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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported):February 25, 1999
BEAR STEARNS ASSET BACKED SECURITIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-9532 13-3836437
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) (Commission File Number) Identification No.)
245 Park Avenue 10167
New York, New York -------
---------------------- (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code (212) 272-4095
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<PAGE>
Item 5. Other Events.
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On February 25, 1999, Bear Stearns Asset Backed Securities, Inc. (the
"Company") entered into a Pooling and Servicing Agreement dated as of January
31, 1999 (the "Pooling and Servicing Agreement"), by and among the Company, as
depositor, Irwin Funding Corp., as transferor (the "Transferor"), Irwin Union
Bank and Trust Company, as master servicer (the "Master Servicer"), and
Norwest Bank Minnesota, National Association, as trustee (the "Trustee"),
providing for the issuance of the Irwin Home Equity Trust 1999-1, Irwin Home
Equity Asset Backed Certificates, Series 1999-1. The Pooling and Servicing
Agreement is annexed hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial
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Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1. The Pooling and Servicing Agreement, dated as of January 31,
1999, by and among the Company, the Transferor, the Master
Servicer and the Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BEAR STEARNS ASSET BACKED
SECURITIES, INC.
By: /s/ Jonathan Lieberman
---------------------------------
Name: Jonathan Lieberman
Title: Managing Director
Dated: March 11, 1999
<PAGE>
Exhibit Index
Exhibit Page
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99.1. Pooling and Servicing Agreement,
dated as of January 31, 1999, by
and among, the Company, the Transferor,
the Master Servicer and the Trustee. 6
EXHIBIT 99.1
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==============================================================================
POOLING AND SERVICING AGREEMENT
Dated as of January 31, 1999
by and among
Bear Stearns Asset Backed Securities, Inc.
(Depositor)
and
Irwin Funding Corp.
(Transferor)
Irwin Union Bank and Trust Company
(Master Servicer)
and
Norwest Bank Minnesota, National Association
(Trustee)
==============================================================================
Irwin Home Equity Trust 1999-1
Irwin Home Equity Asset Backed Certificates,
Series 1999-1
Class A and Class R
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I Definitions.....................................................................................1
Section 1.1 Certain Defined Terms.......................................................................1
Section 1.2 Provisions of General Application..........................................................31
ARTICLE II Establishment of the Trust Sale and Conveyance of Trust Fund...................................33
Section 2.1 Sale and Conveyance of Trust Fund; Priority and Subordination
of Ownership Interests; Establishment of the Trust.........................................33
Section 2.2 Possession of Mortgage Files; Access to Mortgage Files.....................................33
Section 2.3 Delivery of Mortgage Loan Documents........................................................34
Section 2.4 Acceptance by Trustee of the Trust Fund; Certain Substitutions;
Certification by Trustee...................................................................36
Section 2.5 Designations under REMIC Provisions; Designation of Startup Date...........................38
Section 2.6 Execution of Certificates..................................................................38
Section 2.7 Application of Principal and Interest......................................................39
Section 2.8 Grant of Security Interest.................................................................39
Section 2.9 Further Assurances; Powers of Attorney.....................................................39
ARTICLE III Representations and Warranties.................................................................41
Section 3.1 Representations of the Master Servicer.....................................................41
Section 3.2 Representations, Warranties and Covenants of the Depositor.................................42
Section 3.3 Purchase and Substitution..................................................................43
Section 3.4 Master Servicer Covenants..................................................................44
ARTICLE IV The Certificates...............................................................................46
Section 4.1 The Certificates...........................................................................46
Section 4.2 Registration of Transfer and Exchange of Certificates......................................46
Section 4.3 Mutilated, Destroyed, Lost or Stolen Certificates..........................................52
Section 4.4 Persons Deemed Owners......................................................................52
ARTICLE V Administration and Servicing of the Mortgage Loans.............................................53
Section 5.1 Appointment of the Master Servicer.........................................................53
Section 5.2 Subservicing Agreements Between the Master Servicer and Subservicers.......................55
Section 5.3 Collection of Certain Mortgage Loan Payments; Collection Account...........................56
Section 5.4 Permitted Withdrawals from the Collection Account and Trustee
Collection Account.........................................................................58
Section 5.5 Payment of Taxes, Insurance and Other Charges..............................................59
Section 5.6 Maintenance of Casualty Insurance..........................................................60
Section 5.7 Master Servicer Account....................................................................61
Section 5.8 Fidelity Bond; Errors and Omissions Policy.................................................61
Section 5.9 Collection of Taxes, Assessments and Other Items...........................................62
Section 5.10 Periodic Filings with the Securities and Exchange Commission;
Additional Information.....................................................................62
Section 5.11 Enforcement of Due-on-Sale Clauses; Assumption Agreements..................................63
Section 5.12 Realization upon Defaulted Mortgage Loans..................................................64
Section 5.13 Trustee to Cooperate; Release of Mortgage Files............................................66
Section 5.14 Servicing Fee; Servicing Compensation......................................................67
Section 5.15 Reports to the Trustee; Collection Account Statements......................................67
Section 5.16 Annual Statement as to Compliance..........................................................68
Section 5.17 Annual Independent Public Accountants' Servicing Report....................................68
Section 5.18 Reports to be Provided by the Master Servicer..............................................69
Section 5.19 Adjustment of Servicing Compensation in Respect of Prepaid
Mortgage Loans.............................................................................70
Section 5.20 Periodic Advances..........................................................................70
Section 5.21 Indemnification; Third Party Claims........................................................70
Section 5.22 Maintenance of Corporate Existence and Licenses; Merger or
Consolidation of the Master Servicer.......................................................71
Section 5.23 Assignment of Agreement by Master Servicer; Master Servicer
Not to Resign..............................................................................72
ARTICLE VI Distributions and Payments.....................................................................73
Section 6.1 Establishment of Certificate Account, Deposits to the Certificate Account..................73
Section 6.2 Permitted Withdrawals From the Certificate Account.........................................73
Section 6.3 Collection of Money........................................................................74
Section 6.4 The Certificate Insurance Policy...........................................................74
Section 6.5 Distributions..............................................................................75
Section 6.6 Investment of Accounts.....................................................................78
Section 6.7 Reports by Trustee.........................................................................78
Section 6.8 Additional Reports by Trustee and by Master Servicer.......................................78
Section 6.9 Compensating Interest......................................................................78
Section 6.10 Effect of Payments by the Certificate Insurer; Subrogation.................................78
ARTICLE VII Default........................................................................................78
Section 7.1 Events of Default..........................................................................78
Section 7.2 Trustee to Act; Appointment of Successor...................................................78
Section 7.3 Waiver of Defaults.........................................................................78
Section 7.4 Mortgage Loans, Trust Fund and Accounts Held for Benefit
of the Certificate Insurer.................................................................78
ARTICLE VIII Termination....................................................................................78
Section 8.1 Termination................................................................................78
Section 8.2 Additional Termination Requirements........................................................78
Section 8.3 Accounting Upon Termination of Master Servicer.............................................78
ARTICLE IX The Trustee....................................................................................78
Section 9.1 Duties of Trustee..........................................................................78
Section 9.2 Certain Matters Affecting the Trustee......................................................78
Section 9.3 Not Liable for Certificates or Mortgage Loans..............................................78
Section 9.4 Trustee May Own Certificates...............................................................78
Section 9.5 Trustee's Fees and Expenses; Indemnity.....................................................78
Section 9.6 Eligibility Requirements for Trustee.......................................................78
Section 9.7 Resignation and Removal of the Trustee.....................................................78
Section 9.8 Successor Trustee..........................................................................78
Section 9.9 Merger or Consolidation of Trustee.........................................................78
Section 9.10 Appointment of Co-Trustee or Separate Trustee..............................................78
Section 9.11 Tax Returns; OID Interest Reporting........................................................78
Section 9.12 Retirement of Certificates.................................................................78
ARTICLE X Miscellaneous Provisions.......................................................................78
Section 10.1 Limitation on Liability of the Depositor and the Master Servicer...........................78
Section 10.2 Acts of Certificateholders; Certificateholders' Rights.....................................78
Section 10.3 Amendment or Supplement....................................................................78
Section 10.4 Recordation of Agreement...................................................................78
Section 10.5 Duration of Agreement......................................................................78
Section 10.6 Notices....................................................................................78
Section 10.7 Severability of Provisions.................................................................78
Section 10.8 No Partnership.............................................................................78
Section 10.9 Counterparts...............................................................................78
Section 10.10 Successors and Assigns.....................................................................78
Section 10.11 Headings...................................................................................78
Section 10.12 The Certificate Insurer Default............................................................78
Section 10.13 Third Party Beneficiary....................................................................78
Section 10.14 Intent of the Parties......................................................................78
Section 10.15 Appointment of Tax Matters Person..........................................................78
Section 10.16 GOVERNING LAW CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL.......................................................................78
</TABLE>
<PAGE>
EXHIBITS
EXHIBIT A Specimen Certificate Insurance Policy
EXHIBIT B-1 Specimen Class A-1 Certificate
EXHIBIT B-2 Specimen Class A-2 Certificate
EXHIBIT B-3 Specimen Class A-3 Certificate
EXHIBIT B-4 Specimen Class A-4 Certificate
EXHIBIT B-5 Specimen Class A-5 Certificate
EXHIBIT B-6 Specimen Class R Certificate
EXHIBIT C Contents of Mortgage File
EXHIBIT D Mortgage Loan Schedule
EXHIBIT E Trustee's Certificate as to Mortgage Files
EXHIBIT F Form of Initial Certification of Trustee
EXHIBIT G Form of Final Certification of Trustee
EXHIBIT H Form of Request for Release of Mortgage Files
EXHIBIT I Form of Transfer Affidavit and Agreement
EXHIBIT J Form of Certificate to Be Delivered by Transferring Holder
EXHIBIT K Form of ERISA Investment Representation Letter
EXHIBIT L Form of Officer's Certificate of the Transferor:
Prepaid Loans
EXHIBIT M Form of Transferee's Letter
<PAGE>
This Pooling and Servicing Agreement, relating to Irwin Home Equity
Trust 1999-1 (the "Trust"), dated as of January 31, 1999 by and among Bear
Stearns Asset Backed Securities, Inc., as depositor of the Trust (the
"Depositor"), Irwin Funding Corp., as Transferor (the "Transferor"), Irwin
Union Bank and Trust Company, as Master Servicer, (the "Master Servicer"), and
Norwest Bank Minnesota, National Association, in its capacity as trustee (the
"Trustee").
W I T N E S S E T H:
WHEREAS, the Depositor wishes to establish a trust which provides
for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Master Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the trust estate;
WHEREAS, Norwest Bank Minnesota, National Association, is willing to
serve in the capacity of Trustee hereunder; and
WHEREAS, Ambac Assurance Corporation (the "Certificate Insurer") is
intended to be a third-party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Transferor, the Master
Servicer and the Trustee hereby agree as follows:
ARTICLE I
Definitions
Section 1.1 Certain Defined Terms. Whenever used herein the
following words and phrases, unless the context otherwise requires, shall have
the following meanings.
"Accepted Servicing Practices" shall mean the Master Servicer's
normal servicing practices in servicing and administering mortgage loans for
its own account, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
account mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located and will
give due consideration to the Certificate Insurer's and the
Certificateholders' reliance on the Master Servicer.
"Account" shall mean any Eligible Account established hereunder.
"Accrual Period" shall mean (i) with respect to the Class A-1
Certificates and any Remittance Date, the period commencing on the immediately
preceding Remittance Date or, in the case of the first Remittance Date, the
Closing Date, and ending on the day preceding such Remittance Date and (ii)
with respect to the Certificates other than the Class A-1 Certificates and any
Remittance Date, the period commencing on the 1st day of the month immediately
preceding the month in which such Remittance Date occurs and ending on the
last day of the month immediately preceding the month in which such Remittance
Date occurs.
"Adverse REMIC Event" shall have the meaning set forth in Section
5.1(c).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" shall mean this Pooling and Servicing Agreement,
including the Exhibits hereto, as amended or supplemented from time to time in
accordance herewith.
"Aggregate Principal Balance" shall mean the aggregated sum of the
Principal Balances of each of the Mortgage Loans as of any date of
determination.
"Appraised Value" shall mean the appraised value of any Mortgaged
Property, based upon the appraisal or other property valuation made at the
time the related Mortgage Loan is originated; provided that if no such
appraisal was required to be made in accordance with the Underwriting
Guidelines, Appraised Value shall mean the stated value of the Mortgaged
Property as set forth in the loan application submitted by the related
Mortgagor.
"Assignment of Mortgage" shall mean, with respect to each Mortgage
Loan, an assignment of the Mortgage, notice of transfer or equivalent
instrument (which may be in blank) sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer.
"Authorized Denominations" shall mean, in the case of the Class A
Certificates, $1,000 or integral multiples of $1,000 in excess thereof;
provided, however, that one Class A-1 Certificate, one Class A-2 Certificate,
one Class A-3 Certificate, one Class A-4 Certificate and one Class A-5
Certificate each is issuable in a denomination equal to an amount less than
$1,000 such that the aggregate denomination of all Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates or
Class A-5 Certificates, as the case may be, shall be equal to the applicable
Original Class A-1 Principal Balance, Original Class A-2 Principal Balance,
Original Class A-3 Principal Balance, Original Class A-4 Principal Balance or
Original Class A-5 Principal Balance.
"Available Amount" shall mean for any Remittance Date, the sum of
the Group I Available Amount and the Group II Available Amount.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday, or (ii) a day on which banking institutions in the States of
California, Indiana, Minnesota, Maryland or New York are authorized or
obligated by law or executive order to be closed.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
"Certificate" shall mean any Series 1999-1 Class A Certificate or
Series 1999-1 Class R Certificate executed by the Trustee on behalf of the
Trust Fund and authenticated by the Trustee.
"Certificate Account" shall mean the Certificate Account established
in accordance with Section 6.1(a) hereof and maintained by the Trustee.
"Certificateholder" shall mean, except as provided in Article X,
each Person in whose name a Certificate is registered in the Certificate
Register, except that, solely for the purposes of giving any consent (except
any consent required to be obtained pursuant to Section 10.2), waiver, request
or demand pursuant to this Agreement, any Certificate registered in the name
of the Master Servicer or any Subservicer or the Transferor, or any Affiliate
of any of them, shall be deemed not to be outstanding and the undivided
interest in the Trust Fund evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Certificates necessary to
effect any such consent, waiver, request or demand has been obtained. For
purposes of any consent, waiver, request or demand of Certificateholders
pursuant to this Agreement, upon the Trustee's request, the Master Servicer
and the Transferor shall provide to the Trustee a notice identifying any of
their respective Affiliates or the Affiliates of any Subservicer that is a
Certificateholder as of the date(s) specified by the Trustee in such request.
Any Certificates on which payments are made under the Certificate Insurance
Policy shall be deemed to be outstanding and held by the Certificate Insurer
to the extent of such payment.
"Certificate Insurance Policy" shall mean the certificate guaranty
insurance policy no. AB0237BE, and all endorsements thereto dated the Closing
Date, issued by the Certificate Insurer for the benefit of the Class A
Certificateholders, a copy of which is attached hereto as Exhibit A.
"Certificate Insurance Premium Amount" shall mean the product of the
Premium Percentage and the Certificate Principal Balance for the related
Remittance Date.
"Certificate Insurer" shall mean Ambac Assurance Corporation, a
stock insurance company organized and created under the laws of the State of
Wisconsin, and any successors thereto.
"Certificate Insurer Default" shall mean the existence and
continuance of any of the following: (i) a failure by the Certificate Insurer
to make a payment required under a Certificate Insurance Policy in accordance
with its terms; (ii) the entry of a decree or order of a court or agency
having jurisdiction in respect of the Certificate Insurer in an involuntary
case under any present or future federal or state bankruptcy, insolvency or
similar law appointing a conservator or receiver or liquidator or other
similar official of the Certificate Insurer or of any substantial part of its
property, or the entering of an order for the winding up or liquidation of the
affairs of the Certificate Insurer and the continuance of any such decree or
order undischarged or unstayed and in force for a period of 90 consecutive
days; (iii) the Certificate Insurer shall consent to the appointment of a
conservator or receiver or liquidator or other similar proceedings or of
relating to the Certificate Insurer or of or relating to all or substantially
all of its property; or (iv) the Certificate Insurer shall admit in writing
its inability to pay its debts generally as they become due, file a petition
to take advantage of or otherwise voluntarily commence a case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other similar
statute, make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations.
"Certificate Principal Balance" shall mean the sum of the Class A-1
Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance and the Class A-5 Principal Balance.
"Certificate Register" shall have the meaning described in Section
4.2(a).
"Civil Relief Act" shall mean the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended.
"Class" shall mean any designated Class of Certificates of this
Series or of any new Series issued hereunder.
"Class A Certificate" shall mean any Class A-1 Certificate, any
Class A-2 Certificate, any Class A-3 Certificate, any Class A-4 Certificate or
any Class A-5 Certificate.
"Class A Certificateholder" shall mean a Holder of a Class A-1
Certificate, a Class A-2 Certificate, a Class A-3 Certificate, a Class A-4
Certificate or a Class A-5 Certificate.
"Class A-1 Certificate" shall mean any Certificate designated as a
"Class A-1 Certificate" on the face thereof, in the form of Exhibit B-1
hereto, and authenticated by the Trustee in accordance with the procedures set
forth herein.
"Class A-1 Certificateholder" shall mean a Holder of a Class A-1
Certificate.
"Class A-1 Distribution Amount" shall mean, with respect to the
Class A-1 Certificates for any Remittance Date, the amount distributed to the
Holders of the Class A-1 Certificates on such Remittance Date pursuant to
Sections 6.5(a)(iv), (v), (vi) and (viii) and 6.5(b)(vi) hereof.
"Class A-1 Final Scheduled Maturity Date" shall mean the May 15,
2011 Remittance Date.
"Class A-1 Interest Distribution Amount" shall mean, with respect to
the Class A-1 Certificates for any Remittance Date an amount equal to the
aggregate of interest accrued at the Class A-1 Pass-Through Rate during the
Accrual Period on the Class A-1 Principal Balance excluding (i) any Mortgage
Loan Interest Shortfall and (ii) any reductions in interest resulting from the
application of the Civil Relief Act, in each case allocable to the Class A-1
Certificates and as of such Remittance Date.
"Class A-1 Pass-Through Rate" with respect to any Remittance Date,
will be equal to a per annum rate (calculated on the basis of actual days
elapsed divided by 360) equal to the lesser of (i) the sum of (a) LIBOR on the
Interest Determination Date plus (b) 0.30% per annum and (ii) the Weighted
Average Rate Cap.
"Class A-1 Principal Balance" shall mean, as of any date of
determination, the Original Class A-1 Principal Balance less any Group I
Principal Distribution Amount distributed on the Class A-1 Certificates on all
prior Remittance Dates.
"Class A-2 Certificate" shall mean any Certificate designated as a
"Class A-2 Certificate" on the face thereof, in the form of Exhibit B-2
hereto, and authenticated by the Trustee in accordance with the procedures set
forth herein.
"Class A-2 Certificateholder" shall mean a Holder of a Class A-2
Certificate.
"Class A-2 Distribution Amount" shall mean, with respect to the
Class A-2 Certificates for any Remittance Date, the amount distributed to the
Holders of the Class A-2 Certificates on such Remittance Date pursuant
Sections 6.5(a)(iv), (v), (vi) and (viii) and 6.5(b)(vi) hereof.
"Class A-2 Final Scheduled Maturity Date" shall mean the October 15,
2013 Remittance Date.
"Class A-2 Interest Distribution Amount" shall mean, with respect to
the Class A-2 Certificates for any Remittance Date an amount equal to the
aggregate of interest accrued at the Class A-2 Pass-Through Rate during the
Accrual Period on the Class A-2 Principal Balance excluding (i) any Mortgage
Loan Interest Shortfall and (ii) any reductions in interest resulting from the
application of the Civil Relief Act, in each case allocable to the Class A-2
Certificates and as of such Remittance Date.
"Class A-2 Pass-Through Rate" with respect to any Remittance Date,
will be equal to a 5.97% per annum rate (calculated on the basis of an assumed
month of 30 days and an assumed year of 360 days).
"Class A-2 Principal Balance" shall mean, as of any date of
determination, the Original Class A-2 Principal Balance less any Group I
Principal Distribution Amount distributed on the Class A-2 Certificates on all
prior Remittance Dates.
"Class A-3 Certificate" shall mean any Certificate designated as a
"Class A-3 Certificate" on the face thereof, in the form of Exhibit B-3
hereto, and authenticated by the Trustee in accordance with the procedures set
forth herein.
"Class A-3 Certificateholder" shall mean a Holder of a Class A-3
Certificate.
"Class A-3 Distribution Amount" shall mean, with respect to the
Class A-3 Certificates for any Remittance Date, the amount distributed to the
Holders of the Class A-3 Certificates on such Remittance Date pursuant to
Sections 6.5(a)(iv), (v), (vi) and (viii) and 6.5(b)(vi) hereof.
"Class A-3 Final Scheduled Maturity Date" shall mean the October 15,
2023 Remittance Date.
"Class A-3 Interest Distribution Amount" shall mean, with respect to
the Class A-3 Certificates for any Remittance Date an amount equal to the
aggregate of interest accrued at the Class A-3 Pass-Through Rate during the
Accrual Period on the Class A-3 Principal Balance excluding (i) any Mortgage
Loan Interest Shortfall and (ii) any reductions in interest resulting from the
application of the Civil Relief Act, in each case allocable to the Class A-3
Certificates and as of such Remittance Date.
"Class A-3 Pass-Through Rate" with respect to any Remittance Date,
will be equal to a 6.27% per annum rate (calculated on the basis of an assumed
month of 30 days and an assumed year of 360 days).
"Class A-3 Principal Balance" shall mean, as of any date of
determination, the Original Class A-3 Principal Balance less any Group I
Principal Distribution Amounts distributed on the Class A-3 Certificates on
all prior Remittance Dates.
"Class A-4 Certificate" shall mean any Certificate designated as a
"Class A-4 Certificate" on the face thereof, in the form of Exhibit B-4
hereto, and authenticated by the Trustee in accordance with the procedures set
forth herein.
"Class A-4 Certificateholder" shall mean a Holder of a Class A-4
Certificate.
"Class A-4 Distribution Amount" shall mean, with respect to the
Class A-4 Certificates for any Remittance Date, the amount distributed to the
Holders of the Class A-4 Certificates on such Remittance Date pursuant
Sections 6.5(a)(iv), (v), (vi) and (viii) and 6.5(b)(vi) hereof.
"Class A-4 Final Scheduled Maturity Date" shall mean the March 15,
2029 Remittance Date.
"Class A-4 Interest Distribution Amount" shall mean, with respect to
the Class A-4 Certificates for any Remittance Date an amount equal to the
aggregate of interest accrued at the Class A-4 Pass-Through Rate during the
Accrual Period on the Class A-4 Principal Balance excluding (i) any Mortgage
Loan Interest Shortfall and (ii) any reductions in interest resulting from the
application of the Civil Relief Act, in each case allocable to the Class A-4
Certificates and as of such Remittance Date.
"Class A-4 Pass-Through Rate" with respect to any Remittance Date
prior to the Optional Termination Date, will be equal to a 6.57% per annum
rate and with respect to any other Remittance Date, will be equal to a 7.32%
per annum rate (in each case calculated on the basis of an assumed month of 30
days and an assumed year of 360 days).
"Class A-4 Principal Balance" shall mean, as of any date of
determination, the Original Class A-4 Principal Balance less any Group I
Principal Distribution Amounts distributed on the Class A-4 Certificates on
all prior Remittance Dates.
"Class A-5 Base Principal Distribution Amount" shall mean, with
respect to the Class A-5 Certificates for any Remittance Date, (A) the sum of
the amounts referred to in clauses (i), (ii), (iii), (iv), (vi) and (vii) of
clause (b) of the definition of Class A-5 Principal Distribution Amount for
such Remittance Date minus (B) any Overcollateralization Release Amount for
Group II and such Remittance Date.
"Class A-5 Certificate" shall mean any Certificate designated as a
"Class A-5 Certificate" on the face thereof, in the form of Exhibit B-5
hereto, and authenticated by the Trustee in accordance with the procedures set
forth herein.
"Class A-5 Certificateholder" shall mean a Holder of a Class A-5
Certificate.
"Class A-5 Distribution Amount" shall mean, with respect to the
Class A-5 Certificates for any Remittance Date, the amount distributed to the
Holders of the Class A-5 Certificates on such Remittance Date pursuant to
Sections 6.5(a)(vi) and 6.5(b)(iv), (v), (vi) and (viii) hereof.
"Class A-5 Final Scheduled Maturity Date" shall mean the March 15,
2029 Remittance Date.
"Class A-5 Interest Distribution Amount" shall mean, with respect to
the Class A-5 Certificates for any Remittance Date an amount equal to the
aggregate of interest accrued at the Class A-5 Pass-Through Rate during the
Accrual Period on the Class A-5 Principal Balance excluding (i) any Mortgage
Loan Interest Shortfall and (ii) any reductions in interest resulting from the
application of the Civil Relief Act, in each case allocable to the Class A-5
Certificates and as of such Remittance Date.
"Class A-5 Pass-Through Rate" with respect to any Remittance Date
prior to the Optional Termination Date, will be equal to a 6.21% per annum
rate and with respect to any other Remittance Date, will be equal to a 6.96%
per annum rate (in each case calculated on the basis of an assumed month of 30
days and an assumed year of 360 days).
"Class A-5 Principal Balance" shall mean, as of any date of
determination, the Original Class A-5 Principal Balance less any Class A-5
Principal Distribution Amounts distributed on the Class A-5 Certificates on
all prior Remittance Dates.
"Class A-5 Principal Distribution Amount" shall mean, with respect
to the Class A-5 Certificates for any Remittance Date, the lesser of:
(a) the excess of (1) the sum of the Group II Available Amount, any
Group I Excess Spread and the applicable portion of any Insured Payment over
(2) the Class A-5 Interest Distribution Amount; and
(b) the sum, without duplication, of:
(i) that portion of all scheduled installments of principal in
respect of the Mortgage Loans in Group II which is received (or advanced)
during the related Due Period together with all unscheduled recoveries of
principal (including Principal Prepayments, Curtailments and Deficient
Valuations) on such Mortgage Loans in Group II actually collected by the
Master Servicer during the prior calendar month;
(ii) the Principal Balance of each Mortgage Loan in Group II
that either was, effective on such Remittance Date, repurchased by the
Transferor or by the Depositor or purchased by the Master Servicer during the
preceding Due Period, but only to the extent the amount equal to such
Principal Balance is actually received by the Trustee;
(iii) any Substitution Adjustment amounts delivered by the
Depositor on the related Remittance Date in connection with a substitution of
a Mortgage Loan in Group II, to the extent such Substitution Adjustments are
actually received by the Trustee;
(iv) with respect to each Mortgage Loan in Group II that became
a Liquidated Mortgage Loan during the prior calendar month, the Principal
Balance of such Mortgage Loan immediately prior to the time when such Mortgage
Loan became a Liquidated Mortgage Loan;
(v) any Overcollateralization Increase Amount for Group II;
(vi) to the extent of any Subordination Deficit the excess, if
any of the Class A-5 Principal Balance over the aggregate Principal Balance of
the Mortgage Loans in Group II;
(vii) the portion of the proceeds relating to the Group II
Mortgage Loans received by the Trust Fund following any termination of the
1999-1 REMIC carried out in accordance with a plan of complete liquidation
pursuant to Section 8.2 hereof or pursuant to the optional termination of
either of the Trust Fund or the 1999-1 REMIC by either the Master Servicer or
Certificate Insurer in accordance with Section 8.1 hereof, up to the then
outstanding Class A-5 Principal Balance; minus
(viii) any Overcollateralization Release Amount for Group II.
"Class R Certificate" shall mean any Certificate denominated as a
Class R Certificate and subordinate to the Class A Certificates in right of
payment to the extent set forth herein, which Certificate shall be in the form
of Exhibit B-6 hereto.
"Class R Certificateholder" shall mean a Holder of a Class R
Certificate.
"Closing Date" shall mean February 25, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collection Account" shall mean the Eligible Account established and
maintained by the Master Servicer for the benefit of the Certificateholders
and the Certificate Insurer pursuant to Section 5.3(a) hereof.
"Combined Loan-to-Value Ratio" shall mean with respect to any
Mortgage Loan, (i) the sum of (x) the outstanding principal balance of any
mortgage loan senior to such Mortgage Loan and secured by the related
Mortgaged Property as of the date of origination of the related Mortgage Loan,
plus (y) the Principal Balance of the related Mortgage Loan as of the Cut-Off
Date, divided by (ii) the Appraised Value of such Mortgaged Property.
"Commission" shall mean the Securities and Exchange Commission.
"Compensating Interest" shall have the meaning defined in Section
6.9 hereof.
"Curtailment" shall mean, with respect to a Mortgage Loan, any
payment of principal received during a Due Period as part of a payment that is
in excess of the amount of the Monthly Payment due for such Due Period and
which is neither intended to satisfy the Mortgage Loan in full, intended as an
advance payment of an amount due in a subsequent Due Period, nor intended to
cure a delinquency.
"Custodian" shall have the meaning defined in Section 2.2(c).
"Cut-Off Date" shall mean the close of business on January 31, 1999.
"Debt Service Reduction" shall mean, with respect to any Mortgage
Loan, a reduction by a court of competent jurisdiction of the Monthly Payment
due on such Mortgage Loan in a proceeding under the Bankruptcy Code, except
such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
"Deficient Valuation" shall mean, with respect to any Mortgage Loan,
a valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the then outstanding principal balance of
the Mortgage Loan, which valuation results from a proceeding initiated under
the United States Bankruptcy Code.
"Deleted Mortgage Loan" shall mean a Mortgage Loan replaced by a
Qualified Substitute Mortgage Loan or repurchased pursuant to Sections 2.4(c)
or 3.3 hereof.
"Delinquent," a Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment
has not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such payment was due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
delinquent," "90 days delinquent" and so on.
"Depositor" shall mean Bear Stearns Asset Backed Securities, Inc.
and any successor thereto.
"Depository" shall mean the Depository Trust Company, 7 Hanover
Square, New York, New York 10004 and any successor Depository hereafter named.
"Determination Date" shall mean the third Business Day prior to the
Remittance Date.
"Direct Participant" shall mean any broker-dealer, bank or other
financial institution for which the Depository holds Class A Certificates from
time to time as a securities depositary.
"Disqualified Organization" shall mean any of (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing (other than an instrumentality which is a corporation
if all of its activities are subject to tax and, except for the FHLMC, a
majority of its board of directors is not selected by such governmental unit),
(ii) any foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (unless such organization
is subject to the tax imposed by Section 511 of the Code on unrelated business
taxable income), or cooperatives engaged in furnishing electric energy, or
providing telephone service, to persons in rural areas as described in Section
1381(a)(2)(C) of the Code and (iv) any other Person so designated by the
Trustee based upon an Opinion of Counsel provided to the Trustee that the
holding of an ownership interest in a Class R Certificate by such Person may
cause the 1999-1 REMIC or any Person having an ownership interest in any Class
of Certificates (other than such Person) to incur liability for any federal
tax imposed under the Code that would not otherwise be imposed but for the
transfer of an ownership interest in the Class R Certificate to such Person.
The terms "United States", "State" and "international organization" shall have
the meanings set forth in Section 7701 of the Code.
"Due Date" shall mean, with respect to any Mortgage Loan, the day of
the month upon which payment is due from the related Mortgagor under the terms
of the related Mortgage Note.
"Due Period" shall mean, with respect to each Remittance Date, the
period beginning on the opening of business on the first day of the calendar
month preceding the calendar month in which such Remittance Date occurs, and
ending at the close of business on the last day of the calendar month
preceding the calendar month in which such Remittance Date occurs.
"Eligible Account" shall mean either (i) a segregated trust account
or accounts maintained with a depositary institution which is acceptable to
the Certificate Insurer and to each Rating Agency, which institution shall be
the Bank of the West until notice to the contrary is given to the Master
Servicer by the Certificate Insurer and such trust account shall be held in
(a) the corporate trust account department of such depositary institution or
(b) an institution with capital and surplus of not less than $50,000,000, and
a minimum unsecured debt rating of BBB by S&P or Baa3 by Moody's; or (ii) an
account or accounts maintained with an institution acceptable to the
Certificate Insurer and whose deposits are insured by the FDIC, the unsecured
and uncollateralized debt obligations of which institution shall be rated AA
or better by S&P and Aa2 or better by Moody's and the highest short-term
rating by S&P and Moody's, and which is (a) a federal savings and loan
association duly organized, validly existing and in good standing under the
federal banking laws, (b) an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state, (c) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws institution (including the Trustee),
(d) a principal subsidiary of a bank holding company, or (e) approved in
writing by the Certificate Insurer, S&P and Moody's, having capital and
surplus of not less than $50,000,000, acting in its fiduciary capacity.
"ERISA" shall have the meaning defined in Section 4.2(i)(x) hereof.
"Event of Default" shall have the meaning described in Section 7.1.
"Excess Spread" shall mean (i) with respect to Group I, the excess,
if any, of the Group I Available Amount over the sum of the Class A-1 Interest
Distribution Amount, the Class A-2 Interest Distribution Amount, the Class A-3
Interest Distribution Amount, the Class A-4 Interest Distribution Amount and
the Group I Base Principal Distribution Amount and (ii) with respect to Group
II, the excess, if any, of the Group II Available Amount over the sum of the
Class A-5 Interest Distribution Amount and the Class A-5 Base Principal
Distribution Amount.
"FDIC" shall mean the Federal Deposit Insurance Corporation and any
successor thereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation and
any successor thereto.
"FNMA" shall mean the Federal National Mortgage Association and any
successor thereto.
"Foreclosure Profits" shall mean, as to any Remittance Date, the
excess, if any, of (i) Net Liquidation Proceeds in respect of each Mortgage
Loan that became a Liquidated Mortgage Loan during the month immediately
preceding the month of such Remittance Date over (ii) the sum of the unpaid
principal balance of each such Liquidated Mortgage Loan plus accrued and
unpaid interest at the applicable Mortgage Interest Rate on the unpaid
principal balance thereof from the Due Date to which interest was last paid by
the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had been an
REO Mortgage Loan, from the Due Date to which interest was last deemed to have
been paid pursuant to Section 5.12) to the first day of the month following
the month in which such Mortgage Loan became a Liquidated Mortgage Loan.
"Group" shall mean each of Group I or Group II, as applicable.
"Group I" shall mean the segregated group of Mortgage Loans
identified on the Mortgage Loan Schedule as being allocated to Group I.
"Group I Available Amount" shall mean, with respect to any
Remittance Date, (i) the Master Servicer Remittance Amount for such Remittance
Date and Group I minus (ii) the Proportional Share of the Trustee Fee and the
Certificate Insurance Premium Amount for Group I.
"Group I Base Principal Distribution Amount" shall mean, with
respect to the Class A-1 Certificates, the Class A-2 Certificates, the Class
A-3 Certificates and the Class A-4 Certificates for any Remittance Date, (A)
the sum of the amounts referred to in clauses (i), (ii), (iii), (iv), (vi) and
(vii) of clause (b) of the definition of Group I Principal Distribution Amount
for such Remittance Date minus (B) any Overcollateralization Release Amount
for Group I and such Remittance Date.
"Group I Interest Distribution Amount" shall mean for any Remittance
Date, the sum of the Class A-1 Interest Distribution Amount, the Class A-2
Interest Distribution Amount, the Class A-3 Interest Distribution Amount and
the Class A-4 Interest Distribution Amount.
"Group I Principal Distribution Amount" shall mean, with respect to
the Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates and the Class A-4 Certificates, for any Remittance Date, the
lesser of:
(a) the excess of (1) the sum of the Group I Available Amount, any
Group II Excess Spread and the applicable portion of any Insured Payment over
(2) the Group I Interest Distribution Amount; and
(b) the sum, without duplication, of:
(i) that portion of all scheduled installments of principal in
respect of the Mortgage Loans in Group I which is received (or advanced)
during the related Due Period together with all unscheduled recoveries of
principal (including Principal Prepayments, Curtailments and Deficient
Valuations) on such Mortgage Loans in Group I actually collected by the Master
Servicer during the prior calendar month,
(ii) the Principal Balance of each Mortgage Loan in Group I
that either was, effective on such Remittance Date, repurchased by the
Transferor or by the Depositor or purchased by the Master Servicer during the
preceding Due Period, but only to the extent the amount equal to such
Principal Balance is actually received by the Trustee,
(iii) any Substitution Adjustment amounts delivered by the
Depositor on the related Remittance Date in connection with a substitution of
a Mortgage Loan in Group I, to the extent such Substitution Adjustments are
actually received by the Trustee,
(iv) with respect to each Mortgage Loan in Group I that became
a Liquidated Mortgage Loan during the prior calendar month, the Principal
Balance of such Mortgage Loan immediately prior to the time when such Mortgage
Loan became a Liquidated Mortgage Loan,
(v) any Overcollateralization Increase Amount for Group I,
(vi) to the extent of any Subordination Deficit the excess, if
any of the sum of the Class A-1 Principal Balance, Class A-2 Principal
Balance, Class A-3 Principal Balance and Class A-4 Principal Balance over the
aggregate Principal Balance of the Mortgage Loans in Group I,
(vii) the portion of the proceeds relating to the Group I
Mortgage Loans received by the Trust Fund following any termination of the
1999-1 REMIC carried out in accordance with a plan of complete liquidation
pursuant to Section 8.2 hereof or pursuant to the optional termination of any
of the Trust Fund, the 1999-1 REMIC Trust Fund by either the Master Servicer
or Certificate Insurer in accordance with Section 8.1 hereof, up to the then
outstanding Class A-1 Principal Balance, Class A-2 Principal Balance, Class
A-3 Principal Balance and/or Class A-4 Principal Balance, as applicable minus
(viii) any Overcollateralization Release Amount for Group I.
"Group II" shall mean the segregated group of Mortgage Loans
identified on the Mortgage Loan Schedule as being allocated to Group II.
"Group II Available Amount" shall mean, with respect to any
Remittance Date, (i) the Master Servicer Remittance Amount for such Remittance
Date and Group II minus (ii) the Proportional Share of the Trustee Fee and the
Certificate Insurance Premium Amount for Group II.
"Hazardous Materials" shall mean any dangerous, toxic or hazardous
pollutants, chemical wastes or substances, including, without limitation,
those identified pursuant to CERCLA or any other federal, state or local
environmental related laws now existing or hereafter enacted.
"Holder" shall mean each Person in whose name a Certificate is
registered in the Certificate Register, except that solely for the purposes of
giving any consent (except any consent required to be obtained pursuant to
Section 10.2), waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Master Servicer or any Subservicer
or the Transferor, or any Affiliate of any of them, shall be deemed not to be
outstanding and in the case of any Certificate, the undivided interest in the
Trust Fund evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Certificates necessary to effect any such
consent, waiver, request or demand has been obtained.
"Indirect Participant" shall mean any financial institution for whom
any Direct Participant holds an interest in a Class A Certificate.
"Insurance Agreement" shall mean that certain agreement between the
Certificate Insurer, the Depositor, the Transferor, the Master Servicer, Irwin
Home Equity Corporation, as Originator and the Trustee dated as of February
25, 1999.
"Insured Payment" shall have the meaning assigned thereto in the
Certificate Insurance Policy.
"Insurance Proceeds" shall mean proceeds paid by any insurer
pursuant to any insurance policy covering a Mortgage Loan to the extent such
proceeds are not applied to the restoration of the related Mortgaged Property
or released to the related Mortgagor in accordance with Accepted Servicing
Practices. "Insurance Proceeds" do not include "Insured Payments."
"Interest Collections" shall mean all amounts (including, without
limitation, Monthly Payments (or Periodic Advances in respect thereof) and
Liquidation Proceeds) collected on any Mortgage Loan allocable to interest
pursuant to the terms of the related Mortgage Note, or if no provision for
allocation is made therein, pursuant to the terms hereof.
"Interest Determination Date" shall mean, with respect to any
Accrual Period applicable to the Class A-1 Certificates, the second LIBOR
Business Day preceding the first day of such Accrual Period.
"Late Payment Rate" shall have the meaning assigned thereto in the
Certificate Insurance Agreement.
"LIBOR" shall mean, for any Interest Period other than the first
Interest Period, the rate for United States dollar deposits for one month that
appears on the Telerate Screen Page 3750 as of 11:00 a.m., London, England
time, on the second LIBOR Business Day prior to the first day of such Interest
Period. With respect to the first Interest Period, "LIBOR" shall mean the rate
for United States dollar deposits for one month that appears on the Telerate
Screen Page 3750 as of 11:00 a.m., London, England time, two LIBOR Business
Days prior to the Closing Date. If such rate does not appear on such page (or
such other page as may replace such page on such service, or if such service
is no longer offered, such other service for displaying LIBOR or comparable
rates as may be reasonably selected by the Trustee after consultation with the
Master Servicer), the rate will be the Reference Bank Rate. If no such
quotations can be obtained and no Reference Bank Rate is available, LIBOR will
be LIBOR applicable to the preceding Remittance Date.
The establishment of LIBOR on each Interest Determination Date by
the Trustee and the Trustee's calculation of the rate of interest applicable
to the Class A-1 Certificates for the related Accrual Period shall (in the
absence of manifest error) be final and binding. Each such rate of interest
may be obtained by telephoning the Trustee.
"LIBOR Business Day" shall mean any day other than (i) a Saturday or
a Sunday or (ii) a day on which banking institutions in the city of London,
England are required or authorized by law to be closed.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), claim, charge, preference, priority, right,
interest or other security agreement or preferential arrangement of any kind
or nature whatsoever, including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
UCC (other than any such financial statement filed for informational purposes
only) or comparable law of any jurisdiction to evidence any of the foregoing.
"Liquidated Mortgage Loan" shall mean a Mortgage Loan (i) with
respect to which the related Mortgaged Property has been acquired, liquidated
and/or foreclosed upon by the Master Servicer or (ii) which the Master
Servicer has elected to write down the outstanding Principal Balance of such
Mortgage Loan that has been delinquent for a period equal to or greater than
270 days to zero and, in either case, with respect to which the Master
Servicer determines that all Liquidation Proceeds which it expects to recover
have been recovered.
"Liquidated Loan Loss" shall mean, with respect to any Remittance
Date, the aggregate of the amount of losses with respect to each Mortgage Loan
which became a Liquidated Mortgage Loan in the Due Period prior to such
Remittance Date, equal to the excess of (i) the unpaid principal balance of
each such Liquidated Mortgage Loan, plus accrued interest thereon in
accordance with the amortization schedule at the time applicable thereto at
the applicable Mortgage Interest Rate from the Due Date as to which interest
was last paid with respect thereto through the last day of the month in which
such Mortgage Loan became a Liquidated Mortgage Loan, over (ii) Net
Liquidation Proceeds with respect to such Liquidated Mortgage Loan.
"Liquidation Expenses" shall mean expenses incurred by the Master
Servicer in connection with the liquidation of any defaulted Mortgage Loan,
REO Mortgage Loan or REO Property (including, without limitation, legal fees
and expenses, committee or referee fees, and, if applicable, brokerage
commissions and conveyance taxes), any unreimbursed amount expended by the
Master Servicer pursuant to Sections 5.5, 5.6 and 5.12 respecting the related
Mortgage Loan and any unreimbursed expenditures for real property taxes or for
property restoration or preservation of the related Mortgaged Property.
Liquidation Expenses shall not include any previously incurred expenses in
respect of an REO Mortgage Loan which have been netted against related REO
Proceeds.
"Liquidation Proceeds" shall mean amounts received (or, in the case
of Liquidated Mortgage Loans written-down by the Master Servicer, amounts
deposited) by the Master Servicer (including Insurance Proceeds) in connection
with the liquidation of defaulted or written-down Mortgage Loans or property
acquired in respect thereof, whether through foreclosure, sale or otherwise,
including payments in connection with such Mortgage Loans received from the
Mortgagor, other than amounts required to be paid to the Mortgagor pursuant to
the terms of the applicable Mortgage or to be applied otherwise pursuant to
law.
"Loan Repurchase Price" shall have the meaning defined in Section
2.4(c).
"Majority Certificateholders" shall mean the Holder or Holders of
Class A Certificates evidencing an undivided beneficial ownership interest in
the Class A Certificates in excess of 50% in the aggregate.
"Master Servicer" shall mean Irwin Union Bank and Trust Company, an
Indiana banking corporation, or any successor appointed as herein provided.
"Master Servicer Account" shall mean the account created and
maintained pursuant to Section 5.7.
"Master Servicer Termination Delinquency Rate Trigger" shall have
the meaning assigned thereto in the Insurance Agreement.
"Master Servicer Termination Loss Trigger" shall have the meaning
assigned thereto in the Insurance Agreement.
"Master Servicer Employees" shall have the meaning as defined in
Section 5.8 hereof.
"Master Servicer Remittance Amount" shall mean, with respect to any
Determination Date and Group, an amount equal to the sum of (i) all
unscheduled collections of principal and interest on the Mortgage Loans in the
related Group (including Principal Prepayments and any prepayment penalties
received in connection with such Principal Prepayments or Curtailments, Net
REO Proceeds and Net Liquidation Proceeds, if any, and any amounts deposited
in the Collection Account or Certificate Account in connection with a
repurchase of the Mortgage Loans) collected by the Master Servicer during the
Due Period and all scheduled Monthly Payments due on the Mortgage Loans in the
related Group on the Due Date and received by the Master Servicer on or prior
to the second Business Day preceding the related Determination Date, plus (ii)
all Periodic Advances made by the Master Servicer with respect to payments due
to be received on the Mortgage Loans in the related Group on the related Due
Date plus (iii) the amount of Compensating Interest due with respect to
Mortgage Loans in the related Group with respect to the related Due Period,
plus (iv) any other amounts required to be placed in the Collection Account
with respect to Mortgage Loans in the related Group by the Master Servicer
pursuant to this Pooling and Servicing Agreement but excluding, without
duplication, the following:
(a) amounts received on a particular Mortgage as late payments of
principal or interest and respecting which the Master Servicer has previously
made an unreimbursed Periodic Advance;
(b) the portion of Liquidation Proceeds used to reimburse any
unreimbursed Periodic Advances by the Master Servicer;
(c) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(d) that portion of Liquidation Proceeds and REO Proceeds which
represents any unpaid Servicing Fee;
(e) all income from Permitted Investments that is held in the
Collection Account for the account of the Master Servicer;
(f) all amounts in respect of late fees, assumption fees, fees
associated with prepayments other than prepayment penalties, demand statement
fees, reconveyance and recording fees and other service related fees;
(g) all other amounts which are explicitly reimbursable to the
Master Servicer hereunder with respect to the Mortgage Loans, including (1) as
provided in Section 5.4 hereof; and (2) any unreimbursed and accrued
Liquidation Expenses; and
(h) the portion of Net Foreclosure Profits representing any unpaid
Servicing Fee.
"Maturity Date" shall mean the latest possible maturity date as
defined in Section 1.860G-1(a)(4)(iii) of the proposed Treasury regulations,
by which the Certificates representing a regular interest in the 1999-1 REMIC
would be reduced to zero as determined under a hypothetical scenario that
assumes, among other things, that (i) scheduled interest and principal
payments on the Mortgage Loans are received in a timely manner, with no
delinquencies or losses, (ii) there are no principal prepayments on the
Mortgage Loans, (iii) the Transferor and the Master Servicer will not
repurchase any Mortgage Loan and neither the Transferor, the Master Servicer
nor the Certificate Insurer will exercise its option to purchase the Mortgage
Loans and thereby cause a termination of the 1999-1 REMIC, and (iv) certain of
the Mortgage Loans have an original term to maturity of up to 360 months and,
on a latest maturing loan basis, a remaining term to maturity of up to 360
months.
"Monthly Payment" shall mean, as to any Mortgage Loan (including any
REO Mortgage Loan) and any Due Date, the scheduled payment of principal and
interest due thereon by such Due Date (after adjustment for any Curtailments
and Deficient Valuations occurring prior to such Due Date but before any
adjustment to such amortization schedule by reason of any bankruptcy, other
than Deficient Valuations or similar proceeding or any moratorium or similar
waiver or grace period).
"Moody's" shall mean Moody's Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if
such corporation no longer for any reason performs the services of a
securities rating agency, "Moody's" shall be deemed to refer to any other
nationally recognized rating agency designated by the Certificate Insurer.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument creating a lien on the Mortgaged Property to secure the Mortgage
Loan.
"Mortgage Documents" shall mean the documents described in Section
2.3 hereof or on Exhibit C required to be contained in a Mortgage File.
"Mortgage File" shall include the Mortgage Loan documents described
in Section 2.3 hereof and such documents as are applicable from those listed
on Exhibit C attached hereto.
"Mortgage Interest Rate" shall mean, as to any Mortgage Loan, the
per annum rate at which interest accrues on the unpaid principal balance
thereof as set forth in the related Mortgage Note.
"Mortgage Loan" shall mean (i) each fixed rate, closed end mortgage
loan identified on the Mortgage Loan Schedule on the Closing Date secured by a
lien on the related Mortgaged Property, (ii) any additional fixed rate, closed
end mortgage loans identified on the Mortgage Loan Schedule after the Closing
Date, as such schedule is amended and supplemented from time to time to
reflect the deletion of the Deleted Mortgage Loans and the substitution of
Qualified Substitute Mortgage Loans for Deleted Mortgage Loans, (iii) each
Mortgage Note evidencing any loan referred to in (i) or (ii) above, including
all amounts now or hereafter due under such Mortgage Notes, whether relating
to such loans or other loans which may be made from time to time, and (iv) the
related Mortgage. Unless otherwise clearly indicated by the context, Mortgage
Loan shall be deemed to refer to the related REO Mortgage Loan and REO
Property.
"Mortgage Loan Interest Shortfall" shall mean, with respect to any
Remittance Date, as to any Mortgage Loan, any Prepayment Interest Shortfall
for which no payment of Compensating Interest is paid.
"Mortgage Loan Sale Agreement" shall mean the Mortgage Loan Sale
Agreement dated as of January 31, 1999, between Irwin Union Bank and Trust
Company, as seller thereunder, and Irwin Funding Corp., as purchaser
thereunder, as such agreement may be amended, modified or supplemented from
time to time.
"Mortgage Loan Schedule" shall mean the list of the Mortgage Loans
transferred to the Trustee on the Closing Date as part of the Trust Fund and
attached hereto as Exhibit D (and also provided to the Certificate Insurer and
the Trustee on a computer readable magnetic tape or disk). The Mortgage Loan
Schedule shall set forth at a minimum the following information as to each
Mortgage Loan:
(a) the Mortgage Loan identifying number;
(b) the Principal Balance of the Mortgage Loan;
(c) the city, state and ZIP code of the Mortgaged Property;
(d) the type of property;
(e) the current Monthly Payment as of the Cut-Off Date;
(f) the original number of months to maturity;
(g) the scheduled maturity date;
(h) the Combined Loan-to-Value Ratio as of the Cut-Off Date;
(i) the Mortgage Interest Rate as of the Cut-Off Date;
(j) the Appraised Value;
(k) the documentation type (as described in the Underwriting
Guidelines);
(l) the loan classification (as described in the Underwriting
Guidelines); and
(m) whether such Mortgage Loan is in Group I or Group II.
Such "Mortgage Loan Schedule" may consist of multiple reports that
collectively set forth all of the information required, including the
aggregate number of Mortgage Loans and the Aggregate Principal Balance as of
the Cut-Off Date. In addition, a summary of the information regarding the
Mortgage Loans shall be included as a part of the Mortgage Loan Schedule which
summary shall include such consolidated and aggregated information as may be
requested by the Trustee or the Certificate Insurer from time to time.
"Mortgage Note" shall mean the original, executed note, loan
agreement or other evidence of indebtedness evidencing the indebtedness of a
Mortgagor under a Mortgage Loan.
"Mortgaged Property" shall mean the underlying property securing a
Mortgage Loan, consisting of a fee simple estate in a single parcel of land
improved by a Residential Dwelling.
"Mortgaged Property State" shall mean any state in which any
Mortgaged Property is located.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"Net Foreclosure Profits" shall mean, as to any Remittance Date, the
excess, if any, of (i) the aggregate Foreclosure Profits for such Remittance
Date, over (ii) the Liquidated Loan Loss for such Remittance Date.
"Net Liquidation Proceeds" shall mean, as to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses and net of any
unreimbursed Periodic Advances made by the Master Servicer. For all purposes
of this Agreement, Net Liquidation Proceeds shall be allocated first to
accrued and unpaid interest on the related Mortgage Loan and then to the
unpaid principal balance thereof.
"Net REO Proceeds" shall mean, as to any REO Mortgage Loan, REO
Proceeds net of any related expenses of the Master Servicer.
"1999-1 REMIC" shall mean the segregated pool of assets in the Trust
Fund, consisting of: (i) the Mortgage Loans which are from time to time
subject to this Agreement, together with the Mortgage Files relating thereto
and all collections thereon and proceeds thereof, (ii) such assets as from
time to time are identified as REO Property of the 1999-1 REMIC and
collections thereon and proceeds thereof, (iii) assets deposited in the
Certificate Account including any such amounts on deposit in the Certificate
Account invested in Permitted Investments, (iv) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies (other than the
Certificate Insurance Policy) required to be maintained pursuant to this
Agreement and any Insurance Proceeds, (v) Liquidation Proceeds, and (vi)
Released Mortgaged Property Proceeds.
"Nonrecoverable Advance" shall mean, with respect to any Mortgage
Loan, (i) any Periodic Advance previously made and not reimbursed from late
collections pursuant to Section 5.4(b), or (ii) a Periodic Advance proposed to
be made in respect of a Mortgage Loan or REO Property either of which, in the
good faith business judgment of the Master Servicer, as evidenced by an
Officer's Certificate delivered to the Certificate Insurer and the Trustee no
later than the Business Day following such determination, would not be
ultimately recoverable pursuant to Section 5.4.
"Non-United States Person" shall mean any Person other than a United
States Person.
"Officer's Certificate" shall mean a certificate signed by the
Chairman of the Board, the President or a Vice President and the Treasurer,
the Secretary or one of the Assistant Treasurers or Assistant Secretaries of
the Transferor and/or the Master Servicer, or the Depositor, as required by
this Agreement.
"Opinion of Counsel" shall mean a written opinion of counsel, who
may, without limitation, be counsel for the Transferor, the Master Servicer,
the Trustee, a Certificateholder or a Certificateholder's prospective
transferee or the Certificate Insurer (including, except as otherwise provided
herein, in-house counsel) reasonably acceptable to each addressee of such
opinion and experienced in matters relating to the subject of such opinion;
except that any opinion of counsel relating to (i) the qualification of the
1999-1 REMIC as a REMIC, or (ii) compliance with the REMIC Provisions must be
an opinion of counsel who (a) is in fact independent of the Transferor, the
Master Servicer and the Trustee, (b) does not have any direct financial
interest or any material indirect financial interest in the Transferor or the
Master Servicer or the Trustee or in an Affiliate thereof, (c) is not
connected with the Transferor or the Master Servicer or the Trustee as an
officer, employee, director or person performing similar functions, and (d) is
reasonably acceptable to the Certificate Insurer. The Certificate Insurer
shall be an addressee on each Opinion of Counsel relating to, or otherwise
affecting, the Series 1999-1 Certificates.
"Optional Termination Date" shall mean the first date upon which the
Aggregate Principal Balance is less than 10% of the Aggregate Principal
Balance as of the Cut-Off Date.
"Original Class A-1 Principal Balance" shall mean, as of the Startup
Date and as to the Class A-1 Certificates, $ 62,000,000.
"Original Class A-2 Principal Balance" shall mean, as of the Startup
Date and as to the Class A-2 Certificates, $ 22,600,000.
"Original Class A-3 Principal Balance" shall mean, as of the Startup
Date and as to the Class A-3 Certificates, $ 21,400,000.
"Original Class A-4 Principal Balance" shall mean, as of the Startup
Date and as to the Class A-4 Certificates, $ 19,000,000.
"Original Class A-5 Principal Balance" shall mean, as of the Startup
Date and as to the Class A-1 Certificates, $ 25,000,000.
"Originator" shall mean Irwin Home Equity Corporation, an Indiana
corporation.
"Outstanding Mortgage Loan" shall mean, as to any Due Date, a
Mortgage Loan (including an REO Mortgage Loan) which has not been paid in full
prior to such Due Date, which did not become a Liquidated Mortgage Loan prior
to such Due Date and which was not repurchased by the Transferor prior to such
Due Date pursuant to Sections 2.4 or 3.3.
"Overcollateralization Amount" shall mean, with respect to any
Remittance Date and Group, the excess, if any, of (i) the aggregate Principal
Balance of all Mortgage Loans in such Group as of the close of business on the
last day of the related Due Period over (ii) (a) the sum of the Class A-1
Principal Balance, Class A-2 Principal Balance, Class A-3 Principal Balance
and Class A-4 Principal Balance in the case of Group I or (b) the Class A-5
Principal Balance in the case of Group II as of such Remittance Date (after
taking into account the Group I Principal Distribution Amount or the Class A-5
Principal Distribution Amount, other than the Overcollateralization Increase
Amount for such Group, for such Remittance Date).
"Overcollateralization Deficiency Amount" shall mean, with respect
to any date of determination and Group, the excess, if any, of the
Overcollateralization Target Amount for such Group over the
Overcollateralization Amount for such Group.
"Overcollateralization Increase Amount" shall mean with respect to
Group I or Group II, the lesser of (i) the related Excess Spread and (ii) the
related Overcollateralization Deficiency Amount.
"Overcollateralization Target Amount" shall have the meaning
assigned thereto in the Insurance Agreement.
Notwithstanding the above, the Certificate Insurer may, in its sole
discretion, modify the definition of Overcollateralization Target Amount. The
Trustee and the Rating Agencies shall be notified in writing of such
modification prior to the related Remittance Date and any such modification
shall not result in a downgrading of the then-current ratings of any Class A
Certificate without regard to the Certificate Insurance Policy.
"Ownership Interest" shall mean, 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.
"Owner-Occupied Mortgaged Property" shall mean a Residential
Dwelling as to which (i) the related Mortgagor represented an intent to occupy
as such Mortgagor's primary, secondary or vacation residence at the
origination of the Mortgage Loan, and (ii) the Transferor has no actual
knowledge that such Residential Dwelling is not so occupied.
"Percentage Interest" shall mean, with respect to a Class A-1
Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4
Certificate or Class A-5 Certificate, the portion of the total beneficial
ownership interest in the Mortgage Loans evidenced by such Certificate,
expressed as a percentage rounded to four decimal places, equal to a fraction
the numerator of which is the original denomination of such Certificate and
the denominator of which is the Original Class A-1 Principal Balance, the
Original Class A-2 Principal Balance, the Original Class A-3 Principal Balance
or the Original Class A-4 Principal Balance as applicable. With respect to a
Class R Certificate, the portion evidenced thereby as stated on the face of
such Certificate.
"Periodic Advance" shall mean the aggregate of the advances required
to be made by the Master Servicer on any Determination Date pursuant to
Section 5.20 hereof, the amount of any such advances being equal to the sum
of: (i) all Monthly Payments (net of the related Servicing Fee and any amount
excluded from the Master Servicer Remittance Amount pursuant to clauses (a) -
(h) of the definition of "Master Servicer Remittance Amount") on the Mortgage
Loans that are not received by the Master Servicer as of the close of business
on the second Business Day preceding the related Determination Date and have
not been determined by the Master Servicer to be Nonrecoverable Advances, plus
(ii) with respect to each REO Property which was acquired during or prior to
the related Due Period and as to which an REO Disposition did not occur during
the related Due Period, an amount equal to the excess, if any, of (a) interest
on the Principal Balance of the related REO Mortgage Loan at the related
Mortgage Interest Rate, net of the Servicing Fee, for the most recently ended
Due Period for the related Mortgage Loan over (b) the net income from the REO
Property transferred to the Certificate Account for such Remittance Date.
"Permitted Investments" shall be limited to the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States and
any obligation of, or guaranties by, FHLMC or FNMA (other than senior debt
obligations and mortgage pass-through certificates guaranteed by FHLMC or
FNMA) shall be a Permitted Investment; provided, that at the time of such
investment, such investment is acceptable to the Certificate Insurer, but
excluding any of such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemption;
(b) federal funds and certificates of deposit, time and demand
deposits and banker's acceptances issued by any bank or trust company
incorporated under the laws of the United States or any state thereof and
subject to supervision and examination by federal or state banking
authorities, provided that at the time of such investment or contractual
commitment providing for such investment the short-term debt obligations of
such bank or trust company at the date of acquisition thereof have been rated
A-1+ by S&P and P-1 by Moody's;
(c) commercial paper (having original maturities of not more than
180 days) rated A-1+ by S&P and P-1 by Moody's;
(d) investments in money market funds rated "AAAm" or "AAAm-G" by
S&P and "Aaa" by Moody's, including any such fund that is managed by the
Trustee or any Affiliate of the Trustee or for which the Trustee or any of its
Affiliates acts as an advisor; and
(e) investments approved by S&P, Moody's and the Certificate Insurer
in writing delivered to the Trustee;
provided, that each such Permitted Investment shall be a "permitted
investment" within the meaning of Section 860G(a)(5) of the Code and that no
instrument described hereunder shall evidence either the right to receive (x)
only interest with respect to the obligations underlying such instrument or
(y) both principal and interest payments derived from obligations underlying
such instrument and the interest and principal payments with respect to such
instrument provided a yield to maturity at par greater than 120% of the yield
to maturity at par of the underlying obligations; and provided, further, that
no instrument described hereunder may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to stated maturity.
"Permitted Liens" shall mean liens for (i) real estate taxes and
special assessments not yet delinquent (provided, that property taxes may be
delinquent up to one year); (ii) as to the junior Mortgage Loans, any senior
mortgage loan secured by such Mortgaged Property; (iii) covenants, conditions
and restrictions, rights of way, easements and other matters of public record
as of the date of recording that are acceptable to mortgage lending
institutions generally; (iv) with respect to junior Mortgage Loans with
principal balances less than or equal to $35,000 and that were originated on
or after April 13, 1998 with combined loan-to-values of 100% or less, (a)
liens prior to the related first mortgage, if verified as paid, and (b) liens
and judgments of $5,000 or less, including sewer or maintenance liens,
mechanics' liens or UCC filings; and (v) other matters to which like
properties are commonly subject that do not materially interfere with the
benefits of the security intended to be provided by the related Mortgage
Documents.
"Permitted Transferee" shall have the meaning assigned in Section
4.2(i)(vi).
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking
association, unincorporated organization or government or any agency or
political subdivision thereof.
"Plan" shall have the meaning defined in Section 4.2(i)(x).
"Preference Amount" shall mean any amount previously distributed to
a Class A Certificateholder that is recoverable and sought to be recovered as
a voidable preference by a trustee in bankruptcy pursuant to the U.S.
Bankruptcy Code as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Preference Claim" shall have the meaning defined in Section 6.4(e).
"Premium Percentage" shall have the meaning assigned thereto in the
Certificate Insurance Agreement.
"Prepayment Assumption" shall mean a constant prepayment rate of
22%, used solely for determining the accrual of original issue discount and
market discount on the Certificates for federal income tax purposes.
"Prepayment Interest Shortfall" shall mean, with respect to any
Remittance Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment or Curtailment, an amount equal
to the excess, if any, of (i) 30 days' interest on the Principal Balance of
such Mortgage Loan at a per annum rate equal to the Mortgage Interest Rate (or
at such lower rate as may be in effect for such Mortgage Loan pursuant to
application of the Civil Relief Act, any Deficient Valuation and/or any Debt
Service Reduction) minus the rate at which the Servicing Fee is calculated,
over (ii) the amount of interest actually remitted by the Mortgagor in
connection with such Principal Prepayment or Curtailment.
"Principal Balance" shall mean, as to any Mortgage Loan and
Remittance Date, the outstanding principal balance of such Mortgage Loan as of
the last day of the Due Period related to such Remittance Date after giving
effect to Principal Prepayments received and payments of principal collected
during such Due Period, Deficient Valuations incurred prior to the Due Date in
such Due Period and any Curtailments applied by the Master Servicer in
reduction of the unpaid principal balance of such Mortgage Loan as of such Due
Date.
"Principal Collections" shall mean all amounts collected with
respect to a Mortgage Loan, including, without limitation, Monthly Payments
(or Periodic Advances made in respect thereof), any Loan Repurchase Price and
Substitution Adjustments allocable to principal pursuant to the terms of the
related Mortgage Note, or, if no provision for allocation is made therein, in
accordance with the terms hereof.
"Principal Distribution Amount" shall mean the Class A-5 Principal
Distribution Amount or the Group I Principal Distribution Amount.
"Principal Prepayment" shall mean any payment or other recovery of
principal on a Mortgage Loan equal to the outstanding Principal Balance
thereof, received in advance of the final scheduled Due Date which is not
intended as an advance payment of a Scheduled Monthly Payment.
"Proportional Share" shall mean, (i) with respect to Group I, (a)
the sum of the Class A-1 Principal Balance, Class A-2 Principal Balance, Class
A-3 Principal Balance and Class A-4 Principal Balance divided by (b) the
Certificate Principal Balance and (ii) with respect to Group II, (a) the Class
A-5 Principal Balance divided by (b) the Certificate Principal Balance.
"Prospectus Supplement" shall mean the Prospectus Supplement dated
January 28, 1999, as amended and supplemented, relating to the Class A
Certificates and filed with the Commission in connection with the Registration
Statement heretofore filed or to be filed with the Commission pursuant to Rule
424(b)(2) or 424(b)(5).
"Purchase and Sale Agreement" shall mean the Purchase and Sale
Agreement, dated as of the date hereof, between the Transferor and the
Depositor and relating to the sale of the Mortgage Loans to the Depositor.
"Qualified Appraiser" shall mean an appraiser, duly appointed by the
Master Servicer, who had no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation
is not affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfy the
requirements of Title XI of the Federal Institutions Reform, Recovery and
Enforcement Act of 1989 and the regulations promulgated thereunder, all as in
effect on the date the Mortgage Loan was originated.
"Qualified Mortgage" shall have the meaning set forth from time to
time in the definition of "Qualified Mortgage" at Section 860G(a)(3) of the
Code (or any successor statute thereto).
"Qualified Substitute Mortgage Loan" shall mean a mortgage loan or
mortgage loans which (i) has an interest rate at least equal to the Deleted
Mortgage Loan for which it is to be substituted (ii) relates or relate to a
detached one-family residence or to the same type of Residential Dwelling as
the Deleted Mortgage Loan for which it is to be substituted and in each case
has or have the same occupancy status or is an Owner-Occupied Mortgaged
Property, (iii) matures or mature no later than (and not more than one year
earlier than) the Deleted Mortgage Loan for which it is to be substituted,
(iv) has or have a Combined Loan-to-Value Ratio or Combined Loan-to-Value
Ratios at the time of such substitution no higher than the Combined
Loan-to-Value Ratio of the Deleted Mortgage Loan for which it is to be
substituted, (v) has or have a principal balance or principal balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan for which it is to be substituted as of such date, (vi)
satisfies or satisfy the criteria set forth from time to time in the
definition of "qualified replacement mortgage" at Section 860G(a)(4) of the
Code (or any successor statute thereto), (vii) has or have an applicable
borrower or borrowers with the same or better traditionally ranked credit
status as the borrower or borrowers under the Deleted Mortgage Loan for which
it is to be substituted, and (viii) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.1
and 3.2 of the Purchase and Sale Agreement.
"Rating Agency" shall mean S&P or Moody's.
"Record Date" shall mean, with respect to any Remittance Date other
than the initial Remittance Date, the close of business on the last day of the
calendar month immediately preceding the month in which such Remittance Date
occurs and with respect to the initial Remittance Date, the Closing Date.
"Reference Bank Rate" shall mean, with respect to any Interest
Period, as follows: the arithmetic mean (rounded upwards, if necessary, to the
nearest one sixteenth of one percent) of the offered rates for United States
dollar deposits for one month which are offered by the Reference Banks as of
11:00 a.m., London, England time, on the second LIBOR Business Day prior to
the first day of such Interest Period to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the then
outstanding Certificate Principal Balance; provided, that at least two such
Reference Banks provide such rate. If fewer than two offered rates appear, the
Reference Bank Rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Trustee after consultation
with the Master Servicer, as of 11:00 a.m., New York time, on such date for
loans in U.S. Dollars to leading European Banks for a period of one month in
amounts approximately equal to the then outstanding Certificate Principal
Balance. If no such quotations can be obtained, the Reference Bank Rate will
be the Reference Bank Rate applicable to the preceding Interest Period.
"Reference Banks" shall mean Bankers Trust Company, Barclay's Bank
PLC, The Bank of Tokyo and National Westminster Bank PLC; provided that if any
of the foregoing banks are not suitable to serve as a Reference Bank, then any
leading banks selected by the Trustee which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the
control of or under common control with the Depositor or any affiliate
thereof, (iii) whose quotations appear on the Reuters Screen LIBO Page on the
relevant Interest Determination Date and (iv) which have been designated as
such by the Trustee after consultation with the Master Servicer.
"Reimbursement Amount" shall mean, as of any Remittance Date, the
sum of (i) all Insured Payments previously paid by the Certificate Insurer and
in each case not previously repaid to the Certificate Insurer pursuant to
Section 6.5(a)(vii) or 6.5(b)(vii) hereof plus (ii) interest accrued on such
Insured Payments not previously repaid calculated at the Late Payment Rate
from the date such Insured Payment was paid, plus (iii) any amounts then due
and owing to the Certificate Insurer under the Certificate Insurance
Agreement, as certified to the Trustee by the Certificate Insurer, plus (iv)
interest on such amounts at the Late Payment Rate. The Certificate Insurer
shall notify the Trustee and the Depositor of the amount of any Reimbursement
Amount.
"Released Mortgaged Property Proceeds" shall mean, as to any
Mortgage Loan, proceeds received by the Master Servicer in connection with (i)
a taking of an entire Mortgaged Property by exercise of the power of eminent
domain or condemnation or (ii) any release of part of the Mortgaged Property
from the lien of the related Mortgage, whether by partial condemnation, sale
or otherwise; which are not released to the Mortgagor in accordance with
applicable law, Accepted Servicing Practices and this Agreement.
"REMIC" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code.
"REMIC Change of Law" shall mean any proposed, temporary or final
regulation, revenue ruling, revenue procedure or other official announcement
or interpretation relating to the REMIC and the REMIC Provisions issued after
the Closing Date.
"REMIC Provisions" shall mean provisions of the federal income tax
law relating to real estate mortgage investment conduits, which appear at
Sections 860A through 860G of Subchapter M of Chapter I of the Code, and
related provisions, and temporary and final regulations promulgated thereunder
and published rulings, notices and announcements, as the foregoing may be in
effect from time to time.
"Remittance Date" shall mean the 15th day of any month or if such
15th day is not a Business Day, the first Business Day immediately following,
commencing on March 15, 1999.
"REO Disposition" shall mean the final sale by the Master Servicer
of a Mortgaged Property acquired by the Master Servicer in foreclosure or by
deed in lieu of foreclosure.
"REO Mortgage Loan" shall mean any Mortgage Loan that is not a
Liquidated Mortgage Loan and as to which the indebtedness evidenced by the
related Mortgage Note is discharged and the related Mortgaged Property is held
as part of the Trust Fund.
"REO Proceeds" shall mean proceeds received in respect of any REO
Mortgage Loan (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
"REO Property" shall have the meaning described in Section 5.12.
"Representation Letter" shall mean letters to, or agreements with,
the Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Certificate Register under the nominee name of
the Depository.
"Request for Release" shall mean a request for release in
substantially the form attached as Exhibit H hereto.
"Reserve Interest Rate" shall mean, with respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be
either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 0.0625%) of the one-month U.S. dollar lending rates which
New York City banks selected by the Trustee are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks
in the London interbank market or (ii) in the event that the Trustee can
determine no such arithmetic mean, the lowest one-month U.S. dollar lending
rate which New York City banks selected by the Trustee are quoting on such
Interest Determination Date to leading European banks.
"Residential Dwelling" shall mean a one -to four-family dwelling, a
unit in a planned unit development, a unit in a condominium development, a
townhouse or a manufactured housing unit.
"Responsible Officer" shall mean, when used with respect to the
Trustee, any officer assigned to the Corporate Trust Division (or any
successor thereto), including any Vice President, Senior Trust Officer, Trust
Officer, Assistant Trust Officer, any Assistant Secretary, any trust officer
or any other officer of the Trustee customarily performing functions similar
to those performed by any of the above designated officers and to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Transferor or the Master Servicer, the President or any
Vice President, Assistant Vice President, or any Secretary or Assistant
Secretary.
"S&P" shall mean Standard & Poor's Ratings Services, Inc. or any
successor thereto and if such corporation no longer for any reason performs
the services of a securities rating agency, "S&P" shall be deemed to refer to
any other nationally recognized statistical rating organization designated by
the Certificate Insurer.
"Series" shall mean any designated Series of certificates issued
hereunder and governed by this Agreement. When used herein, "this Series"
shall refer to the Irwin Home Equity Asset Backed Certifcates, Series 1999-1.
"Servicing Advances" shall mean all reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations, including, but not limited to, the cost
of (i) the preservation, restoration and protection of the Mortgaged Property,
(ii) any enforcement proceedings, including foreclosures, (iii) expenditures
relating to the purchase or maintenance of a first or second lien not included
in the Trust Fund on the Mortgaged Property, (iv) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (v) compliance with the
obligations (including indemnification obligations) under Sections 5.2
(limited solely to the reasonable and customary out-of-pocket expenses of the
Subservicer), 5.5, 5.6 or 5.9, all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Master Servicer to
the extent provided in Section 5.4(a).
"Servicing Compensation" shall mean the Servicing Fee and other
amounts to which the Master Servicer is entitled pursuant to Section 5.14.
"Servicing Fee" shall mean, as to each Mortgage Loan, the annual fee
payable to the Master Servicer, which is calculated as an amount equal to the
product of (i) 0.50% per annum in the case of any Mortgage Loan that is first
priority Mortgage Loan as of the Cut-Off Date and 1.00% in the case of any
other Mortgage Loan, or up to 0.50% or 1.00% respectively in the event that
Irwin Union Bank and Trust Company is succeeded by the Trustee or any other
successor Master Servicer appointed as herein provided, and (ii) the Principal
Balance thereof. Such fee shall be calculated and payable monthly only on
amounts actually received in respect of interest on such Mortgage Loan and
shall be computed on the basis of the same principal amount and for the period
respecting which any related interest payment on a Mortgage Loan is computed.
The Servicing Fee includes any servicing fees owed or payable to any
Subservicer.
"Servicing Officer" shall mean any officer of the Master Servicer or
the Originator involved in, or responsible for, the administration and
servicing of the Mortgage Loans whose name and specimen signature appear on a
list of servicing officers furnished to the Trustee and the Certificate
Insurer by the Master Servicer, as such list may from time to time be amended.
"Startup Date" shall mean the day designated as such pursuant to
Section 2.5 hereof.
"Subordination Deficit" shall mean, with respect to any Remittance
Date, the excess, if any, of (i) the aggregate of the Certificate Principal
Balance on such Remittance Date, after taking into account the payment of the
Principal Distribution Amount on such Remittance Date (except for amounts
payable under the Certificate Insurance Policy) over (ii) the Aggregate
Principal Balance as of the end of the related Due Period.
"Subservicer" shall mean any Person with whom the Master Servicer
has entered into a Subservicing Agreement and who satisfies the requirements
set forth in Section 5.2(a) hereof in respect of the qualification of a
Subservicer.
"Subservicing Agreement" shall mean any agreement between the Master
Servicer and any Subservicer relating to subservicing and/or administration of
certain Mortgage Loans as provided in Section 5.2(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee and the
Certificate Insurer.
"Substitution Adjustment" shall mean, as to any date on which a
substitution occurs pursuant to Section 2.4 or 3.3, the amount (if any) by
which the aggregate principal balances (after application of principal
payments received on or before the date of substitution of any Qualified
Substitute Mortgage Loans as of the date of substitution) are less than the
aggregate of the Principal Balances of the related Deleted Mortgage Loans
together with 30 days' interest thereon at the Mortgage Interest Rate.
"Tax Matters Person" shall mean the Person or Persons appointed
pursuant to Section 10.15 from time to time to act as the "tax matters person"
(within the meaning of the REMIC Provisions) of the 1999-1 REMIC.
"Tax Return" shall mean the federal income tax return on Internal
Revenue Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit
Income Tax Return," including Schedule Q thereto, Quarterly Notice to Residual
Interest Holders of REMIC Taxable Income or Net Loss Allocation, or any
successor forms, to be filed on behalf of the Trust Fund due to its
classification as a REMIC under the REMIC Provisions, together with any and
all other information reports or returns that may be required to be furnished
to the Certificateholders or filed with the Internal Revenue Service or any
other governmental taxing authority under any applicable provision of federal,
state or local tax laws.
"Telerate Page 3750" shall mean the display page so designated on
the Bridge Telerate Service (or such other page as may replace page 3750 on
such service for the purpose of displaying London interbank offered rates of
major banks). If such rate does not appear on such page (or such other page as
may replace such page on such service, or if such service is no longer
offered, such other service for displaying LIBOR or comparable rates as may be
selected by the Issuer after consultation with the Trustee), the rate will be
the Reference Bank Rate.
"Transfer" shall mean any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit and Agreement" shall have the meaning as defined
in Section 4.2(i)(ii).
"Transferee" shall mean any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor" shall mean Irwin Funding Corp., a Delaware corporation.
"Trust" shall mean Irwin Home Equity Trust 1999-1, the trust created
hereunder.
"Trust Fund" shall mean (i) each Mortgage transferred to the Trust
pursuant to the provisions hereof, (ii) all rights of or assigned to the
Depositor under the Purchase and Sale Agreement (and exclusive of any of its
obligations), (iii) such assets as from time to time are identified as REO
Property and collections thereon and proceeds thereof, (iv) all assets
deposited in the Accounts, including any amounts on deposit in the Collection
Account, the Trustee Collection Account, and the Certificate Account and all
amounts in the Accounts invested in Permitted Investments, (v) the Trustee's
rights with respect to the Mortgage Loans under all insurance policies (other
than the Certificate Insurance Policy) required to be maintained pursuant to
this Agreement and any Insurance Proceeds, (vi) all Liquidation Proceeds and
(vii) all Released Mortgaged Property Proceeds and (viii) all rights against
the Transferor arising under the Purchase and Sale Agreement.
"Trustee" shall mean Norwest Bank Minnesota, National Association,
or its successor in interest, or any successor trustee appointed as herein
provided.
"Trustee Collection Account" shall mean any Eligible Account
established and maintained by the Trustee for the benefit of the
Certificateholders pursuant to Section 5.3(a) hereof.
"Trustee Fee" shall mean, as to any Remittance Date, the fee payable
to the Trustee in respect of its services as Trustee that accrues at a monthly
rate equal to 1/12 of 0.005% of the Certificate Principal Balance as of such
Remittance Date together with its out-of-pocket expenses, 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 enable the Trustee to
service the Mortgage Loans properly and effectively.
"Trustee's Mortgage File" shall mean the documents delivered to the
Trustee or its designated agent pursuant to Section 2.3.
"Trustee's Remittance Report" shall have the meaning as defined in
Section 6.7.
"Underwriter" shall mean Bear, Stearns & Co. Inc.
"Underwriting Guidelines" shall mean the underwriting guidelines of
the Transferor, Irwin Union Bank and Trust Company and of the Originator, a
copy of which is attached as an exhibit to the Purchase and Sale Agreement.
"United States Person" shall mean a beneficial owner of a
Certificate that is for United States federal income tax purposes (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof (other than a partnership that is not
treated as a United States person under any applicable Treasury regulations),
(iii) an estate whose income is subject to United States federal income tax
regardless of its source or (iv) a trust if a court within the United States
is able to exercise primary supervision over the administration of the trust
and one or more United States persons have the authority to control all
substantial decisions of the trust.
"Unpaid REO Amortization" shall mean, as to any REO Mortgage Loan
and any month, the aggregate of the installments of principal and accrued
interest deemed to be due in such month and in any prior months that remain
unpaid, calculated in accordance with Section 5.12.
"Weighted Average Rate Cap" shall mean with respect to the Class A-1
Certificates, on any Remittance Date, that maximum interest rate computed to
equal one-twelfth the weighted average Mortgage Interest Rate for the Group I
Mortgage Loans, net of the Premium Percentage and the rates at which the
Servicing Fee and the Trustee's Fee are calculated.
Section 1.2 Provisions of General Application.
(a) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles.
(b) The terms defined in this Article include the plural as well as
the singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest relating to the Class A-1
Certificates (other than with respect to the Mortgage Loans, or as otherwise
specifically set forth herein) provided for herein shall be made on the basis
of actual days elapsed divided by a year comprised of 360 days. All
calculations of interest relating to the Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates or Class A-5 Certificates (other than
with respect to the Mortgage Loans, or as otherwise specifically set forth
herein) provided for herein, shall be made on the basis of an assumed year of
360 days consisting of twelve 30 day months. All calculations of interest with
respect to any Mortgage Loan provided for herein shall be made in accordance
with the terms of the related Mortgage Note and Mortgage or, if such documents
do not specify the basis upon which interest accrues thereon, on the basis of
dividing actual days elapsed by a 365 day year.
(f) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Master Servicer; provided, however,
that for purposes of calculating distributions on the Certificates prepayments
with respect to any Mortgage Loan are deemed to be received on the date they
are applied in accordance with customary servicing practices consistent with
the terms of the related Mortgage Note and Mortgage to reduce the outstanding
principal balance of such Mortgage Loan on which interest accrues.
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ARTICLE II
Establishment of the Trust;
Sale and Conveyance of Trust Fund
Section 2.1 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests; Establishment of the Trust.
(a) The Depositor does hereby sell, transfer, assign, set over and
convey to the Trust for the benefit of the Certificateholders and the
Certificate Insurer without recourse but subject to the provisions in this
Section 2.1 and the other terms and provisions of this Agreement, all of the
right, title and interest of the Depositor in and to the Trust Fund, exclusive
of the obligations of the Depositor, Transferor or any other party with
respect to the Mortgage Loans. In connection with such transfer and
assignment, and pursuant to Section 2.5 of the Purchase and Sale Agreement,
the Depositor does hereby also irrevocably transfer, assign, set over and
otherwise convey to the Trustee all of its rights (exclusive of its
obligations) under the Purchase and Sale Agreement, including, without
limitation, its right to exercise the remedies created by Section 3.4 of the
Purchase and Sale Agreement for breaches of representations and warranties,
agreements and covenants of the Transferor contained in Sections 3.1 and 3.2
of the Purchase and Sale Agreement.
(b) The rights of the Certificateholders to receive payments with
respect to the Mortgage Loans in respect of the Certificates and all ownership
interests of the Certificateholders, shall be as set forth in this Agreement.
In this regard, all rights of the Class R Certificateholders to receive
payments in respect of the Class R Certificates, are subject and subordinate
to the preferential rights of the Class A Certificateholders to receive
payments in respect of the Class A Certificates and to the Certificate
Insurer's rights to receive the Reimbursement Amount.
(c) The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "Irwin Home Equity Trust 1999-1" and
does hereby appoint Norwest Bank Minnesota, National Association as Trustee in
accordance with the provisions of this Agreement.
Section 2.2 Possession of Mortgage Files; Access to Mortgage Files.
(a) Upon the issuance of the Certificates, the ownership of each
Mortgage Note, the Mortgage and the contents of the related Mortgage File
related to each Mortgage Loan shall be vested in the Trustee for the benefit
of the Certificateholders and the Certificate Insurer, as their respective
interests may appear.
(b) Pursuant to Section 2.4 of the Mortgage Loan Sale Agreement,
Irwin Union Bank and Trust Company has delivered or caused to be delivered the
Trustee's Mortgage File related to each Mortgage Loan to the Trustee.
(c) The Trustee may enter into a custodial agreement pursuant to
which the Trustee will appoint a custodian (a "Custodian") to hold the
Mortgage Files in trust for the benefit of the Trustee; provided, however,
that the custodian so appointed shall in no event be the Depositor, the
Transferor or the Master Servicer or any Person known to a Responsible Officer
of the Trustee to be an Affiliate of any of them.
(d) The Custodian shall afford the Depositor, the Certificate
Insurer and the Master Servicer reasonable access to all records and
documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable request and during
normal business hours at the offices of the Custodian.
Section 2.3 Delivery of Mortgage Loan Documents.
(a) In connection with each conveyance pursuant to Section 2.1 or
2.2 hereof, the Depositor has delivered or does hereby agree to deliver or
cause to be delivered to the Trustee the Certificate Insurance Policy and each
of the following documents for each Mortgage Loan sold by the Transferor to
the Depositor and sold by the Depositor to the Trust Fund:
(i) The original Mortgage Note, endorsed by the holder of
record without recourse in the following form: "Pay to the order of
___________, without recourse" and signed by manual or facsimile signature in
the name of an authorized officer of the holder of record, Irwin Union Bank
and Trust Company, and if by the Transferor, by an authorized officer;
(ii) The original Mortgage with evidence of recording indicated
thereon; provided, however, that if such Mortgage has not been returned from
the applicable recording office, then such recorded Mortgage shall be
delivered when so returned;
(iii) An assignment of the original Mortgage, in suitable form
for recordation in the jurisdiction in which the related Mortgaged Property is
located, in the name of the holder of record of the Mortgage Loan by an
authorized officer (with evidence of submission for recordation of such
assignment in the appropriate real estate recording office for such Mortgaged
Property to be received by the Trustee within 60 days of the Closing Date);
provided, however, that Assignments of Mortgages shall not be required to be
submitted for recording with respect to any Mortgage Loan which relates to the
Trustee's Mortgage File if the Trustee, each of the Rating Agencies and the
Certificate Insurer shall have received an opinion of counsel satisfactory to
the Trustee, each of the Rating Agencies and the Certificate Insurer stating
that, in such counsel's opinion, the failure to record such Assignment of
Mortgage shall not have a materially adverse effect on the security interest
of the Trustee in the Mortgage); provided, further, that any Assignment of
Mortgage for which an opinion has been delivered shall be recorded by the
Master Servicer upon the earlier to occur of (a) receipt by the Trustee of the
Certificate Insurer's written direction to record such Mortgage, (b) the
occurrence of any Event of Default, as such term is defined in this Agreement,
or (c) a bankruptcy or insolvency proceeding involving the Mortgagor is
initiated or foreclosure proceedings are initiated against the Mortgaged
Property as a consequence of an event of default under the Mortgage Loan;
provided, however, that if the related Mortgage has not been returned from the
applicable recording office within 120 days of the Closing Date, then such
assignment shall be delivered when so returned (and a blanket assignment with
respect to each unrecorded Mortgage shall be delivered on the Closing Date);
(iv) Any recorded intervening Assignments of the Mortgage with
evidence of recording thereon; and
(v) Any assumption, modification, consolidation or extension
agreements;
provided, however, that in the case of any Mortgage Loans which have been
prepaid in full after the Cut-Off Date and prior to the date of the execution
of this Agreement, the Depositor, in lieu of delivering the above documents,
hereby delivers to the Trustee a certification of an officer of the Transferor
of the nature set forth in Exhibit M attached hereto; and provided, further,
however, that as to certain Mortgages or assignments thereof which have been
delivered or are being delivered to recording offices for recording and have
not been returned to the Transferor in time to permit their delivery hereunder
at the time of such transfer, in lieu of delivering such original documents,
the Depositor is delivering to the Trustee a true copy thereof with a
certification by the Transferor on the face of such copy substantially as
follows: "certified true and correct copy of original which has been
transmitted for recordation." The Transferor has agreed pursuant to the
Purchase and Sale Agreement that it will deliver such original documents on
behalf of the Depositor to the Trustee promptly after they are received, and
no later than 90 days after the Closing Date; provided, however, that in those
instances where the public recording office retains the original Mortgage or
Assignment of Mortgage after it has been recorded or such original document
has been lost by the recording office, the Transferor shall be deemed to have
satisfied its obligations hereunder if it shall have delivered to the Trustee
a copy of such original Mortgage or Assignment of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
The Transferor has agreed pursuant to the Purchase and Sale Agreement, at its
own expense, to record (or to provide the Trustee with evidence of recordation
thereof) each assignment within 60 days of the Closing Date in the appropriate
public office for real property records, provided that such assignments are
redelivered by the Trustee to the Transferor upon the Transferor's written
request and at the Transferor's expense, unless the Transferor (at its
expense) furnishes to the Trustee, the Certificate Insurer and the Rating
Agencies 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 preserve 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 Transferor.
On or prior to the Closing Date the Master Servicer, at its own
expense shall complete the endorsement of each Mortgage Note such that the
final endorsement appears in the following form:
"Pay to the order of _________, without recourse, Irwin Union Bank
and Trust Company."
The Master Servicer, at its own expense shall also complete each
Assignment of Mortgage either in blank or such that the final Assignment of
Mortgage appears in the following form:
"Norwest Bank Minnesota, National Association, as Trustee for Irwin
Home Equity Trust 1999-1 formed pursuant to the Pooling and
Servicing Agreement dated as of January 31, 1999, among Bear Stearns
Asset Backed Securities, Inc. as Depositor, Irwin Funding Corp, as
Transferor, Irwin Union Bank and Trust Company, as Master Servicer
and Norwest Bank Minnesota, National Association, as Trustee"
(b) Without diminution of the requirements of Sections 2.2(c) and
this Section 2.3, all original documents relating to the Mortgage Loans that
are not delivered to the Trustee are and shall be delivered to the Master
Servicer by the Transferor on behalf of the Depositor pursuant to the Purchase
and Sale Agreement, and shall be held by the Master Servicer in trust for the
benefit of the Trustee on behalf of the Certificateholders and the Certificate
Insurer. In the event that any such original document is required pursuant to
the terms of this Section 2.3 to be a part of a Mortgage File, the Master
Servicer shall promptly deliver such original document to the Trustee. In
acting as custodian of any such original document, the Master Servicer agrees
further that it does not and will not have or assert any beneficial ownership
interest in the Mortgage Loans or the Mortgage Files. Promptly upon the
Depositor's and the Trust's acquisition thereof and the Master Servicer's
receipt thereof, the Master Servicer on behalf of the Trust shall mark
conspicuously each original document not delivered to the Trustee, and the
Transferor's master data processing records evidencing each Mortgage Loan with
a legend, acceptable to the Trustee and the Certificate Insurer, evidencing
that the Trust has purchased the Mortgage Loans and all right and title
thereto and interest therein pursuant to the Purchase and Sale Agreement and
this Agreement.
(c) In the event that any Mortgage Note required to be delivered
pursuant to this Section 2.3 is conclusively determined by any of the
Transferor, the Master Servicer, the Custodian or the Trustee to be lost,
stolen or destroyed, the Transferor shall, within 14 days of the Closing Date
or the later date upon which such Mortgage Note has been conclusively
determined to be lost, deliver to the Trustee a "lost note affidavit" in form
and substance acceptable to the Trustee, and shall simultaneously therewith
request the obligor on such Mortgage Note to execute and return a replacement
Mortgage Note, and shall further agree to hold the Trustee and the Certificate
Insurer harmless from any loss or damage resulting from any action taken in
reliance on the delivery and possession by the Trustee of such lost note
affidavit. Upon the receipt of such replacement Mortgage Note, the Trustee
shall return the lost note affidavit. Delivery by the Transferor of such lost
note affidavit shall not affect the obligations of the Transferor under the
Purchase and Sale Agreement with respect to the related Mortgage Loan.
Section 2.4 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee.
(a) The Trustee agrees to execute and deliver to the Depositor, the
Certificate Insurer, the Master Servicer and the Transferor on or prior to the
Closing Date an acknowledgment of receipt of the Certificate Insurance Policy
and, with respect to each initial Mortgage Loan, the original Mortgage Note
(with any exceptions noted), in the form attached as Exhibit E hereto and
declares that it will hold such documents and any amendments, replacements or
supplements thereto, as well as any other assets included in the definition of
Trust Fund and delivered to the Trustee, as Trustee in trust upon and subject
to the conditions set forth herein for the benefit of the Certificateholders
and the Certificate Insurer.
(b) The Trustee agrees, for the benefit of the Certificateholders
and the Certificate Insurer, to review (or cause to be reviewed) each
Trustee's Mortgage File within 45 Business Days after the Closing Date and to
deliver to the Transferor, the Master Servicer, the Depositor and the
Certificate Insurer a certification in the form attached hereto as Exhibit F
to the effect that, as to each Mortgage Loan listed in Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), (1)
all documents required to be delivered to it pursuant to Section 2.3 hereof
and the Purchase and Sale Agreement are in its possession, (2) each such
document has been reviewed by it, has been, to the extent required, executed
and has not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute physical
alteration if initialed by the Mortgagor), appears regular on its face and
relates to such Mortgage Loan. The Trustee shall be under no duty or
obligation to (1) 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 (2) determine whether any Trustee's
Mortgage File should contain any of the documents referred to in Section
2.3(a)(v).
On or prior to the first anniversary of the Closing Date, the
Trustee shall deliver (or cause to be delivered) to the Master Servicer, the
Transferor, the Depositor and the Certificate Insurer a final certification in
the form attached hereto as Exhibit G to the effect that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid
in full or any Mortgage Loan specifically identified in such certification as
not covered by such certification), and as to any document noted in an
exception included in the Trustee's initial certification, (i) all documents
required to be delivered to it pursuant to Section 2.3 hereof and the Purchase
and Sale Agreement are in its possession, (ii) each such document has been
reviewed by it, has been, to the extent required, executed and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten
additions, changes or corrections shall not constitute physical alteration if
initialed by the Mortgagor), appears regular on its face and relates to such
Mortgage Loan.
(c) If the Certificate Insurer or the Trustee during the process of
reviewing the Trustee's Mortgage Files finds any document constituting a part
of a Trustee's Mortgage File which is not executed, has not been received, is
unrelated to the Mortgage Loan identified in the related Mortgage Loan
Schedule, or does not conform to the requirements of Section 2.3 or the
description thereof as set forth in the related Mortgage Loan Schedule, the
Trustee or the Certificate Insurer, as applicable, shall promptly so notify
the Master Servicer, the Transferor, the Certificate Insurer and the Trustee.
In performing any such review, the Trustee may conclusively rely on the
Transferor as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Trustee's review of
the Mortgage Files is limited solely to confirming that the documents listed
in Section 2.3 have been executed and received and relate to the Mortgage
Files identified in the related Mortgage Loan Schedule. Pursuant to the
Purchase and Sale Agreement, the Transferor has agreed to use reasonable
efforts to cause to be remedied a material defect in a document constituting
part of a Mortgage File of which it is so notified by the Trustee. If,
however, within 120 days after the Trustee's notice to it respecting such
defect the Transferor has not caused to be remedied the defect and the defect
materially and adversely affects the interest of the Certificateholders in the
related Mortgage Loan or the interests of the Certificate Insurer (in either
case in the reasonable determination of the Certificate Insurer), the Trustee
shall enforce the Transferor's obligation pursuant to the Purchase and Sale
Agreement to either (1) substitute in lieu of such Mortgage Loan a Qualified
Substitute Mortgage Loan in the manner and subject to the conditions set forth
in Section 3.3 hereof or (2) purchase such Mortgage Loan at a purchase price
equal to the outstanding Principal Balance of such Mortgage Loan as of the
date of purchase, plus the greater of (x) all accrued and unpaid interest
thereon and (y) 30 days' interest thereon, computed at the related Mortgage
Interest Rate, plus the amount of any unreimbursed Servicing Advances made by
the Master Servicer with respect to such Mortgage Loan, which purchase price
shall be deposited in the Certificate Account prior to the next succeeding
Determination Date, after deducting therefrom any amounts received in respect
of such repurchased Mortgage Loan or Loans and being held in the Collection
Account or Trustee Collection Account for future distribution to the extent
such amounts have not yet been applied to principal or interest on such
Mortgage Loan (the "Loan Repurchase Price"); provided, however, that the
Transferor may not, pursuant to clause (ii) preceding, purchase the Principal
Balance of any Mortgage Loan that is not in default or as to which no default
is imminent unless the Transferor has theretofore delivered an Opinion of
Counsel knowledgeable in federal income tax matters which states that such a
purchase would not constitute a prohibited transaction under the Code.
(d) Upon receipt by the Trustee of a certification of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt of the related Trustee's Mortgage File, and the deposit of the
amounts described above into the Certificate Account (which certification
shall be in the form of Exhibit H hereto), the Trustee shall release to the
Master Servicer for release to the Transferor the related Trustee's Mortgage
File and shall execute, without recourse, and deliver such instruments of
transfer furnished by the Transferor as may be necessary to transfer such
Mortgage Loan to the Transferor. The Trustee shall notify the Certificate
Insurer if the Transferor fails to repurchase or substitute for a Mortgage
Loan in accordance with the foregoing.
Section 2.5 Designations under REMIC Provisions; Designation of
Startup Date.
(a) The Class A Certificates are hereby designated as the "regular
interests", and the Class R Certificates are designated the single class of
"residual interests" in the 1999-1 REMIC for the purposes of the REMIC
Provisions. The 1999-1 REMIC shall be designated as the "Irwin Home Equity
Trust 1999-1 REMIC."
(b) The Closing Date will be the "startup day" of the 1999-1 REMIC
within the meaning of Section 860G(a)(9) of the Code (the "Startup Date").
Section 2.6 Execution of Certificates. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the delivery to it of the Trustee's
Mortgage Files relating thereto and, concurrently with such delivery, has
executed, authenticated and delivered to or upon the order of the Depositor,
in exchange for the Mortgage Loans, the Trustee's Mortgage Files and the other
assets included in the definition of Trust Fund, Certificates duly
authenticated by the Trustee, and, in the case of the Class A Certificates, in
Authorized Denominations, evidencing the entire beneficial ownership interest
in the Trust Fund.
Section 2.7 Application of Principal and Interest. In the event that
Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the
outstanding Principal Balance of the related Mortgage Loan plus accrued
interest thereon, or any Mortgagor makes a partial payment of any Monthly
Payment due on a Mortgage Loan, such Net Liquidation Proceeds or partial
payment shall be applied to payment of the related Mortgage Note as provided
therein, and if not so provided, first to interest accrued at the Mortgage
Interest Rate, then to the principal owed on such Mortgage Loan.
Section 2.8 Grant of Security Interest.
(a) It is the intention of the parties hereto that the conveyance by
the Depositor of the Trust Fund to the Trustee on behalf of the Trust shall
constitute a purchase and sale of such Trust Fund and not a loan. In the
event, however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale,
it is the intention of the parties hereto that this Agreement shall constitute
a security agreement under applicable law, and that the Depositor shall be
deemed to have granted and hereby grants to the Trustee, on behalf of the
Trust, a first priority perfected security interest in all of the Depositor's
right, title and interest in, to and under the Trust Fund to secure a loan in
an amount equal to the purchase price of the Mortgage Loans. The conveyance by
the Depositor of the Trust Fund to the Trustee on behalf of the Trust shall
not constitute and are not intended to result in an assumption by the Trustee,
the Certificate Insurer or any Certificateholder of any obligation of the
Transferor, Irwin Union Bank and Trust Company or any other Person in
connection with the Trust Fund.
(b) The Depositor and the Master Servicer shall take no action
inconsistent with the Trust's ownership of the Trust Fund and shall indicate
or shall cause to be indicated in its records and records held on its behalf
that ownership of each Mortgage Loan and the assets in the Trust Fund are held
by the Trustee on behalf of the Trust. In addition, the Depositor and the
Master Servicer shall respond to any inquiries from third parties with respect
to ownership of a Mortgage Loan or any other asset in the Trust Fund by
stating that it is not the owner of such asset and that ownership of such
Mortgage Loan or other Trust Fund asset is held by the Trustee on behalf of
the Trust.
Section 2.9 Further Assurances; Powers of Attorney.
(a) The Master Servicer agrees that, from time to time, at its
expense, it shall cause the Transferor (and the Depositor also agrees that it
shall), promptly to execute and deliver all further instruments and documents,
and take all further action, that may be necessary or appropriate, or that the
Master Servicer or the Trustee may reasonably request, in order to perfect,
protect or more fully evidence the transfer of ownership of the Trust Fund or
to enable the Trustee to exercise or enforce any of its rights hereunder.
Without limiting the generality of the foregoing, the Master Servicer and the
Depositor will, upon the request of the Master Servicer or of the Trustee
execute and file (or cause to be executed and filed) such real estate filings,
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate.
(b) In the event that the Depositor in unable to fulfill its
obligations in subsection (a) above, the Depositor hereby grants to the Master
Servicer and the Trustee powers of attorney to execute all documents on its
behalf under this Agreement and the Purchase and Sale Agreement as may be
necessary or desirable to effectuate the foregoing.
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<PAGE>
ARTICLE III
Representations and Warranties
Section 3.1 Representations of the Master Servicer. The Master
Servicer hereby represents and warrants to the Trustee, the Depositor, the
Certificate Insurer and the Certificateholders as of the Closing Date and
during the term of this Agreement:
(a) the Master Servicer is a bank duly organized, validly existing
and in good standing under the laws of the State of Indiana, and has full
power and authority to own its assets and to transact the business in which it
is currently engaged. The Master Servicer is duly qualified to do business and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Master Servicer;
(b) the Master Servicer has full power and authority to make,
execute, deliver and perform this Agreement and all of the transactions
contemplated hereunder, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement;
(c) the Master Servicer is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consent, license, approval
or authorization or registration or declaration as shall have been obtained or
filed, as the case may be;
(d) the execution and delivery of this Agreement and the performance
of the transactions contemplated hereby by the Master Servicer will not
violate any material provision of any existing law or regulation or any order
or decree of any court applicable to the Master Servicer or any provision of
the articles or bylaws of the Master Servicer, or constitute a material breach
of any mortgage, indenture, contract or other agreement to which the Master
Servicer is a party or by which it may be bound; and
(e) no suit in equity, action at law or other judicial or
administrative proceeding of or before any court, tribunal or governmental
body is currently pending or, to the knowledge of the Master Servicer,
threatened against the Master Servicer or any of its properties or with
respect to this Agreement or the Securities that in the opinion of the Master
Servicer has a reasonable likelihood of resulting in a material adverse effect
on the transactions contemplated by this Agreement
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.1 shall survive the delivery of the respective
Mortgage Files to the Trustee or to a custodian, as the case may be, and inure
to the benefit of the Trustee and the Certificate Insurer.
Section 3.2 Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Trustee that as of the date of this Agreement or as of such date specifically
provided herein:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey
the Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor, all requisite corporate action having been
taken, and, assuming the due authorization, execution and delivery hereof by
the Master Servicer and the Trustee, constitutes or will constitute the legal,
valid and binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of, or registration
or filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Depositor
with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been received or obtained on
or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(1) conflicts or will conflict with or results or will result in a breach of,
or constitutes or will constitute a default or results or will result in an
acceleration under (i) the charter or bylaws of the Depositor, or (ii) of any
term, condition or provision of any material indenture, deed of trust,
contract or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound;
(2) results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (3)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents
or instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the Depositor's
reasonable judgment, might materially and adversely affect the performance by
the Depositor of its obligations under this Agreement, or the validity or
enforceability of this Agreement; and
(g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that would materially and adversely affect
its performance hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.2 shall survive delivery of the
respective Mortgage Files to the Trustee or to a custodian, as the case may
be, and shall inure to the benefit of the Trustee and the Certificate Insurer.
Section 3.3 Purchase and Substitution.
(a) It is understood and agreed that the representations and
warranties set forth in Sections 3.1 and 3.2 of the Purchase and Sale
Agreement shall survive delivery of the Certificates to the
Certificateholders. Pursuant to the Purchase and Sale Agreement, with respect
to any representation or warranty contained in Sections 3.1 or 3.2 of the
Purchase and Sale Agreement that is made to the best of the Transferor's
knowledge, if it is discovered by the Master Servicer, any Subservicer, the
Trustee, the Certificate Insurer or any Certificateholder that the substance
of such representation and warranty was inaccurate as of the Closing Date and
such inaccuracy materially and adversely affects the value of the related
Mortgage Loan, then notwithstanding the Transferor's lack of knowledge with
respect to the inaccuracy at the time the representation or warranty was made,
such inaccuracy shall be deemed a breach of the applicable representation or
warranty. Upon discovery by the Transferor, the Master Servicer, any
Subservicer, the Trustee or the Certificate Insurer of a breach of any of such
representations and warranties which materially and adversely affects the
value of the Mortgage Loans or the interest of the Certificateholders, or
which materially and adversely affects the interests of the Certificate
Insurer or the Certificateholders in the related Mortgage Loan in the case of
a representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the
Transferor's best knowledge), the party discovering such breach shall give
prompt written notice to the others. Subject to the last paragraph of this
Section 3.3, within 60 days of the earlier of its discovery or its receipt of
notice of any breach of a representation or warranty, pursuant to the Purchase
and Sale Agreement, the Transferor shall be required to (1) promptly cure such
breach in all material respects, (2) purchase such Mortgage Loan in the manner
and at the price specified in Section 2.4(c) (in which case the Mortgage Loan
shall become a Deleted Mortgage Loan), (3) remove such Mortgage Loan from the
Trust Fund (in which case the Mortgage Loan shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans;
provided, that, such substitution is effected not later than the date which is
two years after the Startup Date or at such later date, if the Trustee and the
Certificate Insurer receive an Opinion of Counsel to the effect that such
substitution will not constitute a prohibited transaction for the purposes of
the REMIC provisions of the Code or cause the 1999-1 REMIC to fail to qualify
as a REMIC at any time any Certificates are outstanding. Pursuant to the
Purchase and Sale Agreement, any such substitution shall be accompanied by
payment by the Transferor of the Substitution Adjustment, if any, to the
Master Servicer to be deposited in the Certificate Account.
(b) As to any Deleted Mortgage Loan for which the Transferor
substitutes a Qualified Substitute Mortgage Loan or Loans, the Transferor
shall be required pursuant to the Purchase and Sale Agreement to effect such
substitution by delivering to the Trustee a certification in the form attached
hereto as Exhibit H, executed by a Servicing Officer and the documents
described in Sections 2.3(a)(i)-(v) for such Qualified Substitute Mortgage
Loan or Loans.
(c) The Master Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Mortgage Loan
or Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loans on or before the date of
substitution will be retained by the Transferor. The Trust Fund will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Transferor shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted Mortgage Loan. The
Master Servicer shall give written notice to the Trustee and the Certificate
Insurer that such substitution has taken place and shall amend the Mortgage
Loan Schedule to reflect the removal of such Deleted Mortgage Loan from the
terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan. Upon such substitution, such Qualified Substitute Mortgage Loan
or Loans shall be subject to the terms of this Agreement in all respects.
(d) It is understood and agreed that the obligation of the
Transferor set forth in Section 3.4 of the Purchase and Sale Agreement to
cure, purchase, substitute or otherwise pay amounts to the Trust or the
Certificate Insurer for a defective Mortgage Loan as provided in such Section
3.4 constitutes the sole remedies of the Trustee, the Certificate Insurer and
the Certificateholders with respect to a breach of the representations and
warranties of the Transferor set forth in Sections 3.1 and 3.2 of the Purchase
and Sale Agreement. The Trustee shall give prompt written notice to the
Certificate Insurer, Moody's and S&P of any repurchase or substitution made
pursuant to Section 3.3 or Section 2.4(b) hereof.
(e) Upon discovery by the Master Servicer, the Trustee, the
Certificate Insurer or any Certificateholder that any Mortgage Loan does not
constitute a Qualified Mortgage, the Person discovering such fact shall
promptly (and in any event within 5 days of the discovery) give written notice
thereof to the others of such Persons. In connection therewith, pursuant to
the Purchase and Sale Agreement, the Transferor shall be required to
repurchase or substitute a Qualified Substitute Mortgage Loan for the affected
Mortgage Loan within 60 days of the earlier of such discovery by any of the
foregoing parties, or the Trustee's or the Transferor's receipt of notice, in
the same manner as it would a Mortgage Loan for a breach of representation or
warranty contained in Section 3.1 or 3.2 of the Purchase and Sale Agreement.
The Trustee shall reconvey to the Transferor the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as
it would a Mortgage Loan repurchased for breach of a representation or
warranty contained in Section 3.1 or 3.2 of the Purchase and Sale Agreement.
Section 3.4 Master Servicer Covenants. The Master Servicer hereby
covenants to the Trustee, the Depositor and the Certificate Insurer and the
Certificateholders that as of the Closing Date and during the term of this
Agreement:
(a) The Master Servicer shall deliver on the Closing Date an opinion
from the general counsel or the corporate counsel of the Master Servicer as to
general corporate matters in form and substance reasonably satisfactory to
Underwriter's counsel and counsel to the Certificate Insurer; and
(b) The Master Servicer may in its discretion (1) waive any
prepayment penalty or other charge, assumption fee, late payment charge or
other charge in connection with a Mortgage Loan, and (2) arrange a schedule,
running for no more than 180 days after the Due Date for payment of any
installment on any Mortgage Note, for the liquidation of delinquent items;
provided, that the Master Servicer shall not agree to the modification or
waiver of any provision of a Mortgage Loan at a time when such Mortgage Loan
is not in default or such default is not imminent, if such modification or
waiver would be treated as a taxable exchange under Code Section 1001, unless
such exchange would not be considered a "prohibited transaction" under the
REMIC Provisions.
It is understood and agreed that the covenants set forth in this Section 3.4
shall survive the delivery of the respective Mortgage Files to the Trustee or
to a custodian, as the case may be, and inure to the benefit of the Trustee
and the Certificate Insurer.
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<PAGE>
ARTICLE IV
The Certificates
Section 4.1 The Certificates. The Certificates shall be
substantially in the forms annexed hereto as, in the case of the Class A-1
Certificate, Exhibit B-1, in the case of the Class A-2 Certificate, Exhibit
B-2, in the case of the Class A-3 Certificate, Exhibit B-3, in the case of the
Class A-4 Certificate, Exhibit B-4, in the case of the Class A-5 Certificate,
Exhibit B-5 and in the case of the Class R Certificate, Exhibit B-6. All
Certificates shall be executed by manual or facsimile signature on behalf of
the Trustee by an authorized officer and authenticated by the manual or
facsimile signature of an authorized officer. Any Certificates bearing the
signatures of individuals who were at the time of the execution thereof the
authorized officers of the Trustee shall bind the Trustee, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the delivery of such Certificates or did not hold such offices at the date of
such Certificates. All Certificates issued hereunder shall be dated the date
of their authentication.
Section 4.2 Registration of Transfer and Exchange of Certificates.
(a) The Trustee, as registrar, shall cause to be kept a register
(the "Certificate Register") in which, subject to such reasonable regulations
as it may prescribe, the Trustee shall provide for the registration of
Certificates and the registration of transfer of Certificates. The Trustee is
hereby appointed registrar for the purpose of registering and transferring
Certificates, as herein provided. The Certificate Insurer and the Master
Servicer shall be entitled to inspect and copy the Certificate Register and
the records of the Trustee relating to the Certificates during normal business
hours upon reasonable notice.
(b) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement
as the Certificates surrendered upon such registration of transfer or
exchange.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by
the Holder or holder thereof or his attorney duly authorized in writing. Every
Certificate shall include a statement of insurance provided by the Certificate
Insurer.
(d) No service charge shall be made to a Holder or holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer
or exchange shall be an expense of the Trust.
(e) It is intended that the Class A Certificates be registered so as
to participate in a global book-entry system with the Depository, as set forth
herein. The Class A-1 Certificates shall, except as otherwise provided in the
next paragraph, be initially issued in the form of a single fully registered
Class A-1 Certificate with a denomination equal to the Original Class A-1
Principal Balance. The Class A-2 Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Class A-2 Certificate with a denomination equal to the
Original Class A-2 Principal Balance. The Class A-3 Certificates shall, except
as otherwise provided in the next paragraph, be initially issued in the form
of a single fully registered Class A-3 Certificate with a denomination equal
to the Original Class A-3 Principal Balance. The Class A-4 Certificates shall,
except as otherwise provided in the next paragraph, be initially issued in the
form of a single fully registered Class A-4 Certificate with a denomination
equal to the Original Class A-4 Principal Balance. The Class A-5 Certificates
shall, except as otherwise provided in the next paragraph, be initially issued
in the form of a single fully registered Class A-5 Certificate with a
denomination equal to the Original Class A-5 Principal Balance. Upon initial
issuance, the ownership of each such Class A Certificate shall be registered
in the Certificate Register in the name of Cede & Co., or any successor
thereto, as nominee for the Depository. The Depositor and the Trustee are
hereby authorized to execute and deliver the Representation Letter with the
Depository. With respect to Class A Certificates registered in the Certificate
Register in the name of Cede & Co., as nominee of the Depository, the
Depositor, the Transferor, the Master Servicer, the Trustee and the
Certificate Insurer shall have no responsibility or obligation to Direct or
Indirect Participants or beneficial owners for which the Depository holds
Class A Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Transferor, the Master
Servicer, the Trustee and the Certificate Insurer shall have no responsibility
or obligation with respect to (1) the accuracy of the records of the
Depository, Cede & Co., or any Direct or Indirect Participant with respect to
any Ownership Interest, (2) the delivery to any Direct or Indirect Participant
or any other Person, other than a Certificateholder, of any notice with
respect to the Class A Certificates or (3) the payment to any Direct or
Indirect Participant or any other Person, other than a Certificateholder, of
any amount with respect to any distribution of principal or interest on the
Class A Certificates. No Person other than a Certificateholder shall receive a
certificate evidencing such Class A Certificate. Upon delivery by the
Depository to the Trustee of written notice to the effect that the Depository
has determined to substitute a new nominee in place of Cede & Co., and subject
to the provisions hereof with respect to the payment of interest by the
mailing of checks or drafts to the Certificateholders appearing as
Certificateholders at the close of business on a Record Date, the name "Cede &
Co." in this Agreement shall refer to such new nominee of the Depository.
(f) In the event that (1) the Depository or the Master Servicer
advises the Trustee in writing that the Depository is no longer willing or
able to discharge properly its responsibilities as nominee and depository with
respect to the Class A Certificates and the Master Servicer or the Depository
is unable to locate a qualified successor or (2) the Master Servicer at its
sole option elects to terminate the book-entry system through the Depository,
the Class A Certificates shall no longer be restricted to being registered in
the Certificate Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Master Servicer may determine
that the Class A Certificates shall be registered in the name of and deposited
with a successor depository operating a global book-entry system, as may be
acceptable to the Master Servicer, or such depository's agent or designee but,
if the Master Servicer does not select such alternative global book-entry
system, then the Class A Certificates may be registered in whatever name or
names Certificateholders transferring Class A Certificates shall designate, in
accordance with the provisions hereof; provided, however, that any such
reregistration shall be at the expense of the Master Servicer.
(g) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede
& Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates as the case may be and all notices with
respect to such Class A Certificates as the case may be shall be made and
given, respectively, in the manner provided in the Representation Letter.
(h) No transfer, sale, pledge or other disposition of any Class R
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the Securities Act of 1933 and
effective registration or qualification under applicable state securities laws
or "Blue Sky" laws, or is made in a transaction that does not require such
registration or qualification. None of the Master Servicer, the Depositor, the
Transferor or the Trustee is obligated under this Agreement to register the
Certificates under the Securities Act of 1933, as amended or any other
securities law or to take any action not otherwise required under this
Agreement to permit the transfer of the Class R Certificates without such
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Transferor, the Master Servicer and the Certificate Insurer
against any liability that may result if the transfer is not exempt or is not
made in accordance with such applicable federal and state laws. Promptly after
receipt by an indemnified party under this paragraph of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this paragraph,
notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
paragraph. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to appoint counsel reasonably satisfactory
to such indemnified party to represent the indemnified party in such action;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are in conflict with or contrary to the
interests of the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to defend such action on behalf of
such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to appoint
counsel to defend such action and approval by the indemnified party of such
counsel, the indemnifying party will not be liable to such indemnified party
under this paragraph for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (1) the
indemnified party shall have employed separate counsel in accordance with the
proviso of the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel for any indemnified party), (2) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of commencement of
the action or (3) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
Under no circumstances shall the indemnified party enter into a settlement
agreement with respect to any lawsuit, claim or other proceeding without the
prior written consent of the indemnifying party.
(i) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Master Servicer or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under subclause
(vii) below and to execute all instruments of transfer and to do all other
things necessary in connection with any such sale, and the rights of each
Person acquiring any Ownership Interest in a Class R Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee and a United States
Person and shall promptly notify the Trustee of any change or impending change
in its status as either a United States Person or a Permitted Transferee;
(ii) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery to it,
and shall not register the Transfer of any Class R Certificate until its
receipt of, an affidavit and agreement (a "Transfer Affidavit and Agreement")
attached hereto as Exhibit I from the proposed Transferee, representing and
warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in the Class R
Certificate that is the subject of the proposed Transfer as a nominee, trustee
or agent for any Person that is not a Permitted Transferee, that for so long
as it retains its Ownership Interest in a Class R Certificate, it will
endeavor to remain a Permitted Transferee, and that it has reviewed the
provisions of this Section 4.2(i) and agrees to be bound by them;
(iii) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (ii) above, if a Responsible
Officer of the Trustee has actual knowledge that the proposed Transferee is
not a Permitted Transferee, no Transfer of an Ownership Interest in a Class R
Certificate to such proposed Transferee shall be effected;
(iv) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person attempts to transfer its
Ownership Interest in a Class R Certificate and (y) not to transfer its
Ownership Interest unless it provides a certificate (attached hereto as
Exhibit J) to the Trustee stating that, among other things, it has no actual
knowledge that such other Person is not a Permitted Transferee;
(v) Each Person holding or acquiring an Ownership Interest in a
Class R Certificate, by purchasing an Ownership Interest in such Certificate,
agrees to give the Trustee written notice that it is a "pass-through interest
holder" within the meaning of temporary Treasury Regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership Interest in a
Class R Certificate, if it is, or is holding an Ownership Interest in a Class
R Certificate on behalf of, a "pass-through interest holder";
(vi) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement. In addition, no Transfer of a Class R Certificate shall be made
unless the Trustee shall have received a representation letter, the form of
which is attached hereto as Exhibit N from the Transferee of such Certificate
to the effect that such Transferee is a United States Person and is not a
"disqualified organization" (as defined in Section 860E(e)(5) of the
Code)(such Person, a "Permitted Transferee");
(vii) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of this
Section 4.2 shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall become a Holder of a
Class R Certificate in violation of the provisions of this Section 4.2, then
the last preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of such
Class R Certificate. The Trustee shall notify the Master Servicer upon receipt
of written notice or discovery by a Responsible Officer that the registration
of transfer of a Class R Certificate was not in fact permitted by this Section
4.2. Knowledge shall not be imputed to the Trustee with respect to an
impermissible transfer in the absence of such a written notice or discovery by
a Responsible Officer. The Trustee shall be under no liability to any Person
for any registration of transfer of a Class R Certificate that is in fact not
permitted by this Section 4.2 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered after receipt of the related Transfer Affidavit and Transfer
Certificate. The Trustee shall be entitled, but not obligated to recover from
any Holder of a Class R Certificate that was in fact not a Permitted
Transferee at the time it became a Holder or, at such subsequent time as it
became other than a Permitted Transferee, all payments made on such Class R
Certificate at and after either such time. Any such payments so recovered by
the Trustee shall be paid and delivered by the Trustee to the last preceding
Holder of such Certificate;
(viii) If any purported transferee shall become a Holder of a
Class R Certificate in violation of the restrictions in this Section 4.2, then
the Master Servicer or its designee shall have the right, without notice to
the Holder or any prior Holder of such Class R Certificate, to sell such Class
R Certificate to a purchaser selected by the Master Servicer or its designee
on such reasonable terms as the Master Servicer or its designee may choose.
Such purchaser may be the Master Servicer itself or any Affiliate of the
Master Servicer. The proceeds of such sale, net of commissions, expenses and
taxes due, if any, will be remitted by the Master Servicer to the last
preceding purported transferee of such Class R Certificate, except that in the
event that the Master Servicer determines that the Holder or any prior Holder
of such Class R Certificate may be liable for any amount due under this
Section 4.2 or any other provision of this Agreement, the Master Servicer may
withhold a corresponding amount from such remittance as security for such
claim. The terms and conditions of any sale under this subclause (viii) shall
be determined in the sole discretion of the Master Servicer or its designee,
and it shall not be liable to any Person having an Ownership Interest in a
Class R Certificate as a result of its exercise of such discretion;
(ix) The provisions of Section 4.2(i) may be modified, added to
or eliminated (solely to amend the transfer restrictions contained in this
Section), provided that there shall have been delivered to the Trustee and the
Certificate Insurer an Opinion of Counsel to the effect that such modification
of, addition to or elimination of such provisions will not cause the 1999-1
REMIC to cease to qualify as a REMIC and will not cause (x) the 1999-1 REMIC
to be subject to an entity-level tax caused by the Transfer of any Ownership
Interest in a Class R Certificate to a Person that is not a Permitted
Transferee or (y) a Person other than the prospective transferee to be subject
to a REMIC-related tax caused by the Transfer of an Ownership Interest in a
Class R Certificate to a Percentage that is not a Permitted Transferee;
(x) No transfer of a Class R Certificate or any interest
therein shall be made to any employee benefit plan or other retirement
arrangement, including individual retirement accounts and annuities, Keogh
plans and collective investment funds and separate accounts in which such
plans, accounts or arrangements are invested, that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the Code
(each, a "Plan"), unless the prospective transferee of such Class R
Certificate provides the Master Servicer and the Trustee with a certification
of facts and, at the prospective transferee's expense, an Opinion of Counsel
which establish to the satisfaction of the Master Servicer and the Trustee
that such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or cause the Master Servicer or the Trustee to be
deemed a fiduciary of such Plan or result in the imposition of an excise tax
under Section 4975 of the Code. In the absence of their having received the
certification of facts or Opinion of Counsel contemplated by the preceding
sentence, the Trustee and the Master Servicer shall require the prospective
transferee of any Class R Certificate to certify (in the form of Exhibit K
hereto) that (A) it is neither (i) a Plan nor (ii) a Person who is directly or
indirectly purchasing a Class R Certificate on behalf of, as named fiduciary
of, as trustee of, or with assets, of a Plan and (B) all funds used by such
transferee to purchase such Certificates will be funds held by it in its
general account which it reasonably believes do not constitute "plan assets"
of any Plan; and
(xi) Subject to the restrictions set forth in this Agreement,
upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office of the Trustee, the Trustee shall execute, authenticate
and deliver in the name of the designated transferee or transferees, a new
Certificate of the same Class and evidencing, in the case of a Class A-1
Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4
Certificate or Class A-5 Certificate, the same Percentage Interest, and in any
other case, the equivalent undivided beneficial ownership interest in the
1999-1 REMIC and dated the date of authentication by the Trustee. At the
option of the Certificateholders, Certificates may be exchanged for other
Certificates of Authorized Denominations of a like aggregate undivided
beneficial ownership interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. No
service charge shall be made for any transfer or exchange of Certificates, but
the Trustee may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates. All Certificates surrendered for transfer and
exchange shall be canceled by the Trustee.
Section 4.3 Mutilated, Destroyed, Lost or Stolen Certificates. (i)
If any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Master Servicer, the
Certificate Insurer and the Trustee such security or indemnity as may
reasonably be required by each of them to save each of them harmless, then, in
the absence of notice to the Master Servicer, the Certificate Insurer and the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like tenor and representing an equivalent beneficial ownership interest,
but bearing a number not contemporaneously outstanding. Upon the issuance of
any new Certificate under this Section 4.3, the Master Servicer and 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 their fees and
expenses connected therewith. Any duplicate Certificate issued pursuant to
this Section 4.3 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time.
Section 4.4 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer and subject to the provisions of
Section 4.2 and Article X, the Master Servicer, the Depositor, the Transferor,
the Certificate Insurer and the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 6.5 and for all other purposes
whatsoever, and the Master Servicer, the Depositor, the Transferor, the
Certificate Insurer and the Trustee shall not be affected by notice to the
contrary.
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<PAGE>
ARTICLE V
Administration and Servicing of the Mortgage Loans
Section 5.1 Appointment of the Master Servicer.
(a) Irwin Union Bank and Trust Company agrees to act as the Master
Servicer and to perform all servicing duties under this Agreement subject to
the terms hereof.
(b) The Master Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and the Certificate Insurer and shall have full
power and authority, acting alone or through one or more Subservicers, to do
any and all things in connection with such servicing and administration which
it may deem necessary or desirable. Without limiting the generality of the
foregoing, the Master Servicer, in its own name or the name of a Subservicer,
may, and is hereby authorized and empowered by the Trustee to, execute and
deliver, on behalf of itself, the Certificateholders, the Certificate Insurer
and the Trustee 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, the insurance
policies and accounts related thereto and the properties subject to the
Mortgages. Upon the execution and delivery of this Agreement, and from time to
time as may be required thereafter, the Trustee shall furnish the Master
Servicer or its Subservicers with any powers of attorney and such other
documents (that have been prepared by the Master Servicer for execution by the
Trustee) as may be necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder.
In servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures consistent with Accepted Servicing Practices
and in a manner consistent with recovery under any insurance policy required
to be maintained by the Master Servicer pursuant to this Agreement.
Costs incurred by the Master Servicer in effectuating the timely
payment of taxes and assessments on the property securing a Mortgage Note and
foreclosure costs may be added by the Master Servicer to the amount owing
under such Mortgage Note where the terms of such Mortgage Note so permit;
provided, however, that the addition of any such cost shall not be taken into
account for purposes of calculating the principal amount of the Mortgage Note
and the Mortgage Loan secured by the Mortgage Note or distributions to be made
to Certificateholders. Such costs shall be recoverable by the Master Servicer
pursuant to Section 5.4. Notwithstanding any other provision of this
Agreement, the Master Servicer shall at all times service the Mortgage Loans
in a manner consistent with the provisions of Sections 5.1(b) and 5.1(c).
(c) It is intended that the 1999-1 REMIC formed hereunder shall
constitute, and that the affairs of the 1999-1 REMIC shall be conducted so as
to qualify it as, a "real estate mortgage investment conduit" ("REMIC") as
defined in and in accordance with the REMIC Provisions. In furtherance of such
intentions, the Master Servicer covenants and agrees that it shall not take
any action or omit to take any action reasonably within the Master Servicer's
control and the scope of its duties more specifically set forth herein that
would (1) result in a taxable event to the Holders of the Certificates or
endanger the REMIC status of the 1999-1 REMIC or (2) result in the imposition
on the 1999-1 REMIC or the Trust Fund of a tax on "prohibited transactions"
(either clause (1) or (2) shall be an "Adverse REMIC Event"); provided,
however, that the Master Servicer may allow reductions in the rate of interest
on any Mortgage Loan so long as the amount of any such reduction does not
exceed the greater of (i) 0.25% and (ii) 5% of the total coupon on such
Mortgage Loan. The Master Servicer shall not take any action or fail to take
any action (whether or not authorized hereunder) as to which the Trustee has
advised it in writing that it has received an Opinion of Counsel to the effect
that an Adverse REMIC Event could occur with respect to such action, and the
Master Servicer shall have no liability hereunder for any action taken by it
in accordance with the written instructions of the Trustee. In addition, prior
to taking any action with respect to the Trust Fund that is not expressly
permitted under the terms of this Agreement (other than interest rate
modifications referred to in the provision to the second preceding sentence),
the Master Servicer will consult with the Trustee or its designee and the
Certificate Insurer, in writing, with respect to whether such action could
cause an Adverse REMIC Event to occur. The Trustee may consult with counsel to
make such written advice, and the cost of same shall be borne by the party
seeking to take the action not permitted by this Agreement. At all times as
may be required by the Code, the Master Servicer shall use its best efforts to
ensure that substantially all of the assets of the Trust will consist of
"qualified mortgages" as defined in Section 860G(a)(3) of the Code and
"permitted investments" as defined in Section 860G(a)(5) of the Code. In the
event any specified time period or other requirement set forth in this
Agreement in respect of compliance with the REMIC Provisions becomes
inconsistent with the REMIC Provisions as the same may be amended, such
specified time period or other requirement shall also be deemed amended to
comply with the requirements of this Section, unless such amended time period
or other requirements shall be less protective of the interests of the
Certificateholders and the Certificate Insurer, in which case, to the extent
consistent with the REMIC Provisions, the former time period or requirement
shall continue in force.
(d) Subject to Section 5.12, the Master Servicer is hereby
authorized and empowered to execute and deliver on behalf of the Trustee and
each Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Master Servicer, each Certificateholder and the
Trustee shall execute any powers of attorney furnished to the Trustee by the
Master Servicer and other documents necessary or appropriate to enable the
Master Servicer to carry out its servicing and administrative duties under
this Agreement.
(e) On and after such time as the Trustee receives the resignation
of, or notice of the removal of, the Master Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 5.23, after receipt by the Trustee and the Certificate Insurer of the
Opinion of Counsel required pursuant to Section 5.23, the Trustee or its
designee approved by the Certificate Insurer shall, within a period not to
exceed 90 days, assume all of the rights and obligations of the Master
Servicer, subject to Section 7.2 hereof. The Master Servicer shall, upon
request of the Trustee but at the expense of the Master Servicer, deliver to
the Trustee all documents and records relating to the Mortgage Loans and an
accounting of amounts collected and held by the Master Servicer and otherwise
use its best efforts to effect the orderly and efficient transfer of servicing
rights and obligations to the assuming party.
(f) The Master Servicer shall deliver a list of Servicing Officers
to the Trustee and the Certificate Insurer by the Closing Date, which list
may, from time to time, be amended, modified or supplemented by the subsequent
delivery to the Trustee and the Certificate Insurer of any superseding list of
Servicing Officers.
Section 5.2 Subservicing Agreements Between the Master Servicer and
Subservicers.
(a) The Master Servicer may, subject to the prior written approval
of the Certificate Insurer, enter into Subservicing Agreements with
Subservicers for the servicing and administration of the Mortgage Loans and
for the performance of any and all other activities of the Master Servicer
hereunder. The Certificate Insurer, Trustee and Depositor acknowledge that the
Master Servicer has the authority to appoint the Originator as Subservicer.
Each Subservicer shall be either (1) a depository institution the accounts of
which are insured by the FDIC or (2) another entity that engages in the
business of originating, acquiring or servicing loans, and in either case
shall be authorized to transact business in the state or states where the
related Mortgaged Properties it is to service are situated if state law
requires such authorization. In addition, each Subservicer will obtain and
preserve its qualifications 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 and any of
the Mortgage Loans and to perform or cause to be performed its duties under
the related Subservicing Agreement which shall provide that the Subservicer's
rights shall automatically terminate upon the termination, resignation or
other removal of the Master Servicer under this Agreement. Each account used
by any Subservicer for the deposit of payments on any of the Mortgage Loans
shall be an Eligible Account.
(b) Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between
the Master Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee, the Certificate Insurer and the
Certificateholders for the servicing and administering of the Mortgage Loans
in accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. For purposes of
this Agreement, the Master Servicer shall be deemed to have received payments
on Mortgage Loans when the Subservicer has received such payments.
In the event the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of an Event of Default), the Trustee
or its designee may, with the prior written consent of the Certificate
Insurer, or shall, at the direction of the Certificate Insurer, either (i)
assume all of the rights and obligations of the Master Servicer under each
Subservicing Agreement that the Master Servicer may have entered into or (ii)
notwithstanding anything to the contrary contained in each such Subservicing
Agreement, terminate the related Subservicer without being required to pay any
fee in connection therewith.
Section 5.3 Collection of Certain Mortgage Loan Payments; Collection
Account.
(a) The Master Servicer shall use its best efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement
and any applicable primary mortgage insurance policy, follow such collection
procedures as shall constitute Accepted Servicing Practices.
The Master Servicer shall establish and maintain in the name of the
Trustee one or more Collection Accounts (collectively, the "Collection
Account"), in trust for the benefit of the Holders of the Certificates and the
Certificate Insurer, one of which may be established and maintained with the
Trustee (the "Trustee Collection Account"). The Master Servicer shall promptly
provide notice to the Certificate Insurer, the Trustee and each Rating Agency
of any creation and establishment of a Collection Account hereunder. Each
Collection Account shall be established and maintained as an Eligible Account,
and one Collection Account may be maintained at the Bank of the West. The
Certificate Insurer, in its sole discretion, may direct the Master Servicer to
close such Collection Account and to establish and maintain a replacement
Collection Account that is an Eligible Account.
(b) On the Closing Date, the Master Servicer shall deposit in the
Collection Account any amounts representing the principal portion of Monthly
Payments on the Mortgage Loans made in respect of any Due Date occurring in
February, 1999 that are received on or prior to the Cut-Off Date and were not
reflected in the Cut-Off Date Principal Balance of the related Mortgage Loan.
On the third Business Day prior to the first Remittance Date, the Master
Servicer shall have deposited into the Certificate Account all of the
following collections and payments received or made by the Master Servicer in
respect of monies due under the Mortgage Loans (other than in respect of
interest on the Mortgage Loans accrued on or before the Due Date immediately
preceding the Cut-Off Date), and shall, on a daily basis thereafter (except as
otherwise provided herein), deposit such collections and payments into the
Collection Account:
(i) all payments received after the Cut-Off Date on account of
principal on the Mortgage Loans and all Principal Prepayments, Curtailments,
associated prepayment penalties and all Net REO Proceeds collected after the
Cut-Off Date;
(ii) all payments received after the Cut-Off Date on account of
interest on the Mortgage Loans (other than payments of interest that accrued
on each Mortgage Loan up to and including the Due Date immediately preceding
the Cut-Off Date);
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of
any Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.4 and 3.3 hereof; and
(vii) any amount expressly required to be deposited in the
Collection Account or Certificate Account in accordance with certain
provisions of this Agreement, including, without limitation amounts in respect
of the termination of the Trust Fund (which shall be deposited in the
Certificate Account), and amounts referenced in Sections 2.4(c), 3.3(a),
3.3(c), 5.6, and 6.6(b) of this Agreement;
provided, however, that the Master Servicer shall be entitled, at its
election, either (a) to withhold and to pay to itself the applicable Servicing
Fee from any payment on account of interest or other recovery (including Net
REO Proceeds) as received and prior to deposit of such payments in the
Collection Account or (b) to withdraw the applicable Servicing Fee from the
Collection Account after the entire payment or recovery has been deposited
therein; provided, further, that with respect to any payment of interest
received by the Master Servicer in respect of a Mortgage Loan (whether paid by
the Mortgagor or received as Liquidation Proceeds, Insurance Proceeds or
otherwise) which is less than the full amount of interest then due with
respect to such Mortgage Loan, only that portion of such payment that bears
the same relationship to the total amount of such payment of interest as the
rate used to determine the Servicing Fee bears to the Mortgage Interest Rate
borne by such Mortgage Loan shall be allocated to the Servicing Fee with
respect to such Mortgage Loan. All other amounts shall be deposited in the
Collection Account not later than the Business Day following the day of
receipt and posting by the Master Servicer. Notwithstanding any regularly
scheduled transfer of funds to the Certificate Account, the Master Servicer
shall, not later than 3 Business Days prior to each Remittance Date transfer
to the Certificate Account all funds in each Collection Account that are to be
included in the Master Servicer Remittance Amount on the Determination Date
immediately preceding the Remittance Date.
The Master Servicer shall direct, in writing, the institution
maintaining each Collection Account to invest the funds in the Collection
Account only in Permitted Investments. No Permitted Investment shall be sold
or disposed of at a gain prior to maturity unless the Master Servicer has
obtained an Opinion of Counsel (at the Master Servicer's expense) that such
sale or disposition will not cause the Trust Fund to be subject to the tax on
income from prohibited transactions imposed by Code Section 860F(a)(1),
otherwise subject the Trust Fund to tax or cause the 1999-1 REMIC to fail to
qualify as a REMIC. All income (other than any gain from a sale or disposition
of the type referred to in the preceding sentence) realized from any such
Permitted Investment shall be for the benefit of the Master Servicer as
additional servicing compensation. The amount of any losses incurred in
respect of any such investments shall be deposited in the Collection Account
by the Master Servicer out of its own funds immediately as realized.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of those described in the
last paragraph of Section 5.14 and payments in the nature of prepayment
charges other than prepayment penalties, late payment charges or assumption
fees need not be deposited by the Master Servicer in the Collection Account.
Notwithstanding any provision herein to the contrary, the Master Servicer
shall not deposit in any Collection Account any amount other than amounts
required to be deposited therein in accordance with the terms of this
Agreement, and the Master Servicer shall have the right at all times to
transfer funds from the Collection Account to the Certificate Account. All
funds deposited by the Master Servicer in the Collection Account and the
Certificate Account shall be held therein for the account of the Trustee in
trust for the Certificateholders and the Certificate Insurer until disbursed
in accordance with Section 6.1 or withdrawn in accordance with Section 5.4.
(c) Prior to the time of their required deposit in the Collection
Account, all amounts required to be deposited therein may be deposited in an
account in the name of Master Servicer, provided that such account is an
Eligible Account. All such funds shall be held by the Master Servicer in trust
for the benefit of the Certificateholders and the Certificate Insurer pursuant
to the terms hereof.
(d) The Collection Account may, upon written notice by the Trustee
to the Certificate Insurer, be transferred to a different depository so long
as such transfer is to an Eligible Account.
Section 5.4 Permitted Withdrawals from the Collection Account and
Trustee Collection Account. The Master Servicer is hereby authorized by the
Trustee (such authorization to be revocable by the Trustee at any time), from
time to time, to make withdrawals from the Collection Account or, as
applicable, the Trustee Collection Account but only for the following
purposes:
(a) to reimburse itself from any funds in the Collection Account and
the Trustee Collection Account for any accrued unpaid Servicing Fees and for
unreimbursed Periodic Advances and Servicing Advances. The Master Servicer's
right to reimbursement for unpaid Servicing Fees and unreimbursed Servicing
Advances shall be limited to late collections on the related Mortgage Loan,
including Liquidation Proceeds, Released Mortgaged Property Proceeds,
Insurance Proceeds and such other amounts on deposit in the Collection Account
as may be collected by the Master Servicer from the related Mortgagor or
otherwise relating to the Mortgage Loan in respect of which such unreimbursed
amounts are owed. The Master Servicer's right to reimbursement for
unreimbursed Periodic Advances shall be limited to late collections of
interest on any Mortgage Loan and to Liquidation Proceeds and Insurance
Proceeds on related Mortgage Loans;
(b) to reimburse itself for any Periodic Advances determined in good
faith to have become Nonrecoverable Advances, such reimbursement to be made
from any funds in the Collection Account and the Trustee Collection Account;
(c) to withdraw from the Collection Account or the Trustee
Collection Account any Preference Amount received from a Mortgagor;
(d) to withdraw any funds deposited in the Collection Account or
Trustee Collection Account that were mistakenly deposited therein;
(e) to withdraw from the Collection Account or the Trustee
Collection Account any funds needed to pay itself Servicing Compensation
pursuant to Section 5.14 hereof to the extent not retained or paid pursuant to
Section 5.3, 5.4 or 5.14;
(f) to withdraw from the Collection Account or the Trustee
Collection Account to pay to the Transferor with respect to each Mortgage Loan
or property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 2.4 or 3.3 or to pay to itself with respect to each
Mortgage Loan or property acquired in respect thereof that has been purchased
pursuant to Section 8.1 all amounts received thereon and not required to be
deposited into the Collection Account or the Trustee Collection Account as a
result of such repurchase or replacement;
(g) subject to the provisions of Section 5.20, to reimburse itself
from the Collection Account or the Trustee Collection Account for (1)
Nonrecoverable Advances that are not, with respect to aggregate Servicing
Advances on any single Mortgage Loan or REO Property, in excess of the
Principal Balance thereof and (2) for amounts to be reimbursed to the Master
Servicer pursuant to Section 5.21;
(h) to withdraw from the Collection Account or the Trustee
Collection Account to pay to the Transferor with respect to each Mortgage Loan
the excess, if any, of (1) interest accrued and unpaid on such Mortgage Loan
on the Cut-Off Date, over (2) interest on such Mortgage Loan from the Due Date
for such Mortgage Loan immediately preceding the Cut-Off Date to the Cut-Off
Date;
(i) to transfer funds from the Collection Account into the Trustee
Collection Account and to withdraw funds from the Collection Account and the
Trustee Collection Account necessary to make deposits to the Certificate
Account (which shall include the Trustee Fee) in the amounts and in the manner
provided for in Section 6.1 hereof;
(j) to pay itself any interest earned on or investment income earned
with respect to funds in the Collection Account or Trustee Collection Account;
or
(k) to clear and terminate the Collection Account and Trustee
Collection Account upon the termination of this Agreement.
The Master Servicer shall keep and maintain a separate accounting
for each Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to subclause (a).
Section 5.5 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Master Servicer shall
maintain accurate records reflecting casualty insurance coverage.
With respect to each Mortgage Loan as to which the Master Servicer
maintains escrow accounts, the Master Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and
other charges which are or may become a lien upon the Mortgaged Property and
the status of primary mortgage guaranty insurance premiums, if any, and
casualty insurance coverage and shall obtain, from time to time, all bills for
the payment of such charges (including renewal premiums) and shall effect
payment thereof prior to the applicable penalty or termination date and at a
time appropriate for securing maximum discounts allowable, employing for such
purpose deposits of the Mortgagor in any escrow account which shall have been
estimated and accumulated by the Master 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 Master Servicer shall, if
it has received notice of a default or deficiency, monitor such payments to
determine if they are made by the Mortgagor.
Section 5.6 Maintenance of Casualty Insurance. For each Mortgage
Loan, the Master Servicer shall maintain or cause to be maintained in
accordance with the Master Servicer's loan servicing policies and procedures
and to the extent required by the related Mortgage Loan to be maintained by
the Mortgagor, fire and casualty insurance with a standard mortgagee clause
and extended coverage in an amount which is not less than the replacement
value of the improvements securing such Mortgage Loan or the unpaid principal
balance of such Mortgage Loan, whichever is less. If, upon origination of the
Mortgage Loan, the Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards (and flood insurance has been made available) the Master Servicer will
cause to be maintained in accordance with the Master Servicer's loan servicing
policies and procedures and to the extent required by the related Mortgage
Loan to be maintained by the Mortgagor, a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (i) the unpaid principal balance of the
Mortgage Loan, (ii) the full insurable value of the Mortgaged Property or
(iii) the maximum amount of insurance available under the Flood Disaster
Protection Act of 1973. With respect to each Mortgage Loan, the Master
Servicer shall in accordance with the Master Servicer's loan servicing
policies and procedures also maintain fire insurance with extended coverage
and, if applicable, flood insurance on REO Property in an amount which is at
least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) the principal balance
owing on such Mortgage Loan at the time of such foreclosure or grant of deed
in lieu of foreclosure plus accrued interest and related Liquidation Expenses.
It is understood and agreed that such insurance shall be with insurers
approved by the Master Servicer and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. The parties acknowledge that the Master
Servicer does not monitor maintenance of insurance with respect to every
Mortgage Loan. Pursuant to Section 5.3, any amounts collected by the Master
Servicer under any insurance policies maintained pursuant to this Section 5.6
(other than amounts to be applied to the restoration or repair of the related
Mortgaged Property or released to the Mortgagor in accordance with Accepted
Servicing Practices) shall be deposited into the Collection Account, subject
to withdrawal pursuant to Section 5.4. Any cost incurred by the Master
Servicer in maintaining any such insurance shall be added to the amount owing
under the Mortgage Loan where the terms of the Mortgage Loan so permit;
provided, however, that the addition of any such cost shall not be taken into
account for purposes of calculating the principal amount of the Mortgage Note
or the Mortgage Loan secured by the Mortgage Note or the distributions to be
made to the Certificateholders. Such costs shall be recoverable by the Master
Servicer pursuant to Section 5.4. In the event that the Master Servicer shall
obtain and maintain a blanket policy issued by an insurer that is acceptable
to FNMA or FHLMC, insuring against hazard losses on all of the Mortgage Loans,
it shall conclusively be deemed to have satisfied its obligation as set forth
in the first sentence of this Section 5.6, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer
shall, in the event that there shall not have been maintained on the related
mortgaged or acquired property an insurance policy complying with the first
sentence of this Section 5.6 and there shall have been a loss which would have
been covered by such a policy had it been maintained, be required to deposit
from its own funds into the Collection Account the amount not otherwise
payable under the blanket policy because of such deductible clause.
Section 5.7 Master Servicer Account. In addition to the Collection
Account, the Master Servicer shall be permitted to establish and maintain one
or more Master Servicer Accounts (collectively, the "Master Servicer
Account"), each of which shall be an Eligible Account, in which the Master
Servicer may deposit all payments by, and collections from, the Mortgagors
received in connection with the Mortgage Loans prior to the Master Servicer's
deposit of all such funds required to be deposited into the Collection
Account. Withdrawals may be made out of such collections in the Master
Servicer Account to reimburse the Master Servicer for any advances not
otherwise required to be made from the Collection Account or for any refunds
made by the Master Servicer of any sums determined to be overages, or to pay
any interest owed to Mortgagors on such account to the extent required by law,
and in order to terminate and clear the Master Servicer Account upon the
termination of this Agreement upon the termination of the Trust Fund.
Section 5.8 Fidelity Bond; Errors and Omissions Policy.
(a) The Master Servicer shall maintain with a responsible company,
and at its own expense, a blanket fidelity bond (a "Fidelity Bond") and an
errors and omissions insurance policy (an "Errors and Omissions Policy"), in a
minimum amount acceptable to FNMA or otherwise in an amount as is commercially
available at a cost that is not generally regarded as excessive by industry
standards, 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 ("Master Servicer
Employees"). Any such fidelity bond and errors and omissions insurance shall
protect and insure the Master Servicer against losses, including losses
resulting from forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Master Servicer Employees. Such fidelity bond shall
also protect and insure the Master 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 5.8
requiring such fidelity bond and errors and omissions insurance shall diminish
or relieve the Master Servicer from its duties and obligations as set forth in
this Agreement. Upon the request of the Trustee, the Certificate Insurer or
any Certificateholder, the Master Servicer shall cause to be delivered to the
Trustee, such Certificateholder or the Certificate Insurer a certified true
copy of such fidelity bond and insurance policy. On the Closing Date, such
bond and insurance is maintained with certain underwriters as may be specified
in writing to the Certificate Insurer and the Trustee, from time to time. Any
such fidelity bond or insurance policy shall not be canceled or modified in a
materially adverse manner without written notice to the Trustee and the
Certificate Insurer.
(b) The Master Servicer shall be deemed to have complied with this
provision if one of its respective Affiliates has such a Fidelity Bond and
Errors and Omissions Policy and, by the terms of such fidelity bond and errors
and omission policy, the coverage afforded thereunder extends to the Master
Servicer. The Master Servicer shall cause each and every Subservicer for it to
maintain a policy of insurance covering errors and omissions and a fidelity
bond which would meet the requirements of Section 5.8(a) hereof. Any such
Fidelity Bond and Errors and Omissions Policy shall not be canceled or
modified in a materially adverse manner without written notice to the
Certificate Insurer.
Section 5.9 Collection of Taxes, Assessments and Other Items. The
Master Servicer shall deposit all payments by Mortgagors for taxes,
assessments, primary mortgage or hazard insurance premiums or comparable items
in the Collection Account. Withdrawals from the Collection Account may be made
to effect payment of taxes, assessments, primary mortgage or hazard insurance
premiums or comparable items, to reimburse the Master Servicer out of related
collections for any advances made in the nature of any of the foregoing, to
refund to any Mortgagors any sums determined to be overages, or to pay any
interest owed to Mortgagors on such account to the extent required by law. The
Master Servicer shall advance the payments referred to in the first sentence
of this Section 5.9 that are not timely paid by the Mortgagors on the date
when the tax, premium or other cost for which such payment is intended is due,
but the Master Servicer shall be required to so advance only to the extent
that such advances, in the good faith judgment of the Master Servicer, will be
recoverable by the Master Servicer pursuant to Section 5.3 out of Liquidation
Proceeds, Insurance Proceeds or otherwise.
Section 5.10 Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Trustee shall prepare or cause to be
prepared for filing with the Commission (other than the Current Report on Form
8-K to be filed by the Depositor in connection with computational materials
and the initial Current Report on Form 8-K to be filed by the Depositor in
connection with the issuance of the Certificates) any and all reports,
statements and information respecting the Trust Fund and/or the Certificates
required to be filed with the Commission pursuant to the Securities Exchange
Act of 1934, and shall solicit any and all proxies of the Certificateholders
whenever such proxies are required to be solicited pursuant to the Securities
Exchange Act of 1934. The Depositor shall promptly file, and exercise its
reasonable best efforts to obtain a favorable response to, no-action requests
with, or other appropriate exemptive relief from, the Commission seeking the
usual and customary exemption from such reporting requirements granted to
issuers of securities similar to the Certificates. Fees and expenses incurred
by the Depositor in connection with this Section shall not be reimbursable
from the Trust Fund.
The Master Servicer and the Depositor each agree to promptly furnish
the Trustee, from time to time upon request, such further information, reports
and financial statements within their respective control related to this
Agreement and the Mortgage Loans as the Trustee reasonably deems appropriate
to prepare and file all necessary reports with the Commission.
Section 5.11 Enforcement of Due-on-Sale Clauses; Assumption
Agreements. In any case in which a Mortgaged Property is about to be conveyed
by the Mortgagor (whether by absolute conveyance or by contract of sale, and
whether or not the Mortgagor remains liable thereon) and the Master Servicer
has knowledge of such prospective conveyance, the Master Servicer shall effect
assumptions in accordance with the terms of any due-on-sale provision
contained in the related Mortgage Note or Mortgage. The Master Servicer shall
enforce any due-on-sale provision contained in such Mortgage Note or Mortgage
to the extent the requirements thereunder for an assumption of the Mortgage
Loan have not been satisfied to the extent permitted under the terms of the
related Mortgage Note, unless such provision is not exercisable under
applicable law and governmental regulations or in the Master Servicer's
judgment, such exercise is reasonably likely to result in legal action by the
Mortgagor, or such conveyance is in connection with a permitted assumption of
the related Mortgage Loan. Subject to the foregoing, the Master Servicer is
authorized to take or enter into an assumption agreement from or with the
Person to whom such property is about to be conveyed, pursuant to which such
person becomes liable under the related Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that
the Mortgage Interest Rate with respect to such Mortgage Loan shall remain
unchanged. The Master Servicer is also authorized to release the original
Mortgagor from liability upon the Mortgage Loan and substitute the new
Mortgagor as obligor thereon. In connection with such assumption or
substitution, the Master Servicer shall apply such underwriting standards and
follow such practices and procedures as shall be normal and usual for mortgage
loans similar to the Mortgage Loans and as it applies to mortgage loans owned
solely by it. The Master Servicer shall notify the Trustee that any such
assumption or substitution agreement has been completed by forwarding to the
Trustee the original copy of such assumption or substitution agreement, which
copy shall be added by the Trustee 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. In connection
with any such assumption or substitution agreement, the Mortgage Interest Rate
of the related Mortgage Note and the payment terms shall not be changed. Any
fee collected by the Master Servicer for entering into an assumption or
substitution of liability agreement will be retained by the Master Servicer as
servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
conveyance by the Mortgagor of the property subject to the Mortgage or any
assumption of a Mortgage Loan by operation of law which the Master Servicer in
good faith determines it may be restricted by law from preventing, for any
reason whatsoever, or if the exercise of such right would impair or threaten
to impair any recovery under any applicable insurance policy or, in the Master
Servicer's judgment, be reasonably likely to result in legal action by the
Mortgagor.
Section 5.12 Realization upon Defaulted Mortgage Loans. Except as
provided in the last two paragraphs of this Section 5.12, the Master Servicer
shall, on behalf of the Trust, foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans as come into
and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 5.1. In
connection with such foreclosure or other conversion, the Master Servicer
shall follow Accepted Servicing Practices. The foregoing is subject to the
proviso that the Master Servicer shall not be required to expend its own funds
in connection with any foreclosure or to restore any damaged property unless
it shall determine that (i) such foreclosure and/or restoration will increase
the proceeds of liquidation of the Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses and (ii) such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall
reimburse itself for such expense prior to the deposit in the Collection
Account of such proceeds). The Master Servicer shall be entitled to
reimbursement of the Servicing Fee and other amounts due it, if any, to the
extent, but only to the extent, that withdrawals from the Collection Account
and the Trustee Collection Account with respect thereto are permitted under
Section 5.3.
The Master Servicer may foreclose against the Mortgaged Property
securing a defaulted Mortgage Loan either by foreclosure, by sale or by strict
foreclosure, and in the event a deficiency judgment is available against the
Mortgagor or any other person, may proceed for the deficiency.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be issued to the Trustee, or to the Master Servicer
on behalf of the Trustee and the Certificateholders. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan, such REO
Mortgage Loan shall be considered to be a Mortgage Loan held in the applicable
REMIC of the Trust Fund until such time as the related Mortgaged Property
shall be sold and such REO Mortgage Loan becomes a Liquidated Mortgage Loan.
Consistent with the foregoing, for purposes of all calculations hereunder, so
long as such REO Mortgage Loan shall be considered to be an Outstanding
Mortgage Loan:
(a) Notwithstanding that the indebtedness evidenced by the related
Mortgage Note shall have been discharged, such Mortgage Note and the related
amortization schedule in effect at the time of any such acquisition of title
(after giving effect to any previous Curtailments and before any adjustment
thereto by reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period) shall be assumed to remain in effect, except
that such schedule shall be adjusted to reflect the application of Net REO
Proceeds received in any month pursuant to the succeeding clause.
(b) Net REO Proceeds received in any month shall be deemed to have
been received first in payment of the accrued interest that remained unpaid on
the date that such Mortgage Loan became an REO Mortgage Loan of the applicable
REMIC of the Trust Fund, with the excess thereof, if any, being deemed to have
been received in respect of the delinquent principal installments that
remained unpaid on such date. Thereafter, Net REO Proceeds received in any
month shall be applied to the payment of installments of principal and accrued
interest on such Mortgage Loan deemed to be due and payable in accordance with
the terms of such Mortgage Note and such amortization schedule. If such Net
REO Proceeds exceed the then Unpaid REO Amortization, the excess shall be
treated as a Curtailment received in respect of such Mortgage Loan.
(c) The Net REO Proceeds allocated to the payment of a related
Servicing Fee shall be limited to an amount equal to the product of (x) the
total amount of Net REO Proceeds allocable to interest multiplied by (y) the
fraction, the numerator of which is the interest rate at which the Servicing
Fee is determined and the denominator of which is the Mortgage Interest Rate
borne by such Mortgage Loan.
In the event that the 1999-1 REMIC acquires any Mortgaged Property
as aforesaid or otherwise in connection with a default or imminent default on
a Mortgage Loan, such Mortgaged Property shall be disposed of by or on behalf
of such 1999-1 REMIC within three years after its acquisition thereby unless
(i) the Master Servicer shall have provided to the Trustee an Opinion of
Counsel to the effect that the holding by such 1999-1 REMIC of the Trust Fund
of such Mortgaged Property subsequent to three years after its acquisition
(and specifying the period beyond such three-year period for which the
Mortgaged Property may be held) will not cause such 1999-1 REMIC to be subject
to the tax on prohibited transactions imposed by Code Section 860F(a)(1),
otherwise subject such 1999-1 REMIC or the Trust Fund to tax or cause the
1999-1 REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding, or (ii) the Master Servicer or the Trustee (at the Master
Servicer's expense) shall have applied for, at least 60 days prior to the
expiration of such three-year period, an extension of such three-year period
in the manner contemplated by Code Section 856(e)(3), in which case the
three-year period shall be extended by the applicable period. The Master
Servicer shall further ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that the sale of such property does not result in the
receipt by the 1999-1 REMIC of any income from non-permitted assets as
described in Code Section 860F(a)(2)(B), and that the 1999-1 REMIC does not
derive any "net income from foreclosure property" within the meaning of Code
Section 860G(c)(2) with respect to such property.
In lieu of foreclosing upon any defaulted Mortgage Loan, the Master
Servicer may, in its discretion, permit the assumption of such Mortgage Loan
if, in the Master Servicer's judgment, such default is unlikely to be cured
and if the assuming borrower satisfies the Master Servicer's underwriting
guidelines with respect to mortgage loans owned by the Master Servicer. In
connection with any such assumption, the Mortgage Interest Rate of the related
Mortgage Note and the payment terms shall not be changed. Any fee collected by
the Master Servicer for entering into an assumption agreement will be retained
by the Master Servicer as servicing compensation. Alternatively, the Master
Servicer may encourage the refinancing of any defaulted Mortgage Loan by the
Mortgagor.
Notwithstanding the foregoing, prior to instituting foreclosure
proceedings or accepting a deed-in-lieu of foreclosure with respect to any
Mortgaged Property, the Master Servicer shall make, or cause to be made,
inspection of the Mortgaged Property in accordance with the Accepted Servicing
Practices and, with respect to environmental hazards, such procedures as are
required by the provisions of the FNMA's selling and servicing guide
applicable to single-family homes and in effect on the date hereof. The Master
Servicer shall be entitled to rely upon the results of any such inspection
made by others. In cases where the inspection reveals that such Mortgaged
Property is potentially contaminated with or affected by hazardous wastes or
hazardous substances, the Master Servicer shall promptly give written notice
of such fact to the Certificate Insurer, the Trustee and each Class A
Certificateholder. The Master Servicer shall not commence foreclosure
proceedings or accept a deed-in-lieu of foreclosure for such Mortgaged
Property without obtaining the consent of the Certificate Insurer.
Section 5.13 Trustee to Cooperate; Release of Mortgage Files. Upon
the payment in full of any Mortgage Loan, or the receipt by the Master
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer shall (i) immediately deliver
to the Trustee two copies of a notice substantially in the form of the Request
for Release attached hereto as Exhibit H (which request shall include a
statement to the effect that all amounts received in connection with such
payment which are required to be deposited in the Collection Account pursuant
to Section 5.3 have been or shall be so deposited) and executed by a Servicing
Officer and (ii) request delivery to it of the Mortgage File. Upon receipt of
such Request for Release, or in a mutually agreeable electronic format which
will, in lieu of a signature on its face, originate from an Authorized
Officer, the Trustee, or the Custodian on its behalf, shall promptly release
the related Mortgage File to the Master Servicer. Upon any such payment in
full, the Master Servicer is authorized to give, as agent for the Trustee and
the mortgagee under the Mortgage which secured the Mortgage Loan, an
instrument of satisfaction (or assignment of mortgage without recourse)
regarding the property subject to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the
Person or Persons entitled thereto against receipt therefor of such payment,
it being understood and agreed that no expenses incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account. In connection therewith, the Trustee
shall execute and return to the Master Servicer any required power of attorney
provided to the Trustee by the Master Servicer and other required
documentation in accordance with Section 5.1(d). From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan and in
accordance with Accepted Servicing Practices, the Trustee shall, upon request
of the Master Servicer and delivery to the Trustee of a Request for Release
signed by a Servicing Officer, release, or cause the Custodian to release, the
related Mortgage File to the Master Servicer and shall execute such documents
as shall be necessary to the prosecution of any such proceedings. Such Request
for Release shall obligate the Master Servicer to return the Mortgage File to
the Trustee when the need therefor by the Master Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to the Request for Release
hereinabove specified, the Mortgage File shall be delivered by the Trustee to
the Master Servicer.
Section 5.14 Servicing Fee; Servicing Compensation.
(a) The Master Servicer shall be entitled, at its election, either
(1) to pay itself the Servicing Fee out of any Mortgagor payment on account of
interest or Net REO Proceeds actually collected prior to the deposit of such
payment in the Collection Account or (2) to withdraw from the Collection
Account or Trustee Collection Account such Servicing Fee pursuant to Section
5.4. The Master Servicer shall also be entitled, at its election, either (i)
to pay itself the Servicing Fee in respect of each delinquent Mortgage Loan
out of Liquidation Proceeds in respect of such Mortgage Loan or other
recoveries with respect thereto to the extent permitted in Section 5.3(a) or
(ii) to withdraw from the Collection Account the Servicing Fee in respect of
each such Mortgage Loan to the extent of such Liquidation Proceeds or other
recoveries, to the extent permitted by Section 5.4(a).
The aggregate Servicing Fee is reserved for the administration of
the Trust Fund and, in the event of replacement of the Master Servicer as
Master Servicer of the Mortgage Loans, for the payment of other expenses
related to such replacement. The aggregate Servicing Fee shall be offset as
provided in Section 5.19. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including maintenance of the hazard insurance required by Section 5.5) and
shall not be entitled to reimbursement therefor except as specifically
provided herein.
(b) Servicing compensation in the form of assumption fees, late
payment charges, tax service fees, fees for statement of account or payoff of
the Mortgage Loan (to the extent permitted by applicable law) or otherwise
shall be retained by the Master Servicer and are not required to be deposited
in the Collection Account.
Section 5.15 Reports to the Trustee; Collection Account Statements.
Not later than 15 days after each Remittance Date, the Master Servicer shall
provide to the Trustee and the Certificate Insurer a statement, certified by a
Servicing Officer, setting forth the status of the Collection Account as of
the close of business on the related Determination Date, stating that all
distributions required by this Agreement to be made by the Master Servicer on
behalf of the Trustee have been made (or if any required distribution has not
been made by the Master Servicer, specifying the nature and status thereof)
and showing, for the period covered by such statement, the aggregate of
deposits into and withdrawals from the Collection Account for each category of
deposit specified in Section 5.3 and each category of withdrawal specified in
Section 5.4, the allocation of such amounts between principal and interest
collected on the Mortgage Loans and the aggregate of deposits into the
Certificate Account as specified in Section 6.1(c). Such statement shall also
state the aggregate unpaid Principal Balance of all the Mortgage Loans as of
the close of business on the last day of the month preceding the month in
which such Remittance Date occurs. Copies of such statement shall be provided
by the Trustee to any Certificateholder upon request.
Section 5.16 Annual Statement as to Compliance. The Master Servicer
will deliver to the Trustee, the Certificate Insurer, S&P and Moody's not
later than the last day of the fifth month (as of the Closing Date, May 31st)
subsequent to the end of the Master Servicer's fiscal year, an Officers'
Certificate stating as to each signer thereof, that (i) a review of the
activities of the Master Servicer during the preceding calendar year and of
its performance under this Agreement has been made under such officer's
supervision, and (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all its obligations under this
Agreement throughout such year, or if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. The first such Officers'
Certificate shall be delivered in May 2000. Such Officers' Certificate shall
be accompanied by the statement described in Section 5.17 of this Agreement.
Copies of such statement shall, upon request, be provided to any
Certificateholder by the Master Servicer, or by the Trustee at the Master
Servicer's expense if the Master Servicer shall fail to provide such copies.
Section 5.17 Annual Independent Public Accountants' Servicing
Report. Not later than the last day of the fifth month (as of the Closing
Date, May 31st) subsequent to the end of the Master Servicer's fiscal year,
the Master Servicer, at its expense, shall cause a firm of nationally
recognized independent public accountants to furnish a statement to the
Trustee, the Certificate Insurer, S&P and Moody's to the effect that, on the
basis of an examination of certain documents and records relating to the
servicing of the mortgage loans being serviced by the Master Servicer under
pooling and servicing agreements similar to this Agreement (which agreements
shall be described in a schedule to such statement), conducted substantially
in compliance with the Uniform Single Attestation Program for Mortgage
Bankers, such firm is of the opinion that such servicing has been conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers
and that such examination has disclosed no exceptions or errors relating to
the servicing activities of the Master Servicer (including servicing of
Mortgage Loans subject to this Agreement) that, in the opinion of such firm,
are material, except for such exceptions as shall be set forth in such
statement. The first such statement shall be delivered in May 2000. Copies of
such statement shall, upon request, be provided to Certificateholders by the
Master Servicer, or by the Trustee at the Master Servicer's expense if the
Master Servicer shall fail to provide such copies. For purposes of such
statement, such firm may conclusively presume that any pooling and servicing
agreement which governs mortgage pass-through certificates offered by the
Depositor (or any predecessor or successor thereto) in a registration
statement under the Securities Act of 1933, as amended, is similar to this
Agreement, unless such other pooling and servicing agreement expressly states
otherwise. In the event such firm requires the Trustee to agree to the
procedures performed by such firm, the Master Servicer shall direct the
Trustee in writing to agree; it being understood and agreed that the Trustee
will deliver such letter of agreement in conclusive reliance upon the
direction of the Master Servicer, and the Trustee shall not make any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures. Delivery of such reports, information and documents to the Trustee
is for informational purposes only, and the Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from the information contained therein, including the Master
Servicer's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on the Officer's Certificates).
Section 5.18 Reports to be Provided by the Master Servicer.
(a) In connection with the transfer of the Certificates, the Trustee
on behalf of any Certificateholder may request that the Master Servicer make
available to any prospective Certificateholder annual unaudited financial
statements of the Master Servicer (or, upon request, audited annual financial
statements of the Master Servicer's ultimate parent corporation) for one or
more of the most recently completed fiscal years for which such statements are
available, which request shall not be unreasonably denied or unreasonably
delayed. Such annual unaudited financial statements also shall be made
available to the Certificate Insurer upon request. In the event such firm
requires the Trustee to agree to the procedures performed by such firm, the
Master Servicer shall direct the Trustee in writing to agree; it being
understood and agreed that the Trustee will deliver such letter of agreement
in conclusive reliance upon the direction of the Master Servicer, and the
Trustee shall not make any independent inquiry or investigation as to, and
shall have no obligation or liability in respect of, the sufficiency, validity
or correctness of such procedures. Delivery of such reports, information and
documents to the Trustee is for informational purposes only, and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from the information contained therein,
including the Master Servicer's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on the Officer's
Certificates).
(b) The Master Servicer also agrees to make available on a
reasonable basis to the Certificate Insurer, the Trustee or any prospective
Certificateholder a knowledgeable financial or accounting officer for the
purpose of answering reasonable questions respecting recent developments
affecting the Master Servicer or the financial statements of the Master
Servicer and to permit the Certificate Insurer or any prospective
Certificateholder to inspect the Master Servicer's servicing facilities during
normal business hours for the purpose of satisfying the Certificate Insurer,
the Trustee or such prospective Certificateholder that the Master Servicer has
the ability to service the Mortgage Loans in accordance with this Agreement.
Section 5.19 Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans. The aggregate amount of the Servicing Fees that the
Master Servicer shall be entitled to receive with respect to all of the
Mortgage Loans and each Remittance Date shall be offset on such Remittance
Date by an amount equal to the aggregate Prepayment Interest Shortfall with
respect to all Mortgage Loans which were subjects of Principal Prepayments
during the Due Period applicable to such Remittance Date. The amount of any
offset against the aggregate Servicing Fee with respect to any Remittance Date
under this Section 5.19 shall be limited to the aggregate amount of the
Servicing Fees otherwise payable to the Master Servicer (without adjustment on
account of Prepayment Interest Shortfalls) with respect to (i) scheduled
payments having the Due Date occurring in the Due Period applicable to such
Remittance Date received by the Master Servicer prior to the Determination
Date, and (ii) Principal Prepayments, Curtailments and Liquidation Proceeds
received in the Due Period applicable to such Remittance Date, and the rights
of the Certificateholders to the offset of the aggregate Prepayment Interest
Shortfalls shall not be cumulative.
Section 5.20 Periodic Advances. If, on the Business Day prior to any
Determination Date, the Master Servicer determines that any Monthly Payments
due on the Due Date immediately preceding such Determination Date have not
been received as of the close of business on the second Business Day preceding
such Determination Date, the Master Servicer shall determine the amount of any
Periodic Advance required to be made with respect to such unpaid Monthly
Payments on the related Determination Date. The Master Servicer shall, on the
Business Day preceding such Determination Date, certify and deliver a magnetic
tape or diskette to the Trustee indicating the payment status of each Mortgage
Loan as of the second Business Day preceding such Determination Date and shall
cause to be deposited in the Collection Account an amount equal to the
Periodic Advance for the related Determination Date, which deposit may be made
in whole or in part from funds in the Collection Account being held for future
distribution or withdrawal on or in connection with Remittance Dates in
subsequent months. Any funds being held for future distribution to
Certificateholders and so used shall be replaced by the Master Servicer from
its own funds by deposit into the Collection Account on or before the
Determination Date corresponding to any such future Determination Date to the
extent that funds in the Collection Account for such future Determination Date
shall otherwise be less than the amount required to be transferred to the
Certificate Account in respect of payments to Certificateholders required to
be made on the Remittance Date related to such future Determination Date.
The Master Servicer shall designate on its records the specific
Mortgage Loans and related installments (or portions thereof) as to which such
Periodic Advance shall be deemed to have been made, such designation, except
in cases of manifest error, being conclusive for purposes of withdrawals from
the Collection Account or Trustee Collection Account pursuant to Section 5.4.
Section 5.21 Indemnification; Third Party Claims.
(a) Each of the Master Servicer, the Depositor, and the Transferor
(solely for the purpose of this Section 5.21, the "Indemnifying Parties")
agrees to indemnify and to hold each of the Master Servicer, the Depositor,
the Trustee, the Transferor, the Certificate Insurer and each
Certificateholder (solely for the purpose of this Section 5.21, the
"Indemnified Parties") harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Indemnified Parties may, respectively,
sustain in any way related to the failure of any one or more of the
Indemnifying Parties to perform its respective duties in compliance with the
terms of this Agreement. Each Indemnified Party and the Master Servicer shall
promptly notify the other Indemnified Parties if a claim is made by a third
party with respect to this Agreement, and the Master Servicer shall with the
consent of the Certificate Insurer, such consent not to be unreasonably
withheld, assume the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees approved by the
Certificate Insurer, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Indemnified Parties in respect of such
claim. The Trustee shall, out of the assets of the Trust Fund, reimburse the
Master Servicer in accordance with Section 5.14 hereof for all amounts
advanced by it pursuant to the preceding sentence except when the claim
relates directly to the failure of the Master Servicer to service and
administer the Mortgages in compliance with the terms of this Agreement;
provided, that the Master Servicer's indemnity hereunder shall not be in any
manner conditioned on the availability of funds for such reimbursement.
(b) The Trustee, at the written request of the Master Servicer
(which the Trustee may conclusively rely on) shall reimburse the Transferor
from amounts otherwise distributable on the Class R Certificates for all
amounts advanced by the Transferor pursuant to the second sentence of Section
4.3 of the Purchase and Sale Agreement except when the relevant claim relates
directly to the failure of the Transferor to perform its duties in compliance
with the terms of the Purchase and Sale Agreement.
Section 5.22 Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Master Servicer.
(a) The Master Servicer will keep in full effect its existence,
rights and franchises as a corporation, will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction
necessary to protect the validity and enforceability of this Agreement or any
of the Mortgage Loans and to perform its duties under this Agreement and will
otherwise operate its business so as to cause the representations and
warranties under Section 3.1 to be true and correct at all times under this
Agreement.
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Master Servicer shall be a party, or any Person
succeeding to the business of the Master Servicer, shall be an established
mortgage loan servicing institution acceptable to the Certificate Insurer that
has a net worth of at least $15,000,000 and is a Permitted Transferee, and in
all events shall be the successor of the Master Servicer 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. The Master Servicer
shall send notice of any such merger or consolidation to the Trustee and the
Certificate Insurer.
Section 5.23 Assignment of Agreement by Master Servicer; Master
Servicer Not to Resign. The Master Servicer shall not assign this Agreement
nor resign from the obligations and duties hereby imposed on it except by
mutual written consent of the Master Servicer, the Transferor, the Certificate
Insurer and the Trustee or upon the determination that the Master Servicer's
duties hereunder are no longer permissible under applicable law and that such
incapacity cannot be cured by the Master Servicer without the incurrence, in
the reasonable judgment of the Certificate Insurer, of unreasonable expense.
Any such determination that the Master Servicer's duties hereunder are no
longer permissible under applicable law permitting the resignation of the
Master Servicer shall be evidenced by a written Opinion of Counsel (who may be
counsel for the Master Servicer) to such effect delivered to the Trustee, the
Transferor, the Depositor and the Certificate Insurer. No such resignation
shall become effective until the Trustee or another successor appointed in
accordance with the terms of this Agreement has assumed the Master Servicer's
responsibilities and obligations hereunder in accordance with Section 7.2. The
Master Servicer shall provide the Trustee, Moody's and S&P and the Certificate
Insurer with 30 days prior written notice of its intention to resign pursuant
to this Section 5.23.
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<PAGE>
ARTICLE VI
Distributions and Payments
Section 6.1 Establishment of Certificate Account, Deposits to the
Certificate Account.
(a) The Trustee shall establish and maintain the Certificate Account
which shall be titled "Certificate Account, Norwest Bank Minnesota, National
Association, as trustee for the registered holders of Irwin Home Equity Asset
Backed Certificates, Series 1999-1, Class A and Class R" and which shall be an
Eligible Account. Notice of the establishment of the Certificate Account shall
be promptly provided in writing to each of the Master Servicer, the Rating
Agencies and the Certificate Insurer.
(b) The Trustee shall control and receive the income from the
investment of funds in the Certificate Account. The Trustee shall deposit the
amount of any losses incurred in respect of any such investments in the
Certificate Account out of its own funds immediately as realized.
(c) On each Determination Date, the Master Servicer shall cause to
be deposited in the Certificate Account from funds on deposit in the
Collection Account, an amount equal to the Master Servicer Remittance Amount
(net of the amount to be deposited pursuant to clause (ii) below) and (ii)
from funds on deposit in the Collection Account or the Trustee Collection
Account, the Net Foreclosure Profits, if any with respect to the related
Remittance Date, minus any portion thereof payable to the Master Servicer
pursuant to Section 5.3.
Section 6.2 Permitted Withdrawals From the Certificate Account. The
Trustee shall, in accordance with the Master Servicer's written directions (in
the case of (a), (b), (d) or (e) below) to the Trustee as described in Section
6.5, withdraw or cause to be withdrawn funds from the Certificate Account for
the following purposes:
(a) to effect the distributions described in Section 6.5(a) and
6.5(b);
(b) to pay to or upon the direction of the Transferor with respect
to each Mortgage Loan or property acquired in respect thereof that has been
repurchased or replaced pursuant to Section 2.4 or 3.3 or to pay to the Master
Servicer with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased all amounts received thereon deposited in the
Certificate Account that do not constitute property of the Trust Fund;
(c) to pay the Trustee any interest earned on or investment income
earned with respect to funds in the Certificate Account;
(d) to return to the Collection Account any amount deposited in the
Certificate Account that was not required to be deposited therein; and
(e) to clear and terminate the Certificate Account upon termination
of the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate Account pursuant to each of subclauses (a)
through (e) listed above.
Section 6.3 Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement, including, but not limited to, (i) all payments due from the Master
Servicer or any Subservicer on the Mortgage Loans in accordance with the
respective terms and conditions of such Mortgage Loans and required to be paid
over to the Trustee by the Master Servicer or by any Subservicer and (ii)
Insured Payments from the Certificate Insurer. The Trustee shall hold all such
money and property received by it as part of the Trust Fund and shall apply it
as provided in this Agreement.
Section 6.4 The Certificate Insurance Policy.
(a) Not later than two Business Days prior to the Remittance Date,
the Trustee, based on the information provided to it by the Master Servicer
pursuant to Section 6.5 hereof, shall determine with respect to the
immediately following Remittance Date the amount to be on deposit in the
Certificate Account reduced by (x) the sum of the amounts described in clauses
(i) and (ii) of Section 6.5(a) and the amounts described in clauses (i) and
(ii) of Section 6.5(b) for the related Remittance Date, and further not
including (y) any Insured Payment.
(b) Not later than 12:00 noon New York City time on the second
Business Day preceding each Remittance Date, the Trustee shall, if the
Trustee, based solely on information provided by the Master Servicer,
determines that the Available Amount for the related Remittance Date is less
than the sum of the Class A-1 Interest Distribution Amount, Class A-2 Interest
Distribution Amount, Class A-3 Interest Distribution Amount, Class A-4
Interest Distribution Amount and Class A-5 Interest Distribution Amount and
any Subordination Deficit for such Remittance Date, complete a Notice in the
form of Exhibit A to the Class A Certificate Insurance Policy, and submit such
notice to the Certificate Insurer and such notice shall serve as a claim for
an Insured Payment in an amount equal to the Insured Payment due with respect
to the Class A Certificates for and on such Remittance Date. The Insured
Payment shall be deposited directly into the Certificate Account in accordance
with the Notice and the Certificate Insurance Policy.
(c) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Certificate from
moneys received under the Certificate Insurance Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times
during normal business hours upon one Business Day's prior notice to the
Trustee.
(d) In the event that the Trustee has received a certified copy of
an order of the appropriate court that any amount distributed on the Class A
Certificates, including any amounts represented by an Insured Payment, has
been voided in whole or in part as a preference payment under applicable
bankruptcy law, the Trustee shall so notify the Certificate Insurer, shall
comply with the provisions of the Certificate Insurance Policy to obtain
payment by the Certificate Insurer of such voided amount distributed, and
shall, at the time it provides notice to the Certificate Insurer, notify, by
mail to Certificateholders of the affected Certificates that, in the event any
Certificateholder's amount distributed is so recovered, such Certificateholder
will be entitled to payment pursuant to the Certificate Insurance Policy, a
copy of which shall be made available through the Trustee, the Certificate
Insurer or the Certificate Insurer's fiscal agent, if any, and the Trustee
shall furnish to the Certificate Insurer or its fiscal agent, if any, its
records evidencing the payments which have been made by the Trustee and
subsequently recovered from Certificateholders, and dates on which such
payments were made.
(e) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law
(a "Preference Claim") of any distribution made with respect to the
Certificates. Each Certificateholder, by its purchase of Certificates, the
Master Servicer and the Trustee agree that, the Certificate Insurer (so long
as no Certificate Insurer Default exists) may at any time during the
continuation of any proceeding relating to a Preference Claim direct all
matters relating to such Preference Claim, including, without limitation, (1)
the direction of any appeal of any order relating to such Preference Claim and
(2) the posting of any surety, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to, and each Certificateholder, the Master
Servicer and the Trustee hereby delegate and assign to the Certificate
Insurer, to the fullest extent permitted by law, the rights of the Master
Servicer, the Trustee and each Certificateholder in the conduct of any such
Preference Claim, including, without limitation, all rights of any party to
any adversary proceeding or action with respect to any court order issued in
connection with any such Preference Claim.
Section 6.5 Distributions. No later than 12:00 noon California time
on the Business Day preceding each Determination Date, the Master Servicer
shall deliver to the Trustee and to the Certificate Insurer a report in a
mutually agreed upon format specifying (x) the outstanding Principal Balances
of each of the Mortgage Loans as of the last day of the calendar month
immediately preceding the Due Period applicable to such Determination Date,
(y) such of the information included in Section 6.7(c) as to the Mortgage
Loans as the Trustee may reasonably require or the Certificate Insurer may
reasonably request and (z) such information as to each Mortgage Loan as of the
Record Date immediately preceding such Determination Date and such other
information as the Trustee shall reasonably require or the Certificate Insurer
may reasonably request. The Master Servicer shall include written direction to
the Trustee (with a copy delivered to the Certificate Insurer) specifying the
following information (which need not be in computer-readable form): (i) each
amount to be transferred from the Collection Account to the Certificate
Account, including (a) the Master Servicer Remittance Amount for Group I and
the Master Servicer Remittance Amount for Group II, (b) the Net Foreclosure
Profits for Group I (net of any portion payable to the Master Servicer) and
the Net Foreclosure Profits for Group II (net of any portion payable to the
Master Servicer) and (c) the Periodic Advances for each Group for the related
Remittance Date; and (ii) instructions to the Trustee specifying the amounts
to be withdrawn from the Certificate Account pursuant to Section 6.2(a)
(including therein an itemization of the amounts to be distributed pursuant to
Section 6.2(a)(i) as specified in Sections 6.5(a)(i)-(ix) and 6.5(b)(i)-(ix)).
The information with respect to the Remittance Date provided by the Master
Servicer to the Trustee and the Certificate Insurer on the Business Day
preceding each Determination Date shall also include the Class A-1
Pass-Through Rate, the Premium Percentage, the Class A-1 Principal Balance,
the Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class
A-4 Principal Balance, the Class A-5 Principal Balance, the aggregate
Principal Balance of the Mortgage Loans in Group I and the aggregate Principal
Balance of the Mortgage Loans in Group II, the Overcollateralization Deficit
for each Group; the Overcollateralization Increase Amount for each Group, the
Overcollateralization Amount for each Group; the Overcollateralization Target
Amount for each Group; and any Subordinate Deficit. The Master Servicer shall
also calculate and provide the Group I Available Amount, the Group II
Available Amount, the Group I Excess Spread, the Group II Excess Spread and
the amount of any Insured Payment. Simultaneous with the delivery of the
foregoing information to the Trustee, the Master Servicer shall provide the
Trustee and the Certificate Insurer with a report including information
specified in each of Sections 6.7(a)(i)-(xi) and in Section 6.7(c)(i)-(vii).
(a) With respect to the Certificate Account (including, if deposited
into such Certificate Account, any Insured Payments), on each Remittance Date,
with respect to Group I, the Trustee shall make the following allocations,
disbursements and transfers in the following order of priority, in accordance
with the information received pursuant to the immediately preceding paragraph
and each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and disbursements
have occurred:
(i) from the Master Servicer Remittance Amount for Group I, to
the Holders of the Class R Certificates, any prepayment penalties collected
during the related Due Period with respect to a Group I Mortgage Loan;
(ii) from the Master Servicer Remittance Amount for Group I, to
the Certificate Insurer, a Proportional Share for Group I of the Certificate
Insurance Premium Amount;
(iii) from the Master Servicer Remittance Amount for Group I
Available Amount, to the Trustee, a Proportional Share for Group I of the
Trustee Fees then due to it;
(iv) from the Group I Available Amount plus any Group II Excess
Spread plus the applicable portion of any Insured Payment, to the Class A-1
Certificateholders an amount equal to the Class A-1 Interest Distribution
Amount, to the Class A-2 Certificateholders an amount equal to the Class A-2
Interest Distribution Amount, to the Class A-3 Certificateholders an amount
equal to the Class A-3 Interest Distribution Amount and to the Class A-4
Certificateholders an amount equal to the Class A-4 Interest Distribution
Amount, pro rata;
(v) from the Group I Available Amount plus any Group II Excess
Spread plus the applicable portion of any Insured Payment, to the Class A-1
Certificateholders an amount equal to the Group I Principal Distribution
Amount net of any Overcollateralization Increase Amount included therein until
the Class A-1 Principal Balance has been reduced to zero, then to the Class
A-2 Certificateholders an amount equal to the Group I Principal Distribution
Amount net of any Overcollateralization Increase Amount included therein until
the Class A-2 Principal Balance has been reduced to zero, then to the Class
A-3 Certificateholders an amount equal to the remaining Group I Principal
Distribution Amount net of any Overcollateralization Increase Amount included
therein until the Class A-3 Principal Balance has been reduced to zero and
finally to the Class A-4 Certificateholders an amount equal to the remaining
Group I Principal Distribution Amount net of any Overcollateralization
Increase Amount included therein until the Class A-4 Principal Balance has
been reduced to zero;
(vi) from the Group I Excess Spread to the Class A-5
Certificateholders an amount equal to the excess of (a) the sum of the Class
A-5 Interest Distribution Amount and any Class A-5 Principal Distribution
Amount net of any Overcollateralization Increase Amount included therein over
(b) the Group II Available Amount until the Class A-5 Principal Balance has
been reduced to zero;
(vii) to the Certificate Insurer the lesser of (x) the excess
of (a) the amount in the Certificate Account (excluding Insured Payments) over
(b) the amount of Insured Payments for such Remittance Date and (y) the
outstanding Reimbursement Amount, if any, as of such Remittance Date;
(viii) from the Group I Excess Spread, first to the Class A-1
Certificateholders an amount equal to any outstanding Overcollateralization
Increase Amount for Group I until the Class A-1 Principal Balance has been
reduced to zero, next to the Class A-2 Certificateholders an amount equal to
any outstanding Overcollateralization Increase Amount for Group I until the
Class A-2 Principal Balance has been reduced to zero, next to the Class A-3
Certificateholders an amount equal to any outstanding Overcollateralization
Increase Amount for Group I until the Class A-3 Principal Balance has been
reduced to zero, next to the Class A-4 Certificateholders an amount equal to
any outstanding Overcollateralization Increase Amount for Group I until the
Class A-4 Principal Balance has been reduced to zero and then to the Class A-5
Certificateholders an amount equal to any outstanding Overcollateralization
Increase Amount for Group II until the Class A-5 Principal Balance has been
reduced to zero; and
(ix) to the Holders of the Class R Certificates, the remaining
Group I Available Amount on deposit in the Certificate Account on such
Remittance Date, if any.
(b) With respect to the Certificate Account (including, if deposited
into such Certificate Account, any Insured Payments), with respect to Group
II, on each Remittance Date, the Trustee shall make the following allocations,
disbursements and transfers in the following order of priority, in accordance
with the information received pursuant to the immediately preceding paragraph
and each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and disbursements
have occurred:
(i) from the Master Servicer Remittance Amount for Group II, to
the Holders of the Class R Certificates, any prepayment penalties collected
during the related Due Period with respect to a Group II Mortgage Loan.
(ii) from the Master Servicer Remittance Amount for Group II,
to the Certificate Insurer, a Proportional Share for Group II of the
Certificate Insurance Premium Amount;
(iii) from the Master Servicer Remittance Amount for Group II,
to the Trustee, a Proportional Share for Group II of the Trustee Fees then due
to it;
(iv) from the Group II Available Amount plus any Group I Excess
Spread plus the applicable portion of any Insured Payment, to the Class A-5
Certificateholders an amount equal to the Class A-5 Interest Distribution
Amount, pro rata;
(v) from the Group II Available Amount plus any Group I Excess
Spread plus the applicable portion of any Insured Payment, to the Class A-5
Certificateholders an amount equal to the Class A-5 Principal Distribution
Amount net of any Overcollateralization Increase Amount included therein until
the Class A-5 Principal Balance has been reduced to zero;
(vi) from the Group II Excess Spread to the Class A-1
Certificateholders, Class A-2 Certificateholders, Class A-3 Certificateholders
or Class A-4 Certificateholders, as applicable, an amount equal to the excess
of (a) the sum of the Class A-1 Interest Distribution Amount, the Class A-2
Interest Distribution Amount, the Class A-3 Interest Distribution Amount, the
Class A-4 Interest Distribution Amount and any Group I Principal Distribution
Amount net of any Overcollateralization Increase Amount included therein over
(b) the Group I Available Amount until the Class A-1 Principal Balance, Class
A-2 Principal Balance, Class A-3 Principal Balance or Class A-4 Principal
Balance, as applicable, has been reduced to zero;
(vii) to the Certificate Insurer the lesser of (x) the excess
of a) the amount in the Certificate Account (excluding Insured Payments) over
(b) the amount of Insured Payments for such Remittance Date and (y) the
outstanding Reimbursement Amount, if any, as of such Remittance Date;
(viii) from the Group II Excess Spread, first to the Class A-5
Certificateholders an amount equal to any outstanding Overcollateralization
Increase Amount for Group II until the Class A-5 Principal Balance has been
reduced to zero, next to the Class A-1 Certificateholders an amount equal to
any outstanding Overcollateralization Increase Amount for Group I until the
Class A-1 Principal Balance has been reduced to zero, next to the Class A-2
Certificateholders an amount equal to any outstanding Overcollateralization
Increase Amount for Group I until the Class A-2 Principal Balance has been
reduced to zero, next to the Class A-3 Certificateholders an amount equal to
any outstanding Overcollateralization Increase Amount for Group I until the
Class A-3 Principal Balance has been reduced to zero and then to the Class A-4
Certificateholders an amount equal to any outstanding Overcollateralization
Increase Amount for Group I until the Class A-4 Principal Balance has been
reduced to zero; and
(ix) to the Holders of the Class R Certificates, the remaining
Group II Available Amount on deposit in the Certificate Account on such
Remittance Date, if any.
Notwithstanding the foregoing, the aggregate amounts distributed on
all Remittance Dates to the Holders of the Class A-1 Certificates, the Holders
of the Class A-2 Certificates, the Holders of the Class A-3 Certificates, the
Holders of the Class A-4 Certificates and the Holders of the Class A-5
Certificates on account of principal shall not exceed the Original Class A-1
Principal Balance, Original Class A-2 Principal Balance, Original Class A-3
Principal Balance, Original Class A-4 Principal Balance or Original Class A-5
Principal Balance, as applicable.
Section 6.6 Investment of Accounts.
(a) So long as no Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account held by the Trustee may be invested and reinvested by the
Trustee, in one or more Permitted Investments bearing interest or sold at a
discount and maturing not later than the next Remittance Date. Notwithstanding
anything to the contrary in this Section 6.6(a), all amounts received under
the Certificate Insurance Policy shall remain uninvested.
If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Account. The Trustee shall
be liable for any investment loss or other charge resulting therefrom.
(b) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Collection Account shall be for the
benefit of the Master Servicer as servicing compensation (in addition to the
Servicing Fee). The Master Servicer shall deposit in the related Account the
amount of any loss incurred in respect of any Permitted Investment held
therein which is in excess of the income and gain thereon immediately upon
realization of such loss, without any right to reimbursement therefor from its
own funds.
Section 6.7 Reports by Trustee.
(a) On each Remittance Date the Trustee shall forward a report
delivered to it by the Master Servicer on the Business Day preceding each
Determination Date, as described in Section 6.5 hereof, to each Holder, to the
Certificate Insurer, to the Depositor, to the Master Servicer, to S&P and to
Moody's (the "Trustee Remittance Report"). Such report shall set forth the
following information set forth separately for each Group where appropriate:
(i) the amount of the distributions made on such Remittance
Date with respect to the Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates and the Class R Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments or
other unscheduled recoveries of principal included therein;
(iii) the amount of such distributions allocable to interest
and the calculation thereof;
(iv) the amount of any Net Liquidation Proceeds included in
such distributions and the calculation thereof;
(v) the principal amount of the Class A-1 Certificates (based
on a Certificate in an original principal amount of $1,000), the principal
amount of the Class A-2 Certificates (based on a Certificate in an original
principal amount of $1,000), the principal amount of the Class A-3
Certificates (based on a Certificate in an original principal amount of
$1,000), the principal amount of the Class A-4 Certificates (based on a
Certificate in an original principal amount of $1,000) and the principal
amount of the Class A-5 Certificates (based on a Certificate in an original
principal amount of $1,000) then outstanding, and the outstanding amount of
the Principal Balances, after giving effect to any principal payments made on
such Remittance Date;
(vi) the amount of any Insured Payment included in the amounts
distributed to the Class A Certificateholders on such Remittance Date;
(vii) (a) for each Group, the amount of the
Overcollateralization Amount, the Overcollateralization Target Amount, the
Overcollateralization Increase Amount and (b) any Subordination Deficit on
such Remittance Date;
(viii) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in each such distribution; and
(ix) the amounts, if any, of any related Liquidation Loan
Losses for the related Due Period.
Items (i), (ii) and (iii) above shall, with respect to the Class A
Certificates, be presented on the basis of a Certificate having a $1,000
denomination. In addition, by January 31 of each calendar year following any
year during which the Certificates are outstanding, the Trustee shall furnish
a report to each Holder of record if so requested in writing at any time
during each calendar year as to the aggregate of amounts reported pursuant to
(i), (ii) and (iii) with respect to the Certificates for such calendar year.
(b) All distributions made to the Certificateholders according to
Class or type of Certificate on each Remittance Date will be made on a pro
rata basis among the Certificateholders as of the next preceding Record Date
based on the proportional beneficial ownership interest in the 1999-1 REMIC as
are represented by their respective Certificates, and shall be made by wire
transfer of immediately available funds to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if, in the case of a Class A Certificateholder, such
Certificateholder shall own of record Certificates of the same Class which
have denominations aggregating at least $5,000,000 appearing in the
Certificate Register and shall have provided complete wiring instructions at
least five Business Days prior to the Record Date, and otherwise by check
mailed to the address of such Certificateholder appearing in the Certificate
Register.
(c) In addition, on each Remittance Date the Trustee will distribute
to each Holder, to the Certificate Insurer, to the Underwriter, to the
Depositor, to S&P and to Moody's, together with the information described in
subsection (a) preceding, the following information with respect to the
Mortgage Loans as of the close of business on the last Business Day of the
prior calendar month (except as otherwise provided in clause (v) below) stated
separately for each Group, which is hereby required to be prepared by the
Master Servicer and furnished to the Trustee for such purpose on or prior to
the related Determination Date:
(i) the total number of Mortgage Loans and the aggregate
Principal Balances thereof, together with the number, aggregate principal
balances of such Mortgage Loans and the percentage (based on the aggregate
Principal Balances of the Mortgage Loans) of the aggregate Principal Balances
of such Mortgage Loans to the aggregate Principal Balance of all Mortgage
Loans (A) 30-59 days Delinquent, (B) 60-89 days Delinquent and (C) 90 or more
days Delinquent;
(ii) the number, aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of the aggregate Principal Balances of such Mortgage Loans to
the aggregate Principal Balance of all Mortgage Loans in foreclosure
proceedings and the number, aggregate Principal Balances of all Mortgage Loans
and percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of any such Mortgage Loans also included in any of the statistics
described in the foregoing clause (i);
(iii) the number, aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of the aggregate Principal Balances of such Mortgage Loans to
the aggregate Principal Balance of all Mortgage Loans relating to Mortgagors
in bankruptcy proceedings and the number, aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal Balances of
the Mortgage Loans) of any such Mortgage Loans are also included in any of the
statistics described in the foregoing clause (i);
(iv) the number, aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of the aggregate Principal Balances of such Mortgage Loans to
the aggregate Principal Balance of all Mortgage Loans relating to REO Mortgage
Loans and the number, aggregate Principal Balances of all Mortgage Loans and
percentage (based on the aggregate Principal Balances of the Mortgage Loans)
of any such Mortgage Loans that are also included in any of the statistics
described in the foregoing clause (i);
(v) the weighted average of the Mortgage Interest Rate for the
Mortgage Loans on the Due Date occurring in the Due Period related to such
Remittance Date;
(vi) the weighted average remaining term to stated maturity of
all Mortgage Loans; and
(vii) the book value of any REO Property.
Section 6.8 Additional Reports by Trustee and by Master Servicer.
(a) The Trustee shall report to the Depositor, the Master Servicer
and the Certificate Insurer with respect to the amount then held in the
Certificate Account (including investment earnings accrued or scheduled to
accrue) held by the Trustee and the identity of the investments included
therein, as the Depositor, the Master Servicer or the Certificate Insurer may
from time to time request in writing.
(b) From time to time, at the request of the Certificate Insurer,
the Trustee shall report to the Certificate Insurer with respect to its actual
knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth
in the Purchase and Sale Agreement, the Mortgage Loan Sale Agreement or in
Section 3.1 or 3.2 hereof.
(c) On each Remittance Date, the Trustee shall forward to Bloomberg
Financial Markets, L.P. ("Bloomberg") and the Underwriter information prepared
by the Master Servicer with respect to the Mortgage Loan and the Certificates
as of such Remittance Date, using a format and media mutually acceptable to
the Trustee, the Underwriter and Bloomberg.
Section 6.9 Compensating Interest. Not later than the close of
business on the third Business Day prior to the Remittance Date, the Master
Servicer shall remit to the Trustee (without right or reimbursement therefor)
for deposit into the Certificate Account an amount equal to the lesser of (i)
the aggregate of the Prepayment Interest Shortfalls for the related Remittance
Date resulting from Principal Prepayments during the related Due Period and
(ii) its aggregate Servicing Fees received in the related Due Period (the
"Compensating Interest").
Section 6.10 Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Certificates which is made with
moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Certificates from the Trust. The
Depositor, the Master Servicer and the Trustee acknowledge, and each Holder by
its acceptance of a Certificate agrees, that without the need for any further
action on the part of the Certificate Insurer, the Depositor, the Master
Servicer, the Trustee or the Certificate Registrar (i) to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on the Certificates to the Holders of such
Certificates, the Certificate Insurer will be fully subrogated to, and each
Certificateholder, the Master Servicer and the Trustee hereby delegate and
assign to the Certificate Insurer, to the fullest extent permitted by law, the
rights of such Holders to receive such principal and interest from the Trust
Fund, including, without limitation, any amounts due to the Certificateholders
in respect of securities law violations arising from the offer and sale of the
Certificates, and (ii) the Certificate Insurer shall be paid such amounts but
only from the sources and in the manner provided herein for the payment of
such amounts. The Trustee and the Master Servicer shall cooperate in all
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the
Holders as otherwise set forth herein.
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<PAGE>
ARTICLE VII
Default
Section 7.1 Events of Default.
(a) In case one or more of the following Events of Default by the
Master Servicer shall occur and be continuing, that is to say:
(i) any failure by the Master Servicer to remit to the Trustee
any payment required to be made by the Master Servicer under the terms of this
Agreement or to deliver the report required by Section 6.5 of this Agreement;
(ii) the failure by the Master Servicer to make any required
Servicing Advance or Periodic Advance;
(iii) any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this Agreement, or
the breach of any representation and warranty made pursuant to Section 3.1 to
be true and correct which continues unremedied for a period of 30 days after
the date on which written notice of such failure or breach, requiring the same
to be remedied, shall have been given to the Master Servicer, as the case may
be, by the Depositor or the Trustee or to the Master Servicer and the Trustee
by any Certificateholder or the Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Master Servicer and such decree or order shall have
remained in force, undischarged or unstayed for a period of 60 days;
(v) the Master Servicer shall consent 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 Master Servicer or of or relating to all or substantially all of the
Master Servicer's property;
(vi) the Master Servicer shall admit in writing its inability
to pay its debts 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;
(vii) the continuation of a Master Servicer Termination
Delinquency Rate Trigger or a Master Servicer Termination Loss Trigger;
then, and in each and every such case, so long as an Event of
Default shall not have been remedied with respect to (i) - (viii) above, the
Trustee shall, but only at the direction of the Certificate Insurer or the
Majority Certificateholders with the consent of the Certificate Insurer, by
notice in writing to the Master Servicer and a Responsible Officer of the
Trustee, (x) remove the Master Servicer, (y) terminate all the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, as Master Servicer; and (z) with
respect to clauses (vii) and (viii) above, the Trustee shall, but only at the
direction of the Certificate Insurer, after notice in writing to the Master
Servicer and a Responsible Officer of the Trustee, terminate all the rights
and obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, as Master Servicer. Upon receipt by
the Master Servicer and the Trustee of such written notice, all authority and
power of the Master Servicer under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall, subject to Section 7.2, pass to and be
vested in the Trustee or its designee approved by the Certificate Insurer and
the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, at the
expense of the Master Servicer, any and all documents and other instruments
and do or cause to be done all other acts or things necessary or appropriate
to effect the purposes of such notice of termination, including, but not
limited to, the transfer and endorsement or assignment of the Mortgage Loans
and related documents. The Master Servicer agrees to cooperate (and pay any
related costs and expenses) with the Trustee in effecting the termination of
the Master Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee or its designee for
administration by it of all amounts which shall at the time be credited by the
Master Servicer to the Collection Account or thereafter received with respect
to the Mortgage Loans. The Trustee shall promptly notify the Certificate
Insurer, Moody's and S&P upon receiving notice of, or its discovery of, the
occurrence of an Event of Default.
Section 7.2 Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.1, or the Trustee and the Certificate
Insurer receive the resignation of the Master Servicer evidenced by an Opinion
of Counsel pursuant to Section 5.23, or the Master Servicer is removed as
Master Servicer pursuant to Article VII, in which event the Trustee shall
promptly notify the Certificate Insurer and Moody's and S&P, except as
otherwise provided in Section 7.1, the Trustee or its designee shall be the
successor in all respects to the Master Servicer in its capacity as Master
Servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof arising on or after the date of succession; provided,
however, that the Trustee shall not be liable for any actions or the
representations and warranties of any Master Servicer prior to it and
including, without limitation, the obligations of the Master Servicer set
forth in Sections 2.4 and 3.3. The parties hereto acknowledge that during a
period not to exceed 90 days, the successor Master Servicer will not be able
to fully service the Mortgage Loans until the transition of servicing is
complete. Such 90-day period shall be extended as necessary in the event that
the Master Servicer does not cooperate with such successor or the data
provided by the Master Servicer is incomplete or faulty. The Trustee, as
Successor Master Servicer, or any other successor Master Servicer shall be
obligated to pay Compensating Interest pursuant to Section 6.9 hereof; the
Trustee, as Successor Master Servicer is obligated to make advances pursuant
to Section 5.20 unless, and only to the extent the Trustee, as Successor
Master Servicer determines reasonably and in good faith that such advances
would not be recoverable pursuant to Sections 5.4(b), 5.4(g) or 5.4(j), such
determination to be evidenced by a certification of a Responsible Officer of
the Trustee, as Successor Master Servicer delivered to the Certificate
Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders with the consent of the Certificate Insurer or the
Certificate Insurer so requests in writing to the Trustee, appoint, pursuant
to the provisions set forth in paragraph (c) below, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of not
less than $15,000,000 as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities
of the Master Servicer hereunder.
(c) Any Successor Master Servicer shall be entitled to the Servicing
Compensation (including a fee not to exceed the Servicing Fee) and other funds
pursuant to Section 5.14 hereof as the Master Servicer if the Master Servicer
had continued to act as Master Servicer hereunder.
(d) The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Master Servicer agrees to cooperate with the Trustee and any
successor Master Servicer in effecting the termination of the Master
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Master Servicer, as applicable, at the
Master Servicer's cost and expense, all documents and records reasonably
requested by it to enable it to assume the Master Servicer's functions
hereunder and shall promptly also transfer to the Trustee or such successor
Master Servicer, as applicable, all amounts that then have been or should have
been deposited in the Collection Account by the Master Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections
received by the Master Servicer after such removal or resignation shall be
endorsed by it to the Trustee and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor Master Servicer. Neither the
Trustee nor any other successor Master Servicer shall be held liable by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof caused by (1) the failure of the Master Servicer to
deliver, or any delay in delivering, cash, documents or records to it, or (2)
restrictions imposed by any regulatory authority having jurisdiction over the
Master Servicer hereunder. No appointment of a successor to the Master
Servicer hereunder shall be effective until the Trustee and the Certificate
Insurer shall have consented thereto, and written notice of such proposed
appointment shall have been provided by the Trustee to the Certificate Insurer
and to each Certificateholder. The Trustee shall not resign as Master Servicer
until a successor Master Servicer reasonably acceptable to the Certificate
Insurer has been appointed.
(e) Pending appointment of a successor to the Master Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that
no such compensation shall be in excess of that permitted the Master Servicer
pursuant to Section 5.14, together with other Servicing Compensation. The
Master Servicer, the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Section 7.3 Waiver of Defaults. The Certificate Insurer or the
Majority Certificateholders may, on behalf of all Certificateholders, and
subject to the consent of the Certificate Insurer, waive any events permitting
removal of the Master Servicer as Master Servicer pursuant to this Article
VII; provided, however, that the Majority Certificateholders may not waive a
default in making a required distribution on a Certificate without the consent
of the holder of such Certificate. Upon any waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto except to the extent expressly so waived. Notice of any
such waiver shall be given by the Trustee to S&P and Moody's.
Section 7.4 Mortgage Loans, Trust Fund and Accounts Held for Benefit
of the Certificate Insurer.
(a) The Trustee shall hold the Trust Fund and the Mortgage Files for
the benefit of the Certificateholders and the Certificate Insurer and all
references in this Agreement and in the Certificates to the benefit of Holders
of the Certificates shall be deemed to include the Certificate Insurer. The
Trustee shall cooperate in all reasonable respects with any reasonable request
by the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests under this Agreement and the Certificates
unless, as stated in an Opinion of Counsel addressed to the Trustee and the
Certificate Insurer, such action is adverse to the interests of the
Certificateholders or diminishes the rights of the Certificateholders or
imposes additional burdens or restrictions on the Certificateholders.
(b) The Master Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the Certificateholders and for
the benefit of the Certificate Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Certificateholders shall be
deemed to include the Certificate Insurer.
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<PAGE>
ARTICLE VIII
Termination
Section 8.1 Termination.
(a) This Agreement shall terminate upon written notice to the
Trustee of either: (1) the later of the distribution to Certificateholders of
the final payment or collection with respect to the last Mortgage Loan (or
Periodic Advances of same by the Master Servicer), or the disposition of all
funds with respect to the last Mortgage Loan and the remittance of all funds
due hereunder and the payment of all amounts due and payable to the
Certificate Insurer and the Trustee or (2) mutual consent of the Master
Servicer, the Certificate Insurer and all Certificateholders in writing;
provided, however, that in no event shall the Trust established by this
Agreement terminate later than twenty-one years after the death of the last
survivor of the descendants of John D. Rockefeller, alive as of the date
hereof.
(b) In addition, the Master Servicer may, at its option and at its
sole cost and expense (or, if the Master Servicer does not exercise this
option, the Certificate Insurer may, at its sole cost and expense), repurchase
all of the Mortgage Loans on the Optional Termination Date, on the next
succeeding Remittance Date, at a price equal to the sum of (1) the greater of
(i) 100% of the Principal Balance of each outstanding Mortgage Loan and each
REO Mortgage Loan, and (ii) the fair market value (disregarding accrued
interest) of the Mortgage Loans and REO Properties, determined as the average
of three written bids (copies of which shall be delivered to the Trustee and
the Certificate Insurer by the Master Servicer and the reasonable cost of
which may be deducted from the final purchase price) made by nationally
recognized dealers and based on a valuation process which would be used to
value comparable mortgage loans and REO property, plus (2) the aggregate
amount of accrued and unpaid interest on the Mortgage Loans through the
related Due Period and 30 days' interest thereon at a rate equal to the
weighted average of the Mortgage Interest Rates for the Mortgage Loans, net of
the Servicing Fee, plus (3) any unreimbursed amounts due to the Certificate
Insurer under this Agreement or the Certificate Insurer Agreement or any
Trustee Fee then due (the "Termination Price"). Any such purchase shall be
accomplished by deposit into the Certificate Account the Termination Price. No
such termination is permitted without the prior written consent of the
Certificate Insurer (i) if it would result in a draw on the Certificate
Insurance Policy, or (ii) unless the Master Servicer shall have delivered to
the Certificate Insurer an Opinion of Counsel reasonably satisfactory to the
Certificate Insurer stating that no amounts paid hereunder are subject to
recapture as preferential transfers under the United States Bankruptcy Code,
11 U.S.C. Sections 101 et seq., as amended.
(c) If on any Remittance Date, the Master Servicer determines that
there are no outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than funds in the Certificate Account, the Master Servicer
shall send a final distribution notice promptly to each such Certificateholder
in accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Remittance Date upon
which the Trust Fund and the 1999-1 REMIC will terminate and the
Certificateholders shall surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Master Servicer by letter to each of the Certificateholders identified to
the Master Servicer by the Trustee as the Certificateholders of record as of
the most recent Record Date, and shall be mailed during the month of such
final distribution before the Determination Date in such month, specifying (1)
the Remittance Date upon which final payment of such Certificates will be made
upon presentation and surrender of Certificates at the office of the Trustee
therein designated, (2) the amount of any such final payment and (3) that the
Record Date otherwise applicable to such Remittance Date is not applicable,
payments being made only upon presentation and surrender of the Certificates
at the office of the Trustee therein specified. The Master Servicer shall give
such notice to the Trustee therein specified. The Master Servicer shall give
such notice to the Trustee at the time such notice is given to
Certificateholders. The obligations of the Certificate Insurer hereunder shall
terminate upon the deposit by the Master Servicer with the Trustee of a sum
sufficient to purchase all of the Mortgage Loans and REO Properties as set
forth above and when the Class A-1 Principal Balance, Class A-2 Principal
Balance, Class A-3 Principal Balance, Class A-4 Principal Balance and Class
A-5 Principal Balance has been reduced to zero.
(e) In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned written notice, the Master Servicer shall
give a second written notice to the remaining Certificateholders to surrender
their Certificates for cancellation and receive the final distribution with
respect thereto. If within six months after the second notice, all of the
affected Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates and the cost thereof shall be paid out of the
funds and other assets which remain subject hereto. If within nine months
after the second notice all the affected Certificates shall not have been
surrendered for cancellation, the Class R Certificateholders shall be entitled
to all unclaimed funds and other assets which remain subject hereto and the
Trustee upon transfer of such funds shall be discharged of any responsibility
for such funds and the Certificateholders shall look only to the Class R
Certificateholders for payment. Such funds shall remain uninvested.
Section 8.2 Additional Termination Requirements.
(a) In the event that the Master Servicer exercises its purchase
option as provided in Section 8.1, the 1999-1 REMIC shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been furnished with an Opinion of Counsel (which shall not be an expense of
the Trustee) to the effect that the failure of the 1999-1 REMIC (or of any
other REMIC of the Trust Fund) to comply with the requirements of this Section
8.3 will not (1) result in the imposition of taxes on "prohibited
transactions" of such REMIC as defined in Section 860F of the Code or (2)
cause such REMIC to fail to qualify as a REMIC at any time that any Class A
Certificates are outstanding:
(i) Within 90 days prior to the final Remittance Date the
Master Servicer shall adopt and the Trustee shall sign, a plan of complete
liquidation of the 1999-1 REMIC (or the applicable REMIC of the Trust Fund)
meeting the requirements of a "Qualified Liquidation" under Section 860F of
the Code and any regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation, which plan shall include a description of the method for
such liquidation and the price to be conveyed for all of the assets of the
1999-1 REMIC at the time of such liquidation, and at or prior to the final
Remittance Date, the Trustee shall sell all of the assets of the 1999-1 REMIC
(or the applicable REMIC of the Trust Fund) to the Master Servicer for cash;
and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (a) to the Class A Certificateholders the Certificate
Principal Balance, plus one month's interest thereon at the related Class A
Pass-Through Rate, and (b) to the Class R Certificateholders, all of such
REMIC's cash on hand after such payment to the Class A Certificateholders
(other than cash retained to meet claims) and the 1999-1 REMIC shall terminate
at such time.
(b) By their acceptance of the Certificates, the Holders thereof
hereby agree to appoint the Master Servicer as their attorney in fact to: (1)
adopt such a plan of complete liquidation (and the Certificateholders hereby
appoint the Trustee as their attorney in fact to sign such plan) as
appropriate or upon the written request of the Certificate Insurer and (2) to
take such other action in connection therewith as may be reasonably required
to carry out such plan of complete liquidation all in accordance with the
terms hereof.
Section 8.3 Accounting Upon Termination of Master Servicer. Upon
termination of the Master Servicer, the Master Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the "Master Servicer" under
this Agreement.
<PAGE>
ARTICLE IX
The Trustee
Section 9.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing 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. If an Event of Default has occurred and has not been cured or
waived, the Trustee shall exercise such of the rights and power vested in it
by this Agreement, and use the same degree of care and skill in its exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(b) 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 on their face to the requirements of this Agreement;
provided, however, that the Trustee shall not be responsible for the accuracy
or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Master Servicer or the
Transferor hereunder. If any such instrument is found not to conform on its
face to the requirements of this Agreement, the Trustee shall take action as
it deems appropriate to have the instrument corrected and, if the instrument
is not corrected to the Trustee's satisfaction, the Trustee will, at the
expense of the Master Servicer notify the Certificate Insurer and request
written instructions as to the action it deems appropriate to have the
instrument corrected, and if the instrument is not so corrected, the Trustee
will provide notice thereof to the Certificate Insurer who shall then direct
the Trustee as to the action, if any, to be taken.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or other officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) The Trustee 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 the Certificate Insurer or with the consent
of the Certificate Insurer, any Class of the Class A Certificateholders
holding Class A Certificates evidencing Percentage Interests of such Class of
at least 25%, relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or actual knowledge of any default or Event of Default
(except an Event of Default with respect to the nonpayment of any amount
described in Section 7.1(a)), unless a Responsible Officer of the Trustee
shall have received written notice thereof. In the absence of receipt of such
notice, the Trustee may conclusively assume that there is no default or Event
of Default (except a failure to make a Periodic Advance);
(v) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Master Servicer under this Agreement except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties powers and privileges of, the Master Servicer
in accordance with the terms of this Agreement; and
(vi) Subject to the other provisions of this Agreement and
without limiting the generality of this Section, the Trustee shall have no
duty (a) to see to any recording, filing, or depositing of this Agreement or
any agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (b) to see to any insurance, (c) to see to the
payment or discharge of any tax, assessment, or other governmental charge or
any lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust, the Trust Fund, the Certificateholders or the
Mortgage Loans, (d) to confirm or verify the contents of any reports or
certificates of the Master Servicer delivered to the Trustee pursuant to this
Agreement believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties.
(d) It is intended that the 1999-1 REMIC formed hereunder shall
constitute, and that the affairs of the 1999-1 REMIC shall be conducted so as
to qualify it as, a REMIC as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Trustee covenants and agrees
that it shall act as agent (and the Trustee is hereby appointed to act as
agent) and as Tax Matters Person on behalf of the 1999-1 REMIC, and that in
such capacities it shall:
(i) prepare, sign and file, or cause to be prepared and filed,
in a timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax
Return (Form 1066) and any other Tax Return required to be filed by the 1999-1
REMIC, using a calendar year as the taxable year for the 1999-1 REMIC;
(ii) make, or cause to be made, an election, on behalf of the
1999-1 REMIC, to be treated as a REMIC on the federal tax return of the 1999-1
REMIC for its first taxable year;
(iii) prepare and forward, or cause to be prepared and
forwarded, to the Trustee, the Certificateholders and to the Internal Revenue
Service and any other relevant governmental taxing authority all information
returns or reports as and when required to be provided to them in accordance
with the REMIC Provisions;
(iv) to the extent that the affairs of the 1999-1 REMIC are
within its control, conduct such affairs of the 1999-1 REMIC at all times that
any Certificates are outstanding so as to maintain the status of the 1999-1
REMIC as a REMIC under the REMIC Provisions and any other applicable federal,
state and local laws, including, without limitation, information reports
relating to "original issue discount," as defined in the Code, based upon the
Prepayment Assumption and calculated by using the issue price of the
Certificates;
(v) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status of the
1999-1 REMIC;
(vi) pay the amount of any and all federal, state, and local
taxes imposed on the Trust Fund, prohibited transaction taxes as defined in
Section 860F of the Code, other than any amount due as a result of a transfer
or attempted or purported transfer in violation of Section 4.2, imposed on the
Trust Fund when and as the same shall be due and payable (but such obligation
shall not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The Trustee shall be entitled to reimbursement in
accordance with Sections 9.1(c) and 9.5 hereof;
(vii) ensure that any such returns or reports filed on behalf
of the Trust Fund by the Trustee are properly executed by the appropriate
person and submitted in a timely manner;
(viii) represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year
of the Trust Fund, enter into settlement agreements with any governmental
taxing agency, extend any statute of limitations relating to any item of the
Trust Fund and otherwise act on behalf of the Trust Fund in relation to any
tax matter involving the Trust Fund;
(ix) as provided in Section 5.18 hereof, make available
information necessary for the computation of any tax imposed (1) on
transferrers of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is held by
an entity which is not a Permitted Transferee. The Trustee covenants and
agrees that it will cooperate with the Master Servicer in the foregoing
matters and that it will sign, as Trustee, any and all Tax Returns required to
be filed by the Trust Fund. Notwithstanding the foregoing, at such time as the
Trustee becomes the successor Master Servicer, the holder of the largest
percentage of the Class R Certificates shall serve as Tax Matters Person until
such time as an entity is appointed to succeed the Trustee as Master Servicer;
(x) make available to the Internal Revenue Service and those
Persons specified by the REMIC Provisions all information necessary to compute
any tax imposed (A) as a result of the Transfer of an Ownership Interest in a
Class R Certificate to any Person who is not a Permitted Transferee, including
the information described in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5)with respect to the "excess inclusions" of such Class R
Certificate and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Class R Certificate having as among its record holders at any
time any Person that is not a Permitted Transferee. Reasonable compensation
for providing such information may be accepted by the Trustee;
(xi) pay out of its own funds, without any right of
reimbursement from the assets of the Trust Fund, any and all tax related
expenses of the Trust Fund (including, but not limited to, tax return
preparation and filing expenses and any professional fees or expenses related
to audits or any administrative or judicial proceedings with respect to the
Trust Fund that involve the Internal Revenue Service or state tax
authorities), other than the expense of obtaining any Opinion of Counsel
required pursuant to Sections 3.3, 5.12 and 8.2 and other than taxes except as
specified herein;
(xii) upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Class R Certificates the Form 1066
and each Form 1066Q and shall respond promptly to written requests made not
more frequently than quarterly by any Holder of Class R Certificates with
respect to the following matters:
(1) the original projected principal and interest cash flows on
the Closing Date on the regular and residual interests created hereunder and
on the Mortgage Loans, based on the Prepayment Assumption;
(2) the projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to the regular and residual
interests created hereunder and the Mortgage Loans, based on the Prepayment
Assumption;
(3) the Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash flows described
above;
(4) the original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to the regular or residual interests
created hereunder and with respect to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(5) the treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of the 1999-1 REMIC with
respect to such regular interests or bad debt deductions claimed with respect
to the Mortgage Loans;
(6) the amount and timing of any non-interest expenses of the
1999-1 REMIC; and
(7) any taxes (including penalties and interest) imposed on the
1999-1 REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure property" or
state or local income or franchise taxes; and
(xiii) make any other required reports in respect of interest
payments in respect of the Mortgage Loans and acquisitions and abandonments or
Mortgaged Property to the Internal Revenue Service and/or the borrowers, as
applicable.
In the event that any tax is imposed on "prohibited transactions" of
the REMIC as defined in Section 860F(a)(2) of the Code, on the "net income
from foreclosure property" of the REMIC as defined in Section 860G(c) of the
Code, on any contribution to the REMIC after the Startup Date pursuant to
Section 860G(d) of the Code, or any other tax is imposed, such tax shall be
paid by (i) the Trustee, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Agreement, (ii) the Master
Servicer, if such tax arises out of or results from a breach by the Master
Servicer of any of its obligations under this Agreement, or otherwise (iii)
the holders of the Class R Certificates in proportion to their undivided
beneficial ownership interest in the related REMIC as are represented by such
Class R Certificates. To the extent such tax is chargeable against the holders
of the Class R Certificates, notwithstanding anything to the contrary
contained herein, the Trustee is hereby authorized to retain from amounts
otherwise distributable to the Holders of the Class R Certificates on any
Remittance Date sufficient funds to reimburse the Trustee for the payment of
such tax (to the extent that the Trustee has paid the tax and not been
previously reimbursed or indemnified therefor).
Section 9.2 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 9.1:
(i) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond
or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such opinion of counsel;
(iii) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at the
request, or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement, unless such
Certificateholders or the Certificate Insurer, as applicable, shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
(iv) 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;
(v) prior to the occurrence of an Event of Default hereunder
and after the curing 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 to do so by the Certificate Insurer or Holders of
any Class of Class A Certificates evidencing Percentage Interests aggregating
not less than 25% of such class; 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 as a condition to taking any such
action. The reasonable expense of every such examination shall be paid by the
Master Servicer or, if paid by the Trustee, shall be repaid by the Master
Servicer upon demand from the Master Servicer's own funds;
(vi) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(vii) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the powers
granted hereunder; and
(viii) 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.
(b) Following the Startup Date, the Trustee shall not knowingly
accept any contribution of assets to the Trust Fund, unless the Trustee shall
have received an Opinion of Counsel (at the expense of the Master Servicer) to
the effect that the inclusion of such assets in the Trust Fund will not cause
the 1999-1 REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject the 1999-1 REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local
law or ordinances. The Trustee agrees to indemnify the Trust Fund and the
Master Servicer for any taxes and costs, including any attorney's fees,
imposed or incurred by the Trust Fund or the Master Servicer as a result of
the breach of the Trustee's covenants set forth within this subsection (b).
Section 9.3 Not Liable for Certificates or Mortgage Loans. The
recitals contained herein (other than the certificate of authentication on the
Certificates) shall be taken as the statements of the Transferor or the Master
Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of any Mortgage Loan or related document. The
Trustee shall not be accountable for the use or application of any funds paid
to the Master Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Master Servicer. The Trustee
shall not be responsible for the legality or validity of the Agreement or the
validity, priority, perfection or sufficiency of the security for the
Certificates issued or intended to be issued hereunder.
Section 9.4 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgor of
Certificates with the same rights it would have if it were not Trustee, and
may otherwise deal with the parties hereto.
Section 9.5 Trustee's Fees and Expenses; Indemnity.
(a) The Trustee acknowledges that in consideration of the
performance of its duties hereunder it is entitled to receive the Trustee Fee
in accordance with the provision of Section 6.5(a) and Section 6.5(b). The
Trustee shall not be entitled to compensation for any expense, disbursement or
advance as may arise from its negligence or bad faith, and, prior to the
occurrence of an Event of Default, the Trustee shall have no lien on the Trust
Fund for the payment of its fees and expenses.
(b) The Trust Fund, the Trustee and any director, officer, employee
or agent of the Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability, claim, damage or expense arising out of,
or imposed upon the Trust or the Trustee, other than any loss, liability or
expense incurred by reason of (i) the acts of the Trustee not authorized or
required pursuant to this Agreement or taken pursuant to written instructions
received from the Master Servicer, the Certificate Insurer or the Majority
Holders, or (ii) by reason of the Trustee's reckless disregard of obligations
and duties hereunder. The obligation of the Master Servicer under this Section
9.5 arising prior to any resignation or termination of the Master Servicer
hereunder shall survive termination of the Master Servicer and payment of the
Certificates, and shall extend to any co-trustee appointed pursuant to this
Article IX.
Section 9.6 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (a) a banking association organized and doing
business under the laws of any state or the United States of America subject
to supervision or examination by federal or state authority, (b) authorized
under such laws to exercise corporate trust powers, including taking title to
the Trust Fund assets on behalf of the Certificateholders (c) having a
combined capital and surplus of at least $50,000,000, (d) whose long-term
deposits, if any, shall be rated at least BBB by S&P and Baa3 by Moody's
(except as provided herein) or such lower long-term deposit rating as may be
approved in writing by the Certificate Insurer, and (e) reasonably acceptable
to the Certificate Insurer. If such 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 shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.7.
Section 9.7 Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Master Servicer,
the Certificate Insurer and to all Certificateholders. Upon receiving such
notice of resignation, the Master Servicer shall promptly appoint a successor
trustee by written instrument, in duplicate, which instrument shall be
delivered to the resigning Trustee and to the successor trustee. A copy of
such instrument shall be delivered to the Depositor, the Certificateholders,
the Certificate Insurer and the Transferor by the Master Servicer. Unless a
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment
of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.6 and shall fail to resign after
written request therefor by the Master Servicer or the Certificate Insurer, or
if at any time the Trustee shall become incapable of acting, or shall be
adjudged 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 Master Servicer or the
Certificate Insurer may remove the Trustee, and the Master Servicer shall,
within 30 days after such removal, appoint, subject to the approval of the
Certificate Insurer, which approval shall not be unreasonably delayed, a
successor trustee by written instrument, in duplicate, which instrument shall
be delivered to the Trustee so removed and to the successor trustee. A copy of
such instrument shall be delivered to the Depositor, the Certificateholders,
the Certificate Insurer and the Transferor by the Master Servicer.
(c) If the Trustee fails to perform in accordance with the terms of
this Agreement, the Majority Certificateholders or the Certificate Insurer may
remove the Trustee and appoint a successor trustee acceptable to the
Certificate Insurer by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one
complete set of which instruments shall be delivered to the Master Servicer,
one complete set to the Trustee so removed and one complete set to the
successor Trustee so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.8.
Section 9.8 Successor Trustee. Any successor trustee appointed as
provided in Section 9.7 shall execute, acknowledge and deliver to the
Depositor, the Certificate Insurer, the Transferor, the Master 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 the like effect as if
originally named as trustee herein. The predecessor trustee shall deliver to
the successor trustee all Mortgage Files and related documents and statements
held by it hereunder, and the Master Servicer and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations. No
successor trustee shall accept appointment as provided in this Section unless
at the time of such acceptance such successor trustee shall be eligible under
the provisions of Section 9.6. Upon acceptance of appointment by a successor
trustee as provided in this Section, the Master Servicer 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 Moody's and S&P.
If the Master Servicer fails to mail such notice within 10 days after
acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Master Servicer.
Section 9.9 Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated or any corporation or national banking association resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation or national banking association succeeding to the business
of the trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 9.6, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Master Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund,
and to vest in such Person or Persons, in such capacity, such title to the
Trust Fund, or any part thereof, and, subject to the other provisions of this
Section 9.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
9.6 hereunder, and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.8
hereof.
(a) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.10, 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 Master Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to the Trust Fund 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.
(b) 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.
(c) 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. The Trustee shall not be
responsible for any action or inaction of any such separate trustee or
co-trustee, provided that the Trustee appointed such separate trustee or
co-trustee with due care. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.11 Tax Returns; OID Interest Reporting. The Master
Servicer and the Depositor, as applicable, upon request, will promptly furnish
the Trustee with all such information as may be reasonably required in
connection with the Trustee's preparation of all Tax Returns of the Trust Fund
(including all such loan level information as the Trustee may reasonably
request) or for the purpose of the Trustee responding to reasonable requests
for information made by Certificateholders in connection with tax matters,
and, upon request within seven (7) Business Days after its receipt thereof,
the Master Servicer shall (i) sign on behalf of the Trust Fund any Tax Return
that the Master Servicer is required to sign pursuant to applicable federal,
state or local tax laws, and (ii) cause such Tax Return to have been returned
to the Trustee for filing and for distribution to Certificateholders if
required.
Section 9.12 Retirement of Certificates. The Trustee shall, upon the
retirement of the Certificates pursuant hereto or otherwise, furnish to the
Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance
Policy, shall surrender the Certificate Insurance Policy to the Certificate
Insurer for cancellation.
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<PAGE>
ARTICLE X
Miscellaneous Provisions
Section 10.1 Limitation on Liability of the Depositor and the Master
Servicer. Neither the Depositor nor the Master Servicer nor any of the
directors, officers, employees or agents of the Depositor or the Master
Servicer shall be under any liability to the Trust, the Certificateholders or
the Certificate Insurer 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 or the Master Servicer or any such Person against any breach of
warranties or representations made herein, or against any specific liability
imposed on each such party pursuant to this Agreement or against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith
or negligence in the performance of duties or by reason of reckless disregard
of obligations or duties hereunder. The Depositor or the Master Servicer and
any director, officer, employee or agent of the Depositor or the Master
Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any appropriate Person respecting
any matters arising hereunder.
Section 10.2 Acts of Certificateholders; Certificateholders' Rights.
(a) Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if
the Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
(b) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heir to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of
the Trust Fund, nor otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
(c) No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof
or thereof.
(d) The rights of the Certificateholders of Series 1999-1 will be
determined pursuant to this Agreement. The rights of the Holders of any
certificates or other instruments which may be issued by the Trustee pursuant
to Section 4.2 of this Agreement shall be determined by a supplement with
respect thereto. Such supplement may provide for any other agreements between
the parties hereto as long as such agreements do not violate, as to any
Certificate, certificates or other instruments, Section 10.3.
Section 10.3 Amendment or Supplement.
(a) This Agreement may be amended or supplemented from time to time
by the Master Servicer, the Depositor and the Trustee by written agreement,
upon the prior written consent of the Certificate Insurer (which consent shall
not be withheld if, in the Opinion of Counsel addressed to the Trustee and the
Certificate Insurer, failure to amend would adversely affect the interests of
the Certificateholders and such consent would not adversely affect the
interests of the Certificate Insurer), without notice to or consent of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, at the expense of the party requesting the change,
delivered to the Trustee and the Certificate Insurer, adversely affect in any
material respect the interests of any Certificateholder, adversely affect the
status of the 1999-1 REMIC as a REMIC or cause a tax to be imposed on such
REMIC; and provided, further, that no such amendment shall reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, or change the rights or obligations
of any other party hereto without the consent of such party; and provided,
finally, that any such amendment shall, as evidenced by an Opinion of Counsel,
at the expense of the party requesting the change, delivered to the Trustee
and the Certificate Insurer, comply with the terms of this Agreement. The
Trustee shall give prompt written notice to Moody's and S&P of any amendment
made pursuant to this Section 10.3 or pursuant to Section 6.10 of the Purchase
and Sale Agreement.
(b) This Agreement may be amended or supplemented from time to time
by the Master Servicer, the Depositor and the Trustee with the consent of the
Certificate Insurer (which consent shall not be withheld if, in the Opinion of
Counsel addressed to the Trustee and the Certificate Insurer, failure to amend
would adversely affect the interests of the Certificateholders and such
consent would not adversely affect the interests of the Certificate Insurer),
the Majority Certificateholders and the Holders of the majority of the
undivided beneficial ownership interest in the 1999-1 REMIC as is represented
by the Class R Certificates 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; provided, however,
that no such amendment shall be made unless the Trustee and the Certificate
Insurer receive an Opinion of Counsel, at the expense of the party requesting
the change, that such change will not adversely affect the status of the
1999-1 REMIC as a REMIC or cause a tax to be imposed on such REMIC; and
provided, further, that no such amendment shall reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which
are required to be distributed on any Certificate without the consent of the
Holder of such Certificate or reduce the percentage for the Holders of which
are required to consent to any such amendment without the consent of the
Holders of 100% of Certificates affected thereby; and provided, finally, that
any such amendment shall, as evidenced by an Opinion of Counsel, at the
expense of the party requesting the change, delivered to the Trustee and the
Certificate Insurer, comply with the terms of this Agreement.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
Section 10.4 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices
for real property records in all of the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Master Servicer at the
Certificateholders' expense on direction and at the expense of Majority
Certificateholders requesting such recordation, but only when accompanied by
an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders or is necessary
for the administration or servicing of the Mortgage Loans.
Section 10.5 Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 10.6 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Master Servicer, Irwin Union Bank and
Trust Company, 500 Washington Street, Columbus, Indiana 47201, Attention: Grey
Ehlinger and Ellen Mufson, with a copy to Irwin Home Equity Corporation, 12677
Alcosta Boulevard, Suite 500, San Ramon, California 94583, Attention: Fern
Prosnitz, Chief Counsel, and Edwin Corbin, Vice President of Finance (with
copies to the Transferor), (ii) in the case of the Transferor, Irwin Funding
Corp., 500 Washington Street, Columbus, Indiana 47201, Attention: Ellen
Mufson, General Counsel and Greg Ehlinger, Vice President, with an additional
copy of such notice simultaneously delivered to the Master Servicer, (iii) in
the case of the Trustee, Norwest Bank Minnesota, National Association, 11000
Broken Land Parkway, Columbia, Maryland 21044, Attention: Corporate Trust
Services, Irwin Home Equity Trust 1999-1, (iv) in the case of the
Certificateholders, as set forth in the Certificate Register, (v) in the case
of Moody's, 99 Church Street, New York, New York 10007 Attention: Chris
Peters, (vi) in the case of S&P, 26 Broadway, New York, New York 10004
Attention: Residential Mortgage Surveillance Group, (vii) in the case of the
Certificate Insurer: One State Street Plaza, New York, NY 10004, Attention:
Howard Pfeffer, (viii) in the case of Bear Stearns Asset Backed Securities,
Inc., 245 Park Avenue, New York, New York 10167, Attention: Jonathan
Lieberman. Any such notices shall be deemed to be effective with respect to
any party hereto upon the receipt of such notice by such party, except that
notices to the Certificateholders shall be effective upon mailing or personal
delivery.
Section 10.7 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, 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 covenants, agreements, provisions or terms of
this Agreement.
Section 10.8 No Partnership. Nothing herein contained shall be
deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of the Master Servicer shall be rendered as an
independent contractor and not as agent for the Certificateholders.
Section 10.9 Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement.
Section 10.10 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Master Servicer, the Depositor, the
Trustee and the Certificateholders and their respective successors and
permitted assigns.
Section 10.11 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not
be deemed to be part of this Agreement.
Section 10.12 The Certificate Insurer Default. Any right conferred
to the Certificate Insurer shall be suspended during any period in which a
Certificate Insurer Default exists. At such time as the Certificates are no
longer outstanding hereunder, and no amounts owed to the Certificate Insurer
hereunder remain unpaid, the Certificate Insurer's rights hereunder shall
terminate.
Section 10.13 Third Party Beneficiary. The parties agree that each
of the Transferor and the Certificate Insurer is intended and shall have all
rights of a third-party beneficiary of this Agreement.
Section 10.14 Intent of the Parties. It is the intent of the
Depositor and Certificateholders that, for federal income taxes, state and
local income or franchise taxes and other taxes imposed on or measured by
income, the Certificates will be treated as evidencing beneficial ownership
interests in a REMIC. The parties to this Agreement and the holder of each
Certificate, by acceptance of its Certificate, and each beneficial owner
thereof, agree to treat, and to take no action inconsistent with the treatment
of, the Certificates in accordance with the preceding sentence for purposes of
federal income taxes, state and local income and franchise taxes and other
taxes imposed on or measured by income.
Section 10.15 Appointment of Tax Matters Person. The Holders of the
Class R Certificates hereby appoint the Trustee to act as the Tax Matters
Person for the 1999-1 REMIC for all purposes of the Code. The Tax Matters
Person will perform, or cause to be performed, such duties and take, or cause
to be taken, such actions as are required to be performed or taken by the Tax
Matters Person under the code. The Holders of the Class R Certificates may
hereafter appoint a different entity as their agent, or may appoint one of the
Class R Certificateholders to be the Tax Matters Person.
Section 10.16 GOVERNING LAW CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF NEW YORK.
(b) THE MASTER SERVICER AND THE TRUSTEE HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE
UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK
CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED
TO THE ADDRESS SET FORTH IN SECTION 10.6 HEREOF AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN
THE U.S. MAILS, POSTAGE PREPAID. THE DEPOSITOR, THE MASTER SERVICER AND THE
TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE DEPOSITOR, THE
MASTER SERVICER OR THE TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS TO BRING ANY ACTION OR
PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE DEPOSITOR, THE MASTER SERVICER AND THE TRUSTEE EACH HEREBY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
[End of Agreement - Signature Pages Follow]
