasonable action in accordance with the Servicing
Standard as shall be necessary to permit recovery under any Primary Insurance
Policies respecting defaulted Mortgage Loans. Any amounts collected by a
Servicer or the Master Servicer under any Primary Insurance Policies shall be
deposited in the Custodial Account for P&I, Custodial Account for Reserves, or
the Investment Account, as applicable.
Section 3.13. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
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(a) Except as otherwise provided in this Section 3.13, when any
property subject to a Mortgage has been conveyed by the Mortgagor, the Master
Servicer or the related Servicer shall, to the extent that it has knowledge of
such conveyance and in accordance with the Servicing Standard, enforce on
behalf of the Trustee any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, neither the Master Servicer nor the related
Servicer is required to exercise such rights with respect to a Mortgage Loan
if the Person to whom the related Mortgaged Property has been conveyed or is
proposed to be conveyed satisfies the terms and conditions contained in the
Mortgage Note and Mortgage related thereto and the consent of the mortgagee
under such Mortgage Note or Mortgage is not otherwise so required under such
Mortgage Note or Mortgage as a condition to such transfer. In the event that
(i) the Master Servicer or the related Servicer is prohibited by law from
enforcing any such due-on-sale clause, (ii) coverage under any Required
Insurance Policy would be adversely affected, (iii) the Mortgage Note does not
include a due-on-sale clause or (iv) nonenforcement is otherwise permitted
hereunder, the Master Servicer is authorized, subject to Section 3.13(b), to
take or enter into an assumption and modification agreement from or with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, unless
prohibited by applicable state law, the Mortgagor remains liable thereon,
provided that the Mortgage Loan shall continue to be covered (if so covered
before the Master Servicer enters such agreement) by the applicable Required
Insurance Policies. The Master Servicer, subject to Section 3.13(b), is also
authorized with the prior approval of the insurers under any Required
Insurance Policies to enter into a substitution of liability agreement with
such Person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as Mortgagor and becomes liable under
the Mortgage Note. Notwithstanding the foregoing, the Master Servicer shall
not be deemed to be in default under this Section 3.13 by reason of any
transfer or assumption which the Master Servicer reasonably believes it is
restricted by law from preventing, for any reason whatsoever.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.13(a), in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such
Person is to enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage that requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Master
Servicer shall prepare and deliver or cause to be prepared and delivered to
the Trustee for signature and shall direct, in writing, the Trustee to execute
the assumption agreement with the Person to whom the Mortgaged Property is to
be conveyed and such modification agreement or supplement to the Mortgage Note
or Mortgage or other instruments as are reasonable or necessary to carry out
the terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged
Property to such Person. In connection with any such assumption, no material
term of the Mortgage Note may be changed. In addition, the substitute
Mortgagor and the Mortgaged Property must be acceptable to the Master Servicer
in accordance with its underwriting standards as then in effect. Together with
each such substitution, assumption or other agreement or instrument delivered
to the Trustee for execution by it, the Master Servicer shall deliver an
Officer's Certificate signed by a Servicing Officer stating that the
requirements of this subsection have been met in connection therewith. The
Master Servicer shall notify, or cause the related Servicer to notify, the
Trustee that any such substitution or assumption agreement has been completed
by forwarding to the Trustee the original of such substitution or assumption
agreement, which in the case of the original shall be added to the related
Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Master Servicer or any
Servicer for entering into an assumption or substitution of liability
agreement will be retained by the Master Servicer as additional master
servicing compensation.
Section 3.14. Realization Upon Defaulted Mortgage Loans; Repurchase of
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Certain Mortgage Loans.
----------------------
(a) The Master Servicer shall use commercially reasonable efforts in
accordance with the Servicing Standard to foreclose upon or otherwise
comparably convert the ownership of Mortgaged Properties in respect of which
the related Mortgage Loans 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 the Servicing Standard and shall follow the requirements
of the insurer under any Required Insurance Policy; provided, however, that
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the Servicer may enter into, and shall give the Rating Agencies notice of, a
special servicing agreement with an unaffiliated holder of 100% Percentage
Interest of one or more Classes of Subordinated Certificates or a holder of a
class of securities representing interests in one or more Classes of
Subordinated Certificates and provided, further, that entering into such
special servicing agreement shall not result in the downgrading or withdrawal
of the respective ratings when assigned to the Certificates. Any such
agreement may contain provisions whereby such holder may instruct the Servicer
to commence or delay foreclosure proceedings with respect to delinquent
Mortgage Loans and will contain provisions for the deposit of cash by the
holder that would be available for distribution to Certificateholders if
Liquidation Proceeds are less than they otherwise may have been had the
Servicer acted in accordance with its normal procedures. Notwithstanding the
foregoing, the Master Servicer shall not be required to expend its own funds
in connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan after reimbursement
to itself of such expenses and (ii) that such expenses will be recoverable to
it through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Investment 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. The Master Servicer shall not foreclose upon or otherwise comparably
convert a Mortgaged Property if it 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 if the Master Servicer is aware of evidence of toxic waste,
other hazardous substances or other evidence of environmental contamination on
the Mortgaged Property and in either case the Master Servicer determines that
it would be imprudent to do so. In connection with such a foreclosure or other
conversion, the Master Servicer shall cause to be followed practices and
procedures it deems appropriate and that are usual in general mortgage
servicing activities.
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 hereunder. Pursuant to its
efforts to sell such REO Property, the Master Servicer shall either itself or
through an agent selected by the Master Servicer protect and conserve such REO
Property in accordance with the Servicing Standard 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 Investment Account no later than the close
of business on each Determination Date. The Master Servicer shall perform the
tax reporting and withholding required by Sections 1445 and 6050J of the Code
with respect to foreclosures and abandonments, the tax reporting required by
Section 6050H of the Code with respect to the receipt of mortgage interest
from individuals and, if required by Section 6050P of the Code with respect to
the cancellation of indebtedness by certain financial entities, by preparing
such tax and information returns as may be required, in the form required, and
delivering the same to the Trustee for filing.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Master Servicer shall dispose of such
Mortgaged Property prior to three 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 three-year period will not result in the imposition of
taxes on "prohibited transactions" on the REMIC as defined in section 860F of
the Code or cause the REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to
hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement, no
Mortgaged Property acquired by the Trust Fund shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code or (ii) subject the REMIC
to the imposition of any federal, state or local income taxes on the income
earned from such Mortgaged Property under Section 860G(c) of the Code or
otherwise, unless the Master Servicer has agreed to indemnify and hold
harmless the Trust Fund with respect to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of
bringing such a proceeding. The income earned from the management of any REO
Properties, net of reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such management and
net of unreimbursed Master Servicing Fees, Servicing Fees, Advances, Servicer
Advances and Servicing Advances, shall be applied to the payment of principal
of and interest on the related defaulted Mortgage Loans (with interest
accruing as though such Mortgage Loans were still current and adjustments, if
applicable, to the Mortgage Rate were being made in accordance with the terms
of the Mortgage Note) and all such income shall be deemed, for all purposes in
this Agreement, to be payments on account of principal and interest on the
related Mortgage Notes and shall be deposited into the Investment Account. To
the extent the net income received during any calendar month is in excess of
the amount attributable to amortizing principal and accrued interest at the
related Mortgage Rate on the related Mortgage Loan for such calendar month,
such excess shall be considered to be a partial prepayment of principal of the
related Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as any
income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Master Servicer or the related Servicer for
any related unreimbursed Servicing Advances, Master Servicing Fees and
Servicing Fees, as applicable; second, to reimburse the Master Servicer or the
related Servicer for any unreimbursed Advances or Servicer Advances, as
applicable, and to reimburse the Investment Account for any Nonrecoverable
Advances (or portions thereof) that were previously withdrawn by the Master
Servicer pursuant to Section 3.11(a)(iii) that related to such Mortgage Loan;
third, to accrued and unpaid interest (to the extent no Advance or Servicer
Advance has been made for such amount or any such Advance or Servicer Advance
has been reimbursed) on the Mortgage Loan or related REO Property, at the
Adjusted Net Mortgage Rate to the Due Date occurring in the month in which
such amounts are required to be distributed; and fourth, as a recovery of
principal of the Mortgage Loan. Excess Proceeds, if any, from the liquidation
of a Liquidated Mortgage Loan will be retained by the Master Servicer as
additional servicing compensation pursuant to Section 3.17.
(b) 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 Investment 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.
(c) The Master Servicer may agree to a modification of any Mortgage
Loan (the "Relevant Mortgage Loan") upon the request of the related Mortgagor,
provided that the modification is in lieu of a refinancing and the Mortgage
Rate on the Relevant Mortgage Loan, as modified, is approximately a prevailing
market rate for newly-originated mortgage loans having similar terms and (ii)
the Master Servicer purchases the Relevant Mortgage Loan from the Trust Fund
as described below. Effective immediately after such modification, and, in any
event, on the same Business Day on which the modification occurs, all right,
title and interest of the Trustee in and to the Modified Mortgage Loan shall
automatically be deemed transferred and assigned to the Master Servicer and
all benefits and burdens of ownership thereof, including without limitation
the right to accrued interest thereon from and including the date of
modification and the risk of default thereon, shall pass to the Master
Servicer. The Master Servicer shall promptly deliver to the Trustee a
certification of a Servicing Officer to the effect that all requirements of
the first paragraph of this subsection (c) have been satisfied with respect to
such Modified Mortgage Loan.
The Master Servicer shall deposit the Purchase Price for any
Modified Mortgage Loan in the Investment Account pursuant to Section 3.08(e)
within one Business Day after the purchase of such Modified Mortgage Loan.
Upon receipt by the Trustee of written notification of any such deposit signed
by a Servicing Officer, the Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be necessary
to vest in the Master Servicer any Modified Mortgage Loan previously
transferred and assigned pursuant hereto.
The Master Servicer covenants and agrees to indemnify the REMIC
against any and all liability for any "prohibited transaction" taxes and any
related interest, additions and penalties imposed on the REMIC established
hereunder as a result of any modification of a Mortgage Loan effected pursuant
to this subsection (c), any holding of a Modified Mortgage Loan by the REMIC
or any purchase of a Modified Mortgage Loan by the Master Servicer (but such
obligation shall not prevent the Master Servicer or any other appropriate
Person from contesting any such tax in appropriate proceedings and shall not
prevent the Master Servicer from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings). The Master Servicer shall
have no right of reimbursement for any amount paid pursuant to the foregoing
indemnification, except to the extent that the amount of any tax, interest and
penalties, together with interest thereon, is refunded to the REMIC or the
Master Servicer.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
-----------------------------------------------
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer will immediately
notify the Trustee by delivering, or causing to be delivered, a "Request for
Release" substantially in the form of Exhibit N. Upon receipt of such request,
the Trustee shall promptly release the related Mortgage File to the Master
Servicer, and the Trustee shall at the Master Servicer's direction execute and
deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Mortgage in each case provided by the Master
Servicer, together with the Mortgage Note with written evidence of
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 or, at the Master Servicer's
direction, to the related Servicer. Subject to the further limitations set
forth below, the Master Servicer shall cause the Mortgage File or documents so
released to be returned to the Trustee when the need therefor by the Master
Servicer no longer exists, unless the Mortgage Loan is liquidated and the
proceeds thereof are deposited in the Investment Account, in which case the
Master Servicer shall deliver to the Trustee a Request for Release in the form
of Exhibit N, signed by a Servicing Officer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the
Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity.
Section 3.16. Documents, Records and Funds in Possession of the Master
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Servicer to be Held for the Trustee.
-----------------------------------
The Master Servicer 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 Investment
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 Investment Account, Distribution Account
or any Escrow Account or Custodial Account for P&I or Custodial Account for
Reserves, 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 or any Servicer under this Agreement.
Section 3.17. Servicing Compensation.
----------------------
As compensation for its activities hereunder, the Master Servicer
shall be entitled out of each payment of interest on a Mortgage Loan (or
portion thereof) included in the Trust Fund to retain or withdraw from the
Investment Account an amount equal to the Master Servicing Fee for such
Distribution Date.
Additional master servicing compensation in the form of Excess
Proceeds, prepayment penalties, assumption fees, late payment charges and all
income and gain net of any losses realized from Permitted Investments shall be
retained by the Master Servicer to the extent not required to be deposited in
the Investment Account pursuant to Section 3.08. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance
and any Primary Insurance Policy and maintenance of the other forms of
insurance coverage required by this Agreement) and shall not be entitled to
reimbursement therefor except as specifically provided in this Agreement.
As compensation for its activities under its Servicing Agreement,
each Servicer shall be entitled to retain out of each payment of interest on a
Mortgage Loan (or portion thereof) included in the Trust Fund an amount equal
to interest at the applicable Servicing Fee Rate on the Stated Principal
Balance of the related Mortgage Loan for the period covered by such interest
payment.
Additional servicing compensation in the form of prepayment
penalties, assumption fees and late payment charges shall be retained by the
Servicers to the extent not required to be deposited in the Custodial Account
for P&I pursuant to the related Servicing Agreement. Each Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities under its Servicing Agreement (including payment of any premium for
hazard insurance and any Primary Insurance Policy and maintenance of the other
forms of insurance coverage required by this Agreement and its Servicing
Agreement) and shall not be entitled to reimbursement therefor except as
specifically provided in its Servicing Agreement and not inconsistent with
this Agreement.
In the event of any Prepayment Interest Shortfall, the aggregate
Master Servicing Fee for such Distribution Date shall be reduced (but not
below zero) by an amount equal to such Prepayment Interest Shortfall.
Section 3.18. 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 1999 fiscal year, an Officer's Certificate stating, as to
the signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year and of the performance of the Master
Servicer under this Agreement has been made under such officer's supervision,
(ii) to the best of such officer's knowledge, based on such review, the Master
Servicer has fulfilled all its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof and (iii) to the best of such officer's knowledge, each
Servicer has fulfilled all its obligations under its Servicing Agreement
throughout such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and
the nature and status thereof. The Trustee shall forward a copy of each such
statement to each Rating Agency.
Section 3.19. 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 1999 fiscal year, the Master Servicer at its expense
shall cause a nationally or regionally recognized firm of independent public
accountants (who may also render other services to the Servicer, the Seller or
any of their affiliates) 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 Audit Guide for Audits of HUD Approved Nonsupervised Mortgagees, 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 Audit Guide for Audits of HUD Approved
Nonsupervised Mortgagees requires it to report. In rendering such statement,
such firm may rely, as to matters relating to direct servicing of mortgage
loans by Servicers, upon comparable statements for examinations conducted
substantially in compliance with the Audit Guide for Audits of HUD Approved
Nonsupervised Mortgagees (rendered within one year of such statement) of
independent public accountants with respect to the related Servicer. Copies of
such statement shall be provided by the Trustee to any Certificateholder upon
request at the Master Servicer's expense, provided that such statement is
delivered by the Master Servicer to the Trustee.
Section 3.20. Errors and Omissions Insurance; Fidelity Bonds.
----------------------------------------------
The Master Servicer shall obtain and maintain, and shall cause each
Servicer to obtain and maintain, (to the extent generally commercially
available from time to time) fidelity bond and errors and omissions coverage
acceptable to FNMA or FHLMC regarding their obligations under this Agreement
and the applicable Servicing Agreement, respectively.
<PAGE>
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
Section 4.01. Advances.
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The Master Servicer shall determine on or before each Master
Servicer Advance Date whether it is required to make an Advance pursuant to
the definition thereof. If the Master Servicer determines it is required to
make an Advance, it shall, on or before the Master Servicer Advance Date,
either (i) deposit into the Distribution Account an amount equal to the
Advance, (ii) make an appropriate entry in its records relating to the
Distribution 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, or (iii) make a Master Servicer Advance in the form of any
combination of (i) and (ii). Any Amount Held for Future Distribution so
applied shall be replaced by the Master Servicer by deposit in the Investment
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
Investment Account for all Advances of its own funds made pursuant to this
Section 4.01 as provided in Section 3.11. The obligation to make Advances with
respect to any Mortgage Loan shall continue if such Mortgage Loan has been
foreclosed or otherwise terminated and the related Mortgaged Property has not
been liquidated. The Master Servicer shall inform the Trustee of the amount of
the Advance to be made on each Master Servicer Advance Date no later than the
second Business Day before the related Distribution Date.
The Master Servicer shall deliver to the Trustee on the related
Master Servicer Advance Date an Officer's Certificate of a Servicing Officer
indicating the amount of any proposed Advance determined by the Master
Servicer to be a Nonrecoverable Advance.
Section 4.02. Priorities of Distribution.
--------------------------
(a) The Trustee shall withdraw such Available Funds from the
Distribution Account and apply such funds to distributions on the specified
Classes of Senior Certificates in the following order and priority and, in
each case, to the extent of such funds remaining:
(i) to each interest-bearing Class of Senior Certificates, an
amount allocable to interest equal to the related Class Optimal Interest
Distribution Amount, any shortfall being allocated pro rata among such Classes
in proportion to the amount of the Class Optimal Interest Distribution Amount
that would have been distributed in the absence of such shortfall;
(ii) 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 related Non-PO Formula Principal
Amount, up to the amount of the applicable Senior Principal
Distribution Amount for such Distribution Date, will be
distributed as principal, sequentially, of the Class A-R and
Class A-1 Certificates, in that order until the respective
Class Certificate Balances thereof have been reduced to zero.
(iii) 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;
(iv) to each Class of Subordinated Certificates, subject to
paragraph (e) below, in the following order of priority:
(A) to the Class B-1 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(B) to the Class B-1 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(C) to the Class B-2 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(D) to the Class B-2 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(E) to the Class B-3 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(F) to the Class B-3 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(G) to the Class B-4 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(H) to the Class B-4 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(I) to the Class B-5 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date;
(J) to the Class B-5 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero;
(K) to the Class B-6 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such
Class for such Distribution Date; and
(L) to the Class B-6 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the
Class Certificate Balance thereof is reduced to zero; and
(v) to the Class A-R Certificates, any remaining funds.
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 and the Senior Principal
Distribution Amount and (B) the amount distributable on the Senior
Certificates, other than the Class PO Certificates, in respect of principal
shall be equal to the product of (1) the Amount Available for Senior Principal
and (2) a fraction, the numerator of which is the Senior Principal
Distribution Amount and the denominator of which is the sum of the Senior
Principal Distribution Amount and the PO Formula Principal Amount.
(b) [Reserved];
(c) On each Distribution Date on or after the Senior Credit Support
Depletion Date, notwithstanding the allocation and priority set forth in
Section 4.02(a)(ii)(y), 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.
(d) 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' 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.
(e) Notwithstanding the priority and allocation contained in Section
4.02(a), if, with respect to any Class of Subordinated Certificates, on any
Distribution Date the sum of the related Class Subordination Percentages of
such Class and of all Classes of Subordinated Certificates which have a higher
numerical Class designation than such Class (the "Applicable Credit Support
Percentage") is less than the Original Applicable Credit Support Percentage
for such Class, no distribution of Principal Prepayments will be made to any
such Classes (the "Restricted Classes") and the amount of such Principal
Prepayments otherwise distributable to the Restricted Classes shall be
distributed to the Classes of Subordinated Certificates having lower numerical
Class designations than such Class, pro rata, based on their respective Class
Certificate Balances immediately prior to such Distribution Date and shall be
distributed in the sequential order set forth in Section 4.02(a)(iv).
Section 4.03. [Reserved]
Section 4.04. [Reserved]
Section 4.05. Allocation of Realized Losses.
-----------------------------
(a) On or prior to each Determination Date, the Trustee shall
determine the total amount of Realized Losses, including Excess Losses, with
respect to the related Distribution Date.
Realized Losses with respect to any Distribution Date shall be
allocated as follows:
(i) the applicable PO Percentage of any Realized Loss,
including any Excess Loss, shall be allocated to the Class PO Certificates
until the Class Certificate Balance thereof is reduced to zero; and
(ii) (A) the applicable Non-PO Percentage of any Realized Loss
(other than an Excess Loss) shall be allocated first, to the Subordinated
Certificates in reverse order of their respective numerical Class
designations, until the respective Class Certificate Balance of each such
Class is reduced to zero and second, to the Senior Certificates (other than
the Class PO and Class X Certificates), pro rata, on the basis of their
respective Class Certificate Balances, in each case immediately prior to the
related Distribution Date, until the respective Class Certificate Balance of
each such Class is reduced to zero;
(B) the applicable Non-PO Percentage of any Excess Losses
on the Mortgage Loans shall be allocated to the Classes of Senior Certificates
(other than the Class PO and Class X Certificates) and the Subordinated
Certificates then outstanding, pro rata, on the basis of their respective
Class Certificate Balances in each case until the respective Class Certificate
Balances thereof have been reduced to zero.
(b) The Class Certificate Balance of the Class of Subordinated
Certificates then outstanding with the highest numerical Class designation
shall be reduced on each Distribution Date by the amount, if any, by which the
aggregate of the Class Certificate Balances of all outstanding Classes of
Certificates exceeds the Pool Stated Principal Balance for the following
Distribution Date.
(c) Any Realized Loss allocated to a Class of Certificates or any
reduction in the Class Certificate Balance of a Class of Certificates pursuant
to Section 4.05(b) shall be allocated among the Certificates of such Class in
proportion to their respective Certificate Balances.
(d) Any allocation of Realized Losses to a Certificate or to any
Component or any reduction in the Certificate Balance of a Certificate
pursuant to Section 4.05(b) shall be accomplished by reducing the Certificate
Balance or Component Balance thereof, as applicable, immediately following the
distributions made on the related Distribution Date in accordance with the
definition of "Certificate Balance" or "Component Balance," as the case may
be.
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, the Depositor and each Rating Agency a statement setting
forth with respect to the related distribution:
(i) the amount thereof allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments and
Liquidation Proceeds included therein;
(ii) the amount thereof allocable to interest, any Class Unpaid
Interest Shortfall included in such distribution and any remaining
Class Unpaid Interest Shortfall after giving effect to such
distribution;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds
available therefor, the amount of the shortfall and the allocation
thereof as between principal and interest;
(iv) the Class Certificate Balance of each Class of
Certificates after giving effect to the distribution of principal on
such Distribution Date;
(v) the Pool Stated Principal Balance for the following
Distribution Date;
(vi) the Senior Percentage and Subordinated Percentage for the
following Distribution Date;
(vii) the amount of the Master Servicing Fees and Servicing
Fees paid to or retained by the Master Servicer and the Servicers
(with respect to the Servicers, in the aggregate) with respect to
such Distribution Date;
(viii) the Pass-Through Rate for each such Class of
Certificates with respect to such Distribution Date;
(ix) the amount of Advances included in the distribution on
such Distribution Date and the aggregate amount of Advances
outstanding as of the close of business on such Distribution Date;
(x) the number and aggregate principal amounts of Mortgage
Loans (A) delinquent (exclusive of Mortgage Loans in foreclosure)
(1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or
more days and (B) in foreclosure and delinquent (1) 1 to 30 days (2)
31 to 60 days (3) 61 to 90 days and (4) 91 or more days, as of the
close of business on the last day of the calendar month preceding
such Distribution Date;
(xi) for each of the preceding 12 calendar months, or all
calendar months since the Cut-off Date, whichever is less, the
aggregate dollar amount of the Scheduled Payments (A) due on all
Outstanding Mortgage Loans on each of the Due Dates in each such
month and (B) delinquent 60 days or more on each of the Due Dates in
each such month;
(xii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number and
Stated Principal Balance of such Mortgage Loan as of the close of
business on the Determination Date preceding such Distribution Date
and the date of acquisition thereof;
(xiii) the total number and principal balance of any REO
Properties (and market value, if available) as of the close of
business on the Determination Date preceding such Distribution Date;
(xiv) the Senior Prepayment Percentage for the following
Distribution Date;
(xv) the aggregate amount of Realized Losses incurred during
the preceding calendar month and aggregate Realized Losses through
such Distribution Date; and
(xvi) the Special Hazard Loss Coverage Amount, the Fraud Loss
Coverage Amount and the Bankruptcy Loss Coverage Amount, in each
case as of the related Determination Date.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i), (a)(ii) and (a)(vii)
of this Section 4.06 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Code as from time to time in effect.
Section 4.07. Determination of Pass-Through Rates for COFI Certificates.
---------------------------------------------------------
The Pass-Through Rate for each Class of COFI Certificates for each
Interest Accrual Period after the initial Interest Accrual Period shall be
determined by the Trustee as provided below on the basis of the Index and the
applicable formulae appearing in footnotes corresponding to the COFI
Certificates in (1) to the table relating to the Certificates in the
Preliminary Statement.
Except as provided below, with respect to each Interest Accrual
Period following the initial Interest Accrual Period, the Trustee shall not
later than two Business Days following the publication of the applicable Index
determine the Pass-Through Rate at which interest shall accrue in respect of
the COFI Certificates during the related Interest Accrual Period.
Except as provided below, the Index to be used in determining the
respective Pass-Through Rates for the COFI Certificates for a particular
Interest Accrual Period shall be COFI for the second calendar month preceding
such Interest Accrual Period. If at the Outside Reference Date for any
Interest Accrual Period, COFI for the second calendar month preceding such
Interest Accrual Period has not been published, the Trustee shall use COFI for
the third calendar month preceding such Interest Accrual Period. If COFI for
neither the second nor third calendar months preceding any Interest Accrual
Period has been published on or before the related Outside Reference Date, the
Index for such Interest Accrual Period and for all subsequent Interest Accrual
Periods shall be the National Cost of Funds Index for the third calendar month
preceding such Interest Accrual Period (or the fourth preceding calendar month
if such National Cost of Funds Index for the third preceding calendar month
has not been published by such Outside Reference Date). In the event that the
National Cost of Funds Index for neither the third nor fourth calendar months
preceding an Interest Accrual Period has been published on or before the
related Outside Reference Date, then for such Interest Accrual Period and for
each succeeding Interest Accrual Period, the Index shall be LIBOR, determined
in the manner set forth below.
On each Interest Determination Date so long as the COFI Certificates
are outstanding and the applicable Index therefor is LIBOR, the Trustee shall
either (i) request each Reference Bank to inform the Trustee of the quotation
offered by its principal London office for making one-month United States
dollar deposits in leading banks in the London interbank market, as of 11:00
A.M. (London time) on such Interest Determination Date or (ii) in lieu of
making any such request, rely on such Reference Bank quotations that appear at
such time on the Reuters Screen LIBO Page (as defined in the International
Swap Dealers Association Inc. Code of Standard Wording, Assumptions and
Provisions for Swaps, 1986 Edition), to the extent available.
With respect to any Interest Accrual Period for which the applicable
Index is LIBOR, LIBOR for such Interest Accrual Period will be established by
the Trustee on the related Interest Determination Date as follows:
(a) If on any Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the next Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounding such
arithmetic mean upwards if necessary to the nearest whole multiple of 1/32%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next Interest
Accrual Period shall be whichever is the higher of (i) LIBOR as determined on
the previous Interest Determination Date or (ii) the Reserve Interest Rate.
The "Reserve Interest Rate" shall be the rate per annum which the Trustee
determines to be either (i) the arithmetic mean (rounded upwards if necessary
to the nearest whole multiple of 1/32%) of the one-month United States dollar
lending rates that New York City banks selected by the Trustee are quoting, on
the relevant Interest Determination Date, to the principal London offices of
at least two of the Reference Banks to which such quotations are, in the
opinion of the Trustee, being so made, or (ii) in the event that the Trustee
can determine no such arithmetic mean, the lowest one-month United States
dollar lending rate which New York City banks selected by the Trustee are
quoting on such Interest Determination Date to leading European banks.
From such time as the applicable Index becomes LIBOR until all of
the COFI Certificates are paid in full, the Trustee will at all times retain
at least four Reference Banks for the purposes of determining LIBOR with
respect to each Interest Determination Date. The Master Servicer initially
shall designate the Reference Banks. Each "Reference Bank" shall be a leading
bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market, shall not control, be controlled by, or be under common
control with, the Trustee and shall have an established place of business in
London. If any such Reference Bank should be unwilling or unable to act as
such or if the Master Servicer should terminate its appointment as Reference
Bank, the Trustee shall promptly appoint or cause to be appointed another
Reference Bank. The Trustee shall have no liability or responsibility to any
Person for (i) the selection of any Reference Bank for purposes of determining
LIBOR or (ii) any inability to retain at least four Reference Banks which is
caused by circumstances beyond its reasonable control.
In determining LIBOR and any Pass-Through Rate for the COFI
Certificates or any Reserve Interest Rate, the Trustee may conclusively rely
and shall be protected in relying upon the offered quotations (whether
written, oral or on the Reuters Screen) from the Reference Banks or the New
York City banks as to LIBOR or the Reserve Interest Rate, as appropriate, in
effect from time to time. The Trustee shall not have any liability or
responsibility to any Person for (i) the Trustee's selection of New York City
banks for purposes of determining any Reserve Interest Rate or (ii) its
inability, following a good-faith reasonable effort, to obtain such quotations
from the Reference Banks or the New York City banks or to determine such
arithmetic mean, all as provided for in this Section 4.07.
The establishment of LIBOR and each Pass-Through Rate for the COFI
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.
Section 4.08. Determination of Pass-Through Rates for LIBOR Certificates.
----------------------------------------------------------
On each Interest Determination Date so long as the LIBOR
Certificates are outstanding, the Trustee shall either (i) request each
Reference Bank to inform the Trustee of the quotation offered by its principal
London office for making one-month United States dollar deposits to leading
banks in the London interbank market, as of 11:00 A.M. (London time) on such
Interest Determination Date or (ii) in lieu of making any such request, rely
on such Reference Bank quotations that appear at such time on the Reuters
Screen LIBO Page (as defined in the International Swap Dealers Association
Inc. Code of Standard Wording, Assumptions and provisions for Swaps, 1986
Edition), to the extent available.
LIBOR for the next Interest Accrual Period will be established by
the Trustee on each Interest Determination Date as follows:
(a) If on any Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the next Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounding such
arithmetic mean upwards if necessary to the nearest whole multiple of 1/32%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next Interest
Accrual Period shall be whichever is the higher of (i) LIBOR as determined on
the previous Interest Determination Date or (ii) the Reserve Interest Rate.
The "Reserve Interest Rate" shall be the rate per annum which the Trustee
determines to be either (i) the arithmetic mean (rounded upwards if necessary
to the nearest whole multiple of 1/32%) of the one-month United States dollar
lending rates that New York City banks selected by the Trustee are quoting, on
the relevant Interest Determination Date, to the principal London offices of
at least two of the Reference Banks to which such quotations are, in the
opinion of the Trustee, being so made, or (ii) in the event that the Trustee
can determine no such arithmetic mean, the lowest one-month United States
dollar lending rate which New York City banks selected by the Trustee are
quoting on such Interest Determination Date to leading European banks.
(c) If on any Interest Determination Date the trustee is required
but is unable to determine the Reserve Interest Rate in the manner provided in
paragraph (b) above, LIBOR shall be LIBOR as determined on the preceding
Interest Determination Date, or, in the case of the first Interest
Determination Date, the Initial LIBOR Rate.
Until all of the LIBOR Certificates are paid in full, the Trustee
will at all times retain at least four Reference Banks for the purpose of
determining LIBOR with respect to each Interest Determination Date. The Master
Servicer initially shall designate the Reference Banks. Each "Reference Bank"
shall be a leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market, shall not control, be controlled by, or be
under common control with, the Trustee and shall have an established place of
business in London. If any such Reference Bank should be unwilling or unable
to act as such or if the Master Servicer should terminate its appointment as
Reference Bank, the Trustee shall promptly appoint or cause to be appointed
another Reference Bank. The Trustee shall have no liability or responsibility
to any Person for (i) the selection of any Reference Bank for purposes of
determining LIBOR or (ii) any inability to retain at least four Reference
Banks which is caused by circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trustee on each Interest
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes
corresponding to the LIBOR Certificates in the table relating to the
Certificates in the Preliminary Statement.
In determining LIBOR, any Pass-Through Rate for the LIBOR
Certificates or any Reserve Interest Rate, the Trustee may conclusively rely
and shall be protected in relying upon the offered quotations (whether
written, oral or on the Reuters Screen) from the Reference Banks or the New
York City banks as to LIBOR or the Reserve Interest Rate, as appropriate, in
effect from time to time. The Trustee shall not have any liability or
responsibility to any Person for (i) the Trustee's selection of New York City
banks for purposes of determining any Reserve Interest Rate or (ii) its
inability, following a good-faith reasonable effort, to obtain such quotations
from the Reference Banks or the New York City banks or to determine such
arithmetic mean, all as provided for in this Section 4.08.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.
<PAGE>
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
----------------
The Certificates shall be substantially in the forms attached hereto
as exhibits. The Certificates shall be issuable in registered form, in the
minimum denominations, integral multiples in excess thereof (except that one
Certificate in each Class may be issued in a different amount which must be in
excess of the applicable minimum denomination) and aggregate denominations per
Class set forth in the Preliminary Statement.
Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either (x) by
wire transfer in immediately available funds to the account of such holder at
a bank or other entity having appropriate facilities therefor, if (i) such
Holder has so notified the Trustee at least five Business Days prior to the
related Record Date and (ii) such Holder shall hold (A) a Notional Amount
Certificate, (B) 100% of the Class Certificate Balance of any Class of
Certificates or (C) Certificates of any Class with aggregate principal
Denominations of not less than $1,000,000 or (y) by check mailed by first
class mail to such Certificateholder at the address of such holder appearing
in the Certificate Register.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the countersignature and delivery of any
such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless countersigned by the Trustee by
manual signature, and such countersignature upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been
duly executed and delivered hereunder. All Certificates shall be dated the
date of their countersignature. On the Closing Date, the Trustee shall
countersign the Certificates to be issued at the direction of the Depositor,
or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee
on a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
Section 5.02. Certificate Register; Registration of Transfer and Exchange
-----------------------------------------------------------
of Certificates.
---------------
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.06, a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c)
below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration
of transfer of any Certificate, the Trustee shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly
executed by the holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No transfer of a Private Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. In
the event that a transfer is to be made in reliance upon an exemption from the
Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
transfer and such Certificateholder's prospective transferee shall each
certify to the Trustee in writing the facts surrounding the transfer in
substantially the form set forth in Exhibit J (the "Transferor Certificate")
and (i) deliver a letter in substantially the form of either Exhibit K (the
"Investment Letter") or Exhibit L (the "Rule 144A Letter") or (ii) there shall
be delivered to the Trustee at the expense of the transferor an Opinion of
Counsel that such transfer may be made pursuant to an exemption from the
Securities Act. The Depositor shall provide to any Holder of a Private
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee and the Master
Servicer shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information regarding the Certificates, the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably
request to meet its obligation under the preceding sentence. Each Holder of a
Private Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Depositor, the Seller and the Master
Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee (in the event such Certificate is a Private
Certificate or a Residual Certificate, such requirement is satisfied only by
the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit K or Exhibit L), to the effect that such
transferee is not an employee benefit plan or arrangement subject to Section
406 of ERISA or a plan subject to Section 4975 of the Code, nor a person
acting on behalf of any such plan or arrangement nor using the assets of any
such plan or arrangement to effect such transfer, or (ii) if the purchaser is
an insurance company, a representation that the purchaser is an insurance
company which is purchasing such Certificates with funds contained in an
"insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60 or
(iii) in the case of any such ERISA-Restricted Certificate presented for
registration in the name of an employee benefit plan subject to ERISA, or a
plan or arrangement subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan or arrangement or using such
plan's or arrangement's assets, an Opinion of Counsel satisfactory to the
Trustee, which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect that the
purchase or holding of such ERISA-Restricted Certificate will not result in
the assets of the Trust Fund being deemed to be "plan assets" and subject to
the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee to any obligation in addition to those expressly
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 or a Residual Certificate, in the event the
representation letter referred to in the preceding sentence is not furnished,
such representation shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquiror's) acceptance of the
ERISA-Restricted Certificates. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA-Restricted Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee
as described above shall be void and of no effect.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in
fact not permitted by this Section 5.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the transfer
was registered by the Trustee in accordance with the foregoing requirements.
(c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Residual Certificate
unless, in addition to the certificates required to be delivered to
the Trustee under subparagraph (b) above, the Trustee shall have
been furnished with an affidavit (a "Transfer Affidavit") of the
------------------
initial owner or the proposed transferee in the form attached hereto
as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Residual Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer
of a Residual Certificate and (C) not to Transfer its Ownership
Interest in a Residual Certificate or to cause the Transfer of an
Ownership Interest in a Residual Certificate to any other Person if
it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall
vest no rights in the purported Transferee. If any purported
transferee shall become a Holder of a Residual Certificate in
violation of the provisions of this Section 5.02(c), then the last
preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of Transfer
of such Residual Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a
Residual Certificate that is in fact not permitted by Section
5.02(b) and this Section 5.02(c) or for making any payments due on
such Certificate to the Holder thereof or taking any other action
with respect to such Holder under the provisions of this Agreement
so long as the Transfer was registered after receipt of the related
Transfer Affidavit, Transferor Certificate and either the Rule 144A
Letter or the Investment Letter. The Trustee shall be entitled but
not obligated to recover from any Holder of a Residual Certificate
that was in fact not a Permitted Transferee at the time it became a
Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Residual Certificate
at and after either such time. Any such payments so recovered by the
Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
(v) The Depositor shall use its best efforts to make available,
upon receipt of written request from the Trustee, all information
necessary to compute any tax imposed under Section 860E(e) of the
Code as a result of a Transfer of an Ownership Interest in a
Residual Certificate to any Holder who is not a Permitted
Transferee.
The restrictions on Transfers of a Residual Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trust Fund, the Trustee, the
Seller or the Master Servicer, to the effect that the elimination of such
restrictions will not cause the REMIC hereunder to fail to qualify as a REMIC
at any time that the Certificates are outstanding or result in the imposition
of any tax on the Trust Fund, a Certificateholder or another Person. Each
Person holding or acquiring any Ownership Interest in a Residual Certificate
hereby consents to any amendment of this Agreement which, based on an Opinion
of Counsel furnished to the Trustee, is reasonably necessary (a) to ensure
that the record ownership of, or any beneficial interest in, a Residual
Certificate is not transferred, directly or indirectly, to a Person that is
not a Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Residual Certificate which is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at
all times remain registered in the name of the Depository or its nominee and
at all times: (i) registration of the Certificates may not be transferred by
the Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
deal with the Depository, Depository Participants and indirect participating
firms as representatives of the Certificate Owners of the Book-Entry
Certificates for purposes of exercising the rights of holders under this
Agreement, and requests and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants
with respect to indirect participating firms and persons shown on the books of
such indirect participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trustee or the Depositor is
unable to locate a qualified successor, (y) the Depositor at its option
advises the Trustee in writing that it elects to terminate the book-entry
system through the Depository or (z) after the occurrence of an Event of
Default, Certificate Owners representing at least 51% of the Certificate
Balance of the Book-Entry Certificates together advise the Trustee and the
Depository through the Depository Participants in writing that the
continuation of a book-entry system through the Depository is no longer in the
best interests of the Certificate Owners, the Trustee shall notify all
Certificate Owners, through the Depository, of the occurrence of any such
event and of the availability of definitive, fully-registered Certificates
(the "Definitive Certificates") to Certificate Owners requesting the same.
Upon surrender to the Trustee of the related Class of Certificates by the
Depository, accompanied by the instructions from the Depository for
registration, 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 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and (b) there is delivered to the Master Servicer and
the Trustee such security or indemnity as may be required by them to hold each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, countersign and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any
new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate
issued pursuant to this Section 5.03 shall constitute complete and
indefeasible evidence of ownership, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners.
---------------------
The Master Servicer, the Trustee and any agent of the Master
Servicer or the Trustee may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee shall be affected by any notice to the
contrary.
Section 5.05. Access to List of Certificateholders' Names and Addresses.
---------------------------------------------------------
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or Master Servicer shall request such information in writing from
the Trustee, then the Trustee shall, within ten Business Days after the
receipt of such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of such Trust Fund held by the Trustee, if any. The
Depositor and every Certificateholder, by receiving and holding a Certificate,
agree that the Trustee shall not be held accountable by reason of the
disclosure of any such information as to the list of the Certificateholders
hereunder, regardless of the source from which such information was derived.
Section 5.06. Maintenance of Office or Agency.
-------------------------------
The Trustee will maintain or cause to be maintained at its expense
an office or offices or agency or agencies in New York City where Certificates
may be surrendered for registration of transfer or exchange. The Trustee
initially designates its Corporate Trust Office for such purposes. The Trustee
will give prompt written notice to the Certificateholders of any change in
such location of any such office or agency.
<PAGE>
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the Master
------------------------------------------------------
Servicer.
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The Depositor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
Section 6.02. Merger or Consolidation of the Depositor or the Master
------------------------------------------------------
Servicer.
--------
The Depositor and the Master Servicer will each keep in full effect
its existence, rights and franchises as a corporation under the laws of the
United States or under the laws of one of the states thereof and will each
obtain and preserve its qualification to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Master Servicer may be
merged or consolidated, or any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party,
or any person succeeding to the business of the Depositor or the Master
Servicer, shall be the successor of the Depositor or the Master Servicer, as
the case may be, hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that the successor or
-------- -------
surviving Person to the Master Servicer shall be qualified to sell mortgage
loans to, and to service mortgage loans on behalf of, FNMA or FHLMC.
Section 6.03. Limitation on Liability of the Depositor, the Seller, the
---------------------------------------------------------
Master Servicer and Others.
--------------------------
None of the Depositor, the Seller, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Master Servicer shall be under any liability to the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
-------- -------
this provision shall not protect the Depositor, the Seller, the Master
Servicer or any such Person against any breach of representations or
warranties made by it herein or protect the Depositor, the Seller, the Master
Servicer or any such Person from any liability which would otherwise be
imposed by reasons of willful misfeasance, bad faith or gross negligence in
the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Seller, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Seller or the
Master Servicer may rely in good faith on any document of any kind prima facie
----- -----
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Seller, the Master Servicer and any director,
officer, employee or agent of the Depositor, the Seller or the Master Servicer
shall be indemnified by the Trust Fund and held harmless against any loss,
liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense related to any specific Mortgage Loan or Mortgage Loans
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Seller or the
Master Servicer shall be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its respective duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that any of the Depositor, the Seller or the 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 Investment Account.
Section 6.04. Limitation on Resignation of the Master Servicer.
------------------------------------------------
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment of a successor servicer and
receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not result in a downgrading of the rating of
any of the Certificates, 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.
Section 6.05. Indemnification of Depositor and Seller. The Master
---------------------------------------
Servicer agrees to indemnify the Depositor and the Seller and each Person who
controls the Depositor or the Seller within the meaning of the Securities Act
against any claims, losses, damages, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs fees and expenses that the
trust, the Seller or the Depositor may sustain in any way related to the
failure of the Master Servicer to perform its obligations under this Agreement
to service the Mortgage Loans by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties hereunder. The Master Servicer agrees
to indemnify the Depositor and the Seller and each Person who controls the
Depositor or the Seller within the meaning of the Securities Act against any
claims, losses, damages, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs fees and expenses that the trust may
sustain in any way related to the breach of a representation or warranty under
Section 2.03(c).
<PAGE>
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
Distribution Account or remit to the Trustee any payment required to
be made under the terms of this Agreement, which failure shall
continue unremedied for five days (or such longer period as is
required so that three of the days are Business 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 that
materially affects the rights of Certificateholders, which failure
shall continue unremedied for a period of 60 days after the date on
which written notice of such failure shall have been given to the
Master Servicer by the Trustee or the Depositor, or to the Master
Servicer and the Trustee by the Holders of Certificates evidencing
not less than 25% of the Voting Rights evidenced by the
Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of
a receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been
entered against the Master Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of 60
consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations.
If an Event of Default described in clauses (i) to (v) of this
Section 7.01 shall occur, then, and in each and every such case, so long as
such Event of Default shall not have been remedied, the Trustee may, or at the
direction of the Holders of Certificates evidencing not less than 66K% 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), 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 make any Advance
which the Master Servicer failed to make subject to Section 4.01, whether or
not the obligations of the Master Servicer have been terminated pursuant to
this Section. 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 Distribution Account,
or thereafter be received with respect to the Mortgage Loans.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of
any late collection of a Scheduled Payment on a Mortgage Loan which was due
prior to the notice terminating such Master Servicer's rights and obligations
as Master Servicer hereunder and received after such notice, that portion
thereof to which such Master Servicer would have been entitled pursuant to
Sections 3.11(a)(i) through (viii), and any other amounts payable to such
Master Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
Section 7.02. Trustee to Act; Appointment of Successor.
----------------------------------------
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01, the Trustee shall, subject to and to the
extent provided in Section 3.07, be the successor to the Master Servicer in
its capacity as master servicer under this Agreement and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof and applicable law including the obligation to
make Advances pursuant to Section 4.01. As compensation therefor, the Trustee
shall be entitled to all funds relating to the Mortgage Loans that the Master
Servicer would have been entitled to charge to the Investment Account or
Distribution Account if the Master Servicer had continued to act hereunder.
Notwithstanding the foregoing, if the Trustee has become the successor to the
Master Servicer in accordance with Section 7.01, the Trustee may, if it shall
be unwilling to so act, or shall, if it is prohibited by applicable law from
making Advances pursuant to Section 4.01 or if it is otherwise unable to so
act, appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution the appointment of which does
not adversely affect the then current rating of the Certificates, by each
Rating Agency, as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities
of the Master Servicer hereunder. Any successor to the Master Servicer shall
be an institution which is a FNMA and FHLMC approved seller/servicer in good
standing, which has a net worth of at least $15,000,000, which is willing to
service the Mortgage Loans and which executes and delivers to the Depositor
and the Trustee an agreement accepting such delegation and assignment,
containing an assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of the Master Servicer (other
than liabilities of the Master Servicer under Section 6.03 incurred prior to
termination of the Master Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; provided that each Rating
--------
Agency acknowledges that its rating of the Certificates in effect immediately
prior to such assignment and delegation will not be qualified or reduced as a
result of such assignment and delegation. Pending appointment of a successor
to the Master Servicer hereunder, the Trustee, unless the Trustee is
prohibited by law from so acting, shall, subject to Section 3.07, act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess
-------- -------
of the Master Servicing Fee permitted the Master Servicer hereunder. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither
the Trustee nor any other successor master servicer shall be deemed to be in
default hereunder by reason of any failure to make, or any delay in making,
any distribution hereunder or any portion thereof or any failure to perform,
or any delay in performing, any duties or responsibilities hereunder, in
either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
Any successor to the Master Servicer as master servicer shall give
notice to the Mortgagors of such change of servicer and shall, during the term
of its service as master servicer, maintain in force the policy or policies
that the Master Servicer is required to maintain pursuant to Section 6.05.
Section 7.03. Notification to Certificateholders.
----------------------------------
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
<PAGE>
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of the Trustee.
---------------------
The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that are specifically required to be furnished
pursuant to any provision of this Agreement shall examine them to determine
whether they are in the form required by this Agreement; provided, however,
-------- -------
that the Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
-------- -------
(i) unless an Event of Default known to the Trustee shall have
occurred and be continuing, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall
be read into this Agreement against the Trustee and the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement which it believed in good faith to be
genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;
(ii) the Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be finally proven that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates evidencing
not less than 25% of the Voting Rights of Certificates relating to
the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Agreement.
Section 8.02. Certain Matters Affecting the Trustee.
-------------------------------------
Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties and the Trustee shall have no
responsibility to ascertain or confirm the genuineness of any
signature of any such party or parties;
(ii) the Trustee may consult with counsel, financial advisers
or accountants and the advice of any such counsel, financial
advisers or accountants and any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken
or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(iv) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested
in writing so to do by Holders of Certificates evidencing not less
than 25% of the Voting Rights allocated to each Class of
Certificates;
(v) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, accountants or attorneys;
(vi) the Trustee shall not be required to risk or expend its
own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers hereunder if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not assured to it;
(vii) the Trustee shall not be liable for any loss on any
investment of funds pursuant to this Agreement (other than as issuer
of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall
have received written notice thereof; and
(ix) the Trustee shall be under no obligation to exercise any
of the trusts, rights or powers vested in it by this Agreement or to
institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which may be incurred therein or
thereby.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
-----------------------------------------------------
The recitals contained herein and in the Certificates shall be taken
as the statements of the Depositor or the Seller, as the case may be, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates or of any Mortgage Loan or related document other than with
respect to the Trustee's execution and countersignature of the Certificates.
The Trustee shall not be accountable for the use or application by the
Depositor or the Master Servicer of any funds paid to the Depositor or the
Master Servicer in respect of the Mortgage Loans or deposited in or withdrawn
from the Investment Account by the Depositor or the Master Servicer.
Section 8.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
Section 8.05. Trustee's Fees and Expenses.
---------------------------
The Trustee, as compensation for its activities hereunder, shall be
entitled to withdraw from the Distribution Account on each Distribution Date
an amount equal to the Trustee Fee for such Distribution Date. The Trustee and
any director, officer, employee or agent of the Trustee shall be indemnified
by the Master Servicer and held harmless against any loss, liability or
expense (including reasonable attorney's fees) (i) incurred in connection with
any claim or legal action relating to (a) this Agreement, (b) the
Certificates, or (c) the performance of any of the Trustee's duties hereunder,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of any of the
Trustee's duties hereunder or incurred by reason of any action of the Trustee
taken at the direction of the Certificateholders and (ii) resulting from any
error in any tax or information return prepared by the Master Servicer. Such
indemnity shall survive the termination of this Agreement or the resignation
or removal of the Trustee hereunder. Without limiting the foregoing, the
Master Servicer covenants and agrees, except as otherwise agreed upon in
writing by the Depositor and the Trustee, and except for any such expense,
disbursement or advance as may arise from the Trustee's negligence, bad faith
or willful misconduct, to pay or reimburse the Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement with respect to (A)
the reasonable compensation and the expenses and disbursements of its counsel
not associated with the closing of the issuance of the Certificates, (B) the
reasonable compensation, expenses and disbursements of any accountant,
engineer or appraiser that is not regularly employed by the Trustee, to the
extent that the Trustee must engage such persons to perform acts or services
hereunder and (C) printing and engraving expenses in connection with preparing
any Definitive Certificates. Except as otherwise provided herein, the Trustee
shall not be entitled to payment or reimbursement for any routine ongoing
expenses incurred by the Trustee in the ordinary course of its duties as
Trustee, Registrar, Tax Matters Person or Paying Agent hereunder or for any
other expenses.
Section 8.06. Eligibility Requirements for the Trustee.
----------------------------------------
The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority and with a
credit rating which would not cause either of the Rating Agencies to reduce
their respective then current ratings of the Certificates (or having provided
such security from time to time as is sufficient to avoid such reduction) as
evidenced in writing by each Rating Agency. If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07. The entity serving as
Trustee may have normal banking and trust relationships with the Depositor and
its affiliates or the Master Servicer and its affiliates; provided, however,
-------- -------
that such entity cannot be an affiliate of the Seller, the Depositor or the
Master Servicer other than the Trustee in its role as successor to the Master
Servicer.
Section 8.07. Resignation and Removal of the Trustee.
--------------------------------------
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the Depositor, the
Master Servicer and each Rating Agency not less than 60 days before the date
specified in such notice, when, subject to Section 8.08, such resignation is
to take effect, and acceptance by a successor trustee in accordance with
Section 8.08 meeting the qualifications set forth in Section 8.06. If no
successor trustee meeting such qualifications shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice or
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request thereto by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or a
tax is imposed with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund is located and the imposition of such tax would be
avoided by the appointment of a different trustee, then the Depositor or the
Master Servicer may remove the Trustee and appoint a successor trustee by
written instrument, in triplicate, one copy of which shall be delivered to the
Trustee, one copy to the Master Servicer and one copy to the successor
trustee.
The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which shall be
delivered by the successor Trustee to the Master Servicer, one complete set to
the Trustee so removed and one complete set to the successor so appointed.
Notice of any removal of the Trustee shall be given to each Rating Agency by
the successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08.
Section 8.08. Successor Trustee.
-----------------
Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Master Servicer an instrument accepting such appointment
hereunder and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as
if originally named as trustee herein. The Depositor, the Master Servicer and
the predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties, and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 and its appointment
shall not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to
mail such notice within 10 days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed
at the expense of the Depositor.
Section 8.09. Merger or Consolidation of the Trustee.
--------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the business of the Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
eligible under the provisions of Section 8.06 without the execution or filing
of any paper or further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Master Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Fund, and to vest in such Person or Persons, in such capacity and
for the benefit of the Certificateholders, such title to the Trust Fund or any
part thereof, whichever is applicable, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in the case an Event of Default
shall have occurred and be continuing, the Trustee alone shall have the power
to make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
8.06 and no notice to Certificateholders of the appointment of any co-trustee
or separate trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) To the extent necessary to effectuate the purposes of this
Section 8.10, all rights, powers, duties and obligations conferred
or imposed upon the Trustee, except for the obligation of the
Trustee under this Agreement to advance funds on behalf of the
Master Servicer, shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the applicable
Trust Fund or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder and
such appointment shall not, and shall not be deemed to, constitute
any such separate trustee or co-trustee as agent of the Trustee;
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee; and
(iv) The Master Servicer, and not the Trustee, shall be liable
for the payment of reasonable compensation, reimbursement and
indemnification to any such separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees,
when and as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11. Tax Matters.
-----------
It is intended that the assets with respect to which any REMIC
election pertaining to the Trust Fund is to be made, as set forth in the
Preliminary Statement, shall constitute, and that the conduct of matters
relating to such assets shall be such as to qualify such assets as, a "real
estate mortgage investment conduit" as defined in and in accordance with the
REMIC Provisions. In furtherance of such intention, the Trustee covenants and
agrees that it shall act as agent (and the Trustee is hereby appointed to act
as agent) on behalf of the 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 the REMIC, containing such information
and at the times and in the manner as may be required by the Code or state or
local tax laws, regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and
in such manner as may be required thereby; (b) within thirty days of the
Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name,
title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code; (c) make
or cause to be made an election that such assets be treated as a REMIC on the
federal tax return for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and,
if necessary, state tax authorities, all information returns and reports as
and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original
issue discount using the Prepayment Assumption; (e) provide information
necessary for the computation of tax imposed on the transfer of a Residual
Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is
the record holder of an interest (the reasonable cost of computing and
furnishing such information may be charged to the Person liable for such tax);
(f) to the extent that they are under its control, conduct matters relating to
such assets at all times that any Certificates are outstanding so as to
maintain the status as a REMIC under the REMIC Provisions; (g) not knowingly
or intentionally take any action or omit to take any action that would cause
the termination of the REMIC's 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 the
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 the 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 the 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 REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of any REMIC, and otherwise act on behalf of the REMIC in relation to
any tax matter or controversy involving it.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within ten (10) days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows
of the Certificates and the Mortgage Loans. Thereafter, the Depositor shall
provide to the Trustee promptly upon written request therefor any such
additional information or data that the Trustee may, from time to time,
reasonably request in order to enable the Trustee to perform its duties as set
forth herein. The Depositor hereby indemnifies the Trustee for any losses,
liabilities, damages, claims or expenses of the Trustee arising from any
errors or miscalculations of the Trustee that result from any failure of the
Depositor to provide, or to cause to be provided, accurate information or data
to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of
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 or the
Seller, in the case of any such minimum tax, if such tax arises out of or
results from a breach by the Master Servicer or Seller of any of their
obligations under this Agreement or (iii) the Seller, if any such tax arises
out of or results from the Seller's obligation to repurchase a Mortgage Loan
pursuant to Section 2.02 or 2.03 or (iv) in all other cases, or in the event
that the Trustee, the Master Servicer or the Seller fails to honor its
obligations under the preceding clauses (i), (ii) or (iii), any such tax will
be paid with amounts otherwise to be distributed to the Certificateholders, as
provided in Section 3.11(b).
Section 8.12. Periodic Filings.
----------------
Pursuant to written instructions from the Depositor, the Trustee
shall prepare, execute and file all periodic reports required under the
Securities Exchange Act of 1934 in conformity with the terms of the relief
granted to the Depositor in CWMBS, Inc. (February 3, 1994), a copy of which
has been supplied to the Trustee by the Issuer. In connection with the
preparation and filing of such periodic reports, the Depositor and the Master
Servicer shall timely provide to the Trustee all material information
available to them which is required to be included in such reports and not
known to them to be in the possession of the Trustee and such other
information as the Trustee reasonably may request from either of them and
otherwise reasonably shall cooperate with the Trustee. The Trustee shall have
no liability with respect to any failure to properly prepare or file such
periodic reports resulting from or relating to the Trustee's inability or
failure to obtain any information not resulting from its own negligence or
willful misconduct.
<PAGE>
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 (other than in respect of REO Property) 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. 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 Master
Servicer may purchase all Mortgage Loans and REO Properties pursuant to clause
(a) above only if the Pool Stated Principal Balance, at the time of any such
repurchase, aggregates less than ten percent of the Cut-off Date Pool
Principal Balance. The purchase price for the Mortgage Loans shall be
deposited in the Investment 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 Master Servicer the related Mortgage
File and shall execute and deliver such instruments of transfer or assignment
prepared by the Master Servicer, in either case without recourse, as shall be
necessary to vest the Mortgage Loans in the Master Servicer and the Master
Servicer shall succeed to all the Trustee's right, title and interest in and
to the Mortgage Loans and all security and documents related thereto. Such
assignment shall be an assignment outright and not for security. The Master
Servicer shall thereupon own the Mortgage Loans, and all security and
documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
Section 9.02. Final Distribution on the Certificates.
--------------------------------------
If on any Determination Date, the Master Servicer determines that
there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Investment Account, the Master Servicer
shall direct the Trustee promptly to send a final distribution notice to each
Certificateholder. If the Master Servicer elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date
notice is to be mailed to the affected Certificateholders the Master Servicer
shall notify the Depositor and the Trustee of the date the Master Servicer
intends to terminate the Trust Fund and of the applicable repurchase price of
the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given
promptly by the Trustee by letter to Certificateholders mailed not earlier
than the 15th day and not later than the 10th day of the month next preceding
the month of such final distribution. Any such notice shall specify (a) the
Distribution Date upon which final distribution on the Certificates will be
made upon presentation and surrender of Certificates at the office therein
designated, (b) the amount of such final distribution, (c) the location of the
office or agency at which such presentation and surrender must be made, and
(d) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of
the Certificates at the office therein specified. The Master Servicer will
give such notice to each Rating Agency at the time such notice is given to
Certificateholders.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Certificateholders of each Class, in each
case on the final Distribution Date and in the order set forth in Section
4.02, 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 accrued interest thereon (or on their Notional Amount, if
applicable) and (ii) as to the Residual Certificates, the amount, if any,
which remains on deposit in the Distribution Account (other than the amounts
retained to meet claims) after application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain a part of the Trust Fund. If within one year after the
second notice all Certificates shall not have been surrendered for
cancellation, the Class A-R Certificateholders shall be entitled to all
unclaimed funds and other assets of the Trust Fund which remain subject
hereto.
Section 9.03. Additional Termination Requirements.
-----------------------------------
(a) In the event the Master Servicer exercises its purchase option
as provided in Section 9.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless the Trustee has been
supplied with an Opinion of Counsel, at the expense of the Master Servicer, to
the effect that the failure to comply with the requirements of this Section
9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" on the REMIC as defined in Section 860F of the Code, or (ii)
cause the REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date
set forth in the notice given by the Master Servicer under Section
9.02, the Master Servicer shall prepare and the Trustee, at the
expense of the "tax matters person", shall adopt a plan of complete
liquidation within the meaning of Section 860F(a)(4) of the Code
which, as evidenced by an Opinion of Counsel (which opinion shall
not be an expense of the Trustee, the Tax Matters Person or the
Trust Fund), meets the requirements of a qualified liquidation; and
(2) Within 90 days after the time of adoption of such a
plan of complete liquidation, the Trustee shall sell all of the
assets of the Trust Fund to the Master Servicer for cash in
accordance with Section 9.01.
(b) The Trustee as agent for the 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.
<PAGE>
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.
---------
This Agreement may be amended from time to time by the Seller, the
Depositor, the Master Servicer and the Trustee without the consent of any of
the Certificateholders (i) to cure any ambiguity or mistake, (ii) to correct
any defective provision herein or to supplement any provision herein which may
be inconsistent with any other provision herein, (iii) to add to the duties of
the Depositor, the Seller or the Master Servicer, (iv) to add any other
provisions with respect to matters or questions arising hereunder or (v) to
modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement; provided that any action pursuant to clauses (iv)
--------
or (v) above 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; provided, however, that no such Opinion of Counsel shall be
-------- -------
required if the Person requesting the amendment obtains a letter from each
Rating Agency stating that the amendment would not result in the downgrading
or withdrawal of the respective ratings then assigned to the Certificates; 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 Seller, 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 (i) maintain the
qualification of the REMIC as a REMIC under the Code, (ii) avoid or minimize
the risk of the imposition of any tax on the REMIC pursuant to the Code that
would be a claim at any time prior to the final redemption of the Certificates
or (iii) comply with any other requirements of the Code, 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, as applicable, (i) maintain such qualification, (ii)
avoid or minimize the risk of the imposition of such a tax or (iii) comply
with any such requirements of the Code.
This Agreement may also be amended from time to time by the Seller,
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%, or (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.
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 the REMIC or the
Certificateholders or cause the 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.
It shall not be necessary for the consent of Certificateholders
under this Section 10.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be
an expense of the Trustee or the Trust Fund), satisfactory to the Trustee that
(i) such amendment is permitted and is not prohibited by this Agreement and
that all requirements for amending this Agreement have been complied with; and
(ii) either (A) the amendment does not adversely affect in any material
respect the interests of any Certificateholder or (B) the conclusion set forth
in the immediately preceding clause (A) is not required to be reached pursuant
to this Section 10.01.
Section 10.02. Recordation of Agreement; Counterparts.
--------------------------------------
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Master Servicer at its
expense, but only upon direction by the Trustee accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially
affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one
and the same instrument.
Section 10.03. Governing Law.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE 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, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES.
Section 10.04. Intention of Parties.
--------------------
It is the express intent of the parties hereto that the conveyance
(i) of the Mortgage Loans by the Seller to the Depositor and (ii) of the Trust
Fund by the Depositor to the Trustee each be, and be construed as, an absolute
sale thereof. It is, further, not the intention of the parties that such
conveyances be deemed a pledge thereof. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Seller or Depositor, as the case may be, or if for any other
reason this Agreement is held or deemed to create a security interest in
either such assets, then (i) this Agreement shall be deemed to be a security
agreement within the meaning of the Uniform Commercial Code of the State of
New York and (ii) the conveyances provided for in this Agreement shall be
deemed to be an assignment and a grant (i) by the Seller to the Depositor or
(ii) by the Depositor to the Trustee, for the benefit of the
Certificateholders, of a security interest in all of the assets transferred,
whether now owned or hereafter acquired.
The Seller and the Depositor for the benefit of the
Certificateholders shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were deemed
to create a security interest in the Trust Fund, such security interest would
be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of the
Agreement. The Depositor shall arrange for filing any Uniform Commercial Code
continuation statements in connection with any security interest granted or
assigned to the Trustee for the benefit of the Certificateholders.
Section 10.05. Notices.
-------
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency 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 copies of the following:
1. Each report to Certificateholders described in Section 4.06;
2. Each annual statement as to compliance described in Section
3.16;
3. Each annual independent public accountants' servicing report
described in Section 3.17; and
4. Any notice of a purchase of a Mortgage Loan pursuant to
Section 2.02, 2.03 or 3.11.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (a) in
the case of the Depositor, CWMBS, Inc., 155 North Lake Avenue, Pasadena,
California 91101, Attention: David A. Spector, (b) in the case of the Master
Servicer, PNC Mortgage Securities Corp., 75 North Fairway Drive, Vernon Hills,
Illinois 60061, Attention: General Counsel (with a copy directed to the
attention of the Master Servicing Department) 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 Seller, IndyMac, Inc., 155 North Lake Avenue,
Pasadena, California 91101, Attention: Secondary Marketing, (d) 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 1999-C, or such
other address as the Trustee may hereafter furnish to the Depositor or Master
Servicer, and (e) in the case of each of the Rating Agencies, the address
specified therefor in the definition corresponding to the name of such Rating
Agency. Notices to Certificateholders shall be deemed given when mailed, first
class postage prepaid, to their respective addresses appearing in the
Certificate Register.
Section 10.06. Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
Section 10.07. Assignment.
----------
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may not be assigned by the Master
Servicer without the prior written consent of the Trustee and Depositor.
Section 10.08. Limitation on Rights of Certificateholders.
------------------------------------------
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth or contained in the terms of the Certificates
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third party by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
herein provided, and unless the Holders of Certificates evidencing not less
than 25% of the Voting Rights evidenced by the Certificates shall also have
made written request to the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section 10.08, each and every Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Section 10.09. Inspection and Audit Rights.
---------------------------
The Master Servicer agrees that, on reasonable prior notice, it will
permit and will cause each Servicer to permit any representative of the
Seller, 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 Seller, 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 Seller,
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 Servicer.
Section 10.10. Certificates Nonassessable and Fully Paid.
-----------------------------------------
It is the intention of the Depositor that Certificateholders 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.
* * * * * *
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Trustee, the Seller and the
Master Servicer have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first
above written.
CWMBS, INC.,
as Depositor
By: /s/ Celia Coulter
-----------------------------------
Name: Celia Coulter
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Kelly A. Sheahan
-----------------------------------
Name: Kelly A. Sheahan
Title: Assistant Vice President
INDYMAC, INC.,
as Seller
By: /s/ John Kim
-----------------------------------
Name: John Kim
Title: Vice President
PNC MORTGAGE SECURITIES CORP.,
as Master Servicer
By: /s/ Daniel P. Hoffman
-----------------------------------
Name: Daniel P. Hoffman
Title: Vice President
<PAGE>
SCHEDULE I
Mortgage Loan Schedule
[Delivered at Closing to Trustee]
<PAGE>
SCHEDULE II
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1999-C
Representations and Warranties of the Seller
--------------------------------------------
IndyMac, Inc. ("IndyMac") 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 IndyMac, as seller, PNC Mortgage Securities Corp., as master servicer,
CWMBS, Inc., as depositor, and The Bank of New York, as trustee.
(1) IndyMac is duly organized as a Delaware corporation and is
validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by the Pooling and Servicing Agreement to be
conducted by IndyMac 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
perform any of its obligations under the Pooling and Servicing Agreement
in accordance with the terms thereof.
(2) IndyMac has the full corporate power and authority to sell
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 IndyMac 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 IndyMac, enforceable against IndyMac in accordance with its
terms, except that (a) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(3) The execution and delivery of the Pooling and Servicing
Agreement by IndyMac, the sale of the Mortgage Loans by IndyMac 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 IndyMac and will not (A) result in a material
breach of any term or provision of the charter or by-laws of IndyMac 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 IndyMac is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to IndyMac of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over IndyMac; and IndyMac 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 IndyMac's ability to
perform or meet any of its obligations under the Pooling and Servicing
Agreement.
(4) No litigation is pending or, to the best of IndyMac's
knowledge, threatened against IndyMac that would prohibit the execution
or delivery of, or performance under, the Pooling and Servicing Agreement
by IndyMac.
<PAGE>
SCHEDULE III
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1999-C
Representations and Warranties as to the Mortgage Loans
-------------------------------------------------------
IndyMac, Inc. ("IndyMac") 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 or date
of origination of the Mortgage Loan. 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 IndyMac, as seller, PNC
Mortgage Securities Corp., as 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 regularly scheduled monthly
payments due with respect to each Mortgage Loan up to and including the
Due Date immediately prior to the Cut-off Date have been made; and as of
the Cut-off Date, no Mortgage Loan had a regularly scheduled monthly
payment that was 60 or more days Delinquent during the twelve months
prior to the Cut-off Date.
(3) With respect to any Mortgage Loan that is not a Cooperative
Loan, each Mortgage is a valid and enforceable first lien on the
Mortgaged Property subject only to (a) the lien of nondelinquent current
real property taxes and assessments and liens or interests arising under
or as a result of any federal, state or local law, regulation or
ordinance relating to hazardous wastes or hazardous substances and, if
the related Mortgaged Property is a unit in a condominium project or
planned unit development, any lien for common charges permitted by
statute or homeowner association fees, (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 generally acceptable to mortgage lending institutions in
the area wherein the related Mortgaged Property is located 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.
(4) 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.
(5) As of the date of origination of each Mortgage Loan, there
was no delinquent tax or assessment lien against the related Mortgaged
Property.
(6) 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.
(7) 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
(11) below.
(8) To the best of the Seller's knowledge, no Mortgaged
Property has been materially damaged by water, fire, earthquake,
windstorm, flood, tornado or similar casualty (excluding casualty from
the presence of hazardous wastes or hazardous substances, as to which the
Seller makes no representation) so as to affect adversely the value of
the related Mortgaged Property as security for such Mortgage Loan.
(9) 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 or any noncompliance
does not have a material adverse effect on the value of the related
Mortgage Loan.
(10) As of the Closing Date, the Seller has not modified the
Mortgage in any material respect (except that a Mortgage Loan may have
been modified by a written instrument which has been recorded or
submitted for recordation, if necessary, to protect the interests of the
Certificateholders and which has been delivered to the Trustee);
satisfied, cancelled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part from the lien
of such Mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto.
(11) 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.
(12) Each Mortgage Loan was originated (within the meaning of
Section 3(a)(41) of the Securities Exchange Act of 1934, as amended) 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.
(13) 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, unless such failure to be wholly within such boundaries and
restriction lines or such encroachment, as the case may be, does not have
a material effect on the value of such Mortgaged Property.
(14) To the best of the Seller's knowledge, as of the date of
origination of each Mortgage Loan, no improvement located on or being
part of the Mortgaged Property is in violation of any applicable zoning
law or regulation unless such violation would not have a material adverse
effect on the value of the related Mortgaged Property. 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.
(15) 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.
(16) The proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder.
(17) 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.
(18) 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.
(19) 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 customarily required
by institutional single family mortgage lenders in the area where the
Mortgaged Property is located, 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. Anything
to the contrary in this item (19) notwithstanding, no breach of this item
(19) shall be deemed to give rise to any obligation of the Seller to
repurchase or substitute for such affected Mortgage Loan or Loans so long
as the Master Servicer maintains a blanket policy pursuant to the second
paragraph of Section 3.12(a) of the Pooling and Servicing Agreement.
(20) If at the time of origination of each Mortgage Loan,
related the Mortgaged Property was in an area then 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
then-current requirements of the Flood Insurance Administration is in
effect with respect to such Mortgaged Property with a generally
acceptable carrier.
(21) To the best of the Seller's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of
any Mortgaged Property, nor is such a proceeding currently occurring.
(22) To 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 material non-monetary
default, breach, violation or event of acceleration under the Mortgage or
the related Mortgage Note; and the Seller has not waived any material
non-monetary default, breach, violation or event of acceleration.
(23) Each Mortgage File contains an appraisal of the related
Mortgaged Property in a form acceptable to FNMA or FHLMC.
(24) Any leasehold estate securing a Mortgage Loan has a stated
term at least as long as the term of the related Mortgage Loan.
(25) Each Mortgage Loan was selected from among the outstanding
fixed-rate one- to four-family mortgage loans in the Seller's portfolio
at the Closing Date as to which the representations and warranties made
with respect to the Mortgage Loans set forth in this Schedule III can be
made. No such selection was made in a manner intended to adversely affect
the interests of the Certificateholders.
(26) No more than 3.86% of the Mortgage Loans (by aggregate
Stated Principal Balance of the Mortgage Loans) are Cooperative Loans.
(27) Each Cooperative Loan is secured by a valid, subsisting
and enforceable perfected first lien and security interest in the related
Mortgaged Property, subject only to (i) the rights of the Cooperative
Corporation to collect Maintenance and assessments from the Mortgagor,
(ii) the lien of the Blanket Mortgage, if any, on the Cooperative
Property and of real property taxes, water and sewer charges, rents and
assessments on the Cooperative Property not yet due and payable, and
(iii) other matters to which like Cooperative Units are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Security Agreement or the use, enjoyment,
value or marketability of the Cooperative Unit. Each original UCC
financing statement, continuation statement or other governmental filing
or recordation necessary to create or preserve the perfection and
priority of the first priority lien and security interest in the
Cooperative Shares and Proprietary Lease has been timely and properly
made. Any security agreement, chattel mortgage or equivalent document
related to the Cooperative Loan and delivered to the Sponsor or its
designee establishes in the Seller a valid and subsisting perfected first
lien on and security interest in the property described therein, and the
Seller has full right to sell and assign the same.
(28) Each Cooperative Corporation qualifies as a "cooperative
housing corporation" as defined in Section 216 of the Code.
<PAGE>
SCHEDULE IV
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1999-C
Representations and Warranties of the Master Servicer
-----------------------------------------------------
PNC Mortgage Securities Corp. ("PNC") hereby makes the
representations and warranties set forth in this Schedule IV 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 IndyMac, as seller, PNC Mortgage Securities
Corp., as master servicer, CWMBS, Inc., as depositor, and The Bank of New
York, as trustee.
(1) PNC is duly incorporated as a Delaware corporation and is
validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by the Pooling and Servicing Agreement to be
conducted by PNC in any state in which a Mortgaged Property is located or
is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to
enforce each Mortgage Loan, to service the Mortgage Loans in accordance
with the terms of the Pooling and Servicing Agreement and to perform any
of its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(2) PNC has the full corporate power and authority to 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 PNC 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 PNC, enforceable against PNC in accordance with its terms, except that
(a) the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Pooling and Servicing
Agreement by PNC, the servicing of the Mortgage Loans by PNC 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 PNC and will not (A) result in a material breach of
any term or provision of the charter or by-laws of PNC 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 PNC is a party or by which it may be
bound, or (C) constitute a material violation of any statute, order or
regulation applicable to PNC of any court, regulatory body,
administrative agency or governmental body having jurisdiction over PNC;
and PNC 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 PNC's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of PNC's
knowledge, threatened against PNC that would prohibit the execution or
delivery of, or performance under, the Pooling and Servicing Agreement by
PNC.
