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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): April 25, 2000
BANC OF AMERICA FUNDING CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 333-62301 56-193-0085
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(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
100 North Tryon Street, Charlotte, North Carolina 28255
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (704) 386-2400
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(Former Name or Former Address, if Changed Since Last Report:)
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Item 5. Other Events
On April 25, 2000, Banc of America Funding Corporation (the
"Depositor") issued its Mortgage Pass-Through Certificates, Series 2000-1 (the
"Certificates"), pursuant to a Pooling and Servicing Agreement, dated as of
April 1, 2000 (the "Pooling and Servicing Agreement"), by and among the
Depositor, as depositor, Fleet Mortgage Corp. ("FMC"), as servicer and Norwest
Bank Minnesota, National Association, as trustee. The Pooling and Servicing
Agreement is annexed hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibit:
99.1 Pooling and Servicing Agreement, dated as of April 1, 2000, by
and among the Depositor, FMC, and the Trustee.
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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.
BANC OF AMERICA FUNDING CORPORATION
By: /s/ Robert J. Perret
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Name: Robert J. Perret
Date: April 25, 2000 Title: Senior Vice President
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Exhibit Index
Exhibit Page
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99.1. Pooling and Servicing Agreement (without Exhibits) 5
4
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EXHIBIT 99.1
[EXECUTION COPY]
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BANC OF AMERICA FUNDING CORPORATION,
as Depositor,
FLEET MORTGAGE CORP.,
as Servicer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of April 1, 2000
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Mortgage Pass-Through Certificates
Series 2000-1
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS............................................................................................3
Section 1.01 Defined Terms..........................................................................3
Section 1.02 Interest Calculations.................................................................28
ARTICLE II CONVEYANCE OF MORTGAGE LOANS ORIGINAL ISSUANCE OF CERTIFICATES.......................................28
Section 2.01 Conveyance of Mortgage Loans..........................................................28
Section 2.02 Acceptance by the Trustee of the Mortgage Loans.......................................31
Section 2.03 Representations, Warranties and Covenants of the Servicer.............................33
Section 2.04 Representations and Warranties of the Depositor as to the Mortgage Loans..............34
Section 2.05 Designation of Interests in the REMIC.................................................41
Section 2.06 Designation of Start-up Day...........................................................41
Section 2.07 REMIC Certificate Maturity Date.......................................................41
Section 2.08 Execution and Delivery of Certificates................................................41
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS......................................................42
Section 3.01 Servicer to Service Mortgage Loans....................................................42
Section 3.02 Subservicing; Enforcement of the Obligations of Servicer..............................43
Section 3.03 Fidelity Bond; Errors and Omissions Insurance.........................................44
Section 3.04 Access to Certain Documentation.......................................................44
Section 3.05 Maintenance of Primary Mortgage Insurance Policy; Claims..............................44
Section 3.06 Rights of the Depositor and the Trustee in Respect of the Servicer....................45
Section 3.07 Trustee to Act as Servicer............................................................45
Section 3.08 Collection of Mortgage Loan Payments; Servicer Custodial Account; and
Certificate Account...................................................................46
Section 3.09 Collection of Taxes, Assessments and Similar Items; Escrow Accounts...................49
Section 3.10 Access to Certain Documentation and Information Regarding the Mortgage Loans..........50
Section 3.11 Permitted Withdrawals from the Servicer Custodial Account and Certificate
Account...............................................................................50
Section 3.12 Maintenance of Hazard Insurance.......................................................52
Section 3.13 Enforcement of Due-On-Sale Clauses; Assumption Agreements.............................53
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Section 3.14 Realization Upon Defaulted Mortgage Loans; REO Property...............................54
Section 3.15 Trustee and Custodian to Cooperate; Release of Mortgage Files.........................58
Section 3.16 Documents, Records and Funds in Possession of the Servicer to be Held for the
Trustee...............................................................................59
Section 3.17 Servicing Compensation................................................................59
Section 3.18 Annual Statement as to Compliance.....................................................59
Section 3.19 Annual Independent Public Accountants' Servicing Statement; Financial Statements......60
Section 3.20 Advances..............................................................................60
Section 3.21 Modifications, Waivers, Amendments and Consents.......................................60
Section 3.22 Reports to the Securities and Exchange Commission.....................................62
Section 3.23 Tax Reporting to Mortgagors...........................................................62
Section 3.24 Servicer Not Liable for Certificates or Mortgage Loans................................62
ARTICLE IV SERVICER'S CERTIFICATE...............................................................................63
Section 4.01 Servicer's Certificate................................................................63
ARTICLE V PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS; REMIC ADMINISTRATION..................................63
Section 5.01 Distributions.........................................................................63
Section 5.02 Priorities of Distributions...........................................................64
Section 5.03 Allocation of Losses..................................................................71
Section 5.04 Statements to Certificateholders......................................................73
Section 5.05 Tax Returns and Reports to Certificateholders.........................................75
Section 5.06 Tax Matters Person....................................................................76
Section 5.07 Rights of the Tax Matters Person in Respect of the Trustee............................76
Section 5.08 REMIC Related Covenants...............................................................76
ARTICLE VI THE CERTIFICATES.....................................................................................77
Section 6.01 The Certificates......................................................................77
Section 6.02 Registration of Transfer and Exchange of Certificates.................................78
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates.....................................82
Section 6.04 Persons Deemed Owners.................................................................83
ARTICLE VII THE DEPOSITOR AND THE SERVICER......................................................................83
Section 7.01 Respective Liabilities of the Depositor and the Servicer..............................83
Section 7.02 Merger or Consolidation of the Depositor or the Servicer..............................83
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Section 7.03 Limitation on Liability of the Depositor, the Servicer and Others.....................84
Section 7.04 Depositor and Servicer Not to Resign..................................................84
Section 7.05 Assignment............................................................................84
ARTICLE VIII DEFAULT............................................................................................85
Section 8.01 Events of Default.....................................................................85
Section 8.02 Remedies of Trustee...................................................................86
Section 8.03 Directions by Certificateholders and Duties of Trustee During Event of Default........86
Section 8.04 Action upon Certain Failures of the Servicer and upon Event of Default................87
Section 8.05 Trustee to Act; Appointment of Successor..............................................87
Section 8.06 Notification to Certificateholders....................................................88
ARTICLE IX THE TRUSTEE..........................................................................................88
Section 9.01 Duties of Trustee.....................................................................88
Section 9.02 Certain Matters Affecting the Trustee.................................................90
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans.................................91
Section 9.04 Trustee May Own Certificates..........................................................92
Section 9.05 Eligibility Requirements for Trustee..................................................92
Section 9.06 Resignation and Removal of Trustee....................................................92
Section 9.07 Successor Trustee.....................................................................93
Section 9.08 Merger or Consolidation of Trustee....................................................93
Section 9.09 Appointment of Co-Trustee or Separate Trustee.........................................94
Section 9.10 Authenticating Agents.................................................................95
Section 9.11 Trustee's Compensation and Expenses...................................................95
Section 9.12 Appointment of Custodian..............................................................96
Section 9.13 Paying Agents.........................................................................96
Section 9.14 Limitation of Liability...............................................................97
Section 9.15 Trustee May Enforce Claims Without Possession of Certificates.........................97
Section 9.16 Suits for Enforcement.................................................................97
Section 9.17 Waiver of Bond Requirement............................................................98
Section 9.18 Waiver of Inventory, Accounting and Appraisal Requirement.............................98
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ARTICLE X TERMINATION...........................................................................................98
Section 10.01 Termination upon Purchase by the Depositor or Liquidation of All Mortgage Loans.......98
Section 10.02 Additional Termination Requirements..................................................100
ARTICLE XI MISCELLANEOUS PROVISIONS............................................................................100
Section 11.01 Amendment............................................................................100
Section 11.02 Recordation of Agreement.............................................................101
Section 11.03 Limitation on Rights of Certificateholders...........................................102
Section 11.04 Governing Law........................................................................102
Section 11.05 Notices..............................................................................103
Section 11.06 Severability of Provisions...........................................................103
Section 11.07 Certificates Nonassessable and Fully Paid............................................103
Section 11.08 Access to List of Certificateholders.................................................103
Section 11.09 Recharacterization...................................................................104
EXHIBITS
Exhibit A-1 Form of Face of Class A Certificates...............................................A-1-1
Exhibit A-WI Form of Face of Class 1A-WIO and Class 2A-WIO Certificate........................A-WIO-1
Exhibit A-R Form of Face of Class A-R Certificate..............................................A-R-1
Exhibit B-1 Form of Face of Class 1B-1 and 2B-1 Certificates...................................B-1-1
Exhibit B-2 Form of Face of Class 1B-2 and 2B-2 Certificates...................................B-2-1
Exhibit B-3 Form of Face of Class 1B-3 and 2B-3 Certificates...................................B-3-1
Exhibit B-4 Form of Face of Class 1B-4 and 2B-4 Certificates...................................B-4-1
Exhibit B-5 Form of Face of Class 1B-5 and 2B-5 Certificates...................................B-5-1
Exhibit B-6 Form of Face of Class B-6 Certificates.............................................B-6-1
Exhibit C Form of Reverse of all Certificates..................................................C-1
Exhibit D-1 Pool 1 Mortgage Loan Schedule......................................................D-1-1
Exhibit D-2 Pool 2 Mortgage Loan Schedule .....................................................D-2-1
Exhibit E Request for Release of Documents.....................................................E-1
Exhibit F Form of Certification of Establishment of Account....................................F-1
Exhibit G-1 Form of Transferor's Certificate...................................................G-1-1
Exhibit G-2A Form 1 of Transferee's Certificate................................................G-2A-1
Exhibit G-2B Form 2 of Transferee's Certificate................................................G-2B-1
Exhibit H Form of Transferee Representation Letter
for ERISA Restricted Certificates....................................................H-1
Exhibit I Form of Affidavit Regarding Transfer of Residual Certificate.........................I-1
Exhibit J Contents of Servicing File...........................................................J-1
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POOLING AND SERVICING AGREEMENT
THIS POOLING AND SERVICING AGREEMENT, dated as of April 1, 2000, is
hereby executed by and among BANC OF AMERICA FUNDING CORPORATION, as depositor
(together with its permitted successors and assigns, the "Depositor"), FLEET
MORTGAGE CORP., as servicer (together with its permitted successors and assigns,
the "Servicer"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee
(together with its permitted successors and assigns, the "Trustee").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee agree as follows:
PRELIMINARY STATEMENT
In exchange for the Certificates, the Depositor hereby conveys the
Trust Estate to the Trustee to create the Trust. The Trust Estate for federal
income tax purposes will be treated as a real estate mortgage investment conduit
(the "REMIC"). The Class A Certificates (other than the Class A-R Certificate)
and the Class B Certificates are referred to collectively as the "Regular
Certificates" and shall constitute "regular interests" in the REMIC. The Class
A-R Certificate shall be the "residual interest" in the REMIC. The Certificates
will represent the entire beneficial ownership interest in the Trust. The
Certificates will be divided into two Certificate Groups. The Pool 1 Mortgage
Loans will be the primary source of distributions to the Group 1 Certificates.
The Pool 2 Mortgage Loans will be the primary source of distributions to the
Group 2 Certificates. The "latest possible maturity date" for federal income tax
purposes of all interests created hereby will be the REMIC Certificate Maturity
Date. The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess thereof
in which the Classes of Certificates shall be issuable (except that one
Certificate of each Class of Certificates may be issued in any amount in excess
of the minimum denomination):
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Initial Class Integral Multiples
Certificate Balance or Pass-Through Minimum in Excess
Classes Notional Amount Rate Denomination of Minimum
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Class 1A-1 $ 28,011,000.00 6.75% $ 1,000 $1
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Class 1A-2 $ 50,000,000.00 6.75% $ 1,000 $1
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Class 1A-3 $ 138,167,000.00 6.75% $ 1,000 $1
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Class 1A-4 $ 125,840,000.00 6.75% $ 1,000 $1
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Class 1A-5 $ 125,270,000.00 6.75% $ 1,000 $1
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Class 1A-6 $ 10,000,000.00 6.75% $ 1,000 $1
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Class 1A-7 $ 11,366,000.00 6.75% $ 1,000 $1
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Class 1A-8 $ 125,039,000.00 6.75% $ 1,000 $1
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Class 1A-9 $ 92,473,000.00 6.75% $ 1,000 $1
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Class 1A-10 $ 67,103,000.00 6.75% $ 1,000 $1
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Class 1A-11 $ 44,054,000.00 6.75% $ 1,000 $1
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Class 1A-12 $ 93,900,000.00 6.75% $ 1,000 $1
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Class 1A-WIO $ 762,065,870.00 (1) $ 20,000,000 $1
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Class 1B-1 $ 11,743,000.00 6.75% $ 25,000 $1
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Class 1B-2 $ 6,107,000.00 6.75% $ 25,000 $1
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Class 1B-3 $ 3,758,000.00 6.75% $ 25,000 $1
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Class 1B-4 $ 2,819,000.00 6.75% $ 25,000 $1
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Class 1B-5 $ 1,879,000.00 6.75% $ 25,000 $1
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Class 2A-1 $ 119,724,000.00 6.75% $ 1,000 $1
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Class 2A-2 $ 30,000,000.00 6.75% $ 1,000 $1
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Class 2A-WIO $ 85,670,705.06 (2) $ 2,000,000 $1
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Class 2B-1 $ 761,000.00 6.75% $ 25,000 $1
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Class 2B-2 $ 533,000.00 6.75% $ 25,000 $1
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Class 2B-3 $ 381,000.00 6.75% $ 25,000 $1
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Class 2B-4 $ 229,000.00 6.75% $ 25,000 $1
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Class 2B-5 $ 77,000.00 6.75% $ 25,000 $1
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Class B-6 $ 2,183,884.08 6.75% $ 25,000 $1
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Class A-R $ 100.00 6.75% $ 100 N/A
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(1) Interest will accrue on the Class 1A-WIO Notional Amount as of any
Distribution Date at a per annum rate equal to (i) the weighted average of the
Net Mortgage Interest Rates of the Pool 1 Premium Mortgage Loans (based on the
Stated Principal Balances of the Pool 1 Premium Mortgage Loans on the Due Date
in the month preceding the month of such Distribution Date) minus (ii) 6.75%.
(2) Interest will accrue on the Class 2A-WIO Notional Amount as of any
Distribution Date at a per annum rate equal to (i) the weighted average of the
Net Mortgage Interest Rates of the Pool 2 Premium Mortgage Loans (based on the
Stated Principal Balances of the Pool 2 Premium Mortgage Loans on the Due Date
in the month preceding the month of such Distribution Date) minus (ii) 6.75%.
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ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article:
1933 Act: The Securities Act of 1933, as amended.
Accretion Termination Date: The earliest to occur of (i) the
Distribution Date following the Distribution Date on which the Class Certificate
Balance of the Class 1A-10 Certificates has been reduced to zero or (ii) the
Senior Credit Support Depletion Date for the Group 1 Certificates.
Accrued Certificate Interest: For any Distribution Date and each
interest-bearing Class, one month's interest accrued during the related Interest
Accrual Period at the applicable Pass-Through Rate on the applicable Class
Certificate Balance or the Notional Amount, as applicable.
Adjusted Pool Amount: With respect to any Distribution Date and any
Loan Pool, the Cut-Off Date Pool Principal Balance of the Mortgage Loans in that
Loan Pool minus the sum of (i) all amounts in respect of principal received in
respect of the Mortgage Loans in that Loan Pool (including, without limitation,
amounts received as Monthly Payments, Periodic Advances, Principal Prepayments,
Liquidation Proceeds and Substitution Adjustment Amounts) and distributed to
Holders of Certificates in the related Certificate Group on such Distribution
Date and all prior Distribution Dates and (ii) the principal portion of all
Realized Losses (other than Debt Service Reductions) incurred on the Mortgage
Loans in that Loan Pool from the Cut-Off Date through the end of the month
preceding such Distribution Date.
Advance: A Periodic Advance or a Servicing Advance.
Agreement: This Pooling and Servicing Agreement together with all
amendments hereof and supplements hereto.
Amount Held for Future Distribution: As to any Distribution Date and
any Loan Pool, the total of the amounts held in the Servicer Custodial Account
at the close of business on the preceding Determination Date on account of (i)
Principal Prepayments and Liquidation Proceeds received or made for the related
Loan Pool in the month of such Distribution Date and (ii) payments which
represent receipt of Monthly Payments for the related Loan Pool in respect of a
Due Date or Due Dates subsequent to the related Due Date.
Appraised Value: With respect to any Mortgaged Property, either (i) the
lesser of (a) the appraised value determined in an appraisal obtained by the
originator at origination of such Mortgage Loan and (b) the sales price for such
property, except that, in the case of Mortgage Loans the proceeds of which were
used to refinance an existing mortgage loan, the Appraised Value of the related
Mortgaged Property is the appraised value thereof determined in an
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appraisal obtained at the time of refinancing, or (ii) the appraised value
determined in an appraisal made at the request of a Mortgagor subsequent to
origination in order to eliminate the Mortgagor's obligation to keep a Primary
Insurance Policy in force.
Assignment of Mortgage: An individual assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to give record notice of the sale of the Mortgage.
Authenticating Agents: As defined in Section 9.10.
Bankruptcy Loss: Any Deficient Valuation or Debt Service Reduction.
Bankruptcy Loss Amount: As to either Loan Pool and any Distribution
Date, the Initial Bankruptcy Loss Amount less the aggregate amount of Bankruptcy
Losses previously incurred during the period from the Cut-Off Date through the
last day of the month preceding the month of such Distribution Date; provided,
however, that such amount may be reduced from time to time with the written
confirmation of the Rating Agencies that such reduction will not result in a
downgrading to the current rating of the Certificates.
Book-Entry Certificate: All Classes of Certificates other than the
Physical Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of North Carolina, the State of
New York, the State of Maryland, the State of Minnesota, the State of South
Carolina, the State of Wisconsin, the State of Rhode Island or the state in
which the Corporate Trust Office is located are required or authorized by law or
executive order to be closed.
Certificate: Any of the Banc of America Funding Corporation Mortgage
Pass-Through Certificates, Series 2000-1 that are issued pursuant to this
Agreement.
Certificate Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.08(c) in the name of the Trustee
for the benefit of the Certificateholders and designated "Norwest Bank
Minnesota, National Association, , in trust for registered holders of Banc of
America Funding Corporation Mortgage Pass-Through Certificates, Series 2000-1."
Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
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 product of the Percentage Interest of
such Certificate and the Class Certificate Balance of the Class of Certificates
of which such Certificate is a part.
Certificate Custodian: Initially, Norwest Bank Minnesota, National
Association, and thereafter any other Certificate Custodian acceptable to the
Depository and selected by the Trustee.
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Certificate Group: Each of the Group 1 Certificates and the Group 2
Certificates.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of a Book-Entry Certificate. With respect to any
Definitive Certificate, the Certificateholder of such Certificate.
Certificate Register: The register maintained pursuant to Section 6.02.
Certificate Registrar: The registrar appointed pursuant to Section
6.02.
Certificateholder: 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, the Servicer or any affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest and Voting Rights evidenced thereby
shall not be taken into account in determining whether the requisite amount of
Percentage Interests or Voting Rights, as the case may be, necessary to effect
any such consent has been obtained, unless such entity is the registered owner
of the entire Class of Certificates; provided that the Trustee shall not be
responsible for knowing that any Certificate is registered in the name of such
an affiliate unless one of its Responsible Officers has actual knowledge.
Class: As to the Certificates, the Class 1A-1, Class 1A-2, Class 1A-3,
Class 1A-4, Class 1A-5, Class 1A-6, Class 1A-7, Class 1A-8, Class 1A-9, Class
1A-10, Class 1A-11, Class 1A-12, Class 1A-WIO, Class 1B-1, Class 1B-2, Class
1B-3, Class 1B-4, Class 1B-5, Class 2A-1, Class 2A-2, Class 2A-WIO, Class 2B-1,
Class 2B-2, Class 2B-3, Class 2B-4, Class 2B-5, Class B-6 and Class A-R
Certificates, as the case may be.
Class 1A-11 Accrual Distribution Amount: For any Distribution Date and
the Class 1A-11 Certificates prior to the Accretion Termination Date, an amount
with respect to such Class equal to the sum of (i) the amount allocated but not
currently distributable as interest to such Class pursuant to Section 5.02(a)(i)
that is attributable to clause (i) of the definition of "Interest Distribution
Amount" and (ii) the amount allocated but not currently distributable as
interest to such Class pursuant to Section 5.02(a)(i) that is attributable to
clause (ii) of the definition of "Interest Distribution Amount."
Class 1A-12 Priority Amount: As to any Distribution Date, the lesser of
(i) the Class Certificate Balance of the Class 1A-12 Certificates and (ii) the
product of (a) the Class 1A-12 Shift Percentage, (b) the Class 1A-12 Priority
Percentage and (c) the Senior Principal Distribution Amount for the Group 1
Certificates.
Class 1A-12 Priority Percentage: As to any Distribution Date, the
percentage equivalent (carried to six places rounded up) of a fraction the
numerator of which is the Class Certificate Balance of the Class 1A-12
Certificates immediately prior to such date and the denominator of which is the
aggregate of the Class Certificate Balances of all Classes of Senior
Certificates that are Group 1 Certificates immediately prior to such date.
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Class 1A-12 Shift Percentage: As to any Distribution Date, the
percentage indicated below:
Class 1A-12
Distribution Date Occurring In Shift Percentage
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May 2000 through April 2005.............. 0%
May 2005 through April 2006.............. 30%
May 2006 through April 2007.............. 40%
May 2007 through April 2008.............. 60%
May 2008 through April 2009.............. 80%
May 2009 and thereafter.................. 100%
Class 1A-WIO Notional Amount: As to any Distribution Date and the Class
1A-WIO Certificates, the aggregate Stated Principal Balances of the Pool 1
Premium Mortgage Loans on the Due Date in the month preceding the month of such
Distribution Date.
Class 1B-6 Component: The portion of the Class B-6 Certificates to
receive distributions of principal and interest from the Pool 1 Mortgage Loans
as provided in Section 5.02 hereof.
Class 2A-2 Prepayment Shift Percentage: As to any Distribution
Date, the percentage indicated below:
Class 2A-2
Distribution Date Occurring In Shift Percentage
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May 2000 through April 2005.............. 0%
May 2005 through April 2006.............. 30%
May 2006 through April 2007.............. 40%
May 2007 through April 2008.............. 60%
May 2008 through April 2009.............. 80%
May 2009 and thereafter.................. 100%
Class 2A-2 Priority Amount: As to any Distribution Date, the lesser of
(i) the Class Certificate Balance of the Class 2A-2 Certificates and (ii) the
sum of (A) the product of (1) the Class 2A-2 Priority Percentage and (2) the
amount computed pursuant to clauses (a) through (d) of the definition of
Principal Amount for the Pool 2 Mortgage Loans, and (B) the product of (1) the
Class 2A-2 Priority Percentage (2) the Class 2A-2 Prepayment Shift Percentage
and (3) the amount computed pursuant to clauses (e) and (f) of the definition of
Principal Amount.
Class 2A-2 Priority Percentage: As to any Distribution Date, the
percentage equivalent (carried to six places rounded up) of a fraction the
numerator of which is the Class Certificate Balance of the Class 2A-2
Certificates immediately prior to such date and the denominator of which is the
aggregate of the Class Certificate Balances of all Classes of Senior
Certificates and Subordinate Certificates that are Group 2 Certificates
immediately prior to such date.
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Class 2A-WIO Notional Amount: As to any Distribution Date and the Class
2A-WIO Certificates, the aggregate Stated Principal Balances of the Pool 2
Premium Mortgage Loans on the Due Date in the month preceding the month of such
Distribution Date.
Class 2B-6 Component: The portion of the Class B-6 Certificates to
receive distributions of principal and interest from the Pool 2 Mortgage Loans
as provided in Section 5.02 hereof.
Class A Certificates: The Class 1A-1, Class 1A-2, Class 1A-3, Class
1A-4, Class 1A-5, Class 1A-6, Class 1A-7, Class 1A-8, Class 1A-9, Class 1A-10,
Class 1A-11, Class 1A-12, Class 1A-WIO, Class 2A-1, Class 2A-2, Class 2A-WIO,
and Class A-R Certificates.
Class B Certificates: The Class 1B-1, Class 1B-2, Class 1B-3, Class
1B-4, Class 1B-5, Class 2B-1, Class 2B-2, Class 2B-3, Class 2B-4, Class 2B-5 and
Class B-6 Certificates.
Class B-6 Component: The Class 1B-6 Component or the Class 2B-6
Component, as the context requires.
Class B Component Depletion Date: The date on which the Class
Certificate Balance of the first Class B-6 Component is reduced to zero.
Class Certificate Balance: With respect to any Class (other than the
Class 1A-WIO and Class 2A-WIO Certificates) and any date of determination, the
Initial Class Certificate Balance of such Class (plus in the case of the Class
1A-11 Certificates any Class 1A-11 Accrual Distribution Amounts for any
Distribution Dates preceding such date of determination) minus the sum of (i)
all distributions of principal made with respect thereto, (ii) all Realized
Losses allocated thereto pursuant to Section 5.03(a) and (iii) all other
reductions in Class Certificate Balance previously allocated thereto pursuant to
Section 5.03(b). The Class 1A-WIO and Class 2A-WIO Certificates are
Interest-Only Certificates and have no Class Certificate Balance.
Class Interest Shortfall: For any Distribution Date and each
interest-bearing Class, the amount by which Accrued Certificate Interest for
such Class (as reduced pursuant to Section 5.02(g)) exceeds the amount of
interest actually distributed on such Class (or, in the case of the Class 1A-11
Certificates prior to the Accretion Termination Date, the amount included in the
Class 1A-11 Accrual Distribution Amount pursuant to clause (i) of the definition
thereof, but not distributed as interest on the Class 1A-11 Certificates) on
such Distribution Date pursuant to clause (i) of the definition of "Interest
Distribution Amount."
Class Unpaid Interest Shortfall: As to any Distribution Date and each
interest-bearing Class, the amount by which the aggregate Class Interest
Shortfalls for such Class (or, in the case of the Class 1A-11 Certificates prior
to the Accretion Termination Date, the amount included in the Class 1A-11
Accrual Distribution Amount pursuant to clause (ii) of the definition thereof,
but not distributed as interest on the Class 1A-11 Certificates) on prior
Distribution Dates exceeds the amount of interest actually distributed on such
Class on such prior Distribution Dates pursuant to clause (ii) of the definition
of "Interest Distribution Amount."
Closing Date: April 25, 2000.
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Code: The Internal Revenue Code of 1986, as amended.
Compensating Interest: As defined in Section 3.17.
Co-op Shares: Shares issued by private non-profit housing corporations.
Corporate Trust Office: The designated offices of the Trustee at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which offices at the date of execution of this
Agreement are located, for Certificate transfer services, at Norwest Center,
Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0113, Attn:
Corporate Trust Services - Banc of America Funding Corporation Mortgage
Pass-Through Certificates, Series 2000-1, and for all other purposes at 11000
Broken Land Parkway, Columbia, Maryland 21044-3562, Attn: Corporate Trust
Services - Banc of America Funding Corporation Mortgage Pass-Through
Certificates, Series 2000-1.
Cross-Support Balance: On any Distribution Date, an amount equal to the
excess, if any, of (i) the aggregate Stated Principal Balance of the Supporting
Loan Pool over (ii) the aggregate Class Certificate Balance of the Supporting
Certificate Group.
Cross-Support Percentage: For any Distribution Date on or after the
Class B-6 Component Depletion Date, the fraction equal to (i) the Cross-Support
Balance divided by (ii) the aggregate Stated Principal Balance of the Supporting
Loan Pool.
Custodial Agreement: The Custodial Agreement, as amended and
supplemented from time to time, dated as of the date hereof, by and among the
Trustee, the Servicer, the Depositor and the Custodian or any custodial
agreement with the successor custodian in a form reasonable acceptable to the
Trustee.
Custodian: Initially, U.S. Bank, National Association, and thereafter
the person acting as Custodian under the Custodial Agreement as appointed by the
Trustee pursuant to Section 9.12. The Custodian may (but need not) be the
Trustee or any Person directly or indirectly controlling or controlled by or
under common control of either of them. Neither the Servicer nor the Depositor,
nor any Person directly or indirectly controlling or controlled by or under
common control with any such Person may be appointed Custodian.
Customary Servicing Procedures: With respect to the Servicer,
procedures (including collection procedures) that the Servicer customarily
employs and exercises in servicing and administering mortgage loans for its own
account and which are in accordance with accepted mortgage servicing practices
of prudent lending institutions servicing mortgage loans of the same type as the
Mortgage Loans in the jurisdictions in which the related Mortgaged Properties
are located.
Cut-Off Date: April 1, 2000.
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Cut-Off Date Pool Principal Balance: The aggregate of the Cut-Off Date
Principal Balances of the Mortgage Loans in a Loan Pool, which is
$939,408,022.00 for the Pool 1 Mortgage Loans and $152,009,962.38 for the Pool 2
Mortgage Loans..
Cut-Off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-Off Date,
reduced by all installments of principal due on or prior thereto whether or not
paid.
Debt Service Reduction: As to any Mortgage Loan and any Determination
Date, the excess of (i) the Monthly Payment due on the related Due Date under
the terms of such Mortgage Loan over (ii) the amount of the monthly payment of
principal and/or interest required to be paid with respect to such Due Date by
the Mortgagor as established by a court of competent jurisdiction (pursuant to
an order which has become final and nonappealable) as a result of a proceeding
initiated by or against the related Mortgagor under the Bankruptcy Code, as
amended from time to time (11 U.S.C.); provided that no such excess shall be
considered a Debt Service Reduction so long as (a) the Servicer is pursuing an
appeal of the court order giving rise to any such modification and (b)(1) such
Mortgage Loan is not in default with respect to payment due thereunder in
accordance with the terms of such Mortgage Loan as in effect on the Cut-Off Date
or (2) Monthly Payments are being advanced by the Servicer in accordance with
the terms of such Mortgage Loan as in effect on the Cut-Off Date.
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
cured, repurchased or substituted for pursuant to Sections 2.02 or 2.04.
Deficient Valuation: As to any Mortgage Loan and any Determination
Date, the excess of (i) the then outstanding indebtedness under such Mortgage
Loan over (ii) the secured valuation thereof established by a court of competent
jurisdiction (pursuant to an order which has become final and nonappealable) as
a result of a proceeding initiated by or against the related Mortgagor under the
Bankruptcy Code, as amended from time to time (11 U.S.C.), pursuant to which
such Mortgagor retained such Mortgaged Property; provided that no such excess
shall be considered a Deficient Valuation so long as (a) the Servicer is
pursuing an appeal of the court order giving rise to any such modification and
(b)(1) such Mortgage Loan is not in default with respect to payments due
thereunder in accordance with the terms of such Mortgage Loan as in effect on
the Cut-Off Date or (2) Monthly Payments are being advanced by the Servicer in
accordance with the terms of such Mortgage Loan as in effect on the Cut-Off
Date.
Deficient Valuation Mortgage Loan: Any Mortgage Loan that became the
subject of a Deficient Valuation.
Deficit: As defined in Section 5.02(b).
Definitive Certificates: As defined in Section 6.02(c)(iii).
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Depositor: Banc of America Funding Corporation, a Delaware corporation,
or its successor in interest, as depositor of the Trust Estate.
Depository: The Depository Trust Company, the nominee of which is Cede
& Co., as the registered Holder of the Book-Entry Certificates or any successor
thereto appointed in accordance with this Agreement. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the 15th day of the
month of the related Distribution Date (or, if such day is not a Business Day,
the preceding Business Day).
Distribution Date: The 20th day of each month beginning in May 2000
(or, if such day is not a Business Day, the next Business Day).
Due Date: As to any Distribution Date and each Mortgage Loan, the first
day in the calendar month of such Distribution Date.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the trust department of a federal or state chartered depository institution or
trust company, acting in its fiduciary capacity or (iv) an account maintained at
Fleet National Bank or 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 Certificates: The Class B Certificates.
Escrow Account: As defined in Section 3.09.
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Escrow Payments: The amounts constituting taxes, assessments, Primary
Insurance Policy premiums, fire and hazard insurance premiums and other payments
as may be required to be escrowed by the Mortgagor with the mortgagee pursuant
to the terms of any Mortgage Note or Mortgage.
Event of Default: As defined in Section 8.01.
Excess Losses: For any Distribution Date, the amount of any (i) Fraud
Losses in excess of the Fraud Loss Amount, (ii) Special Hazard Losses in excess
of the Special Hazard Loss Amount or (iii) Bankruptcy Losses in excess of the
Bankruptcy Loss Amount.
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
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 Interest Rate from the Due Date as to which interest was last paid
or for which a Periodic Advance was made (and not reimbursed) up to the Due Date
applicable to the Distribution Date immediately following the calendar month
during which such liquidation occurred.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
10.01.
Financial Market Service: Bloomberg Financial Service and any other
financial information provider designated by the Depositor by written notice to
the Trustee.
FIRREA: The Financial Institutions Reform, Recovery and Enforcement Act
of 1989, as amended.
Fitch: Fitch IBCA, Inc., or any successor thereto.
FNMA: Fannie Mae, or any successor thereto.
Fractional Interest: As defined in Section 5.02(h).
Fraud Loss: 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.
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Fraud Loss Amount: For each Loan Pool and for each Distribution Date
occurring during the period from the Closing Date through the first anniversary
of the Cut-Off Date, the Initial Fraud Loss Amount for that Loan Pool reduced by
the amount of Fraud Losses allocated to the related Certificates. Thereafter,
the Fraud Loss Amount for each Loan Pool shall be equal to the lesser of (i) the
Initial Fraud Loss Amount for that Loan Pool reduced by the amount of Fraud
Losses allocated to the related Certificates and (ii) for each Distribution Date
occurring (a) during the period from the day after the first anniversary through
the third anniversary of the Cut-Off Date, 1% of the Pool Stated Principal
Balance for the related Loan Pool, (b) during the period from the day after the
third anniversary through the fifth anniversary of the Cut-Off Date, 0.5% of the
Pool Stated Principal Balance for the related Loan Pool, and (c) after the fifth
anniversary of the Cut-Off Date, zero.
Group 1 Certificates: The Class 1A-1, Class 1A-2, Class 1A-3, Class
1A-4, Class 1A-5, Class 1A-6, Class 1A-7, Class 1A-8, Class 1A-9, Class 1A-10,
Class 1A-11, Class 1A-12, Class 1A-WIO, Class 1B-1, Class 1B-2, Class 1B-3,
Class 1B-4, Class 1B-5 Certificates and the Class 1B-6 Component.
Group 2 Certificates: The Class 2A-1, Class 2A-2, Class 2A-WIO, Class
2B-1, Class 2B-2, Class 2B-3, Class 2B-4, Class 2B-5 Certificates and the Class
2B-6 Component.
Holder: A Certificateholder.
Independent: When used with respect to any specified Person means such
a Person who (i) is in fact independent of the Depositor and the Servicer, (ii)
does not have any direct financial interest or any material indirect financial
interest in the Depositor or the Servicer or in an affiliate of either of them,
and (iii) is not connected with the Depositor or the Servicer as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
Indirect Depository Participant: A broker, dealer, bank or other
financial institution or other Person maintaining a custodial relationship with
a Depository Participant.
Initial Bankruptcy Loss Amount: $188,526.09 for the Pool 1 Mortgage
Loans and $100,000.00 for the Pool 2 Mortgage Loans.
Initial Class Certificate Balance: As to each Class of Certificates
(other than the Class 1A-WIO and Class 2A-WIO Certificates), the Class
Certificate Balance set forth in the Preliminary Statement. The Class 1A-WIO and
Class 2A-WIO Certificates are Interest-Only Certificates and have no Initial
Class Certificate Balance.
Initial Fraud Loss Amount: $9,394,080.22 for the Pool 1 Mortgage Loans
and $1,520,099.62 for the Pool 2 Mortgage Loans.
Initial Special Hazard Amount: $9,474,541.55 for the Pool 1 Mortgage
Loans and $1,536,675.01 for the Pool 2 Mortgage Loans.
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Insurance Policy: With respect to any Mortgage Loan included in the
Trust Estate, any related 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: As to any Distribution Date and each Class of
Certificates, the period from and including the first day of the calendar month
preceding the calendar month of such Distribution Date to but not including the
first day of the calendar month of such Distribution Date.
Interest Distribution Amount: For any Distribution Date and each
interest-bearing Class, the sum of (i) the Accrued Certificate Interest, subject
to reduction pursuant to Section 5.02(g) and (ii) any Class Unpaid Interest
Shortfall for such Class.
Interest-Only Certificates: Any Class of Certificates entitled to
distributions of interest but no distributions of principal. The Class 1A-WIO
and Class 2A-WIO Certificates are the sole classes of Interest-Only
Certificates.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) that was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (in accordance with this Agreement) that it has received
all proceeds 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 Servicing Fees and Advances.
Loan Pool: Each of the Pool 1 Mortgage Loans and the Pool 2 Mortgage
Loans.
Loan-to-Value Ratio: With respect to any Mortgage Loan and any date of
determination, the fraction, expressed as a percentage, the numerator of which
is the outstanding principal balance of the related Mortgage Loan at the date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.
MERS: As defined in Section 2.01(b)(iii).
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Monthly 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.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on a Mortgaged Property securing a Mortgage Note or creating a first
lien on a leasehold interest.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: As to any Mortgage Loan, the per annum rate of
interest at which interest accrues on the principal balance of such Mortgage
Loan in accordance with the terms of the related Mortgage Note.
Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement,
dated April 25, 2000, between the Banc of America Mortgage Capital Corporation,
as seller, and the Depositor, as purchaser.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time amended by the Servicer to reflect the addition of Substitute Mortgage
Loans and the deletion of Defective Mortgage Loans pursuant to the provisions of
this Agreement) transferred to the Trustee as part of the Trust Estate and from
time to time subject to this Agreement, attached hereto as Exhibit D-1 with
respect to the Pool 1 Mortgage Loans and Exhibit D-2 with respect to the Pool 2
Mortgage Loans, setting forth the following information with respect to each
Mortgage Loan: (i) the Mortgage Loan identifying number; (ii) a code indicating
whether the Mortgaged Property is owner-occupied; (iii) the property type for
each Mortgaged Property; (iv) the original months to maturity or the remaining
months to maturity from the Cut-Off Date; (v) the Loan-to-Value Ratio at
origination; (vi) the Mortgage Interest Rate; (vii) the date on which the first
Monthly Payment was due on the Mortgage Loan, and, if such date is not the Due
Date currently in effect, such Due Date; (viii) the stated maturity date; (ix)
the amount of the Monthly Payment as of the Cut-Off Date; (x) the paid-through
date; (xi) the original principal amount of the Mortgage Loan; (xii) the
principal balance of the Mortgage Loan as of the close of business on the
Cut-Off Date, after application of payments of principal due on or before the
Cut-Off Date, whether or not collected, and after deduction of any payments
collected of scheduled principal due after the Cut-Off Date; (xiii) a code
indicating the purpose of the Mortgage Loan; (xiv) a code indicating the
documentation style; and (xv) the Appraised Value. With respect to each Loan
Pool in the aggregate, the respective Mortgage Loan Schedule shall set forth the
following information, as of the Cut-Off Date: (i) the number of Mortgage Loans;
(ii) the current aggregate outstanding principal balance of the Mortgage Loans;
(iii) the weighted average Mortgage Rate of the Mortgage Loans; and (iv) the
weighted average months to maturity of the Mortgage Loans.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to Section 2.01 as from time to time are held as a part of
the Trust Estate (including any Substitute Mortgage Loans and REO Property), the
Mortgage Loans originally so held being
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identified in the Mortgage Loan Schedule attached hereto as Exhibit D-1 with
respect to the Pool 1 Mortgage Loans and in the Mortgage Loan Schedule attached
hereto as Exhibit D-2 with respect to the Pool 2 Mortgage Loans.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with all riders thereto and amendments thereof.
Mortgaged Property: The underlying property securing a Mortgage Loan,
which may include Co-op Shares or residential long-term leases.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Interest Rate: As to any Mortgage Loan and Distribution
Date, such Mortgage Loan's Mortgage Interest Rate thereon on the first day of
the month preceding the month of the related Distribution Date reduced by the
Servicing Fee Rate.
Non-Supported Interest Shortfalls: As to each Loan Pool and any
Distribution Date, the amount, if any, by which the aggregate of Prepayment
Interest Shortfalls for that Loan Pool exceeds Compensating Interest for that
Loan Pool for such Distribution Date.
Non-U.S. Person: A Person other than a U.S. Person.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made in respect of a Mortgage Loan which has not been previously
reimbursed and which, in the good faith judgment of the Servicer, will not or,
in the case of a proposed Advance, would not be ultimately recoverable from the
related Mortgagor, related Liquidation Proceeds, or other recoveries in respect
of the related Mortgage Loan.
Notional Amount: The Class 1A-WIO Notional Amount or the Class 2A-WIO
Notional Amount.
Officer's Certificate: A certificate signed by the Chairman of the
Board, Vice Chairman of the Board, President, Executive Vice President, Senior
Vice President or a Vice President and by the Treasurer, the Secretary or one of
the Assistant Treasurers or Assistant Secretaries, or any other duly authorized
officer of the Depositor or the Servicer, as the case may be, and delivered to
the Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee, who may be counsel for the Depositor or the Servicer, except that any
opinion of counsel relating to the qualification of the Trust Estate as a REMIC
or compliance with the REMIC Provisions must be an opinion of Independent
counsel.
Original Fractional Interest: With respect to each of the following
Classes of Subordinate Certificates, the corresponding percentage described
below, as of the Closing Date:
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Class 1B-1 1.78%
Class 1B-2 1.13%
Class 1B-3 0.73%
Class 1B-4 0.43%
Class 1B-5 0.23%
Class 2B-1 2.24%
Class 2B-2 1.89%
Class 2B-3 1.64%
Class 2B-4 1.49%
Class 2B-5 1.44%
Class B-6 0.00%
Original Subordinate Certificate Balance: $28,184,922.00 with respect
to the Subordinate Certificates that are Group 1 Certificates and $2,285,962.38
with respect to the Subordinate Certificates that are Group 2 Certificates.
OTS: The Office of Thrift Supervision.
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan which
was not the subject of a Principal Prepayment in Full prior to such Due Date,
which did not become a Liquidated Mortgage Loan prior to such Due Date and which
was not purchased from the Trust prior to such Due Date pursuant to Sections
2.02 or 2.04.
Ownership Interest: As to any Certificate, any ownership or security
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, as owner or as pledgee.
Pass-Through Rate: As to each Class of interest-bearing Certificates,
the per annum rate set forth or described in the Preliminary Statement.
Paying Agent: As defined in Section 9.13.
Percentage Interest: As to any Certificate, the percentage obtained by
dividing the initial Certificate Balance, or initial Notional Amount, as
applicable, of such Certificate by the Initial Class Certificate Balance, or
initial Notional Amount, as applicable, of the Class of which such Certificate
is a part.
Periodic Advance: The payment required to be made by the Servicer with
respect to any Distribution Date pursuant to Section 3.20, the amount of any
such payment being equal to the aggregate of Monthly Payments (net of the
Servicing Fee) on the Mortgage Loans (including any REO Property) 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 Servicer has determined would constitute a Nonrecoverable
Advance if advanced.
Permitted Investments: One or more of the following:
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(i) obligations of or guaranteed as to principal and interest
by the United States, FHLMC, FNMA or any agency or instrumentality of
the United States when such obligations are backed by the full faith
and credit of the United States; provided that such obligations of
FHLMC or FNMA shall be limited to senior debt obligations and mortgage
participation certificates other than investments in mortgage-backed or
mortgage participation securities with yields evidencing extreme
sensitivity to the rate of principal payments on the underlying
mortgages, which shall not constitute Permitted Investments hereunder;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of acquisition
thereof with a corporation incorporated under the laws of the United
States or any state thereof rated not lower than "A-1" by S&P and "F-1"
by Fitch;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof, rated not lower than "A-1" by S&P and "F-1" by Fitch;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which is rated not lower than "A-1"
by S&P and "F-1" by Fitch;
(v) investments in money market funds (including funds of the
Trustee or its affiliates, or funds for which an affiliate of the
Trustee acts as advisor, as well as funds for which the Trustee and its
affiliates may receive compensation) rated either "AAAm" or "AAAm G" by
S&P, and "AAA" by Fitch or otherwise approved in writing by each Rating
Agency; and
(vi) other obligations or securities that are acceptable to
each Rating Agency and, as evidenced by an Opinion of Counsel obtained
by the Servicer, will not affect the qualification of the Trust Estate
as a REMIC;
provided, however, that no instrument shall be a Permitted Investment if it
represents either (a) the right to receive only interest payments with respect
to the underlying debt instrument or (b) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest with respect to such instrument provide a yield to
maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
Permitted Transferee: Any Person other than (i) the United States, or
any State or any 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 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)
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(except certain farmers' cooperatives described in Code Section 521), (iv) rural
electric and telephone cooperatives described in Code Section 1381(a)(2)(C) and
(v) any other Person so designated by the Servicer based on an Opinion of
Counsel to the effect that any transfer to such Person may cause the Trust or
any other Holder of a Residual Certificate to incur tax liability that would not
be imposed other than on account of such transfer. The terms "United States,"
"State" and "international organization" shall have the meanings set forth in
Code Section 7701 or successor provisions.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Physical Certificates: The Class A-R, Class 1B-4, Class 1B-5, Class
2B-4, Class 2B-5 and Class B-6 Certificates.
Plan: As defined in Section 6.02(e).
Pool 1 Mortgage Loans: The Mortgage Loans listed on Exhibit D-1 hereto.
Pool 1 Premium Mortgage Loan: Any Pool 1 Mortgage Loan with a Net
Mortgage Interest Rate that is equal to or more than 6.75% per annum.
Pool 2 Mortgage Loans: The Mortgage Loans listed on Exhibit D-2 hereto.
Pool 2 Premium Mortgage Loan: Any Pool 2 Mortgage Loan with a Net
Mortgage Interest Rate that is equal to or more than 6.75% per annum.
Pool Distribution Amount: As to each Loan Pool and any Distribution
Date, the excess of (a) the sum of (i) the aggregate of (A) the interest portion
of any Monthly Payment (net of the Servicing Fee) and the principal portion of
any Monthly Payment due on the Due Date with respect to each Mortgage Loan in
that Loan Pool in the month in which such Distribution Date occurs and which is
received prior to the related Determination Date and (B) all Periodic Advances
and payments of Compensating Interest made by the Servicer with respect to that
Loan Pool in respect of such Distribution Date deposited to the Servicer
Custodial Account pursuant to Section 3.08(b)(vii); (ii) all Liquidation
Proceeds received with respect to that Loan Pool during the preceding calendar
month and deposited to the Servicer Custodial Account pursuant to Section
3.08(b)(iii); (iii) all Principal Prepayments received with respect to that Loan
Pool during the month preceding the month of such Distribution Date and
deposited to the Servicer Custodial Account pursuant to Section 3.08(b)(i)
during such period; (iv) in connection with Defective Mortgage Loans, as
applicable, the aggregate of the Repurchase Prices and Substitution Adjustment
Amounts deposited on the related Remittance Date with respect to that Loan Pool
pursuant to Section 3.08(b)(vi); and (v) any other amounts in the Servicer
Custodial Account deposited therein with respect to that Loan Pool pursuant to
Sections 3.08(b)(iv), (v) and (viii) in respect of such Distribution Date; over
(b) any (i) amounts permitted to be withdrawn from the Servicer Custodial
Account pursuant to clauses (i) through (vii), inclusive, of Section 3.11(a)
with respect to that Loan Pool and (ii) amounts permitted to be withdrawn from
the Certificate Account pursuant to clauses (i) and (ii) of Section 3.11(b) with
respect to that Loan Pool;
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provided, however, that, if on any Distribution Date on or after the Class B-6
Component Depletion Date the related Certificate Group is the Supporting
Certificate Group, the Pool Distribution Amount for a Loan Pool shall be reduced
by the applicable Cross-Support Percentage thereof.
Pool Stated Principal Balance: As to each Loan Pool and any
Distribution Date, the aggregate Stated Principal Balances of all Mortgage Loans
in that Loan Pool that were Outstanding Mortgage Loans immediately following the
Due Date in the month of such Distribution Date.
Premium Mortgage Loan: Any Pool 1 Premium Mortgage Loan or Pool 2
Premium Mortgage Loan, as the context requires.
Prepayment Interest Shortfall: As to any Distribution Date and each
Mortgage Loan subject to a Principal Prepayment received during the calendar
month preceding such Distribution Date, the amount, if any, by which one month's
interest at the related Mortgage Interest Rate (net of the Servicing Fee) on
such Principal Prepayment exceeds the amount of interest paid in connection with
such Principal Prepayment.
Primary Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any Mortgage Loan,
in each case issued by an insurer acceptable to FNMA or FHLMC.
Principal Amount: As to any Distribution Date, the sum of (a) the
principal portion of each Monthly Payment (without giving effect, prior to the
reduction of the Bankruptcy Loss Amount to zero, to any reductions thereof
caused by any Debt Service Reductions) due on each Mortgage Loan on the related
Due Date, (b) the Stated Principal Balance, as of the date of repurchase, of
each Mortgage Loan that was repurchased by the Depositor pursuant to this
Agreement as of such Distribution Date, (c) any Substitution Adjustment Amount
in connection with a Defective Mortgage Loan received with respect to such
Distribution Date, (d) any Liquidation Proceeds allocable to recoveries of
principal of Mortgage Loans that are not yet Liquidated Mortgage Loans received
during the calendar month preceding the month of such Distribution Date, (e)
with respect to each Mortgage Loan that became a Liquidated Mortgage Loan during
the calendar month preceding the month of such Distribution Date, the amount of
Liquidation Proceeds allocable to principal received during the calendar month
preceding the month of such Distribution Date with respect to such Mortgage Loan
and (f) all Principal Prepayments received during the calendar month preceding
the month of such Distribution Date.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan (other than Liquidation Proceeds) which is received in advance of
its scheduled Due Date and is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment of the entire
principal balance of a Mortgage Loan.
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Private Certificates: The Class 1B-4, Class 1B-5, Class 2B-4, Class
2B-5 and Class B-6 Certificates.
Pro Rata Share: As to any Distribution Date and each Certificate Group
and any Class of Subordinate Certificates in that Certificate Group that is not
a Restricted Class, the portion of the Subordinate Principal Distribution Amount
for that Certificate Group allocable to such Class, equal to the product of the
Subordinate Principal Distribution Amount for that Certificate Group for 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 Class
Certificate Balance of the Subordinate Certificates in such Certificate Group
that are not Restricted Classes.
The Pro Rata Share of a Restricted Class shall be 0%.
Public Certificates: The Class A, Class 1B-1, Class 1B-2, Class 1B-3,
Class 2B-1, Class 2B-2 and Class 2B-3 Certificates.
Qualified Appraiser: An appraiser of a Mortgaged Property duly
appointed by the originator of the related Mortgage Loan, who had no interest,
direct or indirect, in such Mortgaged Property or in any loan made on the
security thereof, whose compensation is not affected by the approval or
disapproval of the related Mortgage Loan and who met the minimum qualifications
of FNMA or FHLMC.
Rating Agency: Each of Fitch and S&P. 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
as of the date of such liquidation, equal to (i) the unpaid principal balance of
the Liquidated Mortgage Loan as of the date of such liquidation, plus (ii)
interest at the Net Mortgage Interest 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 Net Mortgage Interest Rate and to principal of the
Liquidated Mortgage Loan. With respect to each Mortgage Loan that 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 that 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 Monthly Payment has been reduced.
Record Date: The last day of the month preceding the month of the
related Distribution Date (or, if such day is not a Business Day, the preceding
Business Day).
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Refinance Mortgage Loan: Any Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
Regular Certificates: As defined in the Preliminary Statement hereto.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Reduction: With respect to any Distribution Date, for 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 pursuant to the terms of the Mortgage Note on
the same principal amount and for the same period as the interest collectible on
such Mortgage Loan for the most recently ended calendar month.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code. "The REMIC" means the REMIC constituted by the
Trust Estate.
REMIC Certificate Maturity Date: The "latest possible maturity date" of
the Regular Certificates as that term is defined in Section 2.07.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 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.
Remittance Date: As to any Distribution Date, by 2:00 p.m. eastern time
on the 18th day of the month in which that Distribution Date occurs (or, if such
day is not a Business Day, the immediately preceding Business Day).
REO Disposition Period: As defined in Section 3.14.
REO Proceeds: Proceeds, net of any related expenses of the Servicer,
received in respect of any REO Property (including, without limitation, proceeds
from the rental of the related Mortgaged Property) which are received prior to
the final liquidation of such Mortgaged Property.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Trust through foreclosure or deed-in-lieu of foreclosure in connection
with a defaulted Mortgage Loan.
Repurchase Price: As to any Defective Mortgage Loan repurchased on any
date pursuant to Sections 2.02 or 2.04, an amount equal to the sum of (i) the
unpaid principal balance thereof and (ii) the unpaid accrued interest thereon at
the applicable Mortgage Interest Rate from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in
which such Mortgage Loan became eligible to be repurchased.
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Request for Release: The Request for Release submitted by the Servicer
to the Custodian on behalf of the Trustee, substantially in the form of Exhibit
E.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan.
Residual Certificate: The Class A-R Certificate.
Responsible Officer: When used with respect to the Trustee, any officer
of the Corporate Trust Department of the Trustee, including any Senior Vice
President, any Vice President, any Assistant Vice President, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers and having responsibility for the
administration of this Agreement.
Restricted Classes: As defined in Section 5.02(h).
S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc.,
or any successor thereto.
Seller: Banc of America Mortgage Capital Corporation, a North Carolina
corporation, or its successor in interest, as seller of the Mortgage Loans under
the Mortgage Loan Purchase Agreement.
Senior Certificates: The Class A Certificates.
Senior Credit Support Depletion Date: For each Certificate Group, the
date on which the aggregate Class Certificate Balance of the Subordinate
Certificates in that Certificate Group, including, with respect to the Class B-6
Certificates, the entire Class Certificate Balance of the Class B-6 Certificate,
is reduced to zero.
Senior Percentage: With respect to any Distribution Date and each
Certificate Group, the percentage, carried six places rounded up, obtained by
dividing the aggregate Class Certificate Balance of the Senior Certificates in
that Certificate Group immediately prior to such Distribution Date by the
aggregate Class Certificate Balance of all Classes of Certificates in that
Certificate Group immediately prior to such Distribution Date.
Senior Prepayment Percentage: For each Certificate Group and any
Distribution Date during the five years beginning on the first Distribution
Date, 100%. The Senior Prepayment Percentage for each Certificate Group and 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 Subordinate Percentage for that Certificate Group for such Distribution
Date; for any Distribution Date in the second year thereafter, the Senior
Percentage plus 60% of the Subordinate Percentage for that Certificate Group for
such Distribution Date; for any Distribution Date in the third year
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thereafter, the Senior Percentage plus 40% of the Subordinate Percentage for
that Certificate Group for such Distribution Date; for any Distribution Date in
the fourth year thereafter, the Senior Percentage plus 20% of the Subordinate
Percentage for that Certificate Group for such Distribution Date; and for any
Distribution Date in the fifth or later years thereafter, the Senior Percentage
for that Certificate Group for such Distribution Date (unless on any of the
foregoing Distribution Dates the Senior Percentage exceeds the initial Senior
Percentage, in which case the Senior Prepayment Percentage for that Certificate
Group for such Distribution Date will once again equal 100%). Notwithstanding
the foregoing, no decrease in the Senior Prepayment Percentage for a Certificate
Group will occur unless both of the Senior Step Down Conditions are satisfied
with respect to that Certificate Group.
Senior Principal Distribution Amount: As to any Distribution Date and
each Certificate Group, the sum of (i) the Senior Percentage for that
Certificate Group of all amounts collected on the related Loan Pool described in
clauses (a) through (d) of the definition of "Principal Amount" for such
Distribution Date and (ii) the Senior Prepayment Percentage for that Certificate
Group of the amounts collected on the related Loan Pool described in clauses (e)
and (f) of the definition of "Principal Amount" for such Distribution Date;
provided, however, that if a Debt Service Reduction that is an Excess Loss is
sustained with respect to a Mortgage Loan in the related Loan Pool that is not a
Liquidated Mortgage Loan, the Senior Principal Distribution Amount for that
Certificate Group will be reduced on the related Distribution Date by the
applicable Senior Percentage of the principal portion of such Debt Service
Reduction; provided, however, that, if on the Distribution Date on or after the
Class B-6 Component Depletion Date the related Certificate Group is the
Supporting Certificate Group, the Senior Principal Distribution Amount for a
Loan Pool shall be reduced by the applicable Cross-Support Percentage thereof.
Senior Step Down Conditions: As of any Distribution Date as to which
any decrease in the Senior Prepayment Percentage for a Certificate Group
applies, (i) the outstanding principal balance of all Mortgage Loans in the
related Loan Pool (including, for this purpose, any Mortgage Loans in
foreclosure or any REO Property) delinquent 60 days or more (averaged over the
preceding six month period), as a percentage of the aggregate Class Certificate
Balance of the Subordinate Certificates in that Certificate Group (averaged over
the preceding six-month period), is not equal to or greater than 50% or (ii)
cumulative Realized Losses with respect to the Mortgage Loans in the related
Loan Pool as of the applicable Distribution Date do not exceed the percentages
of the Original Subordinate Certificate Balance in that Certificate Group set
forth below:
Percentage of
Original Subordinate
Distribution Date Occurring Certificate Balance
--------------------------- --------------------
May 2005 through April 2006 30%
May 2006 through April 2007 35%
May 2007 through April 2008 40%
May 2008 through April 2009 45%
May 2009 and thereafter 50%
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Servicer: Fleet Mortgage Corp., a South Carolina corporation, or its
successor in interest, in its capacity as servicer of the Mortgage Loans, or any
successor servicer appointed as herein provided.
Servicer Custodial Account: The separate Eligible Account created and
maintained by the Servicer pursuant to Section 3.08(b).
Servicer's Certificate: The monthly report required by Section 4.01.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations, including, but not limited to (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) expenses reimbursable
to the Servicer pursuant to Section 3.14 and any enforcement or judicial
proceedings, including foreclosures, (iii) the management and liquidation of any
REO Property and (iv) compliance with the obligations under Section 3.12.
Servicing Fee: With respect to each Mortgage Loan and Distribution
Date, the amount of the fee payable to the Servicer, which shall, for such
Distribution Date, be equal to one-twelfth of the product of the Servicing Fee
Rate with respect to such Mortgage Loan and the Stated Principal Balance of such
Mortgage Loan, subject to reduction as provided in Section 3.17. Such fee shall
be payable monthly, computed on the basis of the same Stated Principal Balance
and period respecting which any related interest payment on a Mortgage Loan is
computed. The Servicer's right to receive the Servicing Fee is limited to, and
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds and other proceeds, to the extent permitted
by Section 3.11) of related Monthly Payments collected by the Servicer, or as
otherwise provided under Section 3.11.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.25% per
annum.
Servicing File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit J hereto, and any additional documents required to be
added to the Servicing File pursuant to this Agreement.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
Similar Law: As defined in Section 6.02(e).
Special Hazard Loss: As to a Mortgaged Property, any Realized Loss on
account of direct physical loss, exclusive of (i) any loss covered by a hazard
policy or a flood insurance policy maintained in respect of such Mortgaged
Property pursuant to Section 3.12 and (ii) any loss caused by or resulting from:
(a) (i) wear and tear, deterioration, rust or corrosion, mold,
wet or dry rot; inherent vice or latent defect; animals,
birds, vermin or insects; or
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(ii) settling, subsidence, cracking, shrinkage,
building or expansion of pavements, foundations, walls,
floors, roofs or ceilings;
(b) 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;
(c) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled or
uncontrolled, and whether such loss is direct or indirect, proximate or
remote; or
(d) (i) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending against
an actual, impending or expected attack (A) by any government
or sovereign power (de jure or de facto), or by any authority
maintaining or using military, naval or air forces; or (B) by
military, naval or air forces; or (C) by an agent of any such
government, power, authority or forces;
(ii) any weapon of war or facility for producing same
employing atomic fission, radioactive force or chemical or
biological contaminants, whether in time of peace or war; or
(iii) 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 Amount: As to each Loan Pool and any Distribution
Date, the lesser of (a) the greatest of (i) 1% of the Pool Stated Principal
Balance of the Mortgage Loans in that Loan Pool, (ii) twice the principal
balance of the largest Mortgage Loan in that Loan Pool, and (iii) the aggregate
principal balance of all Mortgage Loans in that Loan Pool secured by Mortgaged
Properties located in the single California five-digit postal zip code having
the highest aggregate principal balance of any zip code area (all principal
balances to be calculated as of the first day of the month preceding such
Distribution Date after giving effect to Monthly Payments then due, whether or
not paid) and (b) the Initial Special Hazard Loss Amount for that Loan Pool,
reduced (but not below zero) by the amount of Realized Losses in respect of
Special Hazard Mortgage Loans previously incurred with respect to that Loan Pool
during the period from the Cut-Off Date through the last day of the month
preceding the month of such Distribution Date. The Special Hazard Loss Amount
for either Loan Pool may be further reduced from time to time below the amounts
specified above with the written confirmation of the Rating Agencies that such
reduction will not result in a downgrading to the then-current rating of the
Certificates.
Special Hazard Mortgage Loan: Any Liquidated Mortgage Loan as to which
the ability to recover thereon was substantially impaired by reason of a hazard
or loss not covered by a
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hazard policy or flood insurance policy maintained in respect of such Mortgaged
Property pursuant to Section 3.12.
Stated Principal Balance: As to any Mortgage Loan and date, the unpaid
principal balance of such Mortgage Loan as of the Due Date immediately preceding
such 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, and after giving effect to any Deficient Valuation.
Subordinate Certificates: The Class B Certificates.
Subordinate Percentage: As of any Distribution Date and each
Certificate Group, 100% minus the Senior Percentage for that Certificate Group
for such Distribution Date.
Subordinate Prepayment Percentage: As to any Distribution Date and each
Certificate Group, 100% minus the Senior Prepayment Percentage for that
Certificate Group for such Distribution Date.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date and each Certificate Group, an amount equal to the sum of (i)
the Subordinate Percentage for that Certificate Group of all amounts collected
on the related Loan Pool described in clauses (a) through (d) of the definition
of "Principal Amount" for such Distribution Date and (ii) the Subordinate
Prepayment Percentage of the amounts collected on the related Loan Pool
described in clauses (e) and (f) of the definition of "Principal Amount" for
such Distribution Date; provided, however, that if a Debt Service Reduction that
is an Excess Loss is sustained with respect to a Mortgage Loan in the related
Loan Pool that is not a Liquidated Mortgage Loan, the Subordinate Principal
Distribution Amount for that Certificate Group will be reduced on the related
Distribution Date by the applicable Subordinate Percentage of the principal
portion of such Debt Service Reduction; provided, however, that, if on any
Distribution Date on or after the Class B-6 Component Depletion Date the related
Certificate Group is the Supporting Certificate Group, the Subordinate Principal
Distribution Amount for a Loan Pool shall be reduced by the Applicable
Cross-Support Percentage thereof.
Subservicer: Any Person with which the Servicer has entered into a
Subservicing Agreement and which satisfies the requirements set forth therein.
Subservicing Agreement: Any subservicing agreement (which, in the event
the Subservicer is an affiliate of the Servicer, need not be in writing) between
the Servicer and any Subservicer relating to servicing and/or administration of
certain Mortgage Loans as provided in Section 3.02.
Substitute Mortgage Loan: A Mortgage Loan substituted for a Defective
Mortgage Loan which must, on the date of such substitution: (i) have a Stated
Principal Balance, after deduction
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of the principal portion of the Monthly Payment due in the month of
substitution, not in excess of, and not more than 10% less than, the Stated
Principal Balance of the Defective Mortgage Loan; (ii) have a Net Mortgage
Interest Rate equal to that of the Defective Mortgage Loan; (iii) have a
Loan-to-Value Ratio not higher than that of the Defective Mortgage Loan; (iv)
have a remaining term to maturity not greater than (and not more than one year
less than) that of the Defective Mortgage Loan; and (v) comply with each
Mortgage Loan representation and warranty set forth in the Sale Agreement
relating to the Defective Mortgage Loan. More than one Substitute Mortgage Loan
may be substituted for a Defective Mortgage Loan if such Substitute Mortgage
Loans meet the foregoing attributes in the aggregate.
Substitution Adjustment Amount: As defined in Section 2.02.
Supported Certificate Group: The Certificate Group that has the Class
Certificate Balance of its Class B-6 Component reduced to zero first.
Supporting Certificate Group: The Certificate Group that has the Class
Certificate Balance of its Class B-6 Component reduced to zero last.
Supporting Loan Pool: The Loan Pool related to the Supporting
Certificate Group.
Surplus: As defined in Section 5.02(b).
Tax Matters Person: The person designated as "tax matters person" in
accordance with Section 5.06 and the manner provided under Treasury Regulation
ss. 1.860F-4(d) and Treasury Regulation ss. 301.6231(a)(7)-1.
Transition Period: As defined in Section 8.05(a).
Treasury Regulations: The final and temporary regulations promulgated
under the Code by the U.S. Department of the Treasury.
Trust: The trust created by this Agreement.
Trust Estate: The corpus of the Trust created to the extent described
herein, consisting of the Mortgage Loans, such assets as shall from time to time
be identified as deposited in the Servicer Custodial Account or the Certificate
Account, in accordance with this Agreement, REO Property, the Primary Insurance
Policies and any other Required Insurance Policy.
Trustee: Norwest Bank Minnesota, National Association, and its
successors-in-interest, and, if a successor trustee is appointed hereunder, such
successor, as trustee.
Underwriting Guidelines: The underwriting guidelines of Fleet Mortgage
Corp.
U.S. Person: A citizen or resident of the United States, a corporation
or partnership (unless, in the case of a partnership, Treasury Regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of
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Columbia, including an entity treated as a corporation or partnership for
federal income tax purposes, an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust, and one or more such U.S. Persons have the authority to control all
substantial decisions of such trust (or, to the extent provided in applicable
Treasury Regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons).
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 the Holder of
the Residual Certificate, (b) 1% of all Voting Rights shall be allocated to the
Holders of each Class of the Interest-Only Certificates and (c) the remaining
Voting Rights shall be allocated among Holders of the remaining Classes of
Certificates in proportion to the Certificate Balances of their respective
Certificates on such date.
Section 1.02 Interest Calculations. All calculations of interest will
be made on a 360-day year consisting of twelve 30-day months. All dollar amounts
calculated hereunder shall be rounded to the nearest penny with one-half of one
penny being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
on behalf of the Trust for the benefit of the Certificateholders, without
recourse, all the right, title and interest of the Depositor in and to the
Mortgage Loans, including all interest and principal received on or with respect
to the Mortgage Loans (other than payments of principal and interest due and
payable on the Mortgage Loans on or before the Cut-Off Date). The foregoing
sale, transfer, assignment and set over does not and is not intended to result
in a creation of an assumption by the Trustee of any obligation of the Depositor
or any other Person in connection with the Mortgage Loans or any agreement or
instrument relating thereto, except as specifically set forth herein.
(b) In connection with such transfer and assignment, the Depositor has
delivered or caused to be delivered to the Custodian on behalf of the Trustee,
for the benefit of the Certificateholders, the following documents or
instruments with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in the following form: "Pay to the order of
____________, without recourse," with all necessary intervening
endorsements showing a complete chain of endorsement from the
originator (each such endorsement being sufficient to transfer all
right, title and interest
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of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note);
(ii) except as provided below, the original recorded Mortgage
with evidence of a recording thereon, or if any such Mortgage has not
been returned from the applicable recording office or has been lost, or
if such public recording office retains the original recorded Mortgage,
a copy of such Mortgage certified by the Depositor as being a true and
correct copy of the Mortgage;
(iii) subject to the provisos at the end of this paragraph, a
duly executed Assignment of Mortgage in blank (which may be included in
a blanket assignment or assignments), together with, except as provided
below, originals of all interim recorded assignments of such mortgage
or a copy of such interim assignment certified by the Depositor as
being a true and complete copy of the original recorded intervening
assignments of 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, however, that, if the
related Mortgage has not been returned from the applicable public
recording office, such Assignment of Mortgage may exclude the
information to be provided by the recording office; and, provided
further, that if the related Mortgage has been recorded in the name of
Mortgage Electronic Registration Systems, Inc. ("MERS") or its
designee, no Assignment of Mortgage will be required to be prepared or
delivered and instead, the Servicer shall take all actions as are
necessary to cause the Trust to be shown as the owner of the related
Mortgage Loan on the records of MERS for purposes of the system of
recording transfers of beneficial ownership of mortgages maintained by
MERS;
(iv) the originals of all assumption, modification,
consolidation or extension agreements, if any, with evidence of
recording thereon, if any;
(v) the original or duplicate original mortgagee title
insurance policy and all riders thereto;
(vi) the original of any guarantee executed in connection with
the Mortgage Note, if any;
(vii) for each Mortgage Loan which is secured by a residential
long-term lease, if any, a copy of the lease with evidence of recording
indicated thereon, or, if the lease is in the process of being
recorded, a photocopy of the lease, certified by an officer of the
respective prior owner of such Mortgage Loan or by the applicable title
insurance company, closing/settlement/escrow agent or company or
closing attorney to be a true and correct copy of the lease transmitted
for recordation;
(viii) the original of any security agreement, chattel
mortgage or equivalent document executed in connection with the
Mortgage; and
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(ix) for each Mortgage Loan secured by Co-op Shares, the
originals of the following documents or instruments:
(A) the stock certificate;
(B) the stock power executed in blank;
(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; 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);
provided, however, that on the Closing Date, if the Depositor is unable to
deliver or cause the delivery of any original Mortgage Note due to the loss of
such original Mortgage Note, the Depositor may deliver a copy of such Mortgage
Note, together with a lost note affidavit, and shall thereby be deemed to have
satisfied the document delivery requirements of this Section 2.01(b).
If in connection with any Mortgage Loans, the Depositor cannot deliver
(1) the Mortgage, (2) all interim recorded assignments, (3) all assumption,
modification, consolidation or extension agreements, if any, or (4) the lender's
title policy (together with all riders thereto) satisfying the requirements of
clause (ii), (iii), (iv) 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),
(iii) or (iv) above, or because the title policy has not been delivered to
either the Servicer or the Depositor by the applicable title insurer in the case
of clause (v) above, the Depositor shall promptly deliver or cause to be
delivered to the Custodian on behalf of the Trustee, in the case of clause (ii),
(iii) or (iv) above, such Mortgage, such interim assignment or such assumption,
modification, consolidation or extension agreement, as the case may be, with
evidence of recording indicated thereon upon receipt thereof from the public
recording office, but in no event shall any such delivery of any such documents
or instruments be made later than one year following the Closing Date, unless,
in the case of clause (ii), (iii) or (iv) above, there has been a continuing
delay at the applicable recording office or, in the case of clause (v), there
has been a continuing delay at the applicable insurer and the Depositor has
delivered an Officer's Certificate to such effect to the Trustee. The Depositor
shall forward or cause to be forwarded to the Custodian (I) from time to time
additional original documents evidencing an assumption or modification of a
Mortgage Loan and (II) any other documents required to be delivered by the
Depositor or the Servicer to
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the Custodian on the Trustee's behalf. If 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 Servicer shall prepare, execute and deliver or cause to be prepared,
executed and delivered, on behalf of the Trust, such a document to the public
recording office.
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
Custodian on the Trustee's behalf, will cause the Servicer to deposit in the
Servicer Custodial Account the portion of such payment that is required to be
deposited in the Servicer Custodial Account pursuant to Section 3.08.
Section 2.02 Acceptance by the Trustee of the Mortgage Loans. Subject
to the provisions of the following paragraph, the Trustee declares that it, or
the Custodian as its agent, will hold the documents referred to in Section 2.01
and the other documents delivered to it constituting the Mortgage Files, and
that it will hold such other assets as are included in the Trust Estate, in
trust for the exclusive use and benefit of all present and future
Certificateholders. On or prior to the Closing Date, the Trustee shall cause the
Custodian to deliver an initial certification evidencing receipt of a Mortgage
File for each Mortgage Loan.
Within 90 days after the execution and delivery of this Agreement, the
Trustee shall cause the Custodian to review the Mortgage Files in its
possession. If, in the course of such review, the Custodian finds any document
constituting a part of a Mortgage File which does not meet the requirements of
Section 2.01 or is omitted from such Mortgage File, the Trustee shall promptly
so notify the Servicer and the Depositor, or shall cause the Custodian to
promptly so notify the Servicer and the Depositor. In performing any such
review, the Trustee or the Custodian may conclusively rely on the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Custodian's review of the Mortgage Files is limited solely
to confirming that the documents listed in Section 2.01 have been received and
further confirming that any and all documents delivered pursuant to Section 2.01
appear on their face to have been executed and relate to the Mortgage Loans
identified in the Mortgage Loan Schedule. Neither the Trustee nor the Custodian
shall have any responsibility for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form, whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction, or whether a blanket assignment is
permitted in any applicable jurisdiction. The Depositor hereby covenants and
agrees that it will promptly correct or cure such defect within 90 days from the
date it was so notified of such defect and, if the Depositor does not correct or
cure such defect within such period, the Depositor will 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
below or (b) purchase such Mortgage Loan from the Trustee at the Repurchase
Price for such Mortgage Loan; provided, however, that in no event shall such a
substitution occur more than two years from the Closing Date; and, provided
further, that such substitution or repurchase shall occur within 90 days of when
such defect was discovered if such defect will cause the Mortgage Loan not to be
a "qualified mortgage" within the meaning of Section 860G(a)(3) of the Code.
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With respect to each Substitute Mortgage Loan the Depositor shall
deliver to the Custodian on behalf of the Trustee, for the benefit of the
Certificateholders, the Mortgage Note, the Mortgage, the related Assignment of
Mortgage (except for any Mortgage which has been recorded in the name of MERS or
its designee), and such other documents and agreements as are otherwise 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. Monthly Payments due
with respect to any such Substitute Mortgage Loan in the month of substitution
shall not be part of the Trust Estate and will be retained by the Depositor. For
the month of substitution, distributions to Certificateholders will include the
Monthly Payment due for such month on any Defective Mortgage Loan for which the
Depositor has substituted a Substitute Mortgage Loan.
Upon notice from the Depositor or the Trustee, the Servicer shall amend
the Mortgage Loan Schedule for the benefit of the Certificateholders to reflect
the removal of each Mortgage Loan that has become a Defective Mortgage Loan and
the substitution of the Substitute Mortgage Loan or Loans and the Servicer shall
deliver the amended Mortgage Loan Schedule to the Trustee and the Custodian.
Upon such substitution, each Substitute Mortgage Loan shall be subject to the
terms of this Agreement in all respects, and the Depositor shall be deemed to
have made to the Trustee with respect to such Substitute Mortgage Loan, as of
the date of substitution, the representations and warranties made pursuant to
Section 2.04. Upon any such substitution and the deposit to the Servicer
Custodial Account of any required Substitution Adjustment Amount (as described
in the next paragraph) and receipt of a Request for Release, the Trustee shall
direct the Custodian to release the Mortgage File relating to such Defective
Mortgage Loan to the Depositor and shall execute and deliver at the Depositor's
direction such instruments of transfer or assignment prepared by the Depositor,
in each case without recourse, as shall be necessary to vest title in the
Depositor, or its designee, to the Trustee's interest in any Defective Mortgage
Loan substituted for pursuant to this Section 2.02.
For any month in which the Depositor substitutes one or more Substitute
Mortgage Loans for one or more Defective Mortgage Loans, 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 Defective Mortgage Loans (after application of the principal portion
of the Monthly Payments due in the month of substitution) (the "Substitution
Adjustment Amount") plus an amount equal to the aggregate of any unreimbursed
Advances with respect to such Defective Mortgage Loans shall be deposited into
the Certificate Account by the Depositor on or before the Remittance Date for
the Distribution Date in the month succeeding the calendar month during which
the related Mortgage Loan is required to be purchased or replaced hereunder.
The Trustee shall cause the Custodian to retain possession and custody
of each Mortgage File in accordance with and subject to the terms and conditions
set forth herein. The Servicer shall promptly deliver to the Trustee, upon the
execution or, in the case of documents requiring recording, receipt thereof, the
originals of such other documents or instruments constituting the Mortgage File
as come into the Servicer's possession from time to time.
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It is understood and agreed that the obligation of the Depositor 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 and any Certificateholder against the Depositor.
The Trustee or the Custodian, on behalf of the Trustee, shall be under
no duty or obligation (i) to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face or (ii) to determine whether any
Mortgage File should include any of the documents specified in Section
2.01(b)(iv), (vi), (vii) and (viii).
Section 2.03 Representations, Warranties and Covenants of the Servicer.
The Servicer hereby makes the following representations and warranties to the
Depositor and the Trustee, as of the Closing Date:
(a) The Servicer is a corporation duly organized, validly
existing, and in good standing under the laws of South Carolina and has
all licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in each of the states
where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Servicer. The Servicer has power and authority to
execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by the Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized. This
Agreement, assuming due authorization, execution and delivery by the
other parties hereto, evidences the valid, binding and enforceable
obligation of the Servicer, subject to applicable law except as
enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar
laws affecting the enforcement of the rights of creditors and (ii)
general principles of equity, whether enforcement is sought in a
proceeding in equity or at law. All requisite corporate action has been
taken by the Servicer to make this Agreement valid and binding upon the
Servicer in accordance with its terms.
(b) No consent, approval, authorization or order is required
for the transactions contemplated by this Agreement from any court,
governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Servicer is required or, if required, such
consent, approval, authorization or order has been or will, prior to
the Closing Date, be obtained.
(c) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer and
will not result in the breach of any term or provision of the charter
or by-laws of the Servicer or result in the breach of any term or
provision of, or conflict with or constitute a default under or result
in the acceleration of any obligation under, any agreement, indenture
or loan or credit
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agreement or other instrument to which the Servicer or its property is
subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Servicer or its property is
subject.
(d) There is no action, suit, proceeding or investigation
pending or, to the best knowledge of the Servicer, threatened against
the Servicer which, either individually or in the aggregate, would
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Servicer, or in any
material impairment of the right or ability of the Servicer to carry on
its business substantially as now conducted or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the
Servicer contemplated herein, or which would materially impair the
ability of the Servicer to perform under the terms of this Agreement.
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 the Mortgage Loans or each Mortgage Loan, as the case may be, as of
the date hereof or such other date set forth herein that as of the Closing Date:
(a) The information set forth in the Mortgage Loan Schedule is
true and correct in all material respects.
(b) There are no delinquent taxes, ground rents, governmental
assessments, insurance premiums, leasehold payments, including
assessments payable in future installments or other outstanding charges
affecting the lien priority of the related Mortgaged Property.
(c) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by
written instruments, recorded in the applicable public recording office
if necessary to maintain the lien priority of the Mortgage, and which
have been delivered to the Trustee; the substance of any such waiver,
alteration or modification has been approved by the insurer under the
Primary Mortgage Insurance Policy, if any, the title insurer, to the
extent required by the related policy, and is reflected on the Mortgage
Loan Schedule. No instrument of waiver, alteration or modification has
been executed, and no Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement approved by the
insurer under the Primary Mortgage Insurance Policy, if any, the title
insurer, to the extent required by the policy, and which assumption
agreement has been delivered to the Trustee.
(d) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note and the Mortgage, or the exercise of
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any right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury and no such right of rescission, set-off, counterclaim or defense
has been asserted with respect thereto.
(e) All buildings upon the Mortgaged Property are insured by
an insurer generally acceptable to prudent mortgage lending
institutions against loss by fire, hazards of extended coverage and
such other hazards as are customary in the area the Mortgaged Property
is located, pursuant to insurance policies conforming to the
requirements of Customary Servicing Procedures and this Agreement. All
such insurance policies contain a standard mortgagee clause naming the
originator of the Mortgage Loan, its successors and assigns as
mortgagee and all premiums thereon have been paid. If the Mortgaged
Property is in an area identified on a flood hazard map or flood
insurance rate map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made
available), a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect
which policy conforms to the requirements of FNMA or FHLMC. The
Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor.
(f) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protections, equal credit
opportunity or disclosure laws applicable to the origination and
servicing of Mortgage Loan have been complied with.
(g) The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part (other than as to
Principal Prepayments in full which may have been received prior to the
Closing Date), and the Mortgaged Property has not been released from
the lien of the Mortgage, in whole or in part, nor has any instrument
been executed that would effect any such satisfaction, cancellation,
subordination, rescission or release.
(h) The Mortgage is a valid, existing and enforceable first
lien on the Mortgaged Property, including all improvements on the
Mortgaged Property subject only to (i) the lien of current real
property taxes and assessments not yet due and payable, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters
of the public record as of the date of recording being acceptable to
mortgage lending institutions generally and specifically referred to in
the lender's title insurance policy delivered to the originator of the
Mortgage Loan and which do not adversely affect the Appraised Value of
the Mortgaged Property, (iii) if the Mortgaged Property consists of
Co-op Shares, any lien for amounts due to the cooperative housing
corporation for unpaid assessments or charges or any lien of any
assignment of rents or maintenance expenses secured by the real
property owned by the cooperative housing corporation, and (iv) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by the Mortgage or the use, enjoyment,
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value or marketability of the related Mortgaged Property. Any security
agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates
a valid, existing and enforceable first lien and first priority
security interest on the property described therein and the Depositor
has the full right to sell and assign the same to the Trustee.
(i) 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 except as enforceability may
be limited by (i) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors and (ii) general principles of
equity, whether enforcement is sought in a proceeding in equity or at
law.
(j) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage Note and
the Mortgage have been duly and properly executed by such parties.
(k) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no
obligation for the Mortgagee to advance additional funds thereunder and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have
been complied with. All costs fees and expenses incurred in making or
closing the Mortgage Loan and the recording of the Mortgage have been
paid, and the Mortgagor is not entitled to any refund of any amounts
paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage.
(l) To the best of the Depositor's knowledge, all parties
which have had any interest in the Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise, are (or, during the period in which
they held and disposed of such interest, were) in compliance with any
and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located.
(m) The Mortgage Loan is covered by an ALTA lender's title
insurance policy, acceptable to FNMA or FHLMC, issued by a title
insurer acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject
to the exceptions contained in (h)(i) and (ii) above) the Seller, its
successors and assigns as to the first priority lien of the Mortgage in
the original principal amount of the Mortgage Loan. The Depositor is
the sole insured of such lender's title insurance policy, and such
lender's title insurance policy is in full force and effect and will be
in full force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and the Depositor has not done, by act
or omission, anything which would impair the coverage of such lender's
title insurance policy.
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(n) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event of acceleration, and the Seller has not waived any
default, breach, violation or event of acceleration.
(o) As of the date of origination of the Mortgage Loan, there
had been no mechanics' or similar liens or claims filed for work, labor
or material (and no rights are outstanding that under law could give
rise to such lien) affecting the relating Mortgaged Property which are
or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage.
(p) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property,
and no improvements on adjoining properties encroach upon the Mortgaged
Property.
(q) The Mortgage Loan was originated by a commercial bank or
affiliate or similar banking institution or affiliate which is
supervised and examined by a federal or state authority, or by a
mortgagee approved by the Secretary of HUD.
(r) Principal payments on the Mortgage Loan commenced no more
than sixty days after the proceeds of the Mortgaged Loan were
disbursed. The Pool 1 Mortgage Loans are 30-year fixed-rate mortgage
loans having an original term to maturity of not more than 30 years,
with interest payable in arrears on the first day of the month. The
Pool 2 Mortgage Loans are 15-year fixed-rate mortgage loans having an
original term to maturity of not more than 15 years, with interest
payable in arrears on the first day of the month. Each Mortgage Note
requires a monthly payment which is sufficient to fully amortize the
original principal balance over the original term thereof and to pay
interest at the related Mortgage Interest Rate. The Mortgage Note does
not permit negative amortization.
(s) There is no proceeding pending or, to the Depositor's
knowledge, threatened for the total or partial condemnation of the
Mortgaged Property and such property is in good repair and is undamaged
by waste, fire, earthquake or earth movement, windstorm, flood, tornado
or other casualty, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises were intended.
(t) The Mortgage and related Mortgage Note contain customary
and enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including
(i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. To the best
of the Depositor's knowledge, following the date of origination of the
Mortgage Loan, the Mortgaged Property has not been subject to any
bankruptcy proceeding or foreclosure proceeding
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and the Mortgagor has not filed for protection under applicable
bankruptcy laws. There is no homestead or other exemption or right
available to the Mortgagor or any other person which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage.
(u) The Mortgage Note and Mortgage are on forms acceptable to
FNMA or FHLMC.
(v) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the
Mortgaged Property and the security interest of any applicable security
agreement or chattel mortgage referred to in (h) above.
(w) The Mortgage File contains an appraisal of the related
Mortgaged Property, in a form acceptable to FNMA or FHLMC and such
appraisal complies with the requirements of FIRREA, and was made and
signed, prior to the approval of the Mortgage Loan application, by a
Qualified Appraiser.
(x) In the event the Mortgage constitutes 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 the
Mortgage, and no fees or expenses are or will become payable by the
Trustee to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor.
(y) No Mortgage Loan is a graduated payment mortgage loan, no
Mortgage Loan has a shared appreciation or other contingent interest
feature, and no Mortgage Loan contains any "buydown" provision.
(z) The Mortgagor has received all disclosure materials
required by applicable law with respect to the making of mortgage loans
of the same type as the Mortgage Loan and rescission materials required
by applicable law if the Mortgage Loan is a Refinance Mortgage Loan.
(aa) Each Mortgage Loan with a Loan-to-Value Ratio at
origination in excess of 80% will be subject to a Primary Mortgage
Insurance Policy, issued by an insurer acceptable to FNMA or FHLMC,
which insures that portion of the Mortgage Loan in excess of the
portion of the Appraised Value of the Mortgaged Property required by
FNMA. All provisions of such Primary Mortgage Insurance Policy have
been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any Mortgage
subject to any such Primary Mortgage Insurance Policy obligates the
Mortgagor thereunder to maintain such insurance and to pay all premiums
and charges in connection therewith at least until Loan-to-Value Ratio
of such Mortgage Loan is reduced to less than 80% or such other amount
as may be required by or permitted by law. The Mortgage Interest Rate
for the Mortgage Loan does not include any such insurance premium.
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(bb) To the best of the Depositor's knowledge as of the date
of origination of the Mortgage Loan, (i) the Mortgaged Property is
lawfully occupied under applicable law, (ii) 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, have been made or obtained from the
appropriate authorities and (iii) no improvement located on or part of
the Mortgaged Property is in violation of any zoning law or regulation.
(cc) The Assignment of Mortgage (except with respect to any
Mortgage that has been recorded in the name of MERS or its designee) is
in recordable form and is acceptable for recording under the laws of
the jurisdiction in which the Mortgaged Property is located.
(dd) All payments required to be made prior to the Cut-Off
Date for such Mortgage Loan under the terms of the Mortgage Note have
been made and no Mortgage Loan has been more than 30 days delinquent
more than once in the twelve month period immediately prior to the
Cut-Off Date.
(ee) With respect to each Mortgage Loan, the Depositor or
Servicer is in possession of a complete Mortgage File except for the
documents which have been delivered to the Custodian, on behalf of the
Trustee, or which have been submitted for recording and not yet
returned.
(ff) Immediately prior to the transfer and assignment
contemplated herein, the Depositor was the sole owner and holder of the
Mortgage Loans. The Mortgage Loans were not assigned or pledged by the
Depositor and the Depositor had good and marketable title thereto, and
the Depositor had full right to transfer and sell the Mortgage Loans to
the Trustee free and clear of any encumbrance, participation interest,
lien, equity, pledge, claim or security interest and had full right and
authority subject to no interest or participation in, or agreement with
any other party to sell or otherwise transfer the Mortgage Loans.
(gg) Any future advances made prior to the Cut-Off Date have
been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term. The lien of the
Mortgage securing the consolidated principal amount is expressly
insured as having first lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated
interest or by other title evidence acceptable to FNMA and FHLMC. The
consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan.
(hh) The Mortgage Loan was underwritten in accordance with the
applicable Underwriting Guidelines in effect at the time of origination
with exceptions thereto exercised in a reasonable manner.
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(ii) If the Mortgage Loan is secured by a long-term
residential lease, (i) the lessor under the lease holds a fee simple
interest in the land; (ii) the terms of such lease expressly permit the
mortgaging of the leasehold estate, the assignment of the lease without
the lessor's consent and the acquisition by the holder of the Mortgage
of the rights of the lessee upon foreclosure or assignment in lieu of
foreclosure or provide the holder of the Mortgage with substantially
similar protections; (iii) the terms of such lease do not (A) allow the
termination thereof upon the lessee's default without the holder of the
Mortgage being entitled to receive written notice of, and opportunity
to cure, such default, (B) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence,
(C) prohibit the holder of the Mortgage from being insured (or
receiving proceeds of insurance) under the hazard insurance policy or
policies relating to the Mortgaged Property or (D) permit any increase
in the rent other than pre-established increases set forth in the
lease; (E) the original term of such lease is not less than 30 years
with respect to the Pool 1 Mortgage Loans and not less than 15 years
with respect to the Pool 2 Mortgage Loans; (F) the term of such lease
does not terminate earlier than five years after the maturity date of
the Mortgage Note; and (G) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates in transferring
ownership in residential properties is a widely accepted practice.
(jj) The Mortgaged Property is located in the state identified
in the Mortgage Loan Schedule and consists of a parcel of real property
with a detached single family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit, or an
individual unit in a planned unit development, or, in the case of
Mortgage Loans secured by Co-op Shares, leases or occupancy agreements;
provided, however, that any condominium project or planned unit
development generally conforms with the applicable Underwriting
Guidelines regarding such dwellings, and no residence or dwelling is a
mobile home or a manufactured dwelling.
(kk) The Depositor used no adverse selection procedures in
selecting the Mortgage Loan for inclusion in the Trust Estate.
(ll) Each Mortgage Loan is a "qualified mortgage" within
Section 860G(a)(3) of the Code.
(mm) With respect to each Mortgage where a lost note affidavit
has been delivered to the Trustee in place of the related Mortgage
Note, the related Mortgage Note is no longer in existence.
Notwithstanding the foregoing, no representations or warranties are
made by the Depositor as to the environmental condition of any Mortgaged
Property; the absence, presence or effect of hazardous wastes or hazardous
substances on any Mortgaged Property; any casualty resulting from the presence
or effect of hazardous wastes or hazardous substances on, near or emanating from
any Mortgaged Property; the impact on Certificateholders of any environmental
condition or presence of any hazardous substance on or near any Mortgaged
Property; or the compliance of any Mortgaged Property with any environmental
laws, nor is any agent, Person or entity otherwise affiliated with the Depositor
authorized or able to make any such representation,
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warranty or assumption of liability relative to any Mortgaged Property. In
addition, no representations or warranties are made by the Depositor with
respect to the absence or effect of fraud in the origination of any Mortgage
Loan.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Custodian and shall inure to the benefit of the Trustee,
notwithstanding any restrictive or qualified endorsement or assignment.
Upon discovery by either the Depositor, the Servicer, the Trustee or
the Custodian that any of the representations and warranties set forth in this
Section 2.04 is not accurate (referred to herein as a "breach") and that such
breach materially and adversely affects the interests of the Certificateholders
in the related Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties (any Custodian being so obligated
under a Custodial Agreement); provided, however, that any such breach that
causes the Mortgage Loan not to be a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code shall be deemed to materially and adversely
affect the interests of the Certificateholders. Within 90 days of its discovery
or its receipt of notice of any such breach, the Depositor shall cure such
breach in all material respects or shall either (1) repurchase the Mortgage Loan
or any property acquired in respect thereof from the Trustee at a price equal to
the Repurchase Price or (2) if within two years of the Closing Date, substitute
for such Mortgage Loan in the manner described in Section 2.02; provided,
however, that if the breach would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such
repurchase or substitution must occur within 90 days from the date the breach
was discovered. The Repurchase Price of any repurchase described in this
paragraph and the Substitution Adjustment Amount, if any, shall be deposited in
the Certificate Account. It is understood and agreed that the obligation of the
Depositor to repurchase or substitute for any Mortgage Loan or Mortgaged
Property as to which such a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to
Certificateholders, or to the Trustee on behalf of Certificateholders, and such
obligation shall survive until termination of the Trust hereunder.
Section 2.05 Designation of Interests in the REMIC. The Depositor
hereby designates the Classes of Class A Certificates (other than the Class A-R
Certificate) and the Classes of Class B Certificates as classes of "regular
interests" and the Class A-R Certificate as the single class of "residual
interest" in the REMIC for the purposes of Code Sections 860G(a)(1) and
860G(a)(2), respectively.
Section 2.06 Designation of Start-up Day. The Closing Date is hereby
designated as the "start-up day" of the REMIC within the meaning of Section
860G(a)(9) of the Code.
Section 2.07 REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of the regular interests in the REMIC is May 20, 2030.
Section 2.08 Execution and Delivery of Certificates. The Trustee has
executed and delivered to or upon the order of the Depositor, in exchange for
the Mortgage Loans together
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with all other assets included in the definition of "Trust Estate," receipt of
which is hereby acknowledged, Certificates in authorized denominations which
evidence ownership of the entire Trust Estate.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicer to Service Mortgage Loans. For and on behalf of
the Certificateholders, the Servicer shall service and administer the Mortgage
Loans, all in accordance with the terms of this Agreement, Customary Servicing
Procedures, applicable law and the terms of the Mortgage Notes and Mortgages. In
connection with such servicing and administration, the Servicer shall have full
power and authority, acting alone and/or through Subservicers 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, (a) to execute and deliver, on behalf of the Certificateholders and the
Trustee, customary consents or waivers and other instruments and documents, (b)
to consent, with respect to the Mortgage Loans it services, to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages
(but only in the manner provided in this Agreement), (c) to collect any
Insurance Proceeds and other Liquidation Proceeds relating to the Mortgage Loans
it services, and (d) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan it services. The
Servicer shall represent and protect the interests of the Trust in the same
manner as it protects its own interests in mortgage loans in its own portfolio
in any claim, proceeding or litigation regarding a Mortgage Loan and shall not
make or permit any modification, waiver or amendment of any term of any Mortgage
Loan, except as provided pursuant to Section 3.21. Without limiting the
generality of the foregoing, the Servicer, in its own name or in the name of any
Subservicer or the Depositor and the Trustee, is hereby authorized and empowered
by the Depositor and the Trustee, when the Servicer or any Subservicer, 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 it services, and with respect to the related Mortgaged
Properties held for the benefit of the Certificateholders. The 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 Servicer to service and administer the Mortgage Loans it services
to the extent that the 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, upon the direction of the Servicer, shall
promptly execute such documents and deliver them to the Servicer.
In accordance with the standards of the preceding paragraph, the
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 and insurance premiums on Required Insurance Policies relating to the
Mortgage Loans it services, which Servicing Advances shall be
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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 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.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent.
Section 3.02 Subservicing; Enforcement of the Obligations of Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage Loan
it services by a Subservicer pursuant to a Subservicing Agreement; provided,
however, that such subservicing arrangement and the terms of the related
Subservicing Agreement must provide for the servicing of such Mortgage Loan in a
manner consistent with the servicing arrangements contemplated hereunder.
Notwithstanding the provisions of any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Subservicer or reference to actions taken through a Subservicer
or otherwise, the Servicer shall remain obligated and liable to the Depositor,
the Trustee and the Certificateholders for the servicing and administration of
the Mortgage Loans it services in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering those Mortgage Loans. All
actions of each Subservicer performed pursuant to the related Subservicing
Agreement shall be performed as agent of the Servicer with the same force and
effect as if performed directly by the Servicer.
(b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
Mortgage Loans it services that are received by a Subservicer regardless of
whether such payments are remitted by the Subservicer to the Servicer.
(c) Any Subservicing Agreement entered into by the Servicer shall
provide that it may be assumed or terminated by the Trustee, if the Trustee has
assumed the duties of the Servicer, or any successor Servicer, at the Trustee's
or successor Servicer's option, as applicable, without cost or obligation to the
assuming or terminating party or the Trust Estate, upon the assumption by such
party of the obligations of the Servicer pursuant to Section 8.05.
Any Subservicing Agreement, and any other transactions or services
relating to the Mortgage Loans involving a Subservicer, shall be deemed to be
between the Servicer and such Subservicer alone, and the Trustee and the
Certificateholders shall not be deemed parties thereto and shall have no claims
or rights of action against, rights, obligations, duties or liabilities to or
with respect to the Subservicer or its officers, directors or employees, except
as set forth in Section 3.01.
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Section 3.03 Fidelity Bond; Errors and Omissions Insurance. The
Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage on all officers,
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Mortgage Loans it
services. These policies must insure the Servicer against losses resulting from
dishonest or fraudulent acts committed by the Servicer's personnel, any
employees of outside firms that provide data processing services for the
Servicer, and temporary contract employees or student interns. Such fidelity
bond shall also protect and insure the Servicer against losses in connection
with the release or satisfaction of a Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 3.03 requiring such fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. The minimum coverage under any such bond and insurance
policy shall be at least equal to the corresponding amounts required by FNMA in
the FNMA Servicing Guide or by FHLMC in the FHLMC Sellers' & Servicers' Guide,
as amended or restated from time to time, or in an amount as may be permitted to
the Servicer by express waiver of FNMA or FHLMC.
Section 3.04 Access to Certain Documentation. The Servicer shall
provide to the OTS and the FDIC and to comparable regulatory authorities
supervising Holders of Subordinate Certificates and the examiners and
supervisory agents of the OTS, the FDIC and such other authorities, access to
the documentation required by applicable regulations of the OTS and the FDIC
with respect to the Mortgage Loans. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices designated by the Servicer. Nothing in this
Section 3.04 shall limit the obligation of the Servicer to observe any
applicable law and the failure of the Servicer to provide access as provided in
this Section 3.04 as a result of such obligation shall not constitute a breach
of this Section 3.04.
Section 3.05 Maintenance of Primary Mortgage Insurance Policy; Claims.
With respect to each Mortgage Loan with a Loan-to-Value Ratio in excess of 80%
or such other Loan-to-Value Ratio as may be required or allowed by law, the
Servicer shall, without any cost to the Trust Estate, maintain or cause the
Mortgagor to maintain in full force and effect a Primary Insurance Policy
insuring that portion of the Mortgage Loan in excess of a percentage in
conformity with FNMA requirements. The Servicer shall pay or shall cause the
Mortgagor to pay the premium thereon on a timely basis, until the Primary
Insurance Policy is lawfully cancelled. If such Primary Insurance Policy is
terminated, the Servicer shall obtain from another insurer a comparable
replacement policy, with a total coverage equal to the remaining coverage of
such terminated Primary Insurance Policy. If the insurer shall cease to be an
insurer acceptable to FNMA, the Servicer shall notify the Trustee in writing, it
being understood that the Servicer shall not have any responsibility or
liability for any failure to recover under the Primary Insurance Policy for such
reason. If the Servicer determines that recoveries under the Primary Insurance
Policy are jeopardized by the financial condition of the insurer, the Servicer
shall obtain from another insurer which meets the requirements of this Section
3.05 a replacement insurance policy. The Servicer shall not take any action that
would result in noncoverage under any applicable Primary Insurance Policy of any
loss that, but for the actions of the Servicer, would have been covered
thereunder. In connection with any assumption or substitution
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agreement entered into or to be entered into pursuant to Section 3.13, the
Servicer shall promptly notify the insurer under the related Primary Insurance
Policy, if any, of such assumption or substitution of liability in accordance
with the terms of such Primary Insurance Policy and shall take all actions which
may be required by such insurer as a condition to the continuation of coverage
under such Primary Insurance Policy. If such Primary Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Servicer shall obtain a replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Primary Insurance Policy in
a timely fashion in accordance with the terms of such Primary Insurance Policy
and, in this regard, to take such action as shall be necessary to permit
recovery under any Primary Insurance Policy respecting a defaulted Mortgage
Loan. Pursuant to Section 3.09(a), any amounts collected by the Servicer under
any Primary Insurance Policy shall be deposited in the related Escrow Account,
subject to withdrawal pursuant to Section 3.09(b).
The Servicer will comply with all provisions of applicable state and
federal law relating to the cancellation of, or collection of premiums with
respect to, Primary Mortgage Insurance, including, but not limited to, the
provisions of the Homeowners Protection Act of 1998, and all regulations
promulgated thereunder, as amended from time to time.
Section 3.06 Rights of the Depositor and the Trustee in Respect of the
Servicer. The Depositor may, but is not obligated to, enforce the obligations of
the Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Servicer hereunder and in
connection with any such defaulted obligation to exercise the related rights of
the Servicer hereunder; provided, however, that the 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 Servicer
nor shall the Trustee or the Depositor be obligated to supervise the performance
of the Servicer hereunder or otherwise.
Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
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 Subservicer except as set forth in Section 3.07.
The Servicer shall be solely liable for all fees owed by it to any Subservicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees.
Section 3.07 Trustee to Act as Servicer. If the Servicer shall for any
reason no longer be the Servicer hereunder (including by reason of an Event of
Default), the Trustee shall thereupon assume, if it so elects, or shall appoint
a successor Servicer to assume, all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (a)
liable for losses of the Servicer pursuant to Section 3.12 or any acts or
omissions of the predecessor Servicer hereunder, (b) obligated to make Advances
if it is prohibited from doing so by applicable law or (c) deemed to have made
any representations and warranties of the Servicer
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hereunder). Any such assumption shall be subject to Section 7.02 and Section
8.05(a). If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee or the successor
Servicer may elect to succeed to any rights and obligations of the Servicer
under each Subservicing Agreement or may terminate each Subservicing Agreement.
If it has elected to assume the Subservicing Agreement, the Trustee or the
successor Servicer shall be deemed to have assumed all of the Servicer's
interest therein and to have replaced the Servicer as a party to any
Subservicing Agreement entered into by the Servicer as contemplated by Section
3.02 to the same extent as if the Subservicing Agreement had been assigned to
the assuming party except that the Servicer shall not be relieved of any
liability or obligations under any such Subservicing Agreement.
The Servicer that is no longer the Servicer hereunder shall, upon
request of the Trustee, but at the expense of the Servicer, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
or substitute servicing agreement and the Mortgage Loans then being serviced
thereunder and an accounting of amounts collected or held by it and otherwise
use its best efforts to effect the orderly and efficient transfer of such
substitute Subservicing Agreement to the assuming party. The Trustee shall be
entitled to be reimbursed from the Servicer (or by the Trust, if the Servicer is
unable to fulfill its obligations hereunder) for all costs associates with the
transfer of servicing from the predecessor servicer, including, without
limitation, any costs or expenses associated with the complete transfer of all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the Trustee to correct any errors or insufficiencies
in the servicing data or otherwise to enable the Trustee to service the Mortgage
Loans properly and effectively.
Section 3.08 Collection of Mortgage Loan Payments; Servicer Custodial
Account; and Certificate Account.
(a) Continuously from the date hereof until the principal and interest
on all Mortgage Loans are paid in full, the Servicer will proceed diligently, in
accordance with this Agreement, to collect all payments due under each of the
Mortgage Loans it services when the same shall become due and payable. Further,
the Servicer will in accordance with all applicable law and Customary Servicing
Procedures ascertain and estimate taxes, assessments, fire and hazard insurance
premiums, mortgage insurance premiums and all other charges with respect to the
Mortgage Loans it services that, as provided in any Mortgage, will become due
and payable to the end that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable.
Consistent with the foregoing, the 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 it services and (ii) extend the due dates
for payments due on a Mortgage Note for a period not greater than 120 days;
provided, however, that the Servicer cannot extend the maturity of any such
Mortgage Loan past the date on which the final payment is due on the latest
maturing Mortgage Loan as of the Cut-Off Date. In the event of any such
arrangement, the Servicer shall make Periodic Advances on the related Mortgage
Loan in accordance with the provisions of Section 3.20 during the scheduled
period in accordance with the amortization schedule of such Mortgage Loan
without modification thereof by reason of such arrangements. The Servicer shall
not be required to institute or join in litigation with respect to collection of
any payment (whether under a Mortgage, Mortgage Note
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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) The Servicer shall establish and maintain the Servicer Custodial
Account. The Servicer shall deposit or cause to be deposited into the Servicer
Custodial Account, all on a daily basis within one Business Day of receipt,
except as otherwise specifically provided herein, the following payments and
collections remitted by Subservicers or received by the Servicer in respect of
the Mortgage Loans subsequent to the Cut-Off Date (other than in respect of
principal and interest due on the Mortgage Loans on or before the Cut-Off Date)
and the following amounts required to be deposited hereunder with respect to the
Mortgage Loans it services:
(i) all payments on account of principal of the Mortgage
Loans, including Principal Prepayments;
(ii) all payments on account of interest on the Mortgage
Loans, net of the Servicing Fee;
(iii) (A) all Insurance Proceeds and Liquidation Proceeds,
other than Insurance Proceeds to be (1) applied to the restoration or
repair of the Mortgaged Property, (2) released to the Mortgagor in
accordance with Customary Servicing Procedures or (3) required to be
deposited to an Escrow Account pursuant to Section 3.09(a) and (B) any
Insurance Proceeds released from an Escrow Account pursuant to Section
3.09(b)(iv);
(iv) any amount required to be deposited by the Servicer
pursuant to Section 3.08(d) in connection with any losses on Permitted
Investments with respect to the Servicer Custodial Account;
(v) any amounts required to be deposited by the Servicer
pursuant to Section 3.14;
(vi) all Repurchase Prices and all Substitution Adjustment
Amounts received by the Servicer;
(vii) Periodic Advances made by the Servicer pursuant to
Section 3.20 and any payments of Compensating Interest; and
(viii) any other amounts required to be deposited hereunder.
The foregoing requirements for deposits to the Servicer Custodial
Account by the 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 deposited by the Servicer. If the Servicer shall deposit in the
Servicer Custodial Account any amount not required to be deposited, it may at
any time withdraw or direct the institution maintaining the Servicer Custodial
Account to withdraw such
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amount from the Servicer Custodial Account, any provision herein to the contrary
notwithstanding. The Servicer shall maintain adequate records with respect to
all withdrawals made pursuant to this Section 3.08. All funds required to be
deposited in the Servicer Custodial Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.11.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit in the Certificate Account and retain therein the following:
(i) the aggregate amount remitted by the Servicer to the
Trustee pursuant to Section 3.11(a)(viii);
(ii) any amount paid by the Trustee pursuant to Section
3.08(d) in connection with any losses on Permitted Investments with
respect to the Certificate Account; and
(iii) any other amounts deposited hereunder which are required
to be deposited in the Certificate Account.
If the Servicer shall remit any amount not required to be remitted, it
may at any time direct the Trustee to withdraw such amount from the Certificate
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 Certificate Account. All funds
required to be deposited in the Certificate 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 Certificate Account at the
direction of a the Servicer.
(d) Each institution at which the Servicer Custodial Account or the
Certificate Account is maintained shall invest the funds therein as directed in
writing by the Servicer (with respect to the Servicer Custodial Account) or the
Trustee (with respect to the Certificate Account) in Permitted Investments,
which shall mature not later than (i) in the case of the Servicer Custodial
Account, the Business Day next preceding the related Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such account, then such Permitted Investment shall mature not later
than such Remittance Date) and (ii) in the case of the Certificate Account, the
Business Day next preceding the Distribution Date (except that if such Permitted
Investment is an obligation of the institution that maintains such account, then
such Permitted Investment shall mature not later than such Distribution Date)
and, in each case, shall not be sold or disposed of prior to its maturity. All
such Permitted Investments shall be made in the name of the Trustee, for the
benefit of the Certificateholders. All income or gain (net of any losses)
realized from any such investment of funds on deposit in the Servicer Custodial
Account shall be for the benefit of the Servicer as servicing compensation and
shall be retained by it monthly as provided herein. All income or gain (net of
any losses) realized from any such investment of funds on deposit in the
Certificate Account shall be for the benefit of the Trustee as additional
compensation and shall be retained by it monthly as provided herein. The amount
of any losses realized in the Servicer Custodial Account or the Certificate
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Account incurred in any such account in respect of any such investments shall
promptly be deposited by the Servicer in the Servicer Custodial Account or by
the Trustee in the Certificate Account, as applicable.
(e) The Servicer shall give notice to the Trustee of any proposed
change of the location of the Servicer Custodial Account maintained by the
Servicer not later than 30 days and not more than 45 days prior to any change
thereof. The Trustee shall give notice to the Servicer, each Rating Agency and
the Depositor of any proposed change of the location of the Certificate Account
not later than 30 days and not more than 45 days prior to any change thereof.
The creation of the Servicer Custodial Account shall be evidenced by a
certification substantially in the form of Exhibit F hereto. A copy of such
certification shall be furnished to the Trustee.
Section 3.09 Collection of Taxes, Assessments and Similar
Items; Escrow Accounts.
(a) To the extent required by the related Mortgage Note and not
violative of current law, the Servicer shall segregate and hold all funds
collected and received pursuant to each Mortgage Loan which constitute Escrow
Payments in trust separate and apart from any of its own funds and general
assets and for such purpose shall establish and maintain one or more escrow
accounts (collectively, the "Escrow Account"), titled "Fleet Mortgage Corp., in
trust for registered holders of Banc of America Funding Corporation Mortgage
Pass-Through Certificates, Series 2000-1 and various Mortgagors." The Escrow
Account shall be established with a commercial bank, a savings bank or a savings
and loan association that meets the guidelines set forth by FNMA or FHLMC as an
eligible institution for escrow accounts and which is a member of the Automated
Clearing House. In any case, the Escrow Account shall be insured by the FDIC to
the fullest extent permitted by law. The Servicer shall deposit in the
appropriate Escrow Account on a daily basis, and retain therein: (i) all Escrow
Payments collected on account of the Mortgage Loans, (ii) all amounts
representing proceeds of any hazard insurance policy which are to be applied to
the restoration or repair of any related Mortgaged Property and (iii) all
amounts representing proceeds of any Primary Insurance Policy, if applicable.
Nothing herein shall require the 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 by the Servicer only (i) to effect timely payment of taxes, assessments,
mortgage insurance premiums, fire and hazard insurance premiums, condominium or
PUD association dues, or comparable items constituting Escrow Payments for the
related Mortgage, (ii) to reimburse the Servicer out of related Escrow Payments
made with respect to a Mortgage Loan for any Servicing Advance made by the
Servicer pursuant to Section 3.09(c) with respect to such Mortgage Loan, (iii)
to refund to any Mortgagor any sums determined to be overages, (iv) for transfer
to the Servicer Custodial Account upon default of a Mortgagor or in accordance
with the terms of the related Mortgage Loan and if permitted by applicable law,
(v) for application to restore or repair the Mortgaged Property, (vi) to pay to
the Mortgagor, to the extent required by law, any interest paid on the funds
deposited in the Escrow Account, (vii) to pay to itself any interest earned on
funds deposited in the Escrow Account (and not required to be paid to the
Mortgagor), (viii) to the extent permitted under the terms of the related
Mortgage Note and applicable law, to pay late fees with respect to any Monthly
Payment which is received after the
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applicable grace period, (ix) to withdraw suspense payments that are deposited
into the Escrow Account, (x) to withdraw any amounts inadvertently deposited in
the Escrow Account or (xi) to clear and terminate the Escrow Account upon the
termination of this Agreement in accordance with Section 10.01. Any Escrow
Account shall not be a part of the Trust Estate.
(c) With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of taxes, assessments and other charges
which are or may become a lien upon the Mortgaged Property and the status of
Primary Insurance Policy premiums and fire and hazard insurance coverage. The
Servicer shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account, if any, which shall have been estimated and
accumulated by the Servicer in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. To the extent that a Mortgage does not provide
for Escrow Payments, the Servicer shall determine that any such payments are
made by the Mortgagor. The Servicer assumes full responsibility for the timely
payment of all such bills and shall effect timely payments of all such bills
irrespective of each Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments. The Servicer shall advance any such payments
that are not timely paid, but the Servicer shall be required so to advance only
to the extent that such Servicing Advances, in the good faith judgment of the
Servicer, will be recoverable by the Servicer out of Insurance Proceeds,
Liquidation Proceeds or otherwise.
Section 3.10 Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Servicer shall afford 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 Servicer.
Upon reasonable advance notice in writing, the Servicer will provide to
each Certificateholder which is a savings and loan association, bank or
insurance company certain data 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,
however, that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing such
reports and access.
Section 3.11 Permitted Withdrawals from the Servicer Custodial
Account and Certificate Account.
(a) The Servicer may from time to time make withdrawals from the
Servicer Custodial Account, for the following purposes:
(i) to pay to the 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 Servicer,
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as additional servicing compensation, earnings on or investment income
with respect to funds in or credited to the Servicer Custodial Account;
(ii) to reimburse the Servicer for unreimbursed Advances made
by it; provided, however, that the Servicer will be required to
redesposit such amount into the Servicer Custodial Account on or prior
to the next Remittance Date unless such right of reimbursement is being
exercised with respect to amounts received on the Mortgage Loan(s) in
respect of which any such Advance was made;
(iii) to reimburse the Servicer for any Nonrecoverable Advance
previously made;
(iv) to reimburse the Servicer for Insured Expenses from the
related Insurance Proceeds;
(v) to pay to the purchaser, with respect to each Mortgage
Loan or REO Property that has been purchased pursuant to Section 2.02
or 2.04, all amounts received thereon after the date of such purchase;
(vi) to reimburse the Servicer or the Depositor for expenses
incurred by any of them and reimbursable pursuant to Section 7.03;
(vii) to withdraw any amount deposited in the Servicer
Custodial Account and not required to be deposited therein;
(viii) on or prior to the Remittance Date, to withdraw an
amount equal to the related Pool Distribution Amount with respect to
each Loan Pool , and any amounts due to the Trustee under this
Agreement for such Distribution Date, to the extent on deposit, and
remit such amount in immediately available funds to the Trustee for
deposit in the Certificate Account; and
(ix) to clear and terminate the Servicer Custodial Account
upon termination of this Agreement pursuant to Section 10.01.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Servicer Custodial Account pursuant to clauses (i), (ii), (iv) and (v).
Prior to making any withdrawal from the Servicer Custodial Account pursuant to
clause (iii), the Servicer shall deliver to the Trustee an Officer's Certificate
of a Servicing Officer indicating the amount of any previous Advance determined
by the Servicer to be a Nonrecoverable Advance and identifying the related
Mortgage Loan(s) and their respective portions of such Nonrecoverable Advance.
With respect to any Servicer remittance received by the Trustee after
the Remittance Date (including any Periodic Advance required pursuant to Section
3.20 hereof), the Servicer shall pay the Trustee interest on such amount for the
period beginning on and including the Remittance Date on which such remittance
was required to have been made to but excluding the
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date on which such remittance is actually made at a rate equal to the per annum
rate reported as the prime rate in the Wall Street Journal on the Business Day
immediately preceding such Remittance Date. Such interest shall be deposited
into the Certificate Account on the date such late remittance is made. The
payment by the Servicer of any such interest shall not be deemed an extension of
time for payment or a waiver of any Event of Default.
(b) The Trustee shall withdraw funds from the Certificate Account for
distributions to Certificateholders in the manner specified in this Agreement.
In addition, the Trustee may from time to time make withdrawals from the
Certificate Account for the following purposes:
(i) to pay to itself any amounts due to the Trustee under this
Agreement for the related Distribution Date including but not limited
to amounts due to the Trustee pursuant to Sections 3.07, 6.02(f)(vii),
8.01, 8.05 and 9.11;
(ii) to pay to itself as additional compensation earnings on
or investment income with respect to funds in the Certificate Account;
(iii) to withdraw and return to the Servicer any amount
deposited in the Certificate Account and not required to be deposited
therein;
(iv) to pay to the Custodian any amounts due the Custodian
pursuant to Section 9.12; and
(v) to clear and terminate the Certificate Account upon
termination of the Agreement pursuant to Section 10.01.
Section 3.12 Maintenance of Hazard Insurance. The Servicer shall cause
to be maintained for each Mortgage Loan, fire and hazard insurance with extended
coverage customary in the area where the Mortgaged Property is located in an
amount which is at least equal to the lesser of (a) the full insurable value of
the Mortgaged Property or (b) the greater of (i) the outstanding principal
balance owing on the Mortgage Loan and (ii) an amount such that the proceeds of
such insurance shall be sufficient to avoid the application to the Mortgagor or
loss payee of any coinsurance clause under the policy. If the Mortgaged Property
is in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available) the Servicer will cause to be maintained a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration and the requirements of FNMA or FHLMC. The Servicer
shall also maintain on REO Property, fire and hazard insurance with extended
coverage in an amount which is at least equal to the maximum insurable value of
the improvements which are a part of such property, liability insurance and, to
the extent required, flood insurance in an amount required above. Any amounts
collected by the Servicer under any such policies (other than amounts to be
deposited in an Escrow Account and applied to the restoration or repair of the
property subject to the related Mortgage or property acquired in liquidation of
the Mortgage Loan, or to be released to the Mortgagor in accordance with
Customary Servicing Procedures) shall be deposited in the Servicer Custodial
Account, subject to withdrawal pursuant to Section 3.11(a). It is understood and
agreed that no earthquake or other additional insurance need be
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required by the Servicer of any Mortgagor or maintained on REO Property, other
than pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. All policies required
hereunder shall be endorsed with standard mortgagee clauses with loss payable to
the Servicer, and shall provide for at least 30 days prior written notice of any
cancellation, reduction in amount or material change in coverage to the
Servicer.
The hazard insurance policies for each Mortgage Loan secured by a unit
in a condominium development or planned unit development shall be maintained
with respect to such Mortgage Loan and the related development in a manner which
is consistent with FNMA requirements.
Notwithstanding the foregoing, the Servicer may maintain a blanket
policy insuring against hazard losses on all of the Mortgaged Properties
relating to the Mortgage Loans in lieu of maintaining the required hazard
insurance policies for each Mortgage Loan and may maintain a blanket policy
insuring against special flood hazards in lieu of maintaining any required flood
insurance. Any such blanket policies shall (A) be consistent with prudent
industry standards, (B) name the Servicer as loss payee, (C) provide coverage in
an amount equal to the aggregate unpaid principal balance on the related
Mortgage Loans without co-insurance, and (D) otherwise comply with the
requirements of this Section 3.12. Any such blanket policy may contain a
deductible clause; provided, however, that if any Mortgaged Property is not
covered by a separate policy otherwise complying with this Section 3.12 and a
loss occurs with respect to such Mortgaged Property which loss would have been
covered by such a policy, the Servicer shall deposit in the Servicer Custodial
Account the difference, if any, between the amount that would have been payable
under a separate policy complying with this Section 3.12 and the amount paid
under such blanket policy.
Section 3.13 Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.13, when any
Mortgaged Property subject to a Mortgage has been conveyed by the Mortgagor, the
Servicer shall use reasonable efforts, to the extent that it has actual
knowledge of such conveyance, to enforce any due-on-sale clause contained in any
Mortgage Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Servicer is not required to exercise such
rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise required under such Mortgage Note or Mortgage as a condition to such
transfer. If (i) the 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 Servicer is
authorized, subject to Section 3.13(b), to take or seek to enter into an
assumption and modification agreement from or with the Person to whom such
Mortgaged 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,
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however, that the Mortgage Loan shall continue to be covered (if so covered
before the Servicer enters such agreement) by the applicable Required Insurance
Policies. The 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 Servicer shall not be deemed to be in default under this Section
3.13 by reason of any transfer or assumption which the Servicer reasonably
believes it is restricted by law from preventing, for any reason whatsoever.
(b) Subject to the 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 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 no event shall the Trustee incur liability for executing any document under
this Section 3.13 at the direction of the Servicer. 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
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 Servicer shall
deliver an Officer's Certificate signed by a Servicing Officer stating that the
requirements of this subsection have been met. The Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed by
forwarding to the Trustee (or at the direction of the Trustee, the Custodian)
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 Servicer for entering into an assumption or substitution of liability
agreement may be retained by the Servicer as additional servicing compensation.
Notwithstanding the foregoing, to the extent permissible under applicable law
and at the request of the Servicer, the Trustee shall execute and deliver to the
Servicer any powers of attorney and other documents prepared by the Servicer
that are reasonably necessary or appropriate to enable the Servicer to execute
any assumption agreement or modification agreement required to be executed by
the Trustee under this Section 3.13.
Section 3.14 Realization Upon Defaulted Mortgage Loans; REO Property.
(a) The Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of Mortgaged Properties securing such
of the Mortgage Loans
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as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow Customary
Servicing Procedures and shall meet the requirements of the insurer under any
Required Insurance Policy; provided, however, that the Servicer may enter into a
special servicing agreement with an unaffiliated Holder of 100% Percentage
Interest of a Class of Class B Certificates or a holder of a class of securities
representing interests in the Class B Certificates alone or together with other
subordinated mortgage pass-through certificates. Such agreement shall be in form
mutually agreeable to the parties thereto; subject to each Rating Agency's
acknowledgment that the ratings of the Certificates in effect immediately prior
to the entering into such agreement would not be qualified, downgraded or
withdrawn and the Certificates would not be placed on credit review status
(except for possible upgrading) as a result of such agreement. 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
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of any Mortgaged 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
proceeds of the liquidation of the Mortgage Loan (respecting which it shall have
priority for purposes of withdrawals from the Servicer Custodial Account). Any
such expenditures shall constitute Servicing Advances for purposes of this
Agreement.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
In the event of a foreclosure by the Servicer on a defaulted Mortgage
Loan, the Servicer shall as promptly as possible (except for any Mortgage which
has been recorded in the name of MERS or its designee) (a) cause each Assignment
of Mortgage to be in proper form for recording in the appropriate public office
for real property records and (b) at the Depositor's expense, 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 Servicer has not
received the information required to prepare such assignment in recordable form,
the Servicer'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, no
recording of an Assignment of Mortgage will be required if the Depositor
furnishes to the Trustee an unqualified Opinion of Counsel reasonably acceptable
to the Trustee to the effect that recordation of such assignment is not
necessary under applicable state law to enforce the Trustee's interest in the
related Mortgage Loan against the claim of any subsequent transferee of such
Mortgage Loan or any successor to, or creditor of, the Depositor or the
originator of such Mortgage Loan.
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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 Servicer shall ensure that the title to such REO
Property references this Agreement and the Trustee's capacity hereunder.
Pursuant to its efforts to sell such REO Property, the Servicer shall either
itself or through an agent selected by the Servicer manage, conserve, protect
and operate such REO Property in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account and in the
same manner that similar property in the same locality as the REO Property is
managed. Incident to its conservation and protection of the interests of the
Certificateholders, the Servicer may rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Certificateholders for the
period prior to the sale of such REO Property. The Servicer shall prepare for
and deliver to the Trustee a statement with respect to each REO Property that
has been rented, if any, 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; provided, however, that the
Servicer shall have no duty to rent any REO Property on behalf of the Trust. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Servicer Custodial Account no later than the close of business on each
Determination Date.
If the Trust acquires any Mortgaged Property as described above or
otherwise in connection with a default or a default which is reasonably
foreseeable on a Mortgage Loan, the Servicer shall dispose of such Mortgaged
Property prior to the end of the third calendar year following the year of its
acquisition by the Trust (such period, the "REO Disposition Period") unless (A)
the Trustee shall have been supplied by the Servicer with an Opinion of Counsel
to the effect that the holding by the Trust of such Mortgaged Property
subsequent to the REO Disposition 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 Trust Estate to fail to qualify as a REMIC at any time
that any Certificates are outstanding, or (B) the Servicer shall have applied
for (with a copy of such application provided to the Trustee), prior to the
expiration of the REO Disposition Period, an extension of the REO Disposition
Period in the manner contemplated by Section 856(e)(3) of the Code. If such an
Opinion of Counsel is provided or such an exemption is obtained, the Trust may
continue to hold such Mortgaged Property (subject to any conditions contained in
such Opinion of Counsel) for the applicable period. Notwithstanding any other
provision of this Agreement, no Mortgaged Property acquired by the Trust 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 until such time as the
Servicer has submitted such rental agreement or plan to use the Mortgaged
Property for the production of income to the Trustee and the Trustee has
determined that the Mortgaged Property will not be used in such a manner or
pursuant to any terms that would (1) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or (2) 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 Servicer has agreed to
indemnify and hold harmless the Trust with respect to the imposition of any such
taxes. In making the determination called for in the preceding sentence, the
Trustee may rely upon an Opinion of Counsel which
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may be obtained at the expense of the Trust. The Servicer shall identify to the
Trustee any Mortgaged Property relating to a Mortgage Loan held by the Trust for
30 months for which no plans to dispose of such Mortgaged Property by the
Servicer have been made. After delivery of such identification, the Servicer
shall proceed to dispose of any such Mortgaged Property by holding a
commercially reasonable auction for such property.
The income earned from the management of any REO Properties, net of
reimbursement to the Servicer for expenses incurred (including any property or
other taxes) in connection with such management and net of unreimbursed
Servicing Fees, Periodic Advances and Servicing Advances, shall be applied to
the payment of principal of and interest on the related defaulted Mortgage Loans
(solely for the purposes of allocating principal and interest, interest shall be
treated as accruing as though such Mortgage Loans were still current) and all
such income shall be deemed, for all purposes in this Agreement, to be payments
on account of principal and interest on the related Mortgage Notes and shall be
deposited into the Servicer Custodial Account. If 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 Interest 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 Servicer for any related unreimbursed Servicing Advances
and Servicing Fees; second, to reimburse the Servicer for any unreimbursed
Periodic Advances and to reimburse the Servicer Custodial Account for any
Nonrecoverable Advances (or portions thereof) that were previously withdrawn by
the Servicer pursuant to Section 3.11(a)(iii) that related to such Mortgage
Loan; third, to accrued and unpaid interest (to the extent no Periodic Advance
has been made for such amount or any such Periodic Advance has been reimbursed)
on the Mortgage Loan or related REO Property, at the 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 Servicer as additional servicing compensation pursuant to
Section 3.17.
(b) The Depositor shall be entitled, at its option, to repurchase (i)
any such defaulted Mortgage Loan from the Trust Estate if, in the Depositor's
judgment, the default is not likely to be cured by the Mortgagor or (ii) any
Mortgage Loan in the Trust Estate which pursuant to Section 4(b) of the
applicable Mortgage Loan Purchase Agreement the applicable Seller requests the
Depositor to repurchase and to sell to such Seller to facilitate the exercise of
the Seller's rights against the originator or prior holder of such Mortgage
Loan. The purchase price for any such Mortgage Loan shall be 100% of the unpaid
principal balance of such Mortgage Loan plus accrued interest thereon at the
Mortgage Interest Rate through the last day of the month in which such
repurchase occurs. Upon the receipt of such purchase price, the Servicer shall
provide to the Trustee the notification required by Section 3.15 and the Trustee
or the Custodian shall promptly release to the Depositor the Mortgage File
relating to the Mortgage Loan being repurchased.
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Section 3.15 Trustee and Custodian to Cooperate; Release of Mortgage
Files. Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Custodian
by delivering, or causing to be delivered, two copies (one of which will be
returned to the Servicer with the Mortgage File) of a Request for Release (which
may be delivered in an electronic format acceptable to the Trustee and the
Servicer). Upon receipt of such request, the Custodian shall within seven
Business Days release the related Mortgage File to the Servicer. If any of the
Assignments of Mortgage have been recorded in the name of the Trustee, the
Trustee shall at the Servicer's direction execute and deliver to the 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 Servicer, together with the Mortgage Note with written evidence
of cancellation thereon. If the Mortgage has been recorded in the name of MERS
or its designee, the Servicer shall take all necessary action to reflect the
release of the Mortgage on the records of MERS. Expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the related Mortgagor, if in accordance with applicable law and the terms of
the applicable Mortgage Loan Documents. 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 Custodian shall, upon delivery to
the Custodian of a Request for Release signed by a Servicing Officer, release
the Mortgage File within seven Business Days to the Servicer. Subject to the
further limitations set forth below, the Servicer shall cause the Mortgage File
so released to be returned to the Custodian when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan is liquidated and the
proceeds thereof are deposited in the Servicer Custodial Account, in which case
the Servicer shall deliver to the Custodian a Request for Release, signed by a
Servicing Officer.
The Trustee shall execute and deliver to the Servicer any powers of
attorney and other documents prepared by the Servicer that are reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement, upon the request of the Servicer. In
addition, upon prepayment in full of any Mortgage Loan or the receipt of notice
that funds for such purpose have been placed in escrow, the Servicer is
authorized to give, as attorney-in-fact for the Trustee and the mortgagee under
the Mortgage, an instrument of satisfaction (or Assignment of Mortgage without
recourse) regarding the Mortgaged Property relating to such Mortgage Loan, which
instrument of satisfaction or Assignment of Mortgage, as the case may be, shall
be delivered to the Person entitled thereto against receipt of the prepayment in
full. If the Mortgage is registered in the name of MERS or its designee, the
Servicer shall take all necessary action to reflect the release on the records
of MERS. In lieu of executing such satisfaction or Assignment of Mortgage, or if
another document is required to be executed by the Trustee, the Servicer may
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
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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 Servicer
to be Held for the Trustee. The Servicer shall transmit to the Custodian as
required by this Agreement all documents and instruments in respect of a
Mortgage Loan coming into the possession of the Servicer from time to time and
shall account fully to the Trustee for any funds received by the Servicer or
which otherwise are collected by the Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan. The documents constituting
the Servicing File shall be held by the Servicer as custodian and bailee for the
Trustee. All Mortgage Files and funds collected or held by, or under the control
of, the 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 Servicer Custodial Account, shall be
held by the 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 Servicer also agrees that it shall not
knowingly create, incur or subject any Mortgage File or any funds that are
deposited in the Servicer Custodial Account, Certificate Account or any Escrow
Account, or any funds that otherwise are or may become due or payable to the
Trustee for the benefit of the Certificateholders, to any claim, lien, security
interest, judgment, levy, writ of attachment or other encumbrance created by the
Servicer, 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 Servicer shall be entitled to set off
against and deduct from any such funds any amounts that are properly due and
payable to the Servicer under this Agreement.
Section 3.17 Servicing Compensation. The Servicer shall be entitled out
of each payment of interest on a Mortgage Loan (or portion thereof) and included
in the Trust Estate to retain or withdraw from the Servicer Custodial Account an
amount equal to the Servicing Fee for such Distribution Date.
Additional 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 and all other
customary and ancillary income and fees shall be retained by the Servicer to the
extent not required to be deposited in the Servicer Custodial Account pursuant
to Section 3.08(b). The Servicer shall be required to pay all expenses incurred
by it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement therefor except as specifically provided in this
Agreement.
Notwithstanding the foregoing, with respect to the payment of the
Servicing Fee on any Distribution Date, the aggregate Servicing Fee for the
Servicer for such Distribution Date shall be reduced (but not below zero) by an
amount equal to the Prepayment Interest Shortfall for such Distribution Date
relating to the Mortgage Loans (any such reduction, "Compensating Interest").
Section 3.18 Annual Statement as to Compliance. The Servicer shall
deliver to the Trustee and each Rating Agency on or before 90 days after the end
of each calendar year, commencing in 2001, an Officer's Certificate stating, as
to the signer thereof, that (a) a review of
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the activities of the Servicer during the preceding calendar year and of the
performance of the Servicer under this Agreement has been made under such
officer's supervision, and (b) to the best of such officer's knowledge, based on
such review, the 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.
Section 3.19 Annual Independent Public Accountants' Servicing
Statement; Financial Statements. The Servicer shall, at its own expense, on or
before 90 days after the end of each calendar year, commencing in 2001, cause a
firm of independent public accountants (who may also render other services to
the Servicer or any affiliate thereof) which is a member of the American
Institute of Certified Public Accountants to furnish a statement to the Trustee
to the effect that such firm has with respect to the Servicer's overall
servicing operations, examined such operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers,
stating such firm's conclusions relating thereto.
Section 3.20 Advances. The Servicer shall determine on or before each
Remittance Date whether it is required to make a Periodic Advance pursuant to
the definition thereof. If the Servicer determines it is required to make a
Periodic Advance, it shall, on or before the Remittance Date, either (a) deposit
into the Servicer Custodial Account an amount equal to the Advance and/or (b)
make an appropriate entry in its records relating to the Servicer Custodial
Account that any portion of the Amount Held for Future Distribution in the
Servicer Custodial Account has been used by the Servicer in discharge of its
obligation to make any such Periodic Advance. Any funds so applied shall be
replaced by the Servicer by deposit in the Servicer Custodial Account no later
than the close of business on the Business Day preceding the next Remittance
Date. The Servicer shall be entitled to be reimbursed from the Servicer
Custodial Account for all Advances of its own funds made pursuant to this
Section 3.20 as provided in Section 3.11(a). The obligation to make Periodic
Advances with respect to any Mortgage Loan shall continue until the ultimate
disposition of the REO Property or Mortgaged Property relating to such Mortgage
Loan. The Servicer shall inform the Trustee of the amount of the Periodic
Advance to be made by the Servicer on each Remittance Date no later than such
Remittance Date.
The Servicer shall deliver to the Trustee on the related Remittance
Date an Officer's Certificate of a Servicing Officer indicating the amount of
any proposed Periodic Advance determined by the Servicer to be a Nonrecoverable
Advance. Notwithstanding anything to the contrary, the Servicer shall not be
required to make any Periodic Advance or Servicing Advance that would be a
Nonrecoverable Advance.
Section 3.21 Modifications, Waivers, Amendments and Consents.
(a) Subject to this Section 3.21, the Servicer may agree to any
modification, waiver, forbearance, or amendment of any term of any Mortgage Loan
without the consent of the Trustee or any Certificateholder. All modifications,
waivers, forbearances or amendments of any Mortgage Loan shall be in writing and
shall be consistent with Customary Servicing Procedures.
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(b) The Servicer shall not agree to enter into, and shall not enter
into, any modification, waiver (other than a waiver referred to in Section 3.13,
which waiver, if any, shall be governed by Section 3.13), forbearance or
amendment of any term of any Mortgage Loan if such modification, waiver,
forbearance, or amendment would:
(i) affect the amount or timing of any related payment of
principal, interest or other amount payable thereunder;
(ii) in the Servicer's judgment, materially impair the
security for such Mortgage Loan or reduce the likelihood of timely
payment of amounts due thereon; or
(iii) otherwise constitutes a "significant modification"
within the meaning of Treasury Regulations Section 1.860G-2(b);
unless, in each case, (A) such Mortgage Loan is 90 days or more past due or (B)
the Servicer delivers to the Trustee an Opinion of Counsel to the effect that
such modification, waiver, forbearance or amendment would not affect the REMIC
status of the Trust Estate and, in either case, such modification, waiver,
forbearance or amendment is reasonably likely to produce a greater recovery with
respect to such Mortgage Loan than would liquidation. Subject to Customary
Servicing Procedures, the Servicer may permit a forbearance for a Mortgage Loan
which in the Servicer's judgment is subject to imminent default.
(c) Any payment of interest, which is deferred pursuant to any
modification, waiver, forbearance or amendment permitted hereunder, shall not,
for purposes hereof, including, without limitation, calculating monthly
distributions to Certificateholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
or such modification, waiver or amendment so permit.
(d) The Servicer may, as a condition to granting any request by a
Mortgagor for consent, modification, waiver, forbearance or amendment, the
granting of which is within the Servicer's discretion pursuant to the Mortgage
Loan and is permitted by the terms of this Agreement, require that such
Mortgagor pay to the Servicer, as additional servicing compensation, a
reasonable or customary fee for the additional services performed in connection
with such request, together with any related costs and expenses incurred by the
Servicer, which amount shall be retained by the Servicer as additional servicing
compensation.
(e) The Servicer shall notify the Trustee, in writing, of any
modification, waiver, forbearance or amendment of any term of any Mortgage Loan
and the date thereof, and shall deliver to the Trustee (or, at the direction of
the Trustee, the Custodian) for deposit in the related Mortgage File, an
original counterpart of the agreement relating to such modification, waiver,
forbearance or amendment, promptly (and in any event within ten Business Days)
following the execution thereof; provided, however, that if any such
modification, waiver, forbearance or amendment is required by applicable law to
be recorded, the Servicer (i) shall deliver to the Trustee a copy thereof and
(ii) shall deliver to the Trustee such document, with evidence of notification
upon receipt thereof from the public recording office.
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Section 3.22 Reports to the Securities and Exchange Commission. Within
15 days after each Distribution Date, the Trustee shall, in accordance with
industry standards, file with the Securities and Exchange Commission via the
Electronic Data Gathering and Retrieval System (EDGAR), a Form 8-K with a copy
of the statement to the Certificateholders for such Distribution Date as an
exhibit thereto. Prior to January 30, 2001, the Trustee shall, in accordance
with industry standards, file a Form 15 Suspension Notification with respect to
the Trust, if applicable. Prior to March 30, 2001, the Trustee shall file a Form
10-K, in substance conforming to industry standards, with respect to the Trust.
The Depositor hereby grants to the Trustee a limited power of attorney to
execute and file each such document on behalf of the Depositor. Such power of
attorney shall continue until either the earlier of (i) receipt by the Trustee
from the Depositor of written termination and such power of attorney and (ii)
the termination of the Trust. The Servicer and the Depositor agree to promptly
furnish to the Trustee, from time to time upon request, such further
information, reports, and financial statements within its control related to
this Agreement and the Mortgage Loans as the Trustee reasonably deems
appropriate to prepare and file all necessary reports with the Securities and
Exchange Commission. The Trustee shall have no responsibility to file any items
other than those specified in this Section. Upon the request of the Trustee, the
Servicer and the Depositor shall cooperate with the Trustee in the preparation
of any item not set forth under this Section 3.22 and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section.
Section 3.23 Tax Reporting to Mortgagors. The Servicer shall perform,
with respect to the Mortgage Loans, 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. The Servicer shall deliver copies of such
reports to the Trustee, upon request of the Trustee.
Section 3.24 Servicer Not Liable for Certificates or Mortgage Loans.
The Servicer makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates save that the Servicer represents that,
assuming due execution and delivery by the other parties hereto, this Agreement
has been duly authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms, subject, as to enforcement of remedies, to applicable insolvency,
receivership, moratorium and other laws affecting the rights of creditors
generally, and to general principles of equity and the discretion of the court
(regardless of whether enforcement of such remedies is considered in a
proceeding in equity or at law). The Servicer shall not be accountable for the
use or application by the Depositor of funds paid to the Depositor in
consideration of the assignment of the Mortgage Loans hereunder by the
Depositor, or for the use or application of any funds paid to the Trustee or
deposited into the Certificate Account.
The Servicer shall at no time have any responsibility or liability for
or with respect to the compliance by the Depositor with any warranty or
representation made under this Agreement or
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in any related document or the accuracy of any such warranty or representation;
any investment of monies by or at the direction of the Trustee or any loss
resulting therefrom; the acts or omissions of any of the Depositor or the
Trustee; provided, however, that the foregoing shall not relieve the Servicer of
its obligation to perform its duties under this Agreement.
ARTICLE IV
SERVICER'S CERTIFICATE
Section 4.01 Servicer's Certificate. Each month, not later than 12:00
noon Eastern time on the Business Day following each Determination Date, the
Servicer shall deliver to the Trustee, a Servicer's Certificate (in substance
and format mutually acceptable to the Servicer and the Trustee) certified by a
Servicing Officer setting forth the information necessary in order for the
Trustee to perform its obligations under this Agreement. The Trustee may
conclusively rely upon the information contained in a Servicer's Certificate for
all purposes hereunder and shall have no duty to verify or re-compute any of the
information contained therein.
Each such statement shall be provided by the Trustee to any Holder of a
Certificate upon request and shall also, to the extent available, include
information regarding delinquencies on Mortgage Loans set forth pursuant to
Section 5.04(a)(x) and (xii).
ARTICLE V
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS;
REMIC ADMINISTRATION
Section 5.01 Distributions. On each Distribution Date, based solely on
the information in the Servicer's Certificate, the Trustee shall distribute out
of the Certificate Account (to the extent funds are available therein) to each
Certificateholder of record on the related Record Date (other than as provided
in Section 10.01 respecting the final distribution) (a) by check mailed to such
Certificateholder entitled to receive a distribution on such Distribution Date
at the address appearing in the Certificate Register, or (b) upon written
request by the Holder of a Regular Certificate (in the event such
Certificateholder owns of record 100% of a Class of Certificates or holds
Certificates of any Class having denominations aggregating $1,000,000 or more),
by wire transfer or by such other means of payment as such Certificateholder and
the Trustee shall agree upon, such Certificateholder's Percentage Interest in
the amount to which the related Class of Certificates is entitled in accordance
with the priorities set forth below in Section 5.02.
None of the Holders of any Class of Certificates, the Depositor, the
Servicer or the Trustee shall in any way be responsible or liable to Holders of
any Class of Certificates in respect of amounts properly previously distributed
on any such Class.
Amounts distributed with respect to any Class of Certificates shall be
applied first to the distribution of interest thereon and then to principal
thereon.
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Section 5.02 Priorities of Distributions.
(a) On each Distribution Date, the Trustee shall withdraw from the
Certificate Account (to the extent funds are available therein), the amounts
payable to the Trustee pursuant to Sections 3.11(b)(i), 3.11(b)(ii) and
3.11(b)(iv) and shall pay such funds to itself.
(b) Prior to making the distributions described in Sections 5.02(c),
5.02(d) 5.02(e) and 5.02(f) below and for so long as the Class Certificate
Balance of the Class B-6 Certificates has not been reduced to zero, the Trustee
shall determine whether the amount on deposit in the Certificate Account as the
Pool Distribution Amount for each Loan Pool is sufficient to make all required
payments of principal and interest to the related Certificate Group (other than
the applicable Class B-6 Component). If the Pool Distribution Amount with
respect to one Loan Pool is insufficient to make such distributions (such
shortfall, a "Deficit") and the Pool Distribution Amount with respect to the
other Loan Pool exceeds the amount required to make all required payments of
principal and interest to the other Certificate Group (other than the applicable
Class B-6 Component) (such excess, a "Surplus"), then the Surplus (up to the
amount of the Deficit) will be deemed to be part of the Pool Distribution Amount
for the Loan Pool with the Deficit.
(c) On each Distribution Date and based solely on the information
contained in the Servicer's Certificate, the Trustee shall withdraw from the
Certificate Account the Pool Distribution Amount for the Pool 1 Mortgage Loans,
in an amount as specified in written notice received by the Trustee from the
Servicer no later than the related Determination Date, and shall apply such
funds from the Certificate Account to distributions on the Group 1 Certificates
in the following order of priority and to the extent of such funds:
(i) to each Class of Senior Certificates that are Group 1
Certificates, an amount allocable to interest equal to the Interest
Distribution Amount for such Class and any shortfall being allocated
among such Classes in proportion to the amount of the Interest
Distribution Amount that would have been distributed in the absence of
such shortfall; provided, however, that until the Accretion Termination
Date amounts that would have been distributed pursuant to this clause
to the Class 1A-11 Certificates will instead be distributed in
reduction of the Class Certificate Balances of the Class of
Certificates specified in Section 5.02(b)(i).
(ii) to the Class A Certificates that are Group 1
Certificates, an aggregate amount up to the Senior Principal
Distribution Amount for the Group 1 Certificates, such distribution to
be allocated among such Classes in accordance with Section 5.02(d);
(iii) to each Class of Subordinate Certificates that are Group
1 Certificates, subject to paragraph (h) below, in the following order
of priority:
(A) to the Class 1B-1 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
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(B) to the Class 1B-1 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(C) to the Class 1B-2 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(D) to the Class 1B-2 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(E) to the Class 1B-3 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(F) to the Class 1B-3 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(G) to the Class 1B-4 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(H) to the Class 1B-4 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(I) to the Class 1B-5 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(J) to the Class 1B-5 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(K) to the Class B-6 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for the Class 1B-6 Component for such Distribution
Date; and
(L) to the Class B-6 Certificates, an amount
allocable to principal equal to the Pro Rata Share of the
Class 1B-6 Component for such Distribution Date until the
Class Certificate Balance thereof has been reduced to zero;
and
(v) to the Holder of the Class A-R Certificate, any remaining
Pool Distribution Amount for the Pool 1 Mortgage Loans.
All distributions in respect of the Interest Distribution Amount for a
Class of Group 1 Certificates will be applied first with respect to the amount
payable pursuant to clause (i) of the
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definition of "Interest Distribution Amount," and second with respect to the
amount payable pursuant to clause (ii) of such definition.
(d) (i) On each Distribution Date occurring prior to the Accretion
Termination Date, based solely on the information contained in the Servicer's
Certificate, the Class 1A-11 Accrual Distribution Amount will be allocated
sequentially as follows:
first, to the Class 1A-10 Certificates until their Class
Certificate Balance has been reduced to zero; and
second, to the Class 1A-11 Certificates until their Class
Certificate Balance has been reduced to zero.
(ii) On each Distribution Date prior to the Senior Credit
Support Depletion Date for the Group 1 Certificates, the amount distributable to
the Class A Certificates that are Group 1 Certificates pursuant to Section
5.02(c)(ii) for such Distribution Date, will be distributed in the following
order of priority:
first, to the Class A-R Certificate, until its Class
Certificate Balance has been reduced to zero;
second, to the Class 1A-12 Certificates, up to the Class 1A-12
Priority Amount for such Distribution Date, until their Class
Certificate Balance has been reduced to zero;
third, concurrently:
(a) 7.9379797403% to the Class 1A-1 Certificates;
(b) 9.3114869932% to the Class 1A-2 Certificates;
(c) 23.9824815619% to the Class 1A-3 Certificates;
(d) 20.5334156558% to the Class 1A-4 Certificates;
(e) 19.8253668401% to the Class 1A-5 Certificates; and
(f) 18.4092692087% to the Class 1A-8 Certificates;
until the Class Certificate Balance of the Class 1A-1 Certificates has been
reduced to zero;
fourth, concurrently:
(a) 9.3114869931% to the Class 1A-2 Certificates;
(b) 23.9824815619% to the Class 1A-3 Certificates;
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(c) 20.5334156558% to the Class 1A-4 Certificates;
(d) 19.8253668401% to the Class 1A-5 Certificates;
(e) 7.9379797404% to the Class 1A-6 Certificates; and
(f) 18.4092692087% to the Class 1A-8 Certificates;
until the Class Certificate Balance of the Class 1A-6 Certificates has been
reduced to zero;
fifth, concurrently:
(a) 9.3114869931% to the Class 1A-2 Certificates;
(b) 23.9824815619% to the Class 1A-3 Certificates;
(c) 20.5334156558% to the Class 1A-4 Certificates;
(d) 19.8253668401% to the Class 1A-5 Certificates;
(e) 7.9379797404% to the Class 1A-7 Certificates; and
(f) 18.4092692087% to the Class 1A-8 Certificates;
until the Class Certificate Balance of the Class 1A-2 Certificates has been
reduced to zero;
sixth, concurrently:
(a) 23.9824815618% to the Class 1A-3 Certificates;
(b) 20.5334156558% to the Class 1A-4 Certificates;
(c) 19.8253668401% to the Class 1A-5 Certificates;
(d) 17.2494667336% to the Class 1A-7 Certificates; and
(e) 18.4092692087% to the Class 1A-8 Certificates;
until the Class Certificate Balances of the Class 1A-3 and Class 1A-7
Certificates have been reduced to zero;
seventh, concurrently:
(a) 20.5334156558% to the Class 1A-4 Certificates;
(b) 19.8253668401% to the Class 1A-5 Certificates;
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(c) 18.4092692087% to the Class 1A-8 Certificates; and
(d) 41.2319482954% to the Class 1A-9 Certificates;
until the Class Certificate Balance of the Class 1A-4 Certificates has been
reduced to zero;
eighth, concurrently:
(a) 19.8253668400% to the Class 1A-5 Certificates;
(b) 18.4092692087% to the Class 1A-8 Certificates; and
(c) 61.7653639513% to the Class 1A-9 Certificates;
until the Class Certificate Balance of the Class 1A-5 Certificates has been
reduced to zero;
ninth, concurrently:
(a) 18.4092692087% to the Class 1A-8 Certificates; and
(b) 81.5907307913% to the Class 1A-9 Certificates;
until the Class Certificate Balance of the Class 1A-8 Certificates has been
reduced to zero;
tenth, to the Class 1A-9 Certificates until their Class Certificate
Balance has been reduced to zero;
eleventh, to the Class 1A-10 Certificates until their Class Certificate
Balance has been reduced to zero; and
twelfth, to the Class 1A-11 Certificates until their Class Certificate
Balance has been reduced to zero.
The Class 1A-WIO Certificates are Interest-Only Certificates and are
not entitled to distributions in respect of principal.
On each Distribution Date on or after the Senior Credit Support
Depletion Date for the Group 1 Certificates, notwithstanding the allocation and
priority set forth above, the portion of the Pool Distribution Amount for the
Pool 1 Mortgage Loans available to be distributed as principal of the Class A
Certificates that are Group 1 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.
(e) On each Distribution Date and based solely on the information
contained in the Servicer's Certificate, the Trustee shall withdraw from the
Certificate Account the Pool
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Distribution Amount for the Pool 2 Mortgage Loans, in an amount as specified in
written notice received by the Trustee from the Servicer no later than the
related Determination Date, and shall apply such funds from the Certificate
Account to distributions on the Group 2 Certificates in the following order of
priority and to the extent of such funds:
(i) to each Class of Senior Certificates that are Group 2
Certificates, an amount allocable to interest equal to the Interest
Distribution Amount for such Class and any shortfall being allocated
among such Classes in proportion to the amount of the Interest
Distribution Amount that would have been distributed in the absence of
such shortfall;
(ii) to the Class A Certificates that are Group 2
Certificates, an aggregate amount up to the Senior Principal
Distribution Amount for the Group 2 Certificates, such distribution to
be allocated among such Classes in accordance with Section 5.02(f);
(iii) to each Class of Subordinate Certificates that are Group
2 Certificates, subject to paragraph (h) below, in the following order
of priority:
(A) to the Class 2B-1 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(B) to the Class 2B-1 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(C) to the Class 2B-2 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(D) to the Class 2B-2 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(E) to the Class 2B-3 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(F) to the Class 2B-3 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(G) to the Class 2B-4 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(H) to the Class 2B-4 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
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(I) to the Class 2B-5 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(J) to the Class 2B-5 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
has been reduced to zero;
(K) to the Class B-6 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for the Class 2B-6 Component for such Distribution
Date; and
(L) to the Class B-6 Certificates, an amount
allocable to principal equal to the Pro Rata Share of the
Class 2B-6 Component for such Distribution Date until the
Class Certificate Balance thereof has been reduced to zero;
and
(v) to the Holder of the Class A-R Certificate, any remaining
Pool Distribution Amount for the Pool 2 Mortgage Loans.
All distributions in respect of the Interest Distribution Amount for a
Class of Group 2 Certificates will be applied first with respect to the amount
payable pursuant to clause (i) of the definition of "Interest Distribution
Amount," and second with respect to the amount payable pursuant to clause (ii)
of such definition.
(f) On each Distribution Date prior to the Senior Credit Support
Depletion Date for the Group 2 Certificates, the amount distributable to the
Class A Certificates that are Group 2 Certificates pursuant to Section
5.02(e)(ii) for such Distribution Date, will be distributed in the following
order of priority:
first, to the Class 2A-2 Certificates, up to the Class 2A-2
Priority Amount for such Distribution Date;
second, to the Class 2A-1 Certificates until their Class
Certificate Balance has been reduced zero; and
third, to the Class 2A-2 Certificates until their Class
Certificate Balance has been reduced to zero.
The Class 2A-WIO Certificates are Interest-Only Certificates and are
not entitled to distributions in respect of principal.
On each Distribution Date on or after the Senior Credit Support
Depletion Date for the Group 2 Certificates, notwithstanding the allocation and
priority set forth above, the portion of the Pool Distribution Amount for the
Pool 2 Mortgage Loans available to be distributed as principal of the Class A
Certificates that are Group 2 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.
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(g) On each Distribution Date, Accrued Certificate Interest for each
Class of Certificates for such Distribution Date shall be reduced by such
Class's pro rata share, based on such Class's Interest Distribution Amount for
such Distribution Date, without taking into account the allocation made by this
Section 5.02(g), of (i) Non-Supported Interest Shortfalls, (ii) any Excess
Losses allocable to interest, (iii) on and after the Senior Credit Support
Depletion Date, any other Realized Loss allocable to interest and (iv) each
Relief Act Reduction incurred during the calendar month preceding the month of
such Distribution Date.
(h) Notwithstanding the priority and allocation contained in Section
5.02(c)(iii) and Section 5.02(e)(iii), if with respect to any Class of
Subordinate Certificates on any Distribution Date, (i) the aggregate of the
Class Certificate Balances immediately prior to such Distribution Date of all
Classes of Subordinate Certificates in the related Certificate Group which have
a higher numerical Class designation than such Class, divided by (ii) the
aggregate Class Certificate Balance of all the Certificates in the related
Certificate Group immediately prior to such Distribution Date (the "Fractional
Interest") is less than the Original Fractional Interest for such Class, no
distribution of principal will be made to any Classes junior to such Class (the
"Restricted Classes") and the Class Certificate Balances of the Restricted
Classes in the related Certificate Group will not be used in determining the Pro
Rata Share for the Subordinate Certificates in the related Certificate Group
that are not Restricted Classes. For the purposes of computing the Fractional
Interest of any Class, the entire Class Certificate Balance of the Class B-6
Certificates shall be used with respect to each Certificate Group. Any funds
remaining will be distributed in the order provided in Section 5.02(c)(iii) and
5.02(e)(iii), respectively.
Section 5.03 Allocation of Realized Losses.
(a) On or prior to each Determination Date, the Servicer shall inform
the Trustee in writing with respect to each Mortgage Loan, as applicable: (1)
whether any Realized Loss is a Deficient Valuation, a Debt Service Reduction, a
Fraud Loss or a Special Hazard Loss, (2) of the amount of such loss or Deficient
Valuation, or of the terms of such Debt Service Reduction and (3) of the total
amount of Realized Losses. Based on such information, the Trustee shall
determine the total amount of Realized Losses, including Excess Losses, with
respect to each Loan Pool for the related Distribution Date.
The principal portion of Realized Losses with respect to any
Distribution Date and any Certificate Group shall be allocated as follows:
(i) the principal portion of any Realized Loss (other than an
Excess Loss) shall be allocated first, to the Class B-6 Certificates,
until their Class Certificate Balance has been reduced to zero, second,
to the other Subordinate Certificates in such Certificate Group in
reverse order of their respective numerical Class designations
(beginning with the Class of Subordinate Certificates then outstanding
with the highest numerical Class designation) until the respective
Class Certificate Balance of each such Class is reduced to zero, and
third to the Senior Certificates in such Certificate Group (other than
the Class 1A-WIO or Class 2A-WIO, as applicable), pro rata, on the
basis of their respective Class Certificate Balances immediately prior
to the related Distribution Date or, in the case of
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the Class 1A-11 Certificates, the Initial Class Certificate Balance, if
lower, until the Class Certificate Balances thereof have been reduced
to zero; and
(ii) the principal portion of any Excess Losses in the related
Loan Group shall be allocated to the Senior Certificates in such
Certificate Group (other than the Class 1A-WIO or Class 2A-WIO, as
applicable), pro rata, on the basis of their respective Class
Certificate Balances immediately prior to the related Distribution Date
(or, in the case of the Class B-6 Certificates, the portion allocable
to the related Certificate Group) or, in the case of the Class 1A-11
Certificates, the initial Class Certificate Balance, if lower.
(b) For so long as the Class B-6 Certificates are outstanding, the
Class Certificate Balance thereof 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 (after giving effect to the amount to be
distributed as principal and the allocation of Realized Losses on such
Distribution Date) exceeds the Adjusted Pool Amount for both Loan Pools for such
Distribution Date. After the Class Certificate Balance has been reduced to zero,
the Class of Subordinate Certificates in a Certificate Group then outstanding
with the highest numerical Class designation shall be reduced on each
Distribution Date by the amount, if any, by which (i) the aggregate of the Class
Certificate Balances of all outstanding Classes of Certificates in such
Certificate Group (after giving effect to the amount to be distributed as
principal and the allocation of Realized Losses on such Distribution Date) plus
(ii) the Cross-Support Balance, if any, for the related Loan Pool, exceeds the
Adjusted Pool Amount for that Loan Pool for such Distribution Date.
After the Senior Credit Support Depletion Date for a Certificate Group,
the Class Certificate Balances of the Senior Certificates in such Certificate
Group in the aggregate 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 Senior Certificates in such Certificate Group (after
giving effect to the amount to be distributed as a distribution of principal and
the allocation of Realized Losses for the related Loan Pool on such Distribution
Date) exceeds the Adjusted Pool Amount for the related Loan Pool for such
Distribution Date.
Any such reduction shall be allocated among the Senior Certificates in
such Certificate Group based on the Class Certificate Balances immediately prior
to such Distribution Date or, in the case of the Class 1A-11 Certificates, the
Initial Class Certificate Balance, if lower.
(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 5.03(b) above shall be allocated among the Certificates of such Class
in proportion to their respective Percentage Interests.
(d) Any allocation of Realized Losses to a Class of Certificates or any
reduction in the Class Certificate Balance of a Class pursuant to Section
5.03(b) above shall be accomplished by reducing the Class Certificate Balance
thereof prior to the distributions made on the related Distribution Date in
accordance with the definition of "Class Certificate Balance."
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Section 5.04 Statements to Certificateholders.
(a) Prior to the Distribution Date in each month, based upon the
information provided to the Trustee on the Servicer's Certificate delivered to
the Trustee pursuant to Section 4.01, the Trustee shall determine the following
information with respect to such Distribution Date:
(i) the amount allocable to principal for each Certificate
Group, separately identifying the aggregate amount of any Principal
Prepayments and Liquidation Proceeds included therein;
(ii) the amount allocable to interest for each Certificate
Group, the Class 1A-11 Accrual Distribution Amount, 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 each Loan Pool for
the following Distribution Date;
(vi) the Senior Percentage, the Class 1A-12 Priority
Percentage or the Class 2A-2 Priority Percentage, as applicable, and
Subordinate Percentage for each Certificate Group for the following
Distribution Date;
(vii) the amount of the Servicing Fee paid to or retained by
the Servicer with respect to such Distribution Date for each Loan Pool;
(viii) the Pass-Through Rate for each such Class of
Certificates with respect to such Distribution Date;
(ix) the amount of Periodic Advances included in the
distribution for each Certificate Group on such Distribution Date and
the aggregate amount of Periodic Advances outstanding for each
Certificate Group as of the close of business on such Distribution
Date;
(x) the number and aggregate principal amounts of Mortgage
Loans in each Loan Pool (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, as of the close of
business on the last day of the calendar month preceding such
Distribution Date;
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(xi) the total number and principal balance of any REO
Properties in each Loan Pool (and market value, if available) as of the
close of business on the Determination Date preceding such Distribution
Date;
(xii) the Senior Prepayment Percentage and the Subordinate
Prepayment Percentage for each Certificate Group for the following
Distribution Date;
(xiii) the aggregate amount of Realized Losses incurred with
respect to each Loan Pool during the preceding calendar month for each
Certificate Group for such Distribution Date;
(xiv) the Special Hazard Loss Amount, the Fraud Loss Amount
and the Bankruptcy Loss Amount for each Certificate Group, in each case
as of the related Determination Date; and
(xvi) in the case of the Class 1A-WIO Certificates, the Class
1A-WIO Notional Amount for the following Distribution Date and in the
case of the Class 2A-WIO Certificates, the Class 2A-WIO Notional Amount
for the following Distribution Date.
(b) In the case of information furnished pursuant to clauses (i), (ii)
and (ix) of Section 5.04(a), the amounts shall be expressed as a dollar amount
per Certificate with a $1,000 denomination. Upon request, the Trustee shall make
available, with respect to any Mortgage Loan in each Loan Pool 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.
On each Distribution Date, the Trustee shall prepare and furnish to
each Financial Market Service, in electronic or such other format and media
mutually agreed upon by the Trustee, the Financial Market Service and the
Depositor, the information contained in the statement described in Section
5.04(a) for such Distribution Date.
The Trustee will make the monthly statement to Certificateholders, each
Rating Agency and the Servicer (and, at its option, any additional files
containing the same information in an alternative format) available each month
to any interested party via the Trustee's internet website and its fax-on-demand
service. The Trustee's fax-on-demand service may be accessed by calling (301)
815-6610. The Trustee's internet website shall initially be located at
"www.ctslink.com". Assistance in using the website or the fax-on-demand service
can be obtained by calling the Trustee's customer service desk at (301)
815-6600. Parties that are unable to use the above distribution options are
entitled to have a paper copy mailed to them via first class mail by calling the
customer service desk and indicating such. The Trustee shall have the right to
change the way the monthly statements to Certificateholders are distributed in
order to make such distribution more convenient and/or more accessible to the
above parties and the Trustee shall provide timely and adequate notification to
all above parties regarding any such changes.
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Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish to each Person who at any time during the calendar
year was the Holder of a Certificate, if requested in writing by such Person, a
statement containing the information set forth in clauses (i), (ii) and (vii) of
Section 5.04(a), in each case 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 force.
The Trustee shall deliver to the Holders of Certificates any reports or
information the Trustee is required by this Agreement or the Code, Treasury
Regulations or REMIC Provisions to deliver to the Holders of Certificates, and
the Trustee shall prepare and provide to the Certificateholders (by mail,
telephone, or publication as may be permitted by applicable Treasury
Regulations) such other reasonable information as the Trustee deems necessary or
appropriate or is required by the Code, Treasury Regulations, and the REMIC
Provisions including, but not limited to, (i) information to be reported to the
Holder of the Residual Certificate for quarterly notices on Schedule Q (Form
1066) (which information shall be forwarded to the Holder of the Residual
Certificate by the Trustee), (ii) information to be provided to the Holders of
Certificates with respect to amounts which should be included as interest and
original issue discount in such Holders' gross income and (iii) information to
be provided to all Holders of Certificates setting forth the percentage of the
REMIC's assets, determined in accordance with Treasury Regulations using a
convention, not inconsistent with Treasury Regulations, selected by the Trustee
in its absolute discretion, that constitute real estate assets under Section 856
of the Code, and assets described in Section 7701(a)(19)(C) of the Code;
provided, however, that in setting forth the percentage of such assets of the
REMIC, nothing contained in this Agreement, including without limitation Section
7.03 hereof, shall be interpreted to require the Trustee periodically to
appraise the fair market values of the assets of the Trust Estate or to
indemnify the Trust Estate or any Certificateholders from any adverse federal,
state or local tax consequences associated with a change subsequently required
to be made in the Depositor's initial good faith determinations of such fair
market values (if subsequent determinations are required pursuant to the REMIC
Provisions) made from time to time.
Section 5.05 Tax Returns and Reports to Certificateholders.
(a) For federal income tax purposes, the REMIC shall have a calendar
year taxable year and shall maintain its books on the accrual method of
accounting.
(b) The Trustee shall prepare or cause to be prepared, shall execute
and shall file or cause to be filed with the Internal Revenue Service and
applicable state or local tax authorities income tax information returns for
each taxable year with respect to the REMIC containing such information at the
times and in the manner as may be required by the Code, the Treasury Regulations
or state or local tax laws, regulations, or rules, and shall furnish or cause to
be furnished to the REMIC and the Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby.
Within 30 days of the Closing Date, the Trustee shall furnish or cause to be
furnished to the Internal Revenue Service, on Form 8811 or as otherwise required
by the Code or the Treasury Regulations, the name, title, address and
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telephone number of the person that Holders of the Certificates may contact for
tax information relating thereto, together with such additional information at
the time or times and in the manner required by the Code or the Treasury
Regulations. Such 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, the Treasury Regulations or state or local tax laws,
regulations, or rules.
(c) In the first federal income tax return of the REMIC for its short
taxable year ending December 31, 2000, REMIC status shall be elected for such
taxable year and all succeeding taxable years.
(d) The Trustee will maintain or cause to be maintained such records
relating to the REMIC, including but not limited to records relating to the
income, expenses, assets and liabilities of the Trust Estate, and the initial
fair market value and adjusted basis of the Trust Estate property and assets
determined at such intervals as may be required by the Code or the Treasury
Regulations, as may be necessary to prepare the foregoing returns, schedules,
statements or information.
(e) The Trustee shall apply for the tax identification number for the
REMIC via a Form SS-4 or any other acceptable method.
Section 5.06 Tax Matters Person. The Tax Matters Person shall have the
same duties with respect to the REMIC as those of a "tax matters partner" under
Subchapter C of Chapter 63 of Subtitle F of the Code. The Holder of the Class
A-R Certificate is hereby designated as the Tax Matters Person for the REMIC. By
their acceptance of the Class A-R Certificate, such Holder irrevocably appoints
the Trustee as its agent to perform all of the duties of the Tax Matters Person
for the REMIC.
Section 5.07 Rights of the Tax Matters Person in Respect of the
Trustee. The Trustee shall afford the Tax Matters Person, upon reasonable notice
during normal business hours, access to all records maintained by the Trustee in
respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties. Upon request, the Trustee shall furnish
the Tax Matters Person with its most recent report of condition published
pursuant to law or to the requirements of its supervisory or examining authority
publicly available. The Trustee shall make available to the Tax Matters Person
such books, documents or records relating to the Trustee's services hereunder as
the Tax Matters Person shall reasonably request. The Tax Matters Person shall
not have any responsibility or liability for any action or failure to act by the
Trustee and is not obligated to supervise the performance of the Trustee under
this Agreement or otherwise.
Section 5.08 REMIC Related Covenants. For as long as the Trust shall
exist, the Trustee, the Depositor and the Servicer shall act in accordance
herewith to assure continuing treatment of the Trust Estate as a REMIC and avoid
the imposition of tax on the REMIC. In particular:
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(a) The Trustee shall not create, or permit the creation of,
any "interests" in the REMIC within the meaning of Code Section
860D(a)(2) other than the interests represented by the Regular
Certificates and the Residual Certificate.
(b) Except as otherwise provided in the Code, (i) the
Depositor and the Servicer shall not contribute to the Trust Estate and
the Trustee shall not accept property unless substantially all of the
property held in the REMIC constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to the REMIC
after the start-up day unless such contribution would not subject the
Trust Estate to the 100% tax on contributions to a REMIC after the
start-up day of the REMIC imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the REMIC any
fee or other compensation for services and neither the Trustee nor the
Servicer shall knowingly accept, on behalf of the Trust Estate any
income from assets other than those permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or
any portion of the Mortgage Loans (other than in accordance with
Sections 2.02, 2.04 or 3.14(b)), unless such sale is pursuant to a
"qualified liquidation" as defined in Code Section 860F(a)(4)(A) and in
accordance with Article X.
(e) The Trustee shall maintain books with respect to the Trust
on a calendar year taxable year and on an accrual basis.
Neither the Servicer nor the Trustee shall knowingly engage in a
"prohibited transaction" (as defined in Code Section 860F(a)(2)), except that,
with the prior written consent of the Servicer and the Depositor, the Trustee
may engage in the activities otherwise prohibited by the foregoing paragraphs
(b), (c) and (d); provided, however, that the Servicer shall have delivered to
the Trustee an Opinion of Counsel to the effect that such transaction will not
result in the imposition of a tax on the REMIC and will not disqualify the Trust
Estate from treatment as a REMIC; and, provided further, that the Servicer shall
have demonstrated to the satisfaction of the Trustee that such action will not
adversely affect the rights of the Holders of the Certificates and the Trustee
and that such action will not adversely impact the rating of the Certificates.
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates. The Classes of Senior Certificates and
the Subordinate Certificates shall be substantially in the forms set forth in
Exhibits A-1, A-WIO, A-R, B-1, B-2, B-3, B-4, B-5, B-6 and C (reverse of all
Certificates) and shall, on original issue, be executed by the Trustee and shall
be countersigned and delivered by the Trustee to or upon the order of the
Depositor upon receipt by the Trustee of the documents specified in Section
2.01. The Senior Certificates (other than the Class 1A-WIO, Class 2A-WIO and
Class A-R Certificates) shall be available to investors in interests
representing minimum dollar Certificate Balances of $1,000
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and integral multiples of $1 in excess thereof. The Class 1A-WIO and Class
2A-WIO Certificates shall be available to investors in interests representing
minimum Notional Amounts of $20,000,000 and $2,000,000, respectively, and
integral multiples of $1 in excess thereof. The Subordinate Certificates shall
be available to investors in interests representing minimum dollar Certificate
Balances of $25,000 and integral dollar multiples of $1 in excess thereof
(except one Certificate of each such Class may be issued with a different
Certificate Balance). The Class A-R Certificate shall be in a minimum
denomination of $100. The Senior Certificates (other than the Class A-R
Certificate) and the Class 1B-1, Class 1B-2, Class 1B-3, Class 2B-1, Class 2B-2
and Class 2B-3 Certificates shall initially be issued in book-entry form through
the Depository and delivered to the Depository or, pursuant to the Depository's
instructions on behalf of the Depository to, and deposited with, the Certificate
Custodian, and all other Classes of Certificates shall initially be issued in
definitive, fully-registered form.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer or signatory. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Trustee
shall bind the Trustee, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the execution and delivery of such
Certificates or did not hold such offices or positions at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless such Certificate shall have been
manually countersigned by the Trustee substantially in the form provided for
herein, and such countersignature upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their countersignature.
Section 6.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at an office or agency in the
city in which the Corporate Trust Office of the Trustee is located a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided. The Trustee shall initially
serve as Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided.
(b) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class,
tenor and aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and the Trustee shall
authenticate, countersign and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee or the Certificate Registrar) be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or its attorney duly
authorized in writing.
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(c) (i) Except as provided in paragraph (c)(iii) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (A) registration of the
Certificates may not be transferred by the Trustee except to another
Depository; (B) 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; (C) 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; (D) the Depository may collect its usual and customary
fees, charges and expenses from its Depository Participants; (E) the
Trustee shall deal with the Depository as the representative 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 the Depository shall not be deemed to be
inconsistent if they are made with respect to different Certificate
Owners; and (F) 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.
(ii) 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.
(iii) If (A) (1) 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 (2) the
Trustee or the Depositor is unable to locate a qualified successor, (B)
the Depositor at its option advises the Trustee in writing that it
elects to terminate the book-entry system through the Depository or (C)
after the occurrence of an Event of Default, Certificate Owners
representing at least 51% of the aggregate Class Certificate Balances
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 (or by the
Certificate Custodian, if it holds such Class on behalf of the
Depository), accompanied by the instructions from the Depository for
registration, the Trustee shall issue the Definitive Certificates. None
of the Servicer, the Depositor or the Trustee shall be liable for any
delay in delivery of such instruction and may conclusively rely on, and
shall be protected in relying on, such instructions. The Depositor
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, the Trustee shall recognize
the Holders of the Definitive Certificates as Certificateholders
hereunder.
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(d) No transfer of a Private Certificate shall be made unless such
transfer is exempt from the registration requirements of the 1933 Act and any
applicable state securities laws or is made in accordance with the 1933 Act and
such laws. In the event of any such transfer, (i) unless such transfer is made
in reliance on Rule 144A under the 1933 Act, the Trustee or the Depositor may
require a written Opinion of Counsel (which may be in-house counsel) acceptable
to and in form and substance reasonably satisfactory to the Trustee and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from the 1933 Act and such laws
or is being made pursuant to the 1933 Act and such laws, which Opinion of
Counsel shall not be an expense of the Trustee or the Depositor and (ii) the
Trustee shall require a certificate from the Certificateholder desiring to
effect such transfer substantially in the form attached hereto as Exhibit G-1
and a certificate from such Certificateholder's prospective transferee
substantially in the form attached hereto either as Exhibit G-2A or as Exhibit
G-2B, which certificates shall not be an expense of the Trustee or the
Depositor; provided, however, that the foregoing requirements under clauses (i)
and (ii) shall not apply to a transfer of a Private Certificate between or among
the Depositor, either Seller, their affiliates or both. The Depositor shall
provide to any Holder of a Private Certificate and any prospective transferees
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 1933 Act pursuant
to the registration exemption provided by Rule 144A. The Holder of a Private
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
(e) No transfer of an ERISA Restricted Certificate or a beneficial
interest in an ERISA Restricted Certificate that is a Book-Entry Certificate
shall be made unless the transferee delivers to the Trustee either (i) a
representation letter in the form of Exhibit H from the transferee of such
Certificate, which representation letter shall not be an expense of the
Depositor, the Trustee or the Servicer, or (ii) in the case of any ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan or arrangement, including an individual retirement account, subject
to ERISA, the Code, or any federal, state or local law ("Similar Law") which is
similar to ERISA or the Code (collectively, a "Plan"), or a trustee or custodian
of any of the foregoing, an Opinion of Counsel in form and substance
satisfactory to the Trustee to the effect that the purchase or holding of such
ERISA Restricted Certificate by or on behalf of such Plan will not result in the
assets of the Trust Estate being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA, the Code or Similar Law and will not
subject the Trustee, the Depositor or the Servicer to any obligation in addition
to those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee or the Servicer. Any transferee of an ERISA Restricted
Certificate or of a beneficial interest in an ERISA Restricted Certificate that
is a Book-Entry Certificate that does not comply with either clause (i) or (ii)
of the preceding sentence, in each case, will be deemed to have made one of the
representations set forth in Exhibit H. Notwithstanding anything else to the
contrary herein, any purported transfer of an ERISA Restricted Certificate to or
on behalf of a Plan 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.
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Neither the Trustee nor the Certificate Registrar shall have any
liability for transfers of Book-Entry Certificates made through the book-entry
facilities of the Depository or between or among any Depository Participants or
Certificate Owners, made in violation of applicable restrictions. 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.
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 6.02 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.
(f) 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 Person shall acquire an Ownership Interest in a
Residual Certificate unless such Ownership Interest is a pro rata
undivided interest.
(iii) In connection with any proposed transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall require
delivery to it, in form and substance satisfactory to it, of an
affidavit in the form of Exhibit I hereto from the proposed transferee.
(iv) Notwithstanding the delivery of an affidavit by a
proposed transferee under clause (iii) above, if a Responsible Officer
of the Trustee has actual knowledge that the proposed transferee is not
a Permitted Transferee, no transfer of any Ownership Interest in a
Residual Certificate to such proposed transferee shall be effected.
(v) No Ownership Interest in a Residual Certificate may be
purchased by or transferred to any Person that is not a U.S. Person,
unless (A) such Person holds such Residual Certificate in connection
with the conduct of a trade or business within the United States and
furnishes the transferor and the Trustee with an effective Internal
Revenue Service Form 4224 (or successor thereto) or (B) the transferee
delivers to both the transferor and the Trustee an Opinion of Counsel
from a nationally-recognized tax counsel to the effect that such
transfer is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of a Residual
Certificate will not be disregarded for federal income tax purposes.
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(vi) Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 6.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall,
in violation of the provisions of this Section 6.02, become a Holder of
a Residual Certificate, then the prior Holder of such Residual
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Residual Certificate was not in
fact permitted by this Section 6.02, 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 this Section 6.02 or for making any
distributions due on such Residual Certificate to the Holder thereof or
taking any other action with respect to such Holder under the
provisions of the Agreement so long as the transfer was registered in
accordance with this Section 6.02. The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was in fact not
a Permitted Transferee at the time such distributions were made all
distributions made on such Residual Certificate. Any such distributions
so recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Holder of such Residual Certificate that is a
Permitted Transferee.
(vii) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Servicer, will provide to
the Internal Revenue Service, and to the Persons specified in Section
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e) of the Code on transfers of residual
interests to disqualified organizations. The expenses of the Trustee
under this clause (vii) shall be reimbursable by the Trust.
(viii) No Ownership Interest in a Residual Certificate shall
be acquired by a Plan or any Person acting on behalf of a Plan.
(g) No service charge shall be imposed for any transfer or exchange of
Certificates of any Class, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (b) there is delivered to the Trustee, the
Depositor and the Certificate Registrar such security or indemnity reasonably
satisfactory to each, to save each of them harmless, then, in the absence of
actual notice to the Trustee or the Certificate Registrar that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall countersign and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor, Class and
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Percentage Interest but bearing a number not contemporaneously outstanding. Upon
the issuance of any new Certificate under this Section, 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 and the Certificate Registrar) connected
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 6.04 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer, the
Trustee, the Certificate Registrar and any agent of the Depositor, the Servicer,
the Trustee or the Certificate Registrar may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.01 and for all other purposes
whatsoever, and none of the Depositor, the Servicer, the Trustee, the
Certificate Registrar or any agent of the Servicer, the Trustee or the
Certificate Registrar shall be affected by notice to the contrary.
ARTICLE VII
THE DEPOSITOR AND THE SERVICER
Section 7.01 Respective Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith only
to the extent of the obligations specifically and respectively imposed upon and
undertaken by the Depositor and the Servicer herein. By way of illustration and
not limitation, the Depositor is not liable for the servicing and administration
of the Mortgage Loans, nor is it obligated by Section 8.01 to assume any
obligations of the Servicer or to appoint a designee to assume such obligations,
nor is it liable for any other obligation hereunder that it may, but is not
obligated to, assume unless it elects to assume such obligation in accordance
herewith.
Section 7.02 Merger or Consolidation of the Depositor or the Servicer.
The Depositor and the Servicer will each keep in full effect its existence,
rights and franchises as a separate entity under the laws governing its
organization, 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,
the Certificates or any of the Mortgage Loans and to perform its respective
duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Depositor or the Servicer shall be a party, or any Person succeeding
to the business of the Depositor or the Servicer, shall be the successor of the
Depositor or the 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 Servicer shall be qualified to service
mortgage loans on behalf of FNMA or FHLMC.
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Section 7.03 Limitation on Liability of the Depositor, the Servicer and
Others. None of the Depositor, the Servicer or any of the directors, officers,
employees or agents of the Depositor or of the Servicer shall be under any
liability to the Trust Estate or 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 Servicer or any such Person against any
breach of warranties or representations made herein or any liability which would
otherwise be imposed by reason of 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 Servicer and any director,
officer, employee or agent of the Depositor or the 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 Servicer
and any director, officer, employee or agent of the Depositor or the Servicer
shall be indemnified by the Trust Estate and held harmless against any loss,
liability or expense incurred in connection with 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. Neither of the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its respective duties under this Agreement and which in its
opinion may involve it in any expense or liability; provided, however, that the
Depositor or the Servicer may in its discretion undertake any such action which
it may deem necessary or desirable in respect to this Agreement and the rights
and duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Estate, and the Depositor and the Servicer shall be entitled to be
reimbursed therefor out of amounts attributable to the Mortgage Loans on deposit
in the Servicer Custodial Account as provided by Section 3.11.
Section 7.04 Depositor and Servicer Not to Resign. Subject to the
provisions of Section 7.02, neither the Depositor nor the Servicer shall resign
from its respective obligations and duties hereby imposed on it except upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of the
Depositor or the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation by the Servicer shall
become effective until the Trustee or a successor servicer shall have assumed
the Servicer's responsibilities and obligations in accordance with Section 8.05
hereof.
Section 7.05 Assignment. Nothing in this Agreement is intended to or
shall interfere with the Servicer's ability to sell or transfer the servicing
rights created under this Agreement relating to the Mortgage Loans or part
hereof, to a third party under a different purchase and sale agreement;
provided, however, that such sale or transfer of the servicing rights shall be
subject to the Trustee's consent, which consent shall not be unreasonably
withheld. Additionally, any prospective transferee must be: (1) an established
housing and home finance institution approved as a servicer by FNMA or FHLMC;
(2) have a net worth of not less than $10,000,000; and (3)
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shall not, as evidenced in writing by each Rating Agency, adversely affect the
then current rating of any Class of Certificates immediately prior to the
transfer or sale and termination of the terminated Servicer.
ARTICLE VIII
DEFAULT
Section 8.01 Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(a) (i) any failure by the Servicer to remit any Periodic
Advance required to be remitted by the Servicer pursuant to Section
3.20 which failure continues unremedied at 3:00 p.m. on the related
Distribution Date; or (ii) any other failure by the Servicer to deposit
amounts in the Servicer Custodial Account or the Certificate Account in
the amount and manner provided herein which failure continues
unremedied for a period of five days after discovery in the case of
deposits to the Servicer Custodial Account and one Business Day in the
case of deposits to the Certificate Account;
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Certificates or in this Agreement, which
covenants and agreements continue unremedied for a period of 30 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the
Trustee or the Depositor, or to the Servicer, the Depositor and the
Trustee by the Holders of Certificates evidencing Voting Rights
aggregating not less than 25% of all Certificates affected thereby; or
(c) the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings against the Servicer, or for the winding up or liquidation
of the Servicer's affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(d) the consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to substantially all
of its property; or the Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied by the Servicer, either the Trustee or the Depositor may, and
at the direction of the Holders of Certificates evidencing Voting Rights
aggregating not less than 51% of all
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Certificates affected thereby shall, by notice then given in writing to the
Servicer (and to the Trustee, if given by the Depositor, and to the Depositor,
if given by the Trustee), terminate all of the rights and obligations of the
Servicer under this Agreement. If an Event of Default described in clause (a)(i)
hereof shall occur, the Trustee shall, by notice to the Servicer, terminate all
of the rights and obligations of the Servicer under this Agreement and in and to
the Mortgage Loans and proceeds thereof and the Trustee or a successor Servicer
appointed pursuant to Section 8.05 shall make the Advance which the Servicer
failed to make. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Certificates or the Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee pursuant to and under this Section 8.01, unless and
until such time as the Trustee shall appoint a successor Servicer pursuant to
Section 8.05, and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the 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 of the Mortgage Loans and related documents, or otherwise,
including, without limitation, the recordation of the assignments of the
Mortgage Loans to it. The Servicer agrees to cooperate with the Trustee in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Trustee for the
administration by it of all cash amounts that have been deposited by the
Servicer in the Servicer Custodial Account or thereafter received by the
Servicer with respect to the Mortgage Loans. Upon obtaining notice or knowledge
of the occurrence of any Event of Default, the Person obtaining such notice or
knowledge shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register and to each
Rating Agency. All costs and expenses (including attorneys' fees) incurred in
connection with transferring the Mortgage Files to the successor Servicer and
amending this Agreement to reflect such succession as Servicer pursuant to this
Section 8.01 shall be paid in accordance with Section 3.07. Notwithstanding the
termination of the Servicer pursuant hereto, the Servicer shall remain liable
for any causes of action arising out of any Event of Default occurring prior to
such termination.
Section 8.02 Remedies of Trustee. During the continuance of any Event
of Default, so long as such Event of Default shall not have been remedied, the
Trustee, in addition to the rights specified in Section 8.01, shall have the
right, in its own name as trustee of an express trust, to take all actions now
or hereafter existing at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce the rights and remedies, of
the Certificateholders (including the institution and prosecution of all
judicial, administrative and other proceedings and the filing of proofs of claim
and debt in connection therewith). Except as otherwise expressly provided in
this Agreement, no remedy provided for by this Agreement shall be exclusive of
any other remedy, and each and every remedy shall be cumulative and in addition
to any other remedy and no delay or omission to exercise any right or remedy
shall impair any such right or remedy or shall be deemed to be a waiver of any
Event of Default.
Section 8.03 Directions by Certificateholders and Duties of Trustee
During Event of Default. During the continuance of any Event of Default, Holders
of Certificates evidencing Voting Rights aggregating not less than 25% of each
Class of Certificates affected thereby may direct the time, method and place of
conducting any proceeding for any remedy available to the
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Trustee, or exercising any trust or power conferred upon the Trustee under this
Agreement; provided, however, that the Trustee shall be under no obligation to
pursue any such remedy, or to exercise any of the trusts or powers vested in it
by this Agreement (including, without limitation, (a) the conducting or
defending of any administrative action or litigation hereunder or in relation
hereto, and (b) the terminating of the Servicer or any successor Servicer from
its rights and duties as servicer hereunder) at the request, order or direction
of any of the Certificateholders, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby; and, provided
further, that, subject to the provisions of Section 9.01, the Trustee shall have
the right to decline to follow any such direction if the Trustee, based upon an
Opinion of Counsel, determines that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
Section 8.04 Action upon Certain Failures of the Servicer and upon
Event of Default. In the event that the Trustee shall have actual knowledge of
any failure of the Servicer specified in Section 8.01(a) or (b) which would
become an Event of Default upon the Servicer's failure to remedy the same after
notice, the Trustee shall give notice thereof to the Servicer. If the Trustee
shall have knowledge of an Event of Default, the Trustee shall give prompt
written notice thereof to the Certificateholders.
Section 8.05 Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.01, the Trustee shall be the successor in all respects to
the Servicer in its capacity as 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 Servicer
by the terms and provisions hereof or shall appoint a successor pursuant to
Section 3.07. Notwithstanding the foregoing, the parties hereto agree that the
Trustee, in its capacity as successor Servicer, will immediately assume the
obligations of the Servicer to make Periodic Advances and Servicing Advances and
all of the rights of the Servicer to receive reimbursement for such Advances.
The Trustee will assume all other rights and duties of the Servicer as soon as
practicable, but in no event later than 90 days after the Trustee becomes
successor Servicer (the "Transition Period"). Notwithstanding anything provided
herein to the contrary, under no circumstances shall any provision of this
Agreement be construed to require the Trustee, acting in its capacity as
successor to the Servicer in its obligation to make Advances, to advance, expend
or risk its own funds or otherwise incur any financial liability in the
performance of its duties hereunder if it shall have reasonable grounds for
believing that such funds are non-recoverable. Subject to Section 8.05(b), as
compensation therefor, the Trustee shall be entitled to such compensation as the
terminated Servicer would have been entitled to hereunder if no such notice of
termination had been given. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint, or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution having a net worth of not less
than $10,000,000 as the successor to the terminated Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder; provided, however, that any such institution appointed
as successor Servicer shall not,
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as evidenced in writing by each Rating Agency, adversely affect the then current
rating of any Class of Certificates immediately prior to the termination of the
terminated Servicer. The appointment of a successor Servicer shall not affect
any liability of the predecessor Servicer which may have arisen under this
Agreement prior to its termination as Servicer, nor shall any successor Servicer
be liable for any acts or omissions of the predecessor Servicer or for any
breach by the Servicer of any of its representations or warranties contained
herein or in any related document or agreement, including any act, omission or
breach of the predecessor Servicer during the Transition Period. Pending
appointment of a successor to the terminated Servicer hereunder, unless the
Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as provided above. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The Trustee or any other successor Servicer shall be entitled
to be reimbursed for its costs associated with the transfer of servicing from
the predecessor Servicer in the manner set forth in Section 3.07 to the extent
such amounts are not paid by such predecessor Servicer.
(b) In connection with the appointment of a successor Servicer or the
assumption of the duties of the Servicer, as specified in Section 8.05(a), the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans serviced by the predecessor Servicer as it and such
successor shall agree.
(c) Any successor, including the Trustee, to the Servicer as servicer
shall during the term of its service as servicer maintain in force (i) a policy
or policies of insurance covering errors and omissions in the performance of its
obligations as servicer hereunder and (ii) a fidelity bond in respect of its
officers, employees and agents to the same extent as the Servicer is so required
pursuant to Section 3.03.
Section 8.06 Notification to Certificateholders. Upon any termination
or appointment of a successor to the Servicer pursuant to this Article VIII, the
Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register and to each Rating
Agency.
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred of which a
Responsible Officer of the Trustee shall have actual knowledge (which has not
been cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise as a reasonably prudent investor would exercise or use under the
circumstances in the conduct of such investor's own affairs.
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The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act or its own willful misfeasance; provided, however,
that:
(i) prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations
as are specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the Trustee
and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee by the Depositor or
the Servicer and which on their face, do not contradict the
requirements of this Agreement;
(ii) the Trustee (in its individual capacity) shall not be
personally liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was grossly negligent in ascertaining
the pertinent facts;
(iii) the Trustee (in its individual capacity) shall not be
personally liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with the direction of
Certificateholders as provided in Section 8.03;
(iv) the Trustee shall not be charged with knowledge of any
default (other than a default in payment to the Trustee) specified in
clauses (a) and (b) of Section 8.01 or an Event of Default under
clauses (c) and (d) of Section 8.01 unless a Responsible Officer of the
Trustee assigned to and working in the Corporate Trust Office obtains
actual knowledge of such failure or event or any officer of the Trustee
receives written notice of such failure or event at its Corporate Trust
Office from the Servicer, the Depositor or any Certificateholder; and
(v) except to the extent provided in Section 8.05, no
provision in this Agreement shall require the Trustee to expend or risk
its own funds (including, without limitation, the making of any Advance
as successor Servicer) or otherwise incur any personal financial
liability in the performance of any of its duties as Trustee hereunder,
or in the exercise of any of its rights or powers, if the Trustee shall
have reasonable grounds for believing that repayment of funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
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Section 9.02 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.01:
(a) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's 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;
(b) the Trustee may consult with counsel 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;
(c) the Trustee shall be under no obligation to exercise any
of the trusts 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
against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event of
Default (which has not been cured or waived), to exercise such of the
rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise as a prudent investor would
exercise or use under the circumstances in the conduct of such
investor's own affairs;
(d) the Trustee shall not be personally 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;
(e) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do
by Holders or Certificate or any Class evidencing, as to such Class,
Percentage Interests, aggregating not less than 50%; provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
against such expense or liability or payment of such estimated expenses
as a condition to so proceeding; and
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
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Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the execution of,
and the counter-signature on the Certificates) shall be taken as the statements
of the Depositor or Servicer, as applicable, 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 any
Mortgage Loans save that the Trustee represents that, assuming due execution and
delivery by the other parties hereto, this Agreement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject, as to
enforcement of remedies, to applicable insolvency, receivership, moratorium and
other laws affecting the rights of creditors generally, and to general
principles of equity and the discretion of the court (regardless of whether
enforcement of such remedies is considered in a proceeding in equity or at law).
The Trustee shall not be accountable for the use or application by the Depositor
of funds paid to the Depositor in consideration of the assignment of the
Mortgage Loans hereunder by the Depositor, or for the use or application of any
funds paid to Subservicers or the Servicer in respect of the Mortgage Loans or
deposited into the Servicer Custodial Account, or any other account hereunder
(other than the Certificate Account) by the Servicer.
The Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and enforceability of any Mortgage or
any Mortgage Loan, or the perfection and priority of any Mortgage or the
maintenance of any such perfection and priority or for or with respect to the
sufficiency of the Trust or its ability to generate the payments to be
distributed to Certificateholders under this Agreement, including, without
limitation: the existence, condition and ownership of any Mortgaged Property;
the existence and enforceability of any hazard insurance thereon (other than if
the Trustee shall assume the duties of the Servicer pursuant to Section 8.05 and
thereupon only for the acts or omissions of the successor Servicer); the
validity of the assignment of any Mortgage Loan to the Trustee or of any
intervening assignment; the completeness of any Mortgage Loan; the performance
or enforcement of any Mortgage Loan (other than if the Trustee shall assume the
duties of the Servicer pursuant to Section 8.05 and thereupon only for the acts
or omissions of the Trustee as successor Servicer); the compliance by the
Depositor or the Servicer with any warranty or representation made under this
Agreement or in any related document or the accuracy of any such warranty or
representation; any investment of monies by or at the direction of the Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Depositor, the Servicer (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
8.05 and thereupon only for the acts or omissions of the Trustee as successor
Servicer), any Subservicer or any Mortgagor; any action of the Servicer (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
8.05 and thereupon only for the acts or omissions of the Trustee as successor
Servicer) or any Subservicer taken in the name of the Trustee; the failure of
the Servicer or any Subservicer to act or perform any duties required of it as
agent of the Trustee hereunder; or any action by the Trustee taken at the
instruction of the Servicer (other than if the Trustee shall assume the duties
of the Servicer pursuant to Section 8.05 and thereupon only for the acts or
omissions of the Trustee as successor Servicer); provided, however, that the
foregoing shall not relieve the Trustee of its obligation to perform its duties
under this Agreement. The Trustee shall
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file any financing or continuation statement in any public office at any time
required to maintain the perfection of any security interest or lien granted to
it hereunder.
Section 9.04 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 it would have if it were not Trustee and may otherwise deal
with the Servicer, any Subservicer or any of their respective affiliates with
the same right it would have if it were not the Trustee.
Section 9.05 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (a) an institution the deposits of which are
fully insured by the FDIC and (b) a corporation or banking association organized
and doing business under the laws of the United States of America or of any
State, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or State authority and (c) with respect to
every successor trustee hereunder either an institution (i) the long-term
unsecured debt obligations of which are rated at least "A" by S&P and "A" by
Fitch or (ii) whose serving as Trustee hereunder would not result in the
lowering of the ratings originally assigned to any Class of Certificates. The
Trustee shall not be an affiliate of the Depositor or the Servicer. If such
corporation or banking 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 9.05, the combined
capital and surplus of such corporation or banking 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 provision of this Section 9.05, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.06.
Section 9.06 Resignation and Removal of Trustee. The Trustee may at any
time resign and be discharged from the trust hereby created by giving written
notice thereof to the Depositor and the Servicer and mailing a copy of such
notice to all Holders of record. The Trustee shall also mail a copy of such
notice of resignation to each Rating Agency. Upon receiving such notice of
resignation, the Depositor shall use its best efforts to promptly appoint a
successor Trustee, which successor Trustee must be reasonable acceptable to the
Servicer. The appointment of a successor Trustee shall be made by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no successor Trustee
shall have been so appointed and shall have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.05 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Servicer
may remove the Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor.
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The Holders of Certificates evidencing not less than 50% of the Voting
Rights may at any time remove the Trustee by written instrument or instruments
delivered to the Servicer and the Trustee; the Depositor shall thereupon use
their best efforts to appoint a mutually acceptable successor Trustee in
accordance with this Section 9.06, which successor must be reasonable acceptable
to the Servicer.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.06 shall
become effective upon acceptance of appointment by the successor Trustee as
provided in Section 9.07.
Section 9.07 Successor Trustee. Any successor Trustee appointed as
provided in Section 9.06 shall execute, acknowledge and deliver to the Servicer
and to its predecessor Trustee 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 like effect as if originally
named as Trustee herein. The predecessor Trustee shall duly assign, transfer,
deliver and pay over to the successor Trustee the whole of the Mortgage Files
and related documents and statements held by it hereunder, together with all
instruments of transfer and assignment or other documents properly executed as
may be reasonably required to effect such transfer and such of the records or
copies thereof maintained by the predecessor Trustee in the administration
hereof as may be reasonably requested by the successor Trustee and shall
thereupon be discharged from all duties and responsibilities under this
Agreement; provided, however, that if the predecessor Trustee has been
terminated pursuant to the third paragraph of Section 9.06, all reasonable
expenses of the predecessor Trustee incurred in complying with this Section 9.07
shall be reimbursed by the Trust.
No successor Trustee shall accept appointment as provided in this
Section 9.07 unless at the time of such appointment such successor Trustee shall
be eligible under the provisions of Section 9.05.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.07, the successor Trustee shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency.
Section 9.08 Merger or Consolidation of Trustee. Any corporation or
banking association into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation or banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or banking association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, if such corporation or banking association
is eligible under the provisions of Section 9.05, 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.
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Section 9.09 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any of the provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any Mortgaged
Property may at the time be located or for any other reason, the 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 as
co-trustee or separate trustee of all or any part of the Trust Estate, and to
vest in such Person or Persons, in such capacity, such title to the Trust
Estate, or any part thereof, and, subject to the other provision of this Section
9.09, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within ten days after the receipt by it of a request
to do so, 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 9.05 and no notice to Holders
of Certificates of the appointment of co-trustee(s) or separate trustee(s) shall
be required under Section 9.07.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.09, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Estate or
any portion thereof in any such jurisdiction) shall be exercised and performed
by such separate trustee or co-trustee at the direction of the Trustee. No
trustee hereunder shall be held personally liable by reason of any act or
omission of any other trustee hereunder; provided, however, that no appointment
of a co-trustee or separate trustee hereunder shall relieve the Trustee of its
obligations hereunder.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
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 become incapable of acting, resign or be removed, or shall be adjudged a
bankrupt or insolvent, or a receiver of its property shall be appointed, or any
public officer shall take charge or control of such trustee or co-trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation, all of its estates, properties, rights,
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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.
Notwithstanding the appointment of one or more separate trustees or
co-trustees, the Servicer shall only be required to submit information, data or
reports as required under this Agreement to the Trustee and shall only be
required to make a single remittance to a single Certificate Account.
Section 9.10 Authenticating Agents. The Trustee may appoint one or more
authenticating agents ("Authenticating Agents") which shall be authorized to act
on behalf of the Trustee in authenticating or countersigning Certificates.
Initially, the Authenticating Agent shall be Norwest Bank Minnesota, National
Association. Wherever reference is made in this Agreement to the authentication
or countersigning of Certificates by the Trustee or the Trustee's certificate of
authentication or countersigning, such reference shall be deemed to include
authentication or countersigning on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication or countersignature executed on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent must be a
corporation or banking association organized and doing business under the laws
of the United States of America or of any State, having a combined capital and
surplus of at least $15,000,000, authorized under such laws to do a trust
business and subject to supervision or examination by Federal or State
authorities.
Any corporation or banking association into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, conversion or
consolidation to which any Authenticating Agent shall be a party, or any
corporation or banking association succeeding to the corporate agency business
of any Authenticating Agent, shall continue to be the Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee. The Trustee may at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent. Upon receiving a notice of resignation or upon such a
termination, or in case, at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 9.10, the Trustee may
appoint a successor Authenticating Agent and shall mail notice of such
appointment to all Certificateholders. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent.
Section 9.11 Trustee's Compensation and Expenses. The Trustee, as
compensation for its activities hereunder, shall be entitled to receive on each
Distribution Date an amount equal to the earnings on or investment income with
respect to funds in the Certificate Account, if any. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Trust and held harmless against any loss, liability or expense (including
reasonable attorney's fees) (a) incurred in connection with any claim or legal
action relating to (i) this Agreement, (ii) the Certificates, or (iii) the
performance of any of the Trustee's duties hereunder, other than any
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loss, liability or expense incurred by reason of willful misfeasance, bad faith
or gross negligence in the performance of any of the Trustee's duties hereunder,
(b) resulting from any tax or information return which was prepared by, or
should have been prepared by, the Servicer and (c) arising out of the transfer
of any Private Certificate not in compliance with ERISA. Such indemnity shall
survive the termination of this Agreement or the resignation or removal of the
Trustee hereunder. Without limiting the foregoing, 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 gross
negligence, bad faith or willful misconduct, the Trust shall 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 to the
extent permitted by Treasury Regulations Section 1.860G-1(b)(3)(ii) and (iii);
provided, however, that the Depositor and the Trustee intend to enter into a
separate agreement for custody-related services. 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, Certificate Registrar or Paying Agent hereunder or for any
other expenses.
Section 9.12 Appointment of Custodian. The Trustee may at any time on
or after the Closing Date, with the consent of the Depositor and the Servicer,
appoint one or more Custodians to hold all or a portion of the Mortgage Files as
agent for the Trustee, by entering into a custodial agreement in a form
acceptable to the Depositor and the Servicer. Subject to this Article IX, the
Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Certificateholders. Each Custodian shall be a depository institution
subject to supervision by federal or state authority, shall have a combined
capital and surplus of at least $10,000,000 and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File. In the event
the fees and expenses of the Custodian under the Custodial Agreement are not
paid as required thereunder, such fees and expenses shall be payable pursuant to
Section 3.11(b)(iv).
Section 9.13 Paying Agents. The Trustee may appoint one or more Paying
Agents (each, a "Paying Agent") which shall be authorized to act on behalf of
the Trustee in making withdrawals from the Certificate Account and distributions
to Certificateholders as provided in Section 3.08 and Section 5.02. Wherever
reference is made in this Agreement to the withdrawal from the Certificate
Account by the Trustee, such reference shall be deemed to include such a
withdrawal on behalf of the Trustee by a Paying Agent. Initially, the Paying
Agent shall be Norwest Bank Minnesota, National Association. Whenever reference
is made in this Agreement to a distribution by the Trustee or the furnishing of
a statement to Certificateholders by the Trustee, such reference shall be deemed
to include such a distribution or furnishing on behalf of the Trustee by a
Paying Agent. Each Paying Agent shall provide to the Trustee such information
concerning the Certificate Account as the Trustee shall request from time to
time. Each Paying Agent must be a corporation or banking association organized
and doing business under the laws of the United States of America or of any
state, having (except in the case of the Trustee) an office and place of
business in New York, New York, having a combined capital and surplus of at
least $15,000,000, authorized under such laws to do a trust business and subject
to supervision or examination by federal or state authorities.
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Any corporation into which any Paying Agent may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which any Paying Agent shall be a party,
or any corporation succeeding to the corporate agency business of any Paying
Agent, shall continue to be the Paying Agent provided that such corporation
after the consummation of such merger, conversion, consolidation or succession
meets the eligibility requirements of this Section 9.13.
Any Paying Agent may at any time resign by giving written notice of
resignation to the Trustee; provided, however, that the Paying Agent has
returned to the Certificate Account or otherwise accounted, to the reasonable
satisfaction of the Trustee, for all amounts it has withdrawn from the
Certificate Account. The Trustee may at any time terminate the agency of any
Paying Agent by giving written notice of termination to such Paying Agent. Upon
receiving a notice of resignation or upon such a termination, or in case at any
time any Paying Agent shall cease to be eligible in accordance with the
provisions of the first paragraph of this Section 9.13, the Trustee may appoint
a successor Paying Agent and shall mail notice of such appointment to all
Certificateholders. Any successor Paying Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Paying Agent. The Trustee shall remain liable for any duties and
obligations assumed by its appointed Paying Agent.
Section 9.14 Limitation of Liability. The Certificates are executed by
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 9.15 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such preceding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
Section 9.16 Suits for Enforcement. In case an Event of Default or
other default by the Servicer or the Depositor hereunder shall occur and be
continuing, the Trustee, in its discretion, may proceed to protect and enforce
its rights and the rights of the Holders of Certificates under this Agreement by
a suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement or
in aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy, as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Trustee and the Certificateholders.
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Section 9.17 Waiver of Bond Requirement. The Trustee shall be relieved
of, and each Certificateholder hereby waives, any requirement of any
jurisdiction in which the Trust, or any part thereof, may be located that the
Trustee post a bond or other surety with any court, agency or body whatsoever.
Section 9.18 Waiver of Inventory, Accounting and Appraisal Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby waives, any
requirement of any jurisdiction in which the Trust, or any part thereof, may be
located that the Trustee file any inventory, accounting or appraisal of the
Trust with any court, agency or body at any time or in any manner whatsoever.
ARTICLE X
TERMINATION
Section 10.01 Termination upon Purchase by the Depositor or Liquidation
of All Mortgage Loans. Subject to Section 10.02, the respective obligations and
responsibilities of the Depositor, the Servicer and the Trustee created hereby
(other than the obligation of Trustee to make certain payments to
Certificateholders after the Final Distribution Date and to send certain notices
as hereinafter set forth and the obligations of the Trustee pursuant to Sections
5.04(b) and 5.05(b)) shall terminate upon the last action required to be taken
by the Trustee on the Final Distribution Date pursuant to this Article X
following the earlier of (a) the purchase by the Depositor of all Mortgage Loans
and all REO Property remaining in the Trust Estate at a price equal to the sum
of (i) 100% of the Stated Principal Balance of each Mortgage Loan (other than
any Mortgage Loan as to which REO Property has been acquired and whose fair
market value is included pursuant to clause (ii) below) and (ii) the fair market
value of such REO Property (as determined by the Depositor as of the close of
business on the third Business Day next preceding the date upon which notice of
any such termination is furnished to Certificateholders pursuant to the third
paragraph of this Article X), plus any Class Unpaid Interest Shortfall for any
Class of Certificates as well as one month's interest at the related Mortgage
Rate on the Stated Principal Balance of each Mortgage Loan (including any
Mortgage Loan as to which REO Property has been acquired) or (b) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Estate or the disposition of all REO
Property; provided, however, that in no event shall the Trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, living on the date hereof. If the Depositor,
upon written notice to the Trustee and the Servicer, declares that is does not
intend to exercise its right to repurchase the Mortgage Loans as provided in
clause (a) above, the Servicer may (but is not obligated to) purchase the
Mortgage Loans upon the same terms and conditions as apply to the Depositor
under this Article X.
The right of the Depositor, or, if applicable, the Servicer, to
repurchase all Mortgage Loans pursuant to clause (a) above is conditioned upon
the Pool Stated Principal Balance as of the Final Distribution Date being less
than 1% of the Cut-Off Date Pool Principal Balance. If such right is exercised,
the Trustee shall, promptly following payment of the purchase price,
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release to the Depositor, or, if applicable, the Servicer, or their respective
designees the Mortgage Files pertaining to the Mortgage Loans being purchased.
Notice of any termination, specifying the Final Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and for cancellation, shall be given promptly
by the Depositor or, if applicable, the Servicer, (if exercising its right to
purchase the assets of the Trust) or by the Trustee (in any other case) by
letter to Certificateholders mailed not earlier than the 15th day and not later
than the 25th day of the month next preceding the month of such final
distribution specifying (A) the Final Distribution Date upon which final payment
of the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Trustee therein designated, (B) the amount of any
such final payment and (C) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office or agency of the Trustee therein
specified. If the Depositor or, if applicable, the Servicer, is obligated to
give notice to Certificateholders as aforesaid, it shall give such notice to the
Trustee and the Certificate Registrar at the time such notice is given to
Certificateholders. In the event such notice is given by the Depositor or, if
applicable, the Servicer, the Depositor or, if applicable, the Servicer, shall
deposit in the Certificate Account on or before the Final Distribution Date in
immediately available funds an amount equal to the amount necessary to make the
amount, if any, on deposit in the Certificate Account on the Final Distribution
Date equal to the purchase price for the related assets of the Trust computed as
above provided together with a statement as to the amount to be distributed on
each Class of Certificates pursuant to the next succeeding paragraph.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, in the order set
forth in Section 5.02 hereof, on the final Distribution Date and 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 Certificates, the
Class Certificate Balance thereof plus accrued interest thereon, and (II) as to
the Class A-R Certificate, the amounts, if any, which remain on deposit in the
Certificate Account (other than the amounts retained to meet claims) after
application pursuant to clause (I) above.
If all of the Certificateholders do not surrender their Certificates
for final payment and cancellation on or before the Final Distribution Date, the
Trustee shall on such date cause all funds in the Certificate Account not
distributed in final distribution to Certificateholders to continue to be held
by the Trustee in an Eligible Account for the benefit of such Certificateholders
and the Depositor, or, if applicable, the Servicer, (if it exercised its right
to purchase the assets of the Trust Estate) or the Trustee (in any other case)
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 one year after the second notice all the
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 on deposit in
such Eligible Account.
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Section 10.02 Additional Termination Requirements.
(a) If the Depositor, or, if applicable, the Servicer, exercises its
purchase option as provided in Section 10.01, the Trust shall be terminated in
accordance with the following additional requirements, unless the Trustee has
received an Opinion of Counsel to the effect that the failure of the Trust to
comply with the requirements of this Section 10.02 will not (1) result in the
imposition of taxes on "prohibited transactions" of the Trust as defined in
Section 860F of the Code, or (2) cause the Trust Estate to fail to qualify as a
REMIC at any time that any Certificates are outstanding:
(i) within 90 days prior to the Final Distribution Date set
forth in the notice given by the Depositor, or if applicable, the
Servicer, under Section 10.01, the Trustee shall sell all of the assets
of the Trust Estate to the Depositor for cash; and
(ii) the notice given by the Depositor, or, if applicable, the
Servicer, or the Trustee pursuant to Section 10.01 shall provide that
such notice constitutes the adopting of a plan of complete liquidation
of the REMIC as of the date of such notice (or, if earlier, the date on
which such notice was mailed to Certificateholders). The Trustee shall
also specify such date in the final tax return of the REMIC.
(b) By their acceptance of the Residual Certificate, the Holder thereof
hereby agrees to take such other action in connection with such plan of complete
liquidation as may be reasonably requested by the Depositor.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment. This Agreement may be amended from time to
time by the Depositor, the Servicer and the Trustee without the consent of any
of the Certificateholders, (a) to cure any ambiguity or mistake, (b) to correct
or supplement any provisions herein or therein which may be inconsistent with
any other provisions of this Agreement, any amendment to this Agreement or the
related Prospectus Supplement, (c) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary to maintain the qualification of
the Trust Estate as a REMIC at all times that any Certificates are outstanding
or to avoid or minimize the risk of the imposition of any tax on the REMIC
pursuant to the Code that would be a claim against the Trust Estate, provided
that (i) the Trustee has received an Opinion of Counsel to the effect that such
action is necessary or desirable to maintain such qualification or to avoid or
minimize the risk of the imposition of any such tax and (ii) such action shall
not, as evidenced by such Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder, (d) to change the timing and/or
nature of deposits into the Certificate Account, provided that (i) such change
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder and (ii) such change
shall not adversely affect the then-current rating of the Senior Certificates,
the Class 1B-1 Certificates, the Class 1B-2 Certificates, the Class 1B-3
Certificates, the Class 1B-4 Certificates, the Class 1B-5 Certificates, the
Class 2B-1 Certificates, the Class 2B-2 Certificates, the Class 2B-3
Certificates, the Class 2B-4
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Certificates or the Class 2B-5 Certificates as evidenced by a letter from each
Rating Agency rating such Certificates to such effect and (e) to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be materially inconsistent with the provisions of this
Agreement, provided that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder, provided that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders and no
Opinion of Counsel to that effect 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.
This Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee, with the consent of the Holders of Certificates of
each Class of Certificates which is affected by such amendment, evidencing, as
to each such Class of Certificates, Percentage Interests aggregating not less
than 66-2/3%, 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 such Certificates; provided, however,
that no such amendment shall (A) reduce in any manner the amount of, or delay
the timing of, collections of payments on Mortgage Loans or distributions which
are required to be made on any Certificate without the consent of the Holder of
such Certificate or (B) reduce the aforesaid percentage required to consent to
any such amendment, without the consent of the Holders of all Certificates then
Outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of the Trust Estate as a REMIC and
notice of the conclusion expressed in such Opinion of Counsel shall be included
with any such solicitation. An amendment made with the consent of all
Certificateholders and executed in accordance with this Section 11.01 shall be
permitted or authorized by this Agreement notwithstanding that such Opinion of
Counsel may conclude that such amendment would adversely affect the
qualification of the Trust Estate as a REMIC.
Promptly after the execution of any such amendment or consent the
Trustee shall furnish written notification of the substance of or a copy of such
amendment to each Certificateholder and to each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 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
requirements as the Trustee may prescribe.
Section 11.02 Recordation of Agreement. This Agreement may be recorded,
as necessary, 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
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effected by the Servicer and at its expense on direction by the Trustee, who
will act at the direction of Holders of Certificates evidencing not less than
50% of all Voting Rights, but only upon direction of the Trustee accompanied by
an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of 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 11.03 Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
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, 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
person 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 default and of the continuance thereof, as provided herein, and unless also
the Holders of Certificates evidencing Percentage Interests aggregating not less
than 25% of each Class of Certificates affected thereby shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, 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
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 11.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.04 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
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APPLICATION OF THE CONFLICTS OF LAWS PROVISIONS THEREOF, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 11.05 Notices. All demands, notices, instructions, directions,
requests and communications required to be delivered hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at,
mailed by certified mail, return receipt requested to, or delivered to a
nationally recognized overnight courier service for delivery to (provided,
however, that notices to the Trustee shall be deemed effective upon receipt) (a)
in the case of the Depositor, Banc of America Funding Corporation, Bank of
America Corporate Center, 11th Floor, 100 North Tryon Street, Charlotte, North
Carolina 28255, Attention: General Counsel and Chief Financial Officer, (b) in
the case of the Servicer, Fleet Mortgage Corp., 1333 Main Street, Suite 700,
Columbia, South Carolina 29201, Attention: Director of Servicing with a copy to
Fleet Mortgage Corp., 1333 Main Street, Suite 700, Columbia, South Carolina
29201, Attention: General Counsel (c) in the case of the Trustee, at the
Corporate Trust Office, Attention: Banc of America Funding Corporation Mortgage
Pass-Through Certificates, Series 2000-1 (d) in the case of S&P, Standard &
Poor's, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041, Attn: Mortgage Surveillance Group, and (e) in the case of
Fitch, Fitch IBCA, Inc., One State Street Plaza, New York, New York 10004, Attn:
Residential Mortgage Surveillance Group; or, as to each party, at such other
address or at a facsimile number or electronic mail address as shall be
designated by such party in a written notice to each other party. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives such notice.
Section 11.06 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 11.07 Certificates Nonassessable and Fully Paid. It is the
intention of the Trustee that Certificateholders shall not be personally liable
for obligations of the Trust Estate, that the beneficial ownership interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust Estate or for any reason whatsoever, and that Certificates
upon execution, countersignature and delivery thereof by the Trustee pursuant to
Section 6.01 are and shall be deemed fully paid.
Section 11.08 Access to List of Certificateholders. The Certificate
Registrar will furnish or cause to be furnished to the Trustee, within 15 days
after the receipt of a request by the Trustee in writing, a list, in such form
as the Trustee may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date for payment of
distributions to Certificateholders.
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If three or more Certificateholders apply in writing to the Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and is accompanied by a copy of the communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, afford such applicants access during
normal business hours to the most recent list of Certificateholders held by the
Trustee. If such a list is as of a date more than 90 days prior to the date of
receipt of such applicants' request, the Trustee shall promptly request from the
Certificate Registrar a current list as provided above, and shall afford such
applicants access to such list promptly upon receipt.
Every Certificateholder, by receiving and holding such list, agrees
with the Certificate Registrar and the Trustee that neither the Certificate
Registrar nor the Trustee shall be held accountable by reason of the disclosure
of any such information as to the names and addresses of the Certificateholders
hereunder, regardless of the source from which such information was derived.
Section 11.09 Recharacterization. The parties to this Agreement intend
the conveyance by the Depositor to the Trustee of all of its right, title and
interest in and to the Mortgage Loans pursuant to this Agreement to constitute a
purchase and sale and not a loan. Notwithstanding the foregoing, to the extent
that such conveyance is held not to constitute a sale under applicable law, it
is intended that this Agreement shall constitute a security agreement under
applicable law and that the Depositor shall be deemed to have granted to the
Trustee a first priority security interest in all of the Depositor's right,
title and interest in and to the Mortgage Loans.
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IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers thereunto
duly authorized to be hereunto affixed, all as of the day and year first above
written.
BANC OF AMERICA FUNDING
CORPORATION,
as Depositor
By: /s/ Robert J. Perret
Name: Robert J. Perret
Title: Senior Vice President
FLEET MORTGAGE CORP.,
as Servicer
By: /s/ Michael R. Zarro, Jr.
Name: Michael R. Zarro, Jr.
Title: Senior Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By: /s/ Peter J. Masterman
Name: Peter J. Masterman
Title: Vice President
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STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
)
On the 25th day of April, 2000, before me, a notary public in and for
the State of South Carolina, personally appeared Peter J. Masterman, known to me
who, being by me duly sworn, did depose and say that he is an Vice President of
Norwest Bank Minnesota, National Association, a national banking association,
one of the parties that executed the foregoing instrument; and that she signed
her name thereto by order of the Board of Directors of such corporation.
/s/ Tina M. Cox
-------------------------------
Notary Public
[Notarial Seal]
My commission expires 08/06/2003
<PAGE> 112
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
)
On the 25th day of April, 2000, before me, a notary public in and for
the State of North Carolina, personally appeared Robert J. Perret, known to me
who, being by me duly sworn, did depose and say that he is the Senior Vice
President of Banc of America Funding Corporation, a Delaware corporation, one of
the parties that executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of such corporation.
/s/ Tina M. Cox
-------------------------------
Notary Public
[Notarial Seal]
My commission expires 08/06/2003
<PAGE> 113
STATE OF SOUTH CAROLINA )
) ss.:
COUNTY OF RICHLAND )
)
On the 21st day of April, 2000, before me, a notary public in and for
the State of North Carolina, personally appeared Michael R. Zarro, Jr. known to
me who, being by me duly sworn, did depose and say that he is the Senior Vice
President of Fleet Mortgage Corp., a South Carolina corporation, one of the
parties that executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of such corporation.
/s/ Kathryn Howell
---------------------------
Notary Public
[Notarial Seal]
My commission expires 03/20/2005
