- --------------------------------------------------------------------------------
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) September 27, 1999
BEAR STEARNS ASSET BACKED SECURITIES, INC. (as depositor under a Pooling and
Servicing Agreement dated as of September 1, 1999 providing for, inter alia, the
issuance of Mortgage Asset-Backed Pass-Through Certificates, Series 1999-RS3)
Bear Stearns Asset Backed Securities, Inc.
------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 333-83541 13-3836437
-------- --------- ----------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
245 Park Avenue
New York, New York 10167
- ------------------ -----
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code, is (212) 272-4095
- --------------------------------------------------------------------------------
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------------------------------------------------------------------
(a) Not applicable
(b) Not applicable
(c) Exhibits:
Exhibit No. Description
----------- -----------
4.1 Pooling and Servicing Agreement, dated as of
September 1, 1999 among Bear Stearns Asset Backed
Securities, Inc., as depositor, Residential
Funding Corporation, as master servicer and Bank
One, National Association, as trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BEAR STEARNS ASSET BACKED
SECURITIES, INC.
By: /s/ Matthew Perkins
-------------------------
Name: Matthew Perkins
Title: Vice President
Dated: October 14, 1999
<PAGE>
EXHIBITS
================================================================================
BEAR STEARNS ASSET BACKED SECURITIES, INC.,
Depositor,
RESIDENTIAL FUNDING CORPORATION,
Master Servicer,
and
BANK ONE, NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1999
Mortgage Asset-Backed Pass-Through Certificates
Series 1999-RS3
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
<S> <C>
Section 1.01. Definitions...................................................................4
3/1Yield Maintenance Agreement.........................................................4
5/1Yield Maintenance Agreement.........................................................4
Accrued Certificate Interest...........................................................4
Additional Collateral..................................................................5
Additional Collateral Loan.............................................................5
Additional Servicing Fee...............................................................5
Adjusted Mortgage Rate.................................................................5
Adjustment Date........................................................................5
Advance ..............................................................................5
Affiliate..............................................................................5
Agreement..............................................................................5
Amount Held for Future Distribution....................................................6
Appraised Value........................................................................6
Assignment.............................................................................6
Assignment of Proprietary Lease........................................................6
Available Distribution Amount..........................................................6
Balloon Loan...........................................................................7
Balloon Payment........................................................................7
Bankruptcy Amount......................................................................7
Bankruptcy Code........................................................................7
Bankruptcy Loss........................................................................7
Basis Risk Shortfall...................................................................7
Basis Risk Shortfall Carry-Forward Amount..............................................8
Book-Entry Certificate.................................................................8
Business Day...........................................................................8
Cash Liquidation.......................................................................8
Certificate............................................................................8
Certificate Account....................................................................8
Certificate Account Deposit Date.......................................................8
Certificateholder or Holder............................................................8
Certificate Insurer Premium............................................................9
Certificate Insurer Premium Rate.......................................................9
Certificate Owner......................................................................9
Certificate Principal Balance..........................................................9
Certificate Register and Certificate Registrar........................................10
Class .............................................................................10
Class A Certificates..................................................................10
(i)
<PAGE>
Class A-I Certificate.................................................................10
Class A-II Certificate................................................................10
Class A Margin........................................................................10
Class LT1-I Interest..................................................................10
Class LT2-I Interest..................................................................10
Class LT3-I Interest..................................................................10
Class LT1-II Interest.................................................................11
Class LT2-II Interest.................................................................11
Class LT3-II Interest.................................................................11
Class MT1-I Interest..................................................................11
Class MT2-I Interest..................................................................11
Class MT3-I Interest..................................................................11
Class MT4-I Interest..................................................................11
Class MT1-II Interest.................................................................11
Class MT2-II Interest.................................................................12
Class MT3-II Interest.................................................................12
Class MT4-II Interest.................................................................12
Class R Certificate...................................................................12
Class R-I Certificate.................................................................12
Class R-II Certificate................................................................12
Class R-III Certificate...............................................................12
Class SB Certificates.................................................................12
Class SB-I Certificate................................................................12
Class SB-II Certificate...............................................................13
Class UT1-I Interest..................................................................13
Class UT2-I Interest..................................................................13
Class UT2-I Distribution Amount.......................................................13
Class UT2-I Notional Balance..........................................................13
Class UT2-I Pass-Through Rate.........................................................13
Class UT3-I Interest..................................................................13
Class UT3-I Distribution Amount.......................................................13
Class UT3-I Notional Balance..........................................................13
Class UT3-I Pass-Through Rate.........................................................13
Class UT4-I Interest..................................................................14
Class UT5-I Interest..................................................................14
Class UT1-II Interest.................................................................14
Class UT2-II Interest.................................................................14
Class UT2-II Distribution Amount......................................................14
Class UT2-II Notional Balance.........................................................14
Class UT2-II Pass-Through Rate........................................................14
Class UT3-II Interest.................................................................14
Class UT3-II Distribution Amount......................................................14
Class UT3-II Notional Balance.........................................................15
Class UT3-II Pass-Through Rate........................................................15
Class UT4-II Interest.................................................................15
Class UT5-II Interest.................................................................15
(ii)
<PAGE>
Closing Date..........................................................................15
Code .............................................................................15
Compensating Interest.................................................................15
Converted Mortgage Loan...............................................................15
Cooperative...........................................................................15
Cooperative Apartment.................................................................16
Cooperative Lease.....................................................................16
Cooperative Loans.....................................................................16
Cooperative Stock.....................................................................16
Cooperative Stock Certificate.........................................................16
Corporate Trust Office................................................................16
Cumulative Insurance Payments.........................................................16
Curtailment...........................................................................16
Custodial Account.....................................................................16
Custodial Agreement...................................................................17
Custodian.............................................................................17
Cut-off Date..........................................................................17
Cut-off Date Balance..................................................................17
Cut-off Date Principal Balance........................................................17
Debt Service Reduction................................................................17
Deferred Interest.....................................................................17
Deficiency Amount.....................................................................17
Deficient Valuation...................................................................17
Definitive Certificate................................................................18
Deleted Mortgage Loan.................................................................18
Delinquency Ratio.....................................................................18
Delinquent............................................................................18
Depository............................................................................18
Depository Participant................................................................18
Designated Subservicer................................................................18
Destroyed Mortgage Note...............................................................19
Determination Date....................................................................19
Disqualified Organization.............................................................19
Distribution Date.....................................................................19
Due Date .............................................................................19
Due Period............................................................................19
Eligible Account......................................................................19
ERISA .............................................................................20
Event of Default......................................................................20
Excess Bankruptcy Loss................................................................20
Excess Cash Flow......................................................................20
Excess Fraud Loss.....................................................................20
Excess Loss...........................................................................20
Excess Overcollateralization Amount...................................................20
Excess Realized Loss..................................................................20
Excess Special Hazard Loss............................................................20
(iii)
<PAGE>
Extraordinary Events..................................................................21
Extraordinary Losses..................................................................21
Fannie Mae............................................................................21
FASIT .............................................................................21
FDIC .............................................................................22
Freddie Mac...........................................................................22
Final Distribution Date...............................................................22
Fixed Rate Yield Maintenance Agreement................................................22
Foreclosure Restricted Loans..........................................................22
Foreclosure Profits...................................................................22
Fraud Loss Amount.....................................................................22
Fraud Losses..........................................................................23
Gross Margin..........................................................................23
Group I Aggregate Net Excess Turbo Amount.............................................23
Group II Aggregate Net Excess Turbo Amount............................................23
Group I Excess Turbo Amount...........................................................23
Group II Excess Turbo Amount..........................................................23
Group I Loan..........................................................................23
Group II Loan.........................................................................24
Group I Net Mortgage Rate.............................................................24
Group II Net Mortgage Rate............................................................24
Group I Overcollateralization Amount..................................................24
Group II Overcollateralization Amount.................................................24
Group I Standard Mortgage Rate........................................................24
Group II Standard Mortgage Rate.......................................................24
Group I Weighted Average Net Mortgage Rate............................................24
Group II Weighted Average Net Mortgage Rate...........................................24
High Cost Loan........................................................................24
HomeComings...........................................................................24
Hybrid ARM Loan.......................................................................25
Independent...........................................................................25
Index .............................................................................25
Initial Certificate Principal Balance.................................................25
Insurance Account.....................................................................25
Insurance Agreement...................................................................25
Insurance Proceeds....................................................................25
Insured Amount........................................................................25
Insurer .............................................................................25
Insurer Account.......................................................................25
Insurer Default.......................................................................26
Interest Accrual Period...............................................................26
Interest Distribution Amount..........................................................26
Late Collections......................................................................26
Late Payment Rate.....................................................................26
LIBOR .............................................................................26
LIBOR Business Day....................................................................26
(iv)
<PAGE>
LIBOR Rate Adjustment Date............................................................26
Limited Reimbursement Agreement.......................................................27
Limited Reimbursement Counterparty....................................................27
Limited Reimbursement Premium.........................................................27
Limited Reimbursement Premium Rate....................................................27
Liquidation Proceeds..................................................................27
Loan-to-Value Ratio...................................................................27
Maturity Date.........................................................................27
Maximum Mortgage Rate.................................................................27
Maximum Net Mortgage Rate.............................................................28
Minimum Mortgage Rate.................................................................28
Modified Mortgage Loan................................................................28
Modified Net Mortgage Rate............................................................28
Monthly Payment.......................................................................28
Moody's .............................................................................28
Mortgage .............................................................................28
Mortgage File.........................................................................28
Mortgage Loan Accrued Interest........................................................28
Mortgage Loan Program.................................................................29
Mortgage Loan Purchase Agreement......................................................29
Mortgage Loan Schedule................................................................29
Mortgage Loans........................................................................30
Mortgage Note.........................................................................31
Mortgage Rate.........................................................................31
Mortgaged Property....................................................................31
Mortgagor.............................................................................31
Neg Am Loan...........................................................................31
Net Mortgage Rate.....................................................................31
Net Weighted Average Cap Rate.........................................................31
Non-Primary Residence Loans...........................................................31
Non-United States Person..............................................................32
Nonrecoverable Advance................................................................32
Nonsubserviced Mortgage Loan..........................................................32
Note Margin...........................................................................32
Notice .............................................................................32
Officers' Certificate.................................................................32
Opinion of Counsel....................................................................32
Optional Termination Date.............................................................32
Outstanding Mortgage Loan.............................................................32
Overcollateralization Amount..........................................................32
Overcollateralization Increase Amount.................................................33
Overcollateralization Reduction Amount................................................33
Ownership Interest....................................................................33
Parent PowerSM Loan...................................................................33
Pass-Through Rate.....................................................................33
Paying Agent..........................................................................33
(v)
<PAGE>
Percentage Interest...................................................................33
Periodic Cap..........................................................................33
Permitted Investments.................................................................34
Permitted Transferee..................................................................35
Person .............................................................................35
Pledged Asset Mortgage Servicing Agreement............................................35
Policy .............................................................................35
Prepayment Assumption.................................................................35
Prepayment Interest Shortfall.........................................................35
Prepayment Period.....................................................................35
Primary Insurance Policy..............................................................36
Principal Distribution Amount.........................................................36
Principal Prepayment..................................................................36
Principal Prepayment in Full..........................................................37
Program Guide.........................................................................37
Purchase Price........................................................................37
Qualified Substitute Mortgage Loan....................................................37
Rating Agency.........................................................................37
Realized Loss.........................................................................38
Record Date...........................................................................38
Regular Interest......................................................................38
Relief Act............................................................................38
REMIC .............................................................................38
REMIC Administrator...................................................................39
REMIC I .............................................................................39
REMIC Provisions......................................................................39
REO Acquisition.......................................................................39
REO Disposition.......................................................................40
REO Imputed Interest..................................................................40
REO Proceeds..........................................................................40
REO Property..........................................................................40
Repurchase Event......................................................................40
Request for Release...................................................................40
Required Insurance Policy.............................................................40
Required Overcollateralization Amount.................................................40
Reserve Fund Addition.................................................................41
Reserve Fund Deposit..................................................................41
Reserve Fund Residual Right...........................................................41
Residential Funding...................................................................41
Responsible Officer...................................................................41
Rolling Six-Month Delinquency Ratio...................................................41
Security Agreement....................................................................41
Servicing Accounts....................................................................41
Servicing Advances....................................................................41
Servicing Fee.........................................................................42
Servicing Fee Rate....................................................................42
(vi)
<PAGE>
Servicing Modification............................................................42
Servicing Officer.................................................................42
Servicing Trigger.................................................................42
Special Hazard Amount.............................................................43
Special Hazard Loss...............................................................43
Standard & Poor's.................................................................44
Startup Date......................................................................44
Stated Principal Balance..........................................................44
Stepdown Date.....................................................................44
Strike Price......................................................................44
Subordination.....................................................................44
Subserviced Mortgage Loan.........................................................44
Subservicer.......................................................................44
Subservicer Advance...............................................................44
Subservicing Account..............................................................45
Subservicing Agreement............................................................45
Subservicing Fee..................................................................45
Tax Returns.......................................................................45
Transfer .........................................................................45
Transferee........................................................................45
Transferor........................................................................45
Trust Fund........................................................................45
Twelve-Month Loss Amount..........................................................46
Uniform Single Attestation Program for Mortgage Bankers...........................46
Uninsured Cause...................................................................46
United States Person..............................................................46
Voting Rights.....................................................................46
Section 1.02. Determination of LIBOR........................................................46
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.................................................48
Section 2.02. Acceptance by Trustee........................................................52
Section 2.03. Representations, Warranties and Covenants of the Master Servicer
and the Depositor............................................................53
Section 2.04. Representations and Warranties of Residential Funding........................56
Section 2.05. Execution and Authentication of Certificates.................................58
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
(vii)
<PAGE>
Section 3.01. Master Servicer to Act as Servicer...........................................59
Section 3.02. Subservicing Agreements Between Master Servicer and Subservicers;
Enforcement of Subservicers' Obligations; Special Servicing..................60
Section 3.03. Successor Subservicers.......................................................61
Section 3.04. Liability of the Master Servicer.............................................62
Section 3.05. No Contractual Relationship Between Subservicer and Trustee
or Certificateholders........................................................62
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee..............62
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account............................................................63
Section 3.08. Subservicing Accounts; Servicing Accounts....................................65
Section 3.09. Access to Certain Documentation and Information Regarding
the Mortgage Loans...........................................................67
Section 3.10. Permitted Withdrawals from the Custodial Account.............................67
Section 3.11. Maintenance of Primary Insurance Coverage....................................69
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage............69
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements; Certain Assignments..............................................71
Section 3.14. Realization Upon Defaulted Mortgage Loans....................................73
Section 3.15. Trustee to Cooperate; Release of Mortgage Files..............................76
Section 3.16. Servicing and Other Compensation; Compensating Interest......................78
Section 3.17. Reports to the Trustee and the Depositor.....................................79
Section 3.18. Annual Statement as to Compliance............................................79
Section 3.19. Annual Independent Public Accountants' Servicing Report......................79
Section 3.20. Right of the Depositor in Respect of the Master Servicer.....................80
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account..........................................................81
Section 4.02. Distributions................................................................82
Section 4.03. Statements to Certificateholders.............................................88
Section 4.04. Distribution of Reports to the Trustee and the Depositor; Advances
by the Master Servicer.......................................................90
Section 4.05. Allocation of Realized Losses................................................92
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property................93
Section 4.07. Optional Purchase of Defaulted Mortgage Loans................................93
Section 4.08. The Policy...................................................................93
Section 4.09. Surety Bond..................................................................95
Section 4.10. Reserve Fund.................................................................95
Section 4.11. Additional Servicing Fee.....................................................96
ARTICLE V
(viii)
<PAGE>
THE CERTIFICATES
Section 5.01. The Certificates.............................................................98
Section 5.02. Registration of Transfer and Exchange of Certificates........................99
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...........................105
Section 5.04. Persons Deemed Owners.......................................................105
Section 5.05. Appointment of Paying Agent.................................................105
Section 5.06. Optional Purchase of Certificates...........................................106
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the Master Servicer.............108
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicer; Assignment of
Rights and Delegation of Duties by Master Servicer..........................108
Section 6.03. Limitation on Liability of the Depositor, the Master Servicer and Others....109
Section 6.04. Depositor and Master Servicer Not to Resign.................................110
ARTICLE VII
DEFAULT
Section 7.01. Events of Default...........................................................111
Section 7.02. Trustee or Depositor to Act; Appointment of Successor.......................113
Section 7.03. Notification to Certificateholders..........................................114
Section 7.04. Waiver of Events of Default.................................................114
Section 7.05. Servicing Trigger; Removal of Master Servicer...............................115
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee...........................................................116
Section 8.02. Certain Matters Affecting the Trustee.......................................117
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.......................119
Section 8.04. Trustee May Own Certificates................................................119
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses; Indemnification.........119
Section 8.06. Eligibility Requirements for Trustee........................................120
Section 8.07. Resignation and Removal of the Trustee......................................121
Section 8.08. Successor Trustee...........................................................122
Section 8.09. Merger or Consolidation of Trustee..........................................123
Section 8.10. Appointment of Co-Trustee or Separate Trustee...............................123
Section 8.11. Appointment of Custodians...................................................124
(ix)
<PAGE>
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by the Master Servicer or Liquidation
of All Mortgage Loans.......................................................125
Section 9.02. Additional Termination Requirements.........................................127
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration........................................................129
Section 10.02. Master Servicer, REMIC Administrator and Trustee Indemnification............132
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment...................................................................134
Section 11.02. Recordation of Agreement; Counterparts......................................136
Section 11.03. Limitation on Rights of Certificateholders..................................137
Section 11.04. Governing Law...............................................................138
Section 11.05. Notices.....................................................................138
Section 11.06. Notices to Rating Agencies and the Insurer..................................138
Section 11.07. Severability of Provisions..................................................139
Section 11.08. Supplemental Provisions for Resecuritization................................140
Section 11.09. Rights of the Insurer.......................................................140
</TABLE>
Exhibit A Form of Class A Certificate
Exhibit B Form of Class SB Certificate
Exhibit C [Reserved]
Exhibit D Form of Class R Certificate
Exhibit E Form of Custodial Agreement
Exhibit F-1 Group I Loan Schedule
Exhibit F-2 Group II Loan Schedule
Exhibit G Forms of Request for Release
Exhibit H-1 Form of Transfer Affidavit and Agreement
Exhibit H-2 Form of Transferor Certificate
Exhibit I Form of Investor Representation Letter
Exhibit J Form of Transferor Representation Letter
Exhibit K Text of Amendment to Pooling and Servicing
Agreement Pursuant to Section 11.01(e) for a
Limited Guaranty
Exhibit L Form of Limited Guaranty
(x)
<PAGE>
Exhibit M Form of Lender Certification for Assignment of Mortgage Loan
Exhibit N Form of Rule 144A Investment Representation
Exhibit O High Cost Loans
Exhibit P Form of ERISA Letter
Exhibit Q Certificate Guaranty Insurance Policy
Exhibit R Schedule of Yield Maintenance Notional Balances
(xi)
<PAGE>
This Pooling and Servicing Agreement, effective as of
September 1, 1999, among BEAR STEARNS ASSET BACKED SECURITIES, INC., as the
depositor (together with its permitted successors and assigns, the "Depositor"),
RESIDENTIAL FUNDING CORPORATION, as master servicer (together with its permitted
successors and assigns, the "Master Servicer"), and BANK ONE, NATIONAL
ASSOCIATION, a national banking association, (formerly known as The First
National Bank of Chicago) as trustee (together with its permitted successors and
assigns, the "Trustee"),
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage asset-backed pass-through
certificates (collectively, the "Certificates"), to be issued hereunder in seven
classes, which in the aggregate will evidence the entire beneficial ownership
interest in the Mortgage Loans (as defined herein).
REMIC I
As provided herein, the REMIC Administrator will make an election to
treat the segregated pool of assets consisting of the Mortgage Loans and certain
other related assets (exclusive of the Yield Maintenance Agreements and the
Reserve Fund) subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC I." The Class R-I Certificates will
represent the sole class of "residual interests" in REMIC I for purposes of the
REMIC Provisions (as defined herein) under federal income tax law. The following
table irrevocably sets forth the designation, the REMIC I Remittance Rate, the
initial Uncertificated Balance, and solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC I Regular Interests. None of the REMIC I Regular Interests
will be certificated.
<TABLE>
<CAPTION>
REMIC I Initial Uncertificated Latest Possible
Designation Remittance Rate Balance Maturity Date(1)
- ---------------- ------------------------------ -------------------------- --------------------------
<S> <C> <C> <C>
LT1-I Variable(2) $117,420,660.00 October 25, 2032
LT2-I Variable(2) $ 1,198,169.77 October 25, 2032
LT3-I Variable(2) $ 1,198,170.23 October 25, 2032
LT1-II Variable(2) $252,864,500.00 October 25, 2032
LT2-II Variable(2) $ 2,580,247.86 October 25, 2032
LT3-II Variable(2) $ 2,580,253.14 October 25, 2032
</TABLE>
- -------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Group I Loan with the latest maturity date has been
designated as the "latest
possible maturity date" for each REMIC I Regular Interest.
(2) Calculated as provided in the definition of each respective Class
Interest herein.
REMIC II
--------
As provided herein, the REMIC Administrator will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as REMIC II. The Class R-II Certificates will represent
<PAGE>
the sole class of "residual interests" in REMIC II for purposes of the REMIC
Provisions under federal income tax law. The following table irrevocably sets
forth the designation, remittance rate (the "REMIC II Remittance Rate") and
initial Uncertificated Balance for each of the "regular interests" in REMIC II
(the "REMIC II Regular Interests"). The "latest possible maturity date"
(determined solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) for each REMIC II Regular Interest shall be the
thirty-sixth Distribution Date that follows the stated maturity date for the
Mortgage Loan included in the Trust Fund as of the Closing Date with the longest
remaining term to stated maturity. None of the REMIC II Regular Interests will
be certificated.
<TABLE>
<CAPTION>
REMIC II Initial Uncertificated Latest Possible
Designation Remittance Rate Balance Maturity Date(1)
----------- --------------- ------- ----------------
<S> <C> <C> <C>
MT1-I Variable(2) $ 117,420,660.00 October 25, 2032
MT2-I Variable(2) $ 1,198,169.77 October 25, 2032
MT3-I Variable(2) $ 1,198,170.23 October 25, 2032
MT1-II Variable(2) $ 252,864,500.00 October 25, 2032
MT2-II Variable(2) $ 2,580,247.86 October 25, 2032
MT3-II Variable(2) $ 2,580,253.14 October 25, 2032
MT4-I Variable(2) (3) October 25, 2032
MT4-II Variable(2) (3) October 25, 2032
</TABLE>
- -------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest
possible maturity date" for each REMIC II Regular Interest.
(2) Calculated as provided in the definition of the respective Class
Interest herein.
(3) Each of REMIC II Regular Interest MT4-I and MT4-II has no principal
balance but will have the terms provided in the definition of the Class
MT4-I Interest and Class MT4-II Interest.
REMIC III
---------
As provided herein, the REMIC Administrator will elect to
treat the segregated pool of assets consisting of the REMIC II Regular Interests
as a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as REMIC III. The Class R-III Certificates will represent the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions under federal income tax law. The following table irrevocably sets
forth the designation, Pass-Through Rate, aggregate Initial Certificate
Principal Balance, certain features, Maturity Date and initial ratings for each
Class of Certificates comprising the interests representing "regular interests"
in REMIC III (the "REMIC III Regular Certificates"). The "latest possible
maturity date" (determined solely for purposes of satisfying Treasury Regulation
Section 1.860G-1(a)(4)(iii)) for each Class of REMIC III Regular Certificates
shall be the first Distribution Date that follows the Stated Maturity Date for
the Mortgage Loan included in the Trust Fund as of the Closing Date with the
longest remaining term to stated maturity.
2
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE INITIAL
PASS- CERTIFICATE
THROUGH PRINCIPAL
DESIGNATION TYPE RATE BALANCE FEATURES MATURITY DATE INITIAL RATINGS
- ----------- ---- ---- ------- -------- ------------- ---------------
S&P MOODY'S
<S> <C> <C> <C> <C> <C> <C> <C>
Class A-I Senior Adjustable(1) $ 119,817,000.00 Senior October 25, 2032 AAA Aaa
Class A-II Senior Adjustable(1) $ 258,025,000.00 Senior October 25, 2032 AAA Aaa
Class SB-I Subordinate Adjustable(2) $ 22.74 Subordinate October 25, 2032 N/R N/R
Class SB-II Subordinate Adjustable(2) $ 314.11 Subordinate October 25, 2032 N/R N/R
Class R-I Residual N/A N/A Residual October 25, 2032 N/R N/R
Class R-II Residual N/A N/A Residual October 25, 2032 N/R N/R
Class R-III Residual N/A N/A Residual October 25, 2032 N/R N/R
</TABLE>
- ------------------
(1) Calculated in accordance with the definition of "Pass-Through Rate"
herein.
(2) The Class SB Certificates will accrue interest as described in the
definition of the Accrued Certificate Interest. The Class SB
Certificates will not accrue interest on their Certificate Principal
Balance.
The Class A-I Certificates will represent ownership interest
of the Class UT1-I Interest. The Class A-II Certificates will represent
ownership interest of the Class UT1-II Interest. The Class SB-1 Certificates
will represent ownership interest of the Class UT2-I Interest, Class UT3- I
Interest, Class UT4-I Interest and Class UT5-I Interest. The Class SB-II
Certificates will represent ownership interest of the Class UT2-II Interest,
Class UT3-II Interest, Class UT4-II Interest and Class UT5-II Interest.
The Group I Loans have an aggregate Cut-off Date Principal
Balance equal to approximately $119,817,023. The Group I Loans are fixed and
adjustable-rate, fully amortizing, negatively amortizing and balloon payment,
first lien mortgage loans having terms to maturity at origination or
modification of generally not more than 30 years. The Group II Loans have an
aggregate Cut-off Date Principal Balance equal to approximately $258,025,314.
The Group II Loans are fixed and adjustable-rate, fully amortizing, negatively
amortizing and balloon payment, first lien mortgage loans having terms to
maturity at origination or modification of generally not more than 30 years.
In consideration of the mutual agreements herein contained,
the Depositor, the Master Servicer and the Trustee agree as follows:
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ARTICLE I
DEFINITIONS
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Section 1.01. Definitions.
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Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article.
3/1 YIELD MAINTENANCE AGREEMENT: The yield maintenance
agreement relating to the Hybrid ARM Loans with an initial fixed rate period of
3 years, dated as of the Closing Date, between BSFP and the Trustee.
5/1 YIELD MAINTENANCE AGREEMENT: The yield maintenance
agreement relating to the Hybrid ARM Loans with an initial fixed rate period of
3 years, dated as of the Closing Date, between BSFP and the Trustee.
ACCRUED CERTIFICATE INTEREST: With respect to each
Distribution Date and the Class A Certificates, interest accrued during the
preceding Interest Accrual Period at the related Pass- Through Rate less
interest shortfalls from the Mortgage Loans, if any, allocated thereto for such
Distribution Date, to the extent not covered by Subordination, on the
Certificate Principal Balance thereof immediately prior to such Distribution
Date (or in the case of the first Distribution Date, the Cut-off Date). Accrued
Certificate Interest on the Class A Certificates will be reduced by (i) the
interest portion (adjusted to the Net Mortgage Rate (or the Modified Net
Mortgage Rate in the case of a Modified Mortgage Loan)) of Excess Losses to the
extent allocated to the Class A Certificates, (ii) the interest portion of
Advances previously made with respect to a Mortgage Loan or REO Property which
remained unreimbursed following the Cash Liquidation or REO Disposition of such
Mortgage Loan or REO Property that were made with respect to delinquencies that
were ultimately determined to be Excess Losses, (iii) Deferred Interest to the
extent allocated to Accrued Certificate Interest pursuant to Section 4.02(l),
and (iv) any other interest shortfalls, other than Prepayment Interest
Shortfalls, including interest that is not collectible from the Mortgagor for
the related Due Period pursuant to the Relief Act or similar legislation or
regulations as in effect from time to time, with all such reductions allocated
to the Class A Certificates on a PRO RATA basis, in reduction of the Accrued
Certificate Interest which would have resulted absent such reductions. With
respect to each Distribution Date and the Class SB-I Certificates, the sum of
the Class UT2-I Distribution Amount, the Class UT3-I Distribution Amount and the
interest accruing on the Class UT4-I Interest (in each case, prior to the
allocation of any shortfalls or losses), reduced by any interest shortfalls
including Prepayment Interest Shortfalls to the extent not covered by
Compensating Interest pursuant to Section 3.16 or by Excess Cash Flow pursuant
to clauses (vi) and (vii) of Section 4.01(g). With respect to each Distribution
Date and the Class SB-II Certificates, the sum of the Class UT2-II Distribution
Amount, the Class UT3-II Distribution Amount and the interest accruing on the
Class UT4-II Interest (in each case, prior to the allocation of any shortfalls
or losses), reduced by any interest shortfalls including Prepayment Interest
Shortfalls to the extent not covered by
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Compensating Interest pursuant to Section 3.16 or by Excess Cash Flow pursuant
to clauses (vi) and (vii) of Section 4.01(g). In addition, Accrued Certificate
Interest with respect to each Distribution Date, as to any Class SB Certificate,
shall be reduced, on a pro rata basis, by an amount equal to the interest
portion of Realized Losses allocated to the Overcollateralization Amount
pursuant to Section 4.05 hereof. Accrued Certificate Interest on the Class SB
Certificates shall accrue on the basis of a 360-day year consisting of twelve
30-day months.
ADDENDUM AND ASSIGNMENT AGREEMENT: The Addendum and Assignment
Agreement, dated as of January 31, 1995, between MLCC and the Master Servicer.
ADDITIONAL COLLATERAL: With respect to any Mortgage 100SM
Loan, the marketable securities held from time to time as security for the
repayment of such Mortgage 100SM Loan and any related collateral. With respect
to any Parent PowerSM Loan, the third-party guarantee for such Parent PowerSM
Loan, together with (i) any marketable securities held from time to time as
security for the performance of such guarantee and any related collateral or
(ii) any mortgaged property securing the performance of such guarantee, the
related home equity line of credit loan and any related collateral.
ADDITIONAL COLLATERAL LOAN: Each Mortgage Loan that is
supported by Additional Collateral.
ADDITIONAL SERVICING FEE: As defined in Section 4.11.
ADJUSTED MORTGAGE RATE: With respect to any Mortgage Loan and
any date of determination, the Mortgage Rate borne by the related Mortgage Note,
less the rate at which the related Subservicing Fee accrues.
ADJUSTMENT DATE: As to each adjustable rate Mortgage Loan,
each date set forth in the related Mortgage Note on which an adjustment to the
interest rate on such Mortgage Loan becomes effective.
ADVANCE: As to any Mortgage Loan, any advance made by the
Master Servicer, pursuant to Section 4.04.
AFFILIATE: With respect to any Person, any other Person
controlling, controlled by or under common control with such first Person. For
the purposes of this definition, "control" 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: This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
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AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution
Date, the total of the amounts held in the Custodial Account at the close of
business on the preceding Determination Date on account of (i) Liquidation
Proceeds, Insurance Proceeds, Principal Prepayments, Mortgage Loan purchases
made pursuant to Section 2.02, 2.03, 2.04 or 4.07 and Mortgage Loan
substitutions made pursuant to Section 2.03 or 2.04 received or made in the
month of such Distribution Date (other than such Liquidation Proceeds, Insurance
Proceeds and purchases of Mortgage Loans that the Master Servicer has deemed to
have been received in the preceding month in accordance with Section 3.07(b))
and (ii) payments which represent early receipt of scheduled payments of
principal and interest due on a date or dates subsequent to the Due Date in the
related Due Period.
APPRAISED VALUE: As to any Mortgaged Property, one of the
following: (i) the lesser of (a) the appraised value of such Mortgaged Property
based upon the appraisal made at the time of the origination of the related
Mortgage Loan, and (b) the sales price of the Mortgaged Property at such time of
origination, (ii) in the case of a Mortgaged Property securing a refinanced or
modified Mortgage Loan, one of (1) the appraised value based upon the appraisal
made at the time of origination of the loan which was refinanced or modified,
(2) the appraised value determined in an appraisal made at the time of
refinancing or modification or (3) the sales price of the Mortgaged Property, or
(iii) with respect to the Mortgage Loans for which a broker's price opinion was
obtained, the value contained in such opinion.
ASSIGNMENT: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law and accompanied by an Opinion of Counsel to that effect.
ASSIGNMENT OF PROPRIETARY LEASE: With respect to a Cooperative
Loan, the assignment of the related Cooperative Lease from the Mortgagor to the
originator of the Cooperative Loan.
AVAILABLE DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to (a) the sum of (i) the amount relating to the Mortgage Loans on
deposit in the Custodial Account as of the close of business on the immediately
preceding Determination Date and amounts deposited in the Custodial Account in
connection with the substitution of Qualified Substitute Mortgage Loans, (ii)
the amount of any Advance made on the immediately preceding Certificate Account
Deposit Date, (iii) any amount deposited in the Certificate Account on the
related Certificate Account Deposit Date pursuant to the second paragraph of
Section 3.12(a), (iv) any amount that the Master Servicer is not permitted to
withdraw from the Custodial Account pursuant to Section 3.16(e), (v) any amount
deposited in the Certificate Account pursuant to Section 4.07 or 9.01 and (vi)
any amount received by the Trustee pursuant to the Surety Bond or pursuant to
the Limited Reimbursement Agreement in respect of such Distribution Date,
reduced by (b) the sum as of the close of business on the immediately preceding
Determination Date of (x) the Amount Held for Future Distribution, (y) amounts
permitted to be withdrawn by the Master Servicer from the Custodial Account
pursuant to clauses (ii)-(x), inclusive, of Section 3.10(a) and (z) the
Certificate
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Insurer Premium payable with respect to the Class A Certificates on such
Distribution Date, and any payments to the Limited Reimbursement Counterparty in
connection with the Limited Reimbursement Agreement.
BALLOON LOAN: Each of the Mortgage Loans having an original
term to maturity that is shorter than the related amortization term.
BALLOON PAYMENT: With respect to any Balloon Loan, the related
Monthly Payment payable on the stated maturity date of such Balloon Loan.
BANKRUPTCY AMOUNT: As of any date of determination, an amount
equal to $137,315, less the sum of any amounts allocated through Section 4.05
for Bankruptcy Losses up to such date of determination. The Bankruptcy Amount
may be further reduced by the Master Servicer (including accelerating the manner
in which such coverage is reduced) provided that prior to any such reduction,
the Master Servicer shall (i) obtain written approval from the Insurer and
written confirmation from each Rating Agency that such reduction shall not
reduce the rating assigned to any Class of Class A Certificates by such Rating
Agency below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency without taking into
account the Policy, and (ii) provide a copy of such written confirmation to the
Trustee and the Insurer.
BANKRUPTCY CODE: The Bankruptcy Code of 1978, as amended.
BANKRUPTCY LOSS: With respect to any Mortgage Loan, a
Deficient Valuation or Debt Service Reduction; PROVIDED, HOWEVER, that neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy
Loss hereunder so long as the Master Servicer has notified the Trustee and the
Insurer in writing that the Master Servicer is diligently pursuing any remedies
that may exist in connection with the representations and warranties made
regarding the related Mortgage Loan and either (A) the related Mortgage Loan is
not in default with regard to payments due thereunder or (B) delinquent payments
of principal and interest under the related Mortgage Loan and any premiums on
any applicable primary hazard insurance policy and any related escrow payments
in respect of such Mortgage Loan are being advanced on a current basis by the
Master Servicer or a Subservicer, in either case without giving effect to any
Debt Service Reduction.
BASIS RISK SHORTFALL: With respect to any Distribution Date
for which the Pass- Through Rate for the Class A-I Certificates or Class A-II
Certificates is based on clause (iii) of the definition thereof, the excess, if
any, of (x) Accrued Certificate Interest on the Class A-I Certificates or Class
A-II Certificates, as applicable, for such Distribution Date using the lesser of
(a) clause (i) of the definition of Pass-Through Rate for the Class A-I
Certificates or Class A-II Certificates, as applicable, and (b) clause (ii) of
such definition over (y) Accrued Certificate Interest on the Class A-I
Certificates or Class A-II Certificates, as applicable, for such Distribution
Date at the then-applicable Pass-Through Rate to the extent not previously
reimbursed by amounts in the Reserve Fund.
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BASIS RISK SHORTFALL CARRY-FORWARD AMOUNT: With respect to
each Distribution Date and either Class of Class A Certificates, the aggregate
amount of Basis Risk Shortfall for such Class on such Distribution Date, plus
any unpaid Basis Risk Shortfall from prior Distribution Dates, plus accrued
interest on any unpaid related Basis Risk Shortfall from the Distribution Date
when incurred to the Distribution Date when paid at a rate equal to the lesser
of (i) LIBOR plus the related Class A Margin for the Distribution Date when such
Basis Risk Shortfall Carry-Forward Amount is paid and (ii) the Maximum Class A
Rate.
BOOK-ENTRY CERTIFICATE: Any Certificate registered in the name
of the Depository or its nominee.
BSFP: Bear Stearns Financial Products, Inc., or its successor
in interest.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York, the State of
Michigan, the State of California or the State of Illinois (and such other state
or states in which the Custodial Account or the Certificate Account are at the
time located) are required or authorized by law or executive order to be closed.
CASH LIQUIDATION: As to any defaulted Mortgage Loan other than
a Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
CERTIFICATE: Any Class A Certificate, Class SB Certificate or
Class R Certificate.
CERTIFICATE ACCOUNT: The account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "Bank One, National
Association, as trustee, in trust for the registered holders of Bear Stearns
Asset Backed Securities, Inc., Mortgage Asset-Backed Pass- Through Certificates,
Series 1999-RS3" and which must be an Eligible Account. Any such account or
accounts created and maintained subsequent to the Closing Date shall be subject
to the approval of the Insurer, which approval shall not be unreasonably
withheld.
CERTIFICATE ACCOUNT DEPOSIT DATE: As to any Distribution Date,
the Business Day prior thereto.
CERTIFICATEHOLDER OR HOLDER: The Person in whose name a
Certificate is registered in the Certificate Register, except that neither a
Disqualified Organization nor a Non-United States Person shall be a holder of a
Class R Certificate for any purpose hereof. Solely for the purpose of giving any
consent or direction pursuant to this Agreement, any Certificate, other than a
Class R Certificate, registered in the name of the Depositor, the Master
Servicer or any Subservicer or any Affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest or Voting Rights evidenced thereby shall
not be taken into account in determining whether the requisite amount of
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Percentage Interests or Voting Rights necessary to effect any such consent or
direction has been obtained. All references herein to "Holders" or
"Certificateholders" shall reflect the rights of Certificate Owners as they may
indirectly exercise such rights through the Depository and participating members
thereof, except as otherwise specified herein; PROVIDED, HOWEVER, that the
Trustee shall be required to recognize as a "Holder" or "Certificateholder" only
the Person in whose name a Certificate is registered in the Certificate
Register. Unless otherwise indicated in this Agreement, the Custodial Agreement
or the Mortgage Loan Purchase Agreement, whenever reference is made to the
actions taken by the Trustee on behalf of the Certificateholders, such reference
shall include the Insurer as long as there is no Insurer Default continuing.
CERTIFICATE INSURER PREMIUM: The premium payable to the
Insurer on each Distribution Date in an amount equal to one-twelfth of the
product of the Certificate Insurer Premium Rate and the Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution Date.
CERTIFICATE INSURER PREMIUM RATE: With respect to the Mortgage
Loans and any date of determination, the per annum rate specified in the
Insurance Agreement for the purpose of calculating the Certificate Insurer
Premium.
CERTIFICATE OWNER: With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate, as reflected on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent, if any, and otherwise on the books of a Depository
Participant, if any, and otherwise on the books of the Depository.
CERTIFICATE PRINCIPAL BALANCE: With respect to any Class A
Certificate, on any date of determination, an amount equal to (i) the Initial
Certificate Principal Balance of such Certificate as specified on the face
thereof, plus (ii) the Deferred Interest, if any, allocated thereto for each
Distribution Date prior to or coinciding with such date of determination in
accordance with Section 4.02(l), minus (iii) the sum of (x) the aggregate of all
amounts previously distributed with respect to such Certificate (or any
predecessor Certificate) (including such amounts paid pursuant to the Policy or
from the Reserve Fund) and applied to reduce the Certificate Principal Balance
or amount thereof pursuant to Section 4.02(g) and (y) the aggregate of all
reductions in Certificate Principal Balance deemed to have occurred in
connection with Realized Losses which were previously allocated to such
Certificate (or any predecessor Certificate) pursuant to Section 4.05 (other
than any such amounts included in an Insured Amount and paid pursuant to the
Policy or any amounts that were paid to the Trustee pursuant to the Limited
Reimbursement Agreement). With respect to each Class SB-I Certificate, on any
date of determination, an amount equal to the Percentage Interest evidenced by
such Certificate times the excess, if any, of (A) the then aggregate Stated
Principal Balance of the Group I Loans over (B) the then aggregate Certificate
Principal Balance of the Class A-I Certificates then outstanding. With respect
to each Class SB-II Certificate, on any date of determination, an amount equal
to the Percentage Interest evidenced by such Certificate times the excess, if
any, of (A) the then aggregate Stated Principal Balance of the Group II Loans
over (B) the then aggregate Certificate Principal Balance of the Class A-II
Certificates then outstanding.
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CERTIFICATE REGISTER AND CERTIFICATE REGISTRAR: The register
maintained and the registrar appointed pursuant to Section 5.02.
CLASS: Collectively, all of the Certificates or uncertificated
interests bearing the same designation.
CLASS A CERTIFICATES: Any one of the Class A-I or Class A-II
Certificates.
CLASS A-I CERTIFICATE: Any one of the Class A-I Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class SB-I
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses in respect of Loan Group I as set forth in Section
4.05, and evidencing an interest designated as a "regular interest" in REMIC III
for purposes of the REMIC Provisions.
CLASS A-II CERTIFICATE: Any one of the Class A-II Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class SB-II
Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses in respect of Loan Group II as set forth in
Section 4.05, and evidencing an interest designated as a "regular interest" in
REMIC II for purposes of the REMIC Provisions.
CLASS A MARGIN: With respect to the Class A-I Certificates, on
any Distribution Date on or prior to the first Distribution Date after the
Optional Termination Date, 0.40% per annum, and on any Distribution Date
thereafter, 0.80% per annum. With respect to the Class A-II Certificates, on any
Distribution Date on or prior to the first Distribution Date after the Optional
Termination Date, 0.45% per annum, and on any Distribution Date thereafter,
0.90% per annum.
CLASS LT1-I INTEREST: A regular interest in REMIC I that is
held as an asset of REMIC II, that has an initial principal balance equal to 98%
of the Stated Principal Balance of the Group I Loans as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group I Net Mortgage Rate,
and that has such other terms as are described in Section 4.02.
CLASS LT2-I INTEREST: A regular interest in REMIC I that is
held as an asset of REMIC II, that has an initial principal balance equal to 1%
of the Stated Principal Balance of the Group I Loans as of the Cut-off Date less
1% of the Group I Overcollateralization Amount as of the Cut-off Date, that
bears interest at a per annum rate equal to the Group I Net Mortgage Rate, and
that has such other terms as are described in Section 4.02.
CLASS LT3-I INTEREST: A regular interest in REMIC I that is
held as an asset of REMIC II, that has an initial principal balance equal to 1%
of the Stated Principal Balance of the Group I Loans as of the Cut-off Date plus
1% of the Group I Overcollateralization Amount as of the Cut-off Date, that
bears interest at a per annum rate equal to the Group I Net Mortgage Rate, and
that has such other terms as are described in Section 4.02.
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CLASS LT1-II INTEREST: A regular interest in REMIC I that is
held as an asset of REMIC II, that has an initial principal balance equal to 98%
of the Stated Principal Balance of the Group II Loans as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group II Net Mortgage Rate,
and that has such other terms as are described in Section 4.02.
CLASS LT2-II INTEREST: A regular interest in REMIC I that is
held as an asset of REMIC II, that has an initial principal balance equal to 1%
of the Stated Principal Balance of the Group II Loans as of the Cut-off Date
less 1% of the Group II Overcollateralization Amount as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group II Net Mortgage Rate,
and that has such other terms as are described in Section 4.02.
CLASS LT3-II INTEREST: A regular interest in REMIC I that is
held as an asset of REMIC II, that has an initial principal balance equal to 1%
of the Stated Principal Balance of the Group II Loans as of the Cut-off Date
plus 1% of the Group II Overcollateralization Amount as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group II Net Mortgage Rate,
and that has such other terms as are described in Section 4.02.
CLASS MT1-I INTEREST: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
98% of the Stated Principal Balance of the Group I Loans as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group I Net Mortgage Rate,
and that has such other terms as are described in Section 4.02.
CLASS MT2-I INTEREST: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to 1%
of the Stated Principal Balance of the Group I Loans as of the Cut-off Date less
1% of the Group I Overcollateralization Amount as of the Cut-off Date, that
bears interest at a per annum rate equal to the lesser of (i) the Group I
Standard Rate, and (ii) the Group I Net Mortgage Rate, and that has such other
terms as are described in Section 4.02.
CLASS MT3-I INTEREST: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to 1%
of the Stated Principal Balance of the Group I Loans as of the Cut-off Date plus
1% of the Group I Overcollateralization Amount as of the Cut-off Date, that
bears interest at a per annum rate equal to the Group I Net Mortgage Rate, and
that has such other terms as are described in Section 4.02.
CLASS MT4-I INTEREST: A regular interest in REMIC II that is
held as an asset of REMIC III, that has a notional balance equal to the
principal balance of the Class MT2-I Interest, that bears interest at a per
annum rate equal to the excess of (i) the Group I Net Mortgage Rate over (ii)
the Group I Standard Rate, and that has such other terms as are described in
Section 4.02.
CLASS MT1-II INTEREST: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
98% of the Stated Principal Balance of the Group II Loans as of the Cut-off
Date, that bears interest at a per annum rate equal to the Group II Net Mortgage
Rate, and that has such other terms as are described in Section 4.02.
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CLASS MT2-II INTEREST: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to 1%
of the Stated Principal Balance of the Group II Loans as of the Cut-off Date
less 1% of the Group II Overcollateralization Amount as of the Cut-off Date,
that bears interest at a per annum rate equal to the lesser of (i) the Group II
Standard Rate, and (ii) the Group II Net Mortgage Rate, and that has such other
terms as are described in Section 4.02.
CLASS MT3-II INTEREST: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to 1%
of the Stated Principal Balance of the Group II Loans as of the Cut-off Date
plus 1% of the Group II Overcollateralization Amount as of the Cut-off Date,
that bears interest at a per annum rate equal to the Group II Net Mortgage Rate,
and that has such other terms as are described in Section 4.02.
CLASS MT4-II INTEREST: A regular interest in REMIC II that is
held as an asset of REMIC III, that has a notional balance equal to the
principal balance of the Class MT2-II Interest, that bears interest at a per
annum rate equal to the excess of (i) the Group II Net Mortgage Rate over (ii)
the Group II Standard Rate, and that has such other terms as are described in
Section 4.02.
CLASS R CERTIFICATE: Any one of the Class R-I, Class R-II or
Class R-III Certificates.
CLASS R-I CERTIFICATE: Any one of the Class R-I Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit D and evidencing an interest
designated as a "residual interest" in REMIC I for purposes of the REMIC
Provisions.
CLASS R-II CERTIFICATE: Any one of the Class R-II Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit D and evidencing an interest
designated as a "residual interest" in REMIC II for purposes of the REMIC
Provisions.
CLASS R-III CERTIFICATE: Any one of the Class R-III
Certificates executed by the Trustee and authenticated by the Certificate
Registrar substantially in the form annexed hereto as Exhibit D and evidencing
an interest designated as a "residual interest" in REMIC III for purposes of the
REMIC Provisions.
CLASS SB CERTIFICATES: Any one of the Class SB-I and Class
SB-II Certificates.
CLASS SB-I CERTIFICATE: Any one of the Class SB-I Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit B, subordinate to the Class
A-I Certificates with respect to distributions and the allocation of Realized
Losses in respect of Loan Group I as set forth in Section 4.05, and evidencing
an interest designated as a "regular interest" in REMIC III for purposes of the
REMIC Provisions.
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CLASS SB-II CERTIFICATE: Any one of the Class SB-II
Certificates executed by the Trustee and authenticated by the Certificate
Registrar substantially in the form annexed hereto as Exhibit B, subordinate to
the Class A-II Certificates with respect to distributions and the allocation of
Realized Losses in respect of Loan Group II as set forth in Section 4.05, and
evidencing an interest designated as a "regular interest" in REMIC III for
purposes of the REMIC Provisions.
CLASS UT1-I INTEREST: A regular interest in REMIC III that has
an initial principal balance of $119,817,000, that bears interest at a per annum
rate equal to the Group I Standard Rate, and that has such other terms as are
described in Section 4.02.
CLASS UT2-I INTEREST: A regular interest in REMIC III that has
such other terms as are described in Section 4.02.
CLASS UT2-I DISTRIBUTION AMOUNT: With respect to any
Distribution Date, a amount equal to the product of (i) a fraction, the
numerator of which is the number of days in the related Interest Accrual Period
and the denominator of which is 360, (ii) the Class UT2-I Notional Balance
immediately before such distribution date, and (iii) the Class UT2-I
Pass-Through Rate.
CLASS UT2-I NOTIONAL BALANCE: A notional balance equal as of
any date to the sum of the principal balances of the Class MT1-I and Class MT3-I
Interests for such date.
CLASS UT2-I PASS-THROUGH RATE: With respect to any
Distribution Date, a per annum rate equal to (i) the excess of the Group I Net
Mortgage Rate for such date over (ii) the product of two and a fraction, the
numerator of which is the product of (x) Group I Standard Rate, and (y) the
principal balance of the Class MT2-I Interest immediately prior to such
Distribution Date, and denominator of which is the sum of the principal balances
of the Class MT2-I and Class MT3-I Interests immediately before such
Distribution Date.
CLASS UT3-I INTEREST: A regular interest in REMIC III that has
such other terms as are described in Section 4.02.
CLASS UT3-I DISTRIBUTION AMOUNT: With respect to any
Distribution Date, a amount equal to the product of (i) a fraction, the
numerator of which is the number of days in the related Interest Accrual Period
and the denominator of which is 360, (ii) the Class UT3-I Notional Balance
immediately before such distribution date, and (iii) the Class UT3-I
Pass-Through Rate.
CLASS UT3-I NOTIONAL BALANCE: A notional balance equal as of
any date to the sum of the principal balance of the Class MT2-I Interest for
such date.
CLASS UT3-I PASS-THROUGH RATE: With respect to any
distribution Date, a per annum rate equal to (i) the excess of the Group I
Standard Rate for such date over (ii) the product of two and a fraction, the
numerator of which is the product of (x) Group I Standard Rate, and (y) the
principal balance of the Class MT2-I Interest immediately prior to such
Distribution Date, and denominator
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of which is the sum of the principal balances of the Class MT2-I and Class MT3-I
Interests immediately before such Distribution Date.
CLASS UT4-I INTEREST: A regular interest in REMIC III that is
entitled to receive 100% of the amounts distributable with respect to the Class
MT4-I Interest, and that has such other terms as are described in Section 4.02.
CLASS UT5-I INTEREST: A regular interest in REMIC III that
will have a principal balance to the extent of the excess of (i) the aggregate
Stated Principal Balance of the Group I Loans as of the Cut-off Date over (ii)
the aggregate Certificate Principal Balance of the Class A-I Certificates on the
Closing Date. The Class UT5-I Interest will not bear interest.
CLASS UT1-II INTEREST: A regular interest in REMIC III that
has an initial principal balance of $258,025,000, that bears interest at a per
annum rate equal to the Group II Standard Rate, and that has such other terms as
are described in Section 4.02.
CLASS UT2-II INTEREST: A regular interest in REMIC III that
has such other terms as are described in Section 4.02.
CLASS UT2-II DISTRIBUTION AMOUNT: With respect to any
Distribution Date, a amount equal to the product of (i) a fraction, the
numerator of which is the number of days in the related Interest Accrual Period
and the denominator of which is 360, (ii) the Class UT2-II Notional Balance
immediately before such distribution date, and (iii) the Class UT2-II
Pass-Through Rate.
CLASS UT2-II NOTIONAL BALANCE: A notional balance equal as of
any date to the sum of the principal balances of the Class MT1-II and Class
MT3-II Interests for such date.
CLASS UT2-II PASS-THROUGH RATE: With respect to any
distribution Date, a per annum rate equal to (i) the excess of the Group II Net
Mortgage Rate for such date over (ii) the product of two and a fraction, the
numerator of which is the product of (x) Group II Standard Rate, and (y) the
principal balance of the Class MT2-II Interest immediately prior to such
Distribution Date, and denominator of which is the sum of the principal balances
of the Class MT2-II and Class MT3-II Interests immediately before such
Distribution Date.
CLASS UT3-II INTEREST: A regular interest in REMIC III that
has such other terms as are described in Section 4.02.
CLASS UT3-II DISTRIBUTION AMOUNT: With respect to any
Distribution Date, a amount equal to the product of (i) a fraction, the
numerator of which is the number of days in the related Interest Accrual Period
and the denominator of which is 360, (ii) the Class UT3-II Notional Balance
immediately before such distribution date, and (iii) the Class UT3-II
Pass-Through Rate.
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CLASS UT3-II NOTIONAL BALANCE: A notional balance equal as of
any date to the sum of the principal balance of the Class MT2-II Interest for
such date.
CLASS UT3-II PASS-THROUGH RATE: With respect to any
distribution Date, a per annum rate equal to (i) the excess of the Group II
Standard Rate for such date over (ii) the product of two and a fraction, the
numerator of which is the product of (x) Group II Standard Rate, and (y) the
principal balance of the Class MT2-II Interest immediately prior to such
Distribution Date, and denominator of which is the sum of the principal balances
of the Class MT2-II and Class MT3-II Interests immediately before such
Distribution Date.
CLASS UT4-II INTEREST: A regular interest in REMIC III that is
entitled to receive 100% of the amounts distributable with respect to the Class
MT4-II Interest, and that has such other terms as are described in Section 4.02.
CLASS UT5-II INTEREST: A regular interest in REMIC III that
will have a principal balance to the extent of the excess of (i) the aggregate
stated principal balance of the Group II Loans as of the Cut-off Date over (ii)
the aggregate Certificate Principal Balance of the Class A-II Certificates on
the Closing Date. The Class UT5-II Interest will not bear interest.
CLOSING DATE: September 29, 1999.
CODE: The Internal Revenue Code of 1986.
COMPENSATING INTEREST: With respect to any Distribution Date,
an amount equal to Prepayment Interest Shortfalls resulting from Principal
Prepayments in Full or Curtailments during the related Prepayment Period, but
not more than the lesser of (a) one-twelfth of 0.125% of the Stated Principal
Balance of the Mortgage Loans immediately preceding such Distribution Date and
(b) the sum of the Servicing Fee, all income and gain on amounts held in the
Custodial Account and the Certificate Account and payable to the
Certificateholders with respect to such Distribution Date and servicing
compensation to which the Master Servicer may be entitled pursuant to Section
3.10(a)(v) and (vi), in each case with respect to the related Loan Group;
provided that for purposes of this definition the amount of the Servicing Fee
will not be reduced pursuant to Section 7.02 except as may be required pursuant
to the last sentence of such Section.
CONVERTED MORTGAGE LOAN: Any Mortgage Loan for which the
related Mortgage Rate has converted from an adjustable rate to a fixed rate.
COOPERATIVE: A private, cooperative housing corporation which
owns or leases land and all or part of a building or buildings, including
apartments, spaces used for commercial purposes and common areas therein and
whose board of directors authorizes, among other things, the sale of Cooperative
Stock.
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COOPERATIVE APARTMENT: A dwelling unit in a multi-dwelling
building owned or leased by a Cooperative, which unit the Mortgagor has an
exclusive right to occupy pursuant to the terms of a proprietary lease or
occupancy agreement.
COOPERATIVE LEASE: With respect to a Cooperative Loan, the
proprietary lease or occupancy agreement with respect to the Cooperative
Apartment occupied by the Mortgagor and relating to the related Cooperative
Stock, which lease or agreement confers an exclusive right to the
holder of such Cooperative Stock to occupy such apartment.
COOPERATIVE LOANS: Any of the Mortgage Loans made in respect
of a Cooperative Apartment, evidenced by a Mortgage Note and secured by (i) a
Security Agreement, (ii) the related Cooperative Stock Certificate, (iii) an
assignment of the Cooperative Lease, (iv) financing statements and (v) a stock
power (or other similar instrument), and ancillary thereto, a recognition
agreement between the Cooperative and the originator of the Cooperative Loan,
each of which was transferred and assigned to the Trustee pursuant to Section
2.01 and are from time to time held as part of the Trust Fund.
COOPERATIVE STOCK: With respect to a Cooperative Loan, the
single outstanding class of stock, partnership interest or other ownership
instrument in the related Cooperative.
COOPERATIVE STOCK CERTIFICATE: With respect to a Cooperative
Loan, the stock certificate or other instrument evidencing the related
Cooperative Stock.
CORPORATE TRUST OFFICE: The principal office of the Trustee at
which at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of
this instrument is located at 1 Bank One Plaza, Suite IL1-0126, Chicago,
Illinois 60670-0126, Attention: Residential Funding Corporation Series 1999-RS3.
CUMULATIVE INSURANCE PAYMENTS: As of any date of
determination, the aggregate amount of all Insured Amounts previously paid by
the Insurer under the Policy in respect of the Class A Certificates (other than
those attributable to Excess Losses) minus (a) the aggregate of all payments
previously made to the Insurer pursuant to Section 4.02(g)(iv) hereof as
reimbursement for such Insured Amounts, plus (b) interest thereon from the date
such amounts became due until paid in full, at a rate of interest equal to the
Late Payment Rate. Cumulative Insurance Payments do not include any amounts that
were paid to the Trust Fund pursuant to the Limited Reimbursement Agreement, or
for which the Insurer is entitled to reimbursement under the Limited
Reimbursement Agreement.
CURTAILMENT: Any Principal Prepayment made by a Mortgagor
which is not a Principal Prepayment in Full.
CUSTODIAL ACCOUNT: The custodial account or accounts created
and maintained pursuant to Section 3.07 in the name of a depository institution,
as custodian for the holders of the
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Certificates and for the Insurer, for the holders of certain other interests in
mortgage loans serviced or sold by the Master Servicer and for the Master
Servicer, into which the amounts set forth in Section 3.07 shall be deposited
directly. Any such account or accounts shall be an Eligible
Account.
CUSTODIAL AGREEMENT: An agreement that may be entered into
among the Depositor, the Master Servicer, the Trustee and a Custodian in
substantially the form of Exhibit E hereto.
CUSTODIAN: A custodian appointed pursuant to a Custodial
Agreement and reasonably acceptable to the Insurer.
CUT-OFF DATE: September 1, 1999.
CUT-OFF DATE BALANCE: $377,842,336.80.
CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the
unpaid principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due on or prior thereto (or due during the month of
September 1999), whether or not received.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.
DEFERRED INTEREST: With respect to any Neg Am Loan, as of any
Due Date, the amount, if any, by which the Mortgage Loan Accrued Interest for
such Due Date exceeds the Monthly Payment for such Due Date and which amount,
pursuant to the terms of the Mortgage Note, is added to the principal balance of
the Mortgage Loan.
DEFICIENCY AMOUNT: With respect to the Class A Certificates as
of any Distribution Date, (i) any shortfall in amounts available in the
Certificate Account to pay Accrued Certificate Interest for the related Interest
Accrual Period on the Certificate Principal Balance of the Class A Certificates
at the then-applicable Pass-Through Rate, net of any interest shortfalls
relating to Deferred Interest, the Relief Act and any Prepayment Interest
Shortfalls allocated to the Class A Certificates, (ii) the principal portion of
any Realized Losses allocated to such Class A Certificates with respect to such
Distribution Date and not covered by payments from the Reserve Fund and (iii)
the Certificate Principal Balance of the Class A Certificates to the extent
unpaid on the Final Distribution Date or earlier termination of the Trust Fund
pursuant to Section 9.01(a) hereof. The Deficiency Amount does not include any
Basis Risk Shortfalls.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan, or
any reduction in the amount of principal to be paid in
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connection with any scheduled Monthly Payment that constitutes a permanent
forgiveness of principal, which valuation or reduction results from a proceeding
under the Bankruptcy Code.
DEFINITIVE CERTIFICATE: Any definitive, fully registered
Certificate.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be
replaced with a Qualified Substitute Mortgage Loan.
DELINQUENCY RATIO: With respect to the Mortgage Loans and any
Distribution Date, the percentage equivalent of a fraction (a) the numerator of
which equals the sum of (i) 100% of the aggregate Stated Principal Balance of
all Mortgage Loans that are 90 or more days Delinquent, 75% of the aggregate
Stated Principal Balance of all Mortgage Loans that are in foreclosure and (iii)
100% of the aggregate Stated Principal Balance of all Mortgage Loans that are
converted to REO Properties, in each case as of the last day of the related Due
Period and (b) the denominator of which is the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of such Due Period.
DELINQUENT: As used herein, a Mortgage Loan is considered to
be: "30 to 59 days" or "30 or more days" delinquent when a payment due on any
scheduled due date remains unpaid as of the close of business on the next
following monthly scheduled due date; "60 to 89 days" or "60 or more days"
delinquent when a payment due on any scheduled due date remains unpaid as of the
close of business on the second following monthly scheduled due date; and so on.
The determination as to whether a Mortgage Loan falls into these categories is
made as of the close of business on the last business day of each month. For
example, a Mortgage Loan with a payment due on September 1 that remained unpaid
as of the close of business on October 31 would then be considered to be 30 to
59 days delinquent. Delinquency information as of the Cut-off Date is determined
and prepared as of the close of business on the last business day immediately
prior to the Cut-off Date.
DEPOSITORY: The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository for purposes
of registering those Certificates that are to be Book-Entry Certificates is Cede
& Co. The Depository shall at all times be a "clearing corporation" as defined
in Section 8-102(3) of the Uniform Commercial Code of the State of New York and
a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
DESIGNATED SUBSERVICER: Either HomeComings, Cenlar Federal
Savings Bank or GMAC Mortgage Corporation, in each case as Subservicer of
certain of the Mortgage Loans as of the Closing Date.
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DESTROYED MORTGAGE NOTE: A Mortgage Note the original of which
was permanently lost or destroyed and has not been replaced.
DETERMINATION DATE: With respect to any Distribution Date, the
20th day (or if such 20th day is not a Business Day, the Business Day
immediately following such 20th day) of the month of the related Distribution
Date.
DISQUALIFIED ORGANIZATION: Any organization defined as a
"disqualified organization" under Section 860E(e)(5) of the Code, which includes
any of the following: (i) the United States, any State or political subdivision
thereof, any possession of the United States, 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 Freddie Mac, a
majority of its board of directors is not selected by such governmental unit),
(ii) a 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 (including the tax imposed
by Section 511 of the Code on unrelated business taxable income) and (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code. A Disqualified Organization also includes any "electing large
partnership," as defined in Section 775(a) of the Code and any other Person so
designated by the Trustee based upon an Opinion of Counsel that the holding of
an Ownership Interest in a Class R Certificate by such Person may cause the
REMIC or any Person having an Ownership Interest in any Class of Certificates
(other than such Person) to incur a liability for any federal tax imposed under
the Code that would not otherwise be imposed but for the Transfer of an
Ownership Interest in a 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 or successor provisions.
DISTRIBUTION DATE: The 25th day of any month beginning in the
month immediately following the month of the initial issuance of the
Certificates or, if such 25th day is not a Business Day, the Business Day
immediately following such 25th day.
DUE DATE: With respect to each Mortgage Loan, the date on
which the monthly payment is due.
DUE PERIOD: With respect to any Distribution Date, the
calendar month of such Distribution Date.
ELIGIBLE ACCOUNT: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have been
rated by each Rating Agency in its highest rating available, or (ii) an account
or accounts in a depository institution in which such accounts are fully insured
to the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent acceptable to each Rating Agency, as evidenced in writing,
be maintained such that (as evidenced by an Opinion of Counsel delivered to the
Trustee and each Rating Agency) the registered Holders of Certificates have a
claim with respect to the funds in such account or a perfected first security
interest against any collateral (which shall be limited to Permitted
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Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, or (iii) in the case of the Custodial Account, either (A) a trust
account or accounts maintained in the corporate trust department of Bank One,
National Association, or (B) an account or accounts maintained in the corporate
asset services department of Bank One, National Association as long as its short
term debt obligations are rated P-1 (or the equivalent) or better by each Rating
Agency, and its long term debt obligations are rated A2 (or the equivalent) or
better, by each Rating Agency, or (iv) in the case of the Certificate Account, a
trust account or accounts maintained in the corporate trust division of Bank
One, National Association, or (v) an account or accounts of a depository
institution acceptable to each Rating Agency (as evidenced in writing by each
Rating Agency that use of any such account as the Custodial Account or the
Certificate Account will not reduce the rating assigned to any Class of
Certificates by such Rating Agency below the lower of the then-current rating or
the rating assigned to such Certificates as of the Closing Date by such Rating
Agency).
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
EVENT OF DEFAULT: As defined in Section 7.01.
EXCESS BANKRUPTCY LOSS: Any Bankruptcy Loss, or portion
thereof, which exceeds the then-applicable Bankruptcy Amount.
EXCESS CASH FLOW: As defined in Section 4.02(g)(iii).
EXCESS FRAUD LOSS: Any Fraud Loss, or portion thereof, which
exceeds the then- applicable Fraud Loss Amount.
EXCESS LOSS: Any (i) Excess Fraud Loss, Excess Special Hazard
Loss, Excess Bankruptcy Loss or Extraordinary Loss or (ii) any Excess Realized
Loss.
EXCESS OVERCOLLATERALIZATION AMOUNT: With respect to any
Distribution Date, the excess, if any, of (a) the Overcollateralization Amount
on such Distribution Date over (b) the Required Overcollateralization Amount.
EXCESS REALIZED LOSS: Any Realized Loss on a Mortgage Loan,
other than a Excess Fraud Loss, Excess Special Hazard Loss, Excess Bankruptcy
Loss or Extraordinary Loss, to the extent that the amount of such Realized Loss,
plus the aggregate amount of such Realized Losses on all of the Mortgage Loans
since the Cut-off Date, is in excess of 7.5% of the Cut-off Date
Balance.
EXCESS SPECIAL HAZARD LOSS: Any Special Hazard Loss, or
portion thereof, that exceeds the then-applicable Special Hazard Amount.
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EXTRAORDINARY EVENTS: Any of the following conditions with
respect to a Mortgaged Property or Mortgage Loan causing or resulting in a loss
which causes the liquidation of such Mortgage Loan:
(a) losses that are of the type that would be covered by the
fidelity bond and the errors and omissions insurance policy required to
be maintained pursuant to Section 3.12(b) but are in excess of the
coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether such
loss be direct or indirect, proximate or remote or be in whole or in
part caused by, contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war,
including action in hindering, combatting or defending against an
actual, impending or expected attack;
1. by any government or sovereign power, de jure or
de facto, or by any authority maintaining or using military,
naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power,
authority or forces;
4. any weapon of war employing atomic fission or
radioactive force whether in time of peace or war; or
5. insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental authority in
hindering, combatting or defending against such an occurrence,
seizure or destruction under quarantine or customs
regulations, confiscation by order of any government or public
authority; or risks of contraband or illegal transportation or
trade.
EXTRAORDINARY LOSSES: Any loss incurred on a Mortgage Loan
caused by or resulting from an Extraordinary Event.
FANNIE MAE: Fannie Mae, a federally chartered and privately
owned corporation organized and existing under the Federal National Mortgage
Association Charter Act, or any successor thereto.
FASIT: A "financial asset securitization investment trust"
within the meaning of Section 860L of the Code.
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FDIC: Federal Deposit Insurance Corporation or any successor
thereto.
FREDDIE MAC: Freddie Mac, a corporate instrumentality of the
United States created and existing under Title III of the Emergency Home Finance
Act of 1970, as amended, or any successor thereto.
FINAL DISTRIBUTION DATE: The Distribution Date on which the
final distribution in respect of the Certificates will be made pursuant to
Section 9.01, which Final Distribution Date shall in no event be later than the
end of the 90-day liquidation period described in Section 9.02.
FIXED RATE YIELD MAINTENANCE AGREEMENT: The yield maintenance
agreement relating to fixed rate Mortgage Loans, dated as of the Closing Date,
between BSFP and the Trustee.
FORECLOSURE RESTRICTED LOANS: A Mortgage Loan that as of the
Closing Date is more than two payments past due and such past due payments have
not been excused pursuant to a forbearance agreement or a confirmed bankruptcy
plan. The Master Servicer shall prepare a schedule within one day after the
Closing Date.
FORECLOSURE PROFITS: As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and REO Proceeds (net of all amounts reimbursable
therefrom pursuant to Section 3.10(a)(ii)) in respect of each Mortgage Loan or
REO Property for which a Cash Liquidation or REO Disposition occurred in the
related Prepayment Period over the sum of the unpaid principal balance of such
Mortgage Loan or REO Property (determined, in the case of an REO Disposition, in
accordance with Section 3.14) plus accrued and unpaid interest at the Mortgage
Rate on such unpaid principal balance from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in
which such Cash Liquidation or REO Disposition occurred.
FRAUD LOSS AMOUNT: As of any date of determination after the
Cut-off Date, an amount equal to (X) prior to the first anniversary of the
Cut-off Date an amount equal to 3.00% of the aggregate outstanding principal
balance of all of the Mortgage Loans as of the Cut-off Date minus the aggregate
amount of Fraud Losses allocated through Subordination, in accordance with
Section 4.05 since the Cut-off Date up to such date of determination, (Y) from
the first to the second anniversary of the Cut-off Date, an amount equal to (1)
the lesser of (a) the Fraud Loss Amount as of the most recent anniversary of the
Cut-off Date and (b) 2.00% of the aggregate outstanding principal balance of all
of the Mortgage Loans as of the most recent anniversary of the Cut-off Date
minus (2) the Fraud Losses allocated through Subordination, in accordance with
Section 4.05 since the most recent anniversary of the Cut-off Date up to such
date of determination and (Z) from the second to the fifth anniversary of the
Cut-off Date, an amount equal to (1) the lesser of (a) the Fraud Loss Amount as
of the most recent anniversary of the Cut-off Date and (b) 1.00% of the
aggregate outstanding principal balance of all of the Mortgage Loans as of the
most recent anniversary of the Cut-off Date minus (2) the Fraud Losses allocated
through Subordination, in accordance with Section 4.05 since the most recent
anniversary of the Cut-off Date up to such date of determination. On and after
the fifth anniversary of the Cut-off Date the Fraud Loss Amount shall be zero.
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The Fraud Loss Amount may be further reduced by the Master
Servicer (including accelerating the manner in which such coverage is reduced)
provided that prior to any such reduction, the Master Servicer shall (i) obtain
written approval from the Insurer and obtain written confirmation from each
Rating Agency that such reduction shall not reduce the rating assigned to any
Class of Class A Certificates by such Rating Agency below the lower of the
then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency, without taking into account the Policy; and
(ii) provide a copy of such written confirmation to the Trustee and the Insurer.
FRAUD LOSSES: Losses on Mortgage Loans as to which there was
fraud in the origination of such Mortgage Loan.
GROSS MARGIN: As to each adjustable rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note and indicated in Exhibit
F-1 or Exhibit F-2, as applicable, hereto as the "NOTE MARGIN," which percentage
is added to the related Index on each Adjustment Date to determine (subject to
rounding in accordance with the related Mortgage Note, the Periodic Cap, the
Maximum Mortgage Rate and the Minimum Mortgage Rate) the interest rate to be
borne by such Mortgage Loan until the next Adjustment Date.
GROUP I AGGREGATE NET EXCESS TURBO AMOUNT: With respect to any
Distribution Date, the excess of (i) the sum of all Group I Excess Turbo Amounts
for all prior Distribution Dates over (ii) the product of (x) 100 and (y) the
sum of the amounts, for each Distribution Date, added to the principal balance
of the Class LT3-I Interest in excess of 1% of the increase in the
Overcollateralization Amount from the immediately preceding Distribution Date.
GROUP II AGGREGATE NET EXCESS TURBO AMOUNT: With respect to
any Distribution Date, the excess of (i) the sum of all Group II Excess Turbo
Amounts for all prior Distribution Dates over (ii) the product of (x) 100 and
(y) the sum of the amounts, for each distribution Date, added to the principal
balance of the Class LT3-II Interest in excess of 1% of the increase in the
Overcollateralization Amount from the immediately preceding Distribution Date.
GROUP I EXCESS TURBO AMOUNT: With respect to any Distribution
Date, the excess of (i) the aggregate amount of interest paid as principal on
the Class A-I Certificates, over (ii) the product of (x) 100 and (y) the
interest accrued on the Class LT3-I Interest.
GROUP II EXCESS TURBO AMOUNT: With respect to any Distribution
Date, the excess of (i) the aggregate amount of interest paid as principal on
the Class A-II Certificates, over (ii) the product of (x) 100 and (y) the
interest accrued on the Class LT3-II Interest.
GROUP I LOAN: The Mortgage Loans designated on the Mortgage
Loan Schedule attached hereto as Exhibit F-1.
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GROUP II LOAN: The Mortgage Loans designated on the Mortgage
Loan Schedule attached hereto as Exhibit F-2.
GROUP I NET MORTGAGE RATE: The product of (a) the Group I
Weighted Average Net Mortgage Rate and (b) a fraction equal to (x) 30 divided by
(y) the number of days in such Interest Accrual Period.
GROUP II NET MORTGAGE RATE: The product of (a) the Group II
Weighted Average Net Mortgage Rate and (b) a fraction equal to (x) 30 divided by
(y) the number of days in such Interest Accrual Period.
GROUP I OVERCOLLATERALIZATION AMOUNT: With respect to any
Distribution Date, the excess, if any, of (a) the aggregate Stated Principal
Balances of the Group I Loans before giving effect to distributions of principal
to be made on such Distribution Date over (b) the aggregate Certificate
Principal Balance of the Class A-I Certificates immediately prior to such date.
GROUP II OVERCOLLATERALIZATION AMOUNT: With respect to any
Distribution Date, the excess, if any, of (a) the aggregate Stated Principal
Balances of the Group II Loans before giving effect to distributions of
principal to be made on such Distribution Date over (b) the aggregate
Certificate Principal Balance of the Class A-II Certificates immediately prior
to such date.
GROUP I STANDARD MORTGAGE RATE: The lesser of (i) LIBOR plus
the Class A Margin for the Class A-I Certificates and (ii) the Group I Net
Mortgage Rate.
GROUP II STANDARD MORTGAGE RATE: The lesser of (i) LIBOR plus
the Class A Margin for the Class A-II Certificates and (ii) the Group II Net
Mortgage Rate.
GROUP I WEIGHTED AVERAGE NET MORTGAGE RATE: With respect to
any Distribution Date, a per annum rate equal to (a) the weighted average of the
Net Mortgage Rates on the Group I Loans, weighted on the basis of the respective
Stated Principal Balances thereof immediately preceding such Distribution Date
minus (b) the Certificate Insurer Premium Rate.
GROUP II WEIGHTED AVERAGE NET MORTGAGE RATE: With respect to
any Distribution Date, a per annum rate equal to (a) the weighted average of the
Net Mortgage Rates on the Group II Loans, weighted on the basis of the
respective Stated Principal Balances thereof immediately preceding such
Distribution Date minus (b) the Certificate Insurer Premium Rate.
HIGH COST LOAN: The Mortgage Loans set forth hereto as Exhibit
O that are subject to special rules, disclosure requirements and other
provisions that were added to the Federal Truth in Lending Act by the Home
Ownership and Equity Protection Act of 1994.
HOMECOMINGS: HomeComings Financial Network, Inc., a
wholly-owned subsidiary of Residential Funding.
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HYBRID ARM LOAN: Each of the Mortgage Loans which have fixed
rates for a period of three years or five years after origination, and have
adjustable rates thereafter, some of which are interest-only Mortgage Loans for
the first five years prior to converting to an adjustable rate.
INDEPENDENT: When used with respect to any specified Person,
means such a Person who (i) is in fact independent of the Depositor, the Master
Servicer and the Trustee, or any Affiliate thereof, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Depositor, the Master Servicer or the Trustee or in an Affiliate thereof, and
(iii) is not connected with the Depositor, the Master Servicer or the Trustee as
an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
INDEX: With respect to any adjustable rate Mortgage Loan and
as to any Adjustment Date therefor, the related index as stated in the related
Mortgage Note.
INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to each
Class of Certificates, the Certificate Principal Balance of such Class of
Certificates as of the Cut-off Date as set forth in the Preliminary Statement
hereto.
INSURANCE ACCOUNT: The account or accounts created and
maintained pursuant to Section 4.08, which shall be entitled "Bank One, National
Association, as trustee, in trust for the registered holders of Bear Stearns
Asset Backed Securities, Inc., Mortgage Asset-Backed Pass- Through Certificates,
Series 1999-RS3," and which must be an Eligible Account.
INSURANCE AGREEMENT: The Insurance and Indemnity Agreement,
dated as of September 29, 1999, among the Insurer, the Trustee, the Master
Servicer and the Depositor.
INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage
Loans pursuant to any Primary Insurance Policy or any other related insurance
policy covering a Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under the Mortgage, any Subservicer, the Master Servicer or the
Trustee and are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account.
INSURED AMOUNT: With respect to the Class A Certificates, as
of any Distribution Date, the Deficiency Amount, if any, for such Distribution
Date.
INSURER: Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance corporation or its successors in interest.
INSURER ACCOUNT: An account of the Insurer maintained at
Citibank, N.A. (ABA No. 021-000089), Account No. 40609486, Attention: Pamela
Dottin, or such other account as may be designated by the Insurer to the Trustee
in writing not less than five Business Days prior to the related Distribution
Date.
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INSURER DEFAULT: The existence and continuance of any of the
following: (a) a failure by the Insurer to make a payment required under the
Policy in accordance with its terms; or (b)(i) the Insurer (A) files any
petition or commences any case or proceeding under any provision or chapter of
the Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B) makes
a general assignment for the benefit of its creditors, or (C) has an order for
relief entered against it under the Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or (ii) a court of competent
jurisdiction, the Wisconsin insurance department or other competent regulatory
authority enters a final and nonappealable order, judgment or decree (A)
appointing a custodian, trustee, agent or receiver for the Insurer or for all or
any material portion of its property or (B) authorizing the taking of possession
by a custodian, trustee, agent or receiver of the Insurer (or the taking of
possession of all or any material portion of the property of the Insurer).
INTEREST ACCRUAL PERIOD: With respect to any Class of
Certificates, (i) with respect to the Distribution Date in October 1999, the
period commencing the Closing Date and ending on the day preceding the
Distribution Date in October 1999, and (ii) with respect to any Distribution
Date after the Distribution Date in October 1999, the period commencing on the
Distribution Date in the month immediately preceding the month in which such
Distribution Date occurs and ending on the day preceding such Distribution Date.
INTEREST DISTRIBUTION AMOUNT: As defined in Section
4.02(g)(i).
LATE COLLECTIONS: With respect to any Mortgage Loan, all
amounts received during any Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of Monthly Payments due but delinquent
for a previous Due Period and not previously recovered.
LATE PAYMENT RATE: As defined in the Insurance Agreement.
LIBOR: With respect to any Distribution Date, the arithmetic
mean of the London interbank offered rate quotations for one-month U.S. Dollar
deposits, expressed on a per annum basis, determined in accordance with Section
1.02.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or
Sunday or (ii) a day on which banking institutions in London, England are
required or authorized to by law to be closed.
LIBOR RATE ADJUSTMENT DATE: With respect to each Distribution
Date, the second LIBOR Business Day immediately preceding the commencement of
the related Interest Accrual Period.
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LIMITED REIMBURSEMENT AGREEMENT: The Limited Reimbursement
Agreement dated September 29, 1999, between the Insurer and the Limited
Reimbursement Counterparty, a copy of which shall be provided to the Trustee by
the Insurer on the Closing Date.
LIMITED REIMBURSEMENT COUNTERPARTY: The counterparty named in
the Limited Reimbursement Agreement.
LIMITED REIMBURSEMENT PREMIUM: The premium payable under the
Limited Reimbursement Agreement on each Distribution Date in an amount equal to
one-twelfth of the product of the Limited Reimbursement Premium Rate and the
Certificate Principal Balance of the Class A Certificates immediately prior to
such Distribution Date.
LIMITED REIMBURSEMENT PREMIUM RATE: With respect to the
Mortgage Loans and any date of determination, the per annum rate specified in
the Limited Reimbursement Agreement for the purpose of calculating the Limited
Reimbursement Premium.
LIQUIDATION PROCEEDS: Amounts (other than Insurance Proceeds)
received by the Master Servicer in connection with the taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
in connection with the liquidation of a defaulted Mortgage Loan through
trustee's sale, foreclosure sale or otherwise, other than REO Proceeds.
LOAN-TO-VALUE RATIO: As of any date, the fraction, expressed
as a percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
MATURITY DATE: With respect to each Class of Certificates of
regular interest issued by each of REMIC I, REMIC II and REMIC III, the latest
possible maturity date, solely for purposes of Section 1.860G-1(a)(4)(iii) of
the Treasury Regulations, by which the Certificate Principal Balance of each
such Class of Certificates representing a regular interest in the Trust Fund
would be reduced to zero, which is October 25, 2032, which is the Distribution
Date following the latest scheduled maturity date of any Mortgage Loan.
MAXIMUM CLASS A RATE: With respect to any Interest Accrual
Period, 14.00% per annum.
MAXIMUM MORTGAGE RATE: As to any adjustable rate Mortgage
Loan, the rate indicated in Exhibit F-1 or Exhibit F-2 hereto, as applicable, as
the "NOTE CEILING," which rate is the maximum interest rate that may be
applicable to such adjustable rate Mortgage Loan at any time
during the life of such Mortgage Loan.
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MAXIMUM NET MORTGAGE RATE: As to any adjustable rate Mortgage
Loan, the rate per annum indicated in Exhibit F-1 or Exhibit F-2, as applicable,
as the "MAX NET MTG RT" for such adjustable rate Mortgage Loan.
MINIMUM MORTGAGE RATE: As to any adjustable rate Mortgage
Loan, the greater of (i) the Note Margin and (ii) the rate indicated in Exhibit
F-1 or Exhibit F-2 hereto, as applicable, as the "NOTE FLOOR", which rate may be
applicable to such adjustable rate Mortgage Loan at any
time during the life of such adjustable rate Mortgage Loan.
MLCC: Merrill Lynch Credit Corporation, or its successor in
interest.
MODIFIED MORTGAGE LOAN: Any Mortgage Loan that has been the
subject of a Servicing Modification.
MODIFIED NET MORTGAGE RATE: As to any Mortgage Loan that is
the subject of a Servicing Modification, the Net Mortgage Rate minus the rate
per annum by which the Mortgage Rate on such Mortgage Loan was reduced.
MONTHLY PAYMENT: With respect to any Mortgage Loan (including
any REO Property) and the Due Date in any Due Period, the payment of principal
and interest due thereon in accordance with the amortization schedule at the
time applicable thereto (after adjustment, if any, for Curtailments and for
Deficient Valuations occurring prior to such Due Date but before any adjustment
to such amortization schedule by reason of any bankruptcy, other than a
Deficient Valuation, or similar proceeding or any moratorium or similar waiver
or grace period and before any Servicing Modification that constitutes a
reduction of the interest rate on such Mortgage Loan).
MOODY'S: Moody's Investors Service, Inc., or its successor in
interest.
MORTGAGE: With respect to each Mortgage Note related to a
Mortgage Loan which is not a Cooperative Loan, the mortgage, deed of trust or
other comparable instrument creating a first or junior lien on an estate in fee
simple or leasehold interest in real property securing a Mortgage Note.
MORTGAGE 100SM LOAN: A Mortgage Loan that has a Loan-to-Value
Ratio at origination in excess of 80.00% and that is secured by Additional
Collateral and does not have a Primary Mortgage Insurance Policy.
MORTGAGE FILE: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
MORTGAGE LOAN ACCRUED INTEREST: With respect to each Neg Am
Loan and each Due Date, the aggregate amount of interest accrued at the Mortgage
Rate in respect of such Mortgage
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Loan since the preceding Due Date (or in the case of the initial Due Date, since
the Cut-off Date) to but not including such Due Date with respect to which the
Mortgage Loan Accrued Interest is being calculated in accordance with the terms
of such Mortgage Loan, after giving effect to any previous Principal
Prepayments, Deficient Valuation or Debt Service Reduction in respect of such
Neg Am Loan.
MORTGAGE LOAN PROGRAM: The program under which the related
Mortgage Loan was originated, which program shall be one of the following: Core
Program or Portfolio Transaction Program.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase
Agreement, dated September 29, 1999, among Residential Funding, Bear, Stearns &
Co. Inc., Residential Funding Securities Corporation and the Depositor relating
to the sale of the Mortgage Loans to the Depositor.
MORTGAGE LOAN SCHEDULE: The lists of the Mortgage Loans
attached hereto as Exhibit F-1 and Exhibit F-2 (as amended from time to time to
reflect the addition of Qualified Substitute Mortgage Loans), which lists shall
set forth at a minimum the following information as to each Mortgage Loan:
(i) the Mortgage Loan identifying number ("RFC LOAN #");
(ii) the street address of the Mortgaged Property
including state and zip code ("ADDRESS");
(iii) the maturity of the Mortgage Note ("MATURITY DATE",
or "MATURITY DT" for Mortgage Loans and if such
Mortgage Loan is a Balloon Loan, the amortization
term thereof;
(iv) the Mortgage Rate as of the Cut-off Date ("ORIG
RATE")
(v) the Mortgage Rate as of the Cut-off Date for an
adjustable rate Mortgage Loan ("CURR RATE");
(vi) the Net Mortgage Rate as of the Cut-off Date ("CURR
NET");
(vii) the scheduled monthly payment of principal, if any,
and interest as of the Cutoff Date ("ORIGINAL P & I"
or "CURRENT P & I" for the adjustable rate
Mortgage Loans);
(viii) the Cut-off Date Principal Balance ("PRINCIPAL BAL");
(ix) the Loan-to-Value Ratio at origination ("LTV");
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(x) a code "T", "BT" or "CT" under the column "LN
FEATURE," indicating that the Mortgage Loan is
secured by a second or vacation residence (the
absence of any such code means the Mortgage Loan is
secured by a primary residence);
(xi) a code "N" under the column "OCCP CODE", indicating
that the Mortgage Loan is secured by a non-owner
occupied residence (the absence of any such code
means the Mortgage Loan is secured by an owner
occupied residence);
(xii) the Maximum Mortgage Rate for the adjustable rate
Mortgage Loans ("NOTE CEILING");
(xiii) the Maximum Net Mortgage Rate for the adjustable rate
Mortgage Loans ("NET CEILING");
(xiv) the Note Margin for the adjustable rate Mortgage
Loans ("NOTE MARGIN");
(xv) the first Adjustment Date after the Cut-off Date for
the adjustable rate Mortgage Loans ("NXT INT CHG
DT");
(xvi) the Periodic Cap for the adjustable rate Mortgage
Loans ("PERIODIC DECR" or "PERIODIC INCR");
(xvii) the rounding of the semi-annual or annual adjustment
to the Mortgage Rate with respect to the adjustable
rate Mortgage Loans ("NOTE METHOD"); and
(xviii) whether such Mortgage Loan is a Neg Am Loan ("MAX NEG
AM" greater than 100).
Such schedules may consist of multiple reports that
collectively set forth all of the information required.
MORTGAGE LOANS: Such of the mortgage loans transferred and
assigned to the Trustee pursuant to Section 2.01 as from time to time are held
or deemed to be held as a part of the Trust Fund, the Mortgage Loans originally
so held being identified in the initial Mortgage Loan Schedule, and Qualified
Substitute Mortgage Loans held or deemed held as part of the Trust Fund
including, without limitation, (i) with respect to each Cooperative Loan, the
related Mortgage Note, Security Agreement, Assignment of Proprietary Lease,
Cooperative Stock Certificate, Cooperative Lease and Mortgage File and all
rights appertaining thereto, and (ii) with respect to each Mortgage Loan other
than a Cooperative Loan, each related Mortgage Note, Mortgage and Mortgage File
and all rights appertaining thereto.
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MORTGAGE NOTE: The originally executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan, together with any modification thereto.
MORTGAGE RATE: As to any Mortgage Loan, the interest rate
borne by the related Mortgage Note, or any modification thereto other than a
Servicing Modification. The Mortgage Rate on the adjustable rate Mortgage Loans
will adjust on each Adjustment Date to equal the sum (rounded to the nearest
multiple of one-eighth of one percent (0.125%) or up to the nearest one-eighth
of one percent, which are indicated by a "U" on Exhibit F-1 or Exhibit F-2
hereto, as applicable, except in the case of the adjustable rate Mortgage Loans
indicated by an "X" on Exhibit F-1 or Exhibit F-2 hereto under the heading "NOTE
METHOD"), of the related Index plus the Note Margin, in each case subject to the
applicable Periodic Cap, Maximum Mortgage Rate and Minimum Mortgage Rate.
MORTGAGED PROPERTY: The underlying real property securing a
Mortgage Loan.
MORTGAGOR: The obligor on a Mortgage Note.
NEG AM LOAN: Any Mortgage Loan providing for negative
amortization, as indicated in the Mortgage Loan Schedule.
NET MORTGAGE RATE: With respect to any fixed rate Mortgage
Loan, a per annum rate equal to the Adjusted Mortgage Rate for such Mortgage
Loan minus the Servicing Fee Rate. With respect to each adjustable rate Mortgage
Loan and each Due Date occurring on or prior to the first Adjustment Date for
such adjustable rate Mortgage Loan, the rate designated as the "NET MTG RT" for
such adjustable rate Mortgage Loan on Exhibit F-1 or Exhibit F-2 hereto and with
respect to each adjustable rate Mortgage Loan and each Due Date occurring after
each Adjustment Date, a rate equal to the Adjusted Mortgage Rate minus the
Servicing Fee Rate; provided that (i) the Net Mortgage Rate becoming effective
on any Adjustment Date shall not be greater or less than the Net Mortgage Rate
immediately prior to such Adjustment Date plus or minus the Periodic Cap
applicable to such adjustable rate Mortgage Loan and (ii) the Net Mortgage Rate
for any adjustable rate Mortgage Loan shall not exceed a rate equal to the
Maximum Net Mortgage Rate for such adjustable rate Mortgage Loan.
NET WEIGHTED AVERAGE CAP RATE: With respect to any
Distribution Date, a per annum rate equal to (a) the weighted average of the Net
Mortgage Rates on the Mortgage Loans, weighted on the basis of the respective
Stated Principal Balances thereof immediately preceding such Distribution Date
minus (b) (1) the Certificate Insurer Premium Rate plus (2) the Limited
Reimbursement Premium Rate.
NON-PRIMARY RESIDENCE LOANS: The Mortgage Loans designated as
secured by second or vacation residences, or by non-owner occupied residences,
on the Mortgage Loan Schedule.
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NON-UNITED STATES PERSON: Any Person other than a United
States Person.
NONRECOVERABLE ADVANCE: Any Advance previously made or
proposed to be made by the Master Servicer in respect of a Mortgage Loan (other
than a Deleted Mortgage Loan) which, in the good faith judgment of the Master
Servicer, will not, or, in the case of a proposed Advance, would not, be
ultimately recoverable by the Master Servicer from related Late Collections,
Insurance Proceeds, Liquidation Proceeds or REO Proceeds.
NONSUBSERVICED MORTGAGE LOAN: Any Mortgage Loan that, at the
time of reference thereto, is not subject to a Subservicing Agreement.
NOTE MARGIN: As to each adjustable rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note and indicated in Exhibit
F-1 or Exhibit F-2 hereto as the "NOTE MARGIN," which percentage is added to the
Index on each Adjustment Date to determine (subject to rounding in accordance
with the related Mortgage Note, the Periodic Cap, the Maximum Mortgage Rate and
the Minimum Mortgage Rate) the interest rate to be borne by such adjustable rate
Mortgage Loan until the next Adjustment Date.
NOTICE: As defined in Section 4.04.
OFFICERS' CERTIFICATE: A certificate signed by the Chairman of
the Board, the President or a Vice President or Assistant Vice President, or a
Director or Managing Director, and by the Treasurer, the Secretary, or one of
the Assistant Treasurers or Assistant Secretaries of the Depositor or the Master
Servicer, as the case may be, and delivered to the Trustee and the Insurer, as
required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel acceptable to
the Trustee, the Insurer and the Master Servicer, who may be counsel for the
Depositor or the Master Servicer, provided that any opinion of counsel (i)
referred to in the definition of "Disqualified Organization" or (ii) relating to
the qualification of REMIC I, REMIC II or REMIC III as REMICs or compliance with
the REMIC Provisions must, unless otherwise specified, be an opinion of
Independent counsel.
OPTIONAL TERMINATION DATE: Any Distribution Date on or after
which the Stated Principal Balance (before giving effect to distributions to be
made on such Distribution Date) of the Mortgage Loans is less than 10.00% of the
Cut-off Date Balance.
OUTSTANDING MORTGAGE LOAN: As to the Due Date in any Due
Period, a Mortgage Loan (including an REO Property) that was not the subject of
a Principal Prepayment in Full, Cash Liquidation or REO Disposition and that was
not purchased, deleted or substituted for prior to such
Due Date pursuant to Section 2.02, 2.03, 2.04 or 4.07.
OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans before giving effect to
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distributions of principal to be made on such Distribution Date over (b) the
aggregate Certificate Principal Balance of the Class A Certificates immediately
prior to such date.
OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any
Distribution Date other than the first Distribution Date, the lesser of (a) the
Excess Cash Flow for such Distribution Date available to make payments pursuant
to Section 4.02(g)(v), and (b) the excess, if any, of (1) the Required
Overcollateralization Amount for such Distribution Date over (2) the
Overcollateralization Amount for such Distribution Date. With respect to the
first Distribution Date, the Overcollateralization Increase Amount shall be
equal to zero.
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to any
Distribution Date, to the extent the Excess Overcollateralization Amount is, or
would be, after taking into account all other distributions to be made on such
Distribution Date, greater than zero, the Overcollateralization Reduction Amount
shall be equal to any amounts relating to principal which would otherwise be
distributed to the holders of the Class A Certificates on such Distribution
Date.
OWNERSHIP INTEREST: As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
PARENT POWERSM LOAN: A Mortgage Loan that has a Loan-to-Value
Ratio at origination in excess of 80.00%, that is supported by Additional
Collateral and does not have a Primary Mortgage Insurance Policy.
PASS-THROUGH RATE: With respect to each Class of Class A
Certificates and each Interest Accrual Period, a per annum rate equal to the
least of (i) LIBOR plus the related Class A Margin, (ii) the Maximum Class A
Rate and (iii) the Net Weighted Average Cap Rate.
PAYING AGENT: Bank One, National Association or any successor
Paying Agent appointed by the Trustee.
PERCENTAGE INTEREST: With respect to any Class A Certificate,
the undivided percentage ownership interest in the related Class evidenced by
such Certificate, which percentage ownership interest shall be equal to the
Initial Certificate Principal Balance thereof divided by the aggregate Initial
Certificate Principal Balance of all of the Certificates of the same Class. The
Percentage Interest with respect to a Class SB or Class R Certificate shall be
stated on the face thereof.
PERIODIC CAP: With respect to each adjustable rate Mortgage
Loan, the periodic rate cap that limits the increase or the decrease of the
related Mortgage Rate on any Adjustment Date pursuant to the terms of the
related Mortgage Note.
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PERMITTED INVESTMENTS: One or more of the following:
(i) obligations of or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of acquisition
thereof, provided that the unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated by each
Rating Agency in its highest short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof or of any domestic branch of a foreign depository institution
or trust company; provided that the debt obligations of such depository
institution or trust company (or, if the only Rating Agency is Standard
& Poor's, in the case of the principal depository institution in a
depository institution holding company, debt obligations of the
depository institution holding company) at the date of acquisition
thereof have been rated by each Rating Agency in its highest short-term
rating available; and provided further that, if the only Rating Agency
is Standard & Poor's and if the depository or trust company is a
principal subsidiary of a bank holding company and the debt obligations
of such subsidiary are not separately rated, the applicable rating
shall be that of the bank holding company; and, provided further that,
if the original maturity of such short-term obligations of a domestic
branch of a foreign depository institution or trust company shall
exceed 30 days, the short-term rating of such institution shall be A-1+
in the case of Standard & Poor's if Standard & Poor's is a Rating
Agency;
(iv) commercial paper and demand notes (having original
maturities of not more than 365 days) of any corporation incorporated
under the laws of the United States or any state thereof which on the
date of acquisition has been rated by each Rating Agency in its highest
short-term rating available; provided that such commercial paper or
demand notes shall have a remaining maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated
by each Rating Agency in its highest rating available; and
other obligations or securities that are acceptable to the
Insurer and each Rating Agency as a Permitted Investment hereunder and will not
reduce the rating assigned to any Class of Certificates by such Rating Agency
below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency, as evidenced in
writing;
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PROVIDED, HOWEVER, that no instrument shall be a Permitted
Investment if it represents, either (1) the right to receive only interest
payments with respect to the underlying debt instrument or (2) the right to
receive both principal and interest payments derived from obligations underlying
such instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity greater than 120% of the yield to
maturity at par of such underlying obligations. References herein to the highest
rating available on unsecured long-term debt shall mean AAA in the case of
Standard & Poor's and Aaa in the case of Moody's, and references herein to the
highest rating available on unsecured commercial paper and short-term debt
obligations shall mean the following: A-1 in the case of Standard & Poor's and
P-1 in the case of Moody's.
PERMITTED TRANSFEREE: Any Transferee of a Class R Certificate,
other than a Disqualified Organization or Non-United States Person.
PERSON: Any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PLEDGED ASSET MORTGAGE SERVICING AGREEMENT: The Pledged Asset
Mortgage Servicing Agreement, dated as of February 28, 1996 between MLCC and the
Master Servicer.
POLICY: The Certificate Guaranty Insurance Policy No. AB0296BE
issued by the Insurer in respect of the Class A Certificates, a copy of which is
attached hereto as Exhibit Q.
PREPAYMENT ASSUMPTION: With respect to the Class A
Certificates, the prepayment assumption to be used for determining the accrual
of original issue discount and premium and market discount on such Certificates
for federal income tax purposes, which assumes a constant prepayment rate of 18%
per annum with respect to the fixed rate Mortgage Loans, and 25% per annum with
respect to the adjustable rate Mortgage Loans.
PREPAYMENT INTEREST SHORTFALL: As to any Distribution Date and
any Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that
was the subject of (a) a Principal Prepayment in Full during the related
Prepayment Period, an amount equal to the excess of one month's interest at the
related Net Mortgage Rate (or Modified Net Mortgage Rate in the case of a
Modified Mortgage Loan) on the Stated Principal Balance of such Mortgage Loan
over the amount of interest (adjusted to the related Net Mortgage Rate (or
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan)) paid by the
Mortgagor for such Prepayment Period to the date of such Principal Prepayment in
Full or (b) a Curtailment during the prior calendar month, an amount equal to
one month's interest at the related Net Mortgage Rate (or Modified Net Mortgage
Rate in the case of a Modified Mortgage Loan) on the amount of such Curtailment.
PREPAYMENT PERIOD: As to any Distribution Date, the calendar
month preceding the month of distribution.
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PRIMARY INSURANCE POLICY: Each primary policy of mortgage
guaranty insurance as indicated on Exhibit F-1 and Exhibit F-2 with the
exception of either code "23" or "96" under the column "MI CO CODE."
PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the lesser of (a) the excess of (i) the Available
Distribution Amount over (ii) the Interest Distribution Amount and (b) the sum
of:
(i) the principal portion of each Monthly Payment
received or Advanced with respect to the related Due
Period on each Outstanding Mortgage Loan;
(ii) the Stated Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period (or
deemed to have been so repurchased in accordance with
Section 3.07(b)) pursuant to Section 2.02, 2.03, 2.04
or 4.07 and the amount of any shortfall deposited in
the Custodial Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to
Section 2.03 or 2.04 during the related Prepayment
Period;
(iii) the principal portion of all other unscheduled
collections on the Mortgage Loans (including, without
limitation, Principal Prepayments in Full,
Curtailments, Insurance Proceeds, Liquidation
Proceeds and REO Proceeds) received during the
related Prepayment Period (or deemed to have been so
received) to the extent applied by the Master
Servicer as recoveries of principal of the Mortgage
Loans pursuant to Section 3.14;
(iv) the principal portion of any Realized Losses (other
than Excess Losses) incurred (or deemed to have been
incurred) on any Mortgage Loans in the calendar month
preceding such Distribution Date to the extent
covered by Excess Cash Flow for such Distribution
Date; and
(v) except on the first Distribution Date, the amount of
any Overcollateralization Increase Amount for such
Distribution Date;
MINUS
(vi) the amount of any Overcollateralization Reduction
Amount for such Distribution Date.
PRINCIPAL PREPAYMENT: Any payment of principal or other
recovery on a Mortgage Loan, including a recovery that takes the form of
Liquidation Proceeds or Insurance Proceeds, which is received in advance of its
scheduled Due Date and is not accompanied by an amount as to interest
representing scheduled interest on such payment due on any date or dates in any
month or months subsequent to the month of prepayment.
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PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment made by
a Mortgagor of the entire principal balance of a Mortgage Loan.
PROGRAM GUIDE: The AlterNet Seller Guide or the Residential
Funding Seller Guide, as applicable, for mortgage collateral sellers that
participate in Residential Funding's standard mortgage programs, and Residential
Funding's Servicing Guide and any other subservicing arrangements which
Residential Funding has arranged to accommodate the servicing of the Mortgage
Loans.
PURCHASE PRICE: With respect to any Mortgage Loan (or REO
Property) required to be or otherwise purchased on any date pursuant to Section
2.02, 2.03, 2.04 or 4.07, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof plus the principal portion of any related unreimbursed
Advances and (ii) unpaid accrued interest at the Adjusted Mortgage Rate (or
Modified Net Mortgage Rate plus the rate per annum at which the Servicing Fee
and the Certificate Insurer Premium Rate, if any, is calculated in the case of a
Modified Mortgage Loan) (or at the Net Mortgage Rate (or Modified Net Mortgage
Rate in the case of a Modified Mortgage Loan)) plus the Certificate Insurer
Premium Rate, if any, in the case of a purchase made by the Master Servicer) on
the Stated Principal Balance thereof to the first day of the month following the
month of purchase from the Due Date to which interest was last paid by the
Mortgagor.
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan
substituted by Residential Funding or the Depositor for a Deleted Mortgage Loan
which must, on the date of such substitution, as confirmed in an Officers'
Certificate delivered to the Trustee, (i) have an outstanding principal balance,
after deduction of the principal portion of the monthly payment due in the month
of substitution (or in the case of a substitution of more than one Mortgage Loan
for a Deleted Mortgage Loan, an aggregate outstanding principal balance, after
such deduction), not in excess of the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be deposited by Residential
Funding, in the Custodial Account in the month of substitution); (ii) have a
Mortgage Rate and a Net Mortgage Rate no lower than and not more than 1% per
annum higher than the Mortgage Rate and Net Mortgage Rate, respectively, of the
Deleted Mortgage Loan as of the date of substitution; (iii) have a Loan-to-Value
Ratio at the time of substitution no higher than that of the Deleted Mortgage
Loan at the time of substitution; (iv) have a remaining term to stated maturity
not greater than (and not more than one year less than) that of the Deleted
Mortgage Loan; (v) comply with each representation and warranty set forth in
Sections 2.03 and 2.04 hereof and Section 3.1(a) and (b) of the Mortgage Loan
Purchase Agreement and (vi) in the case of the adjustable rate Mortgage Loans,
(w) have a Mortgage Rate that adjusts with the same frequency and based upon the
same Index as that of the Deleted Mortgage Loan, (x) have a Note Margin not less
than that of the Deleted Mortgage Loan; (y) have a Periodic Rate Cap that is
equal to that of the Deleted Mortgage Loan; and (z) have a next Adjustment Date
no later than that of the Deleted Mortgage Loan.
RATING AGENCY: Standard & Poor's and Moody's. If either agency
or a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by the
Depositor and with respect to the Class A Certificates, the Insurer, notice of
which designation shall be given to the Trustee and the Master Servicer.
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REALIZED LOSS: With respect to each Mortgage Loan (or REO
Property) as to which a Cash Liquidation or REO Disposition has occurred, an
amount (not less than zero) equal to (i) the Stated Principal Balance of the
Mortgage Loan (or REO Property) as of the date of Cash Liquidation or REO
Disposition, plus (ii) interest (and REO Imputed Interest, if any) at the Net
Mortgage Rate and the Certificate Insurer Premium Rate from the Due Date as to
which interest was last paid or advanced to Certificateholders up to the last
day of the month in which the Cash Liquidation (or REO Disposition) occurred on
the Stated Principal Balance of such Mortgage Loan (or REO Property) outstanding
during each Due Period that such interest was not paid or advanced to the extent
such interest does not constitute Deferred Interest that has been added to the
principal balance of such Mortgage Loan, minus (iii) the proceeds, if any,
received during the month in which such Cash Liquidation (or REO Disposition)
occurred, to the extent applied as recoveries of interest at the Net Mortgage
Rate and the Certificate Insurer Premium Rate and to principal of the Mortgage
Loan, net of the portion thereof reimbursable to the Master Servicer or any
Subservicer with respect to related Advances or expenses as to which the Master
Servicer or Subservicer is entitled to reimbursement thereunder but which have
not been previously reimbursed. With respect to each Mortgage Loan which is the
subject of a Servicing Modification, (a) the amount by which the interest
portion of a Monthly Payment or the principal balance of such Mortgage Loan was
reduced, and (b) any such amount with respect to a Monthly Payment that was or
would have been due in the month immediately following the month in which a
Principal Prepayment or the Purchase Price of such Mortgage Loan is received or
is deemed to have been received. With respect to each Mortgage Loan which has
become the subject of a Deficient Valuation, the difference between the
principal balance of the Mortgage Loan outstanding immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced by
the Deficient Valuation. With respect to each Mortgage Loan which has become the
object of a Debt Service Reduction, the amount of such Debt Service Reduction.
Notwithstanding the above, neither a Deficient Valuation nor a Debt Service
Reduction shall be deemed a Realized Loss hereunder so long as the Master
Servicer has notified the Trustee and the Insurer in writing that the Master
Servicer is diligently pursuing any remedies that may exist in connection with
the representations and warranties made regarding the related Mortgage Loan and
either (A) the related Mortgage Loan is not in default with regard to payments
due thereunder or (B) delinquent payments of principal and interest under the
related Mortgage Loan and any premiums on any applicable primary hazard
insurance policy and any related escrow payments in respect of such Mortgage
Loan are being advanced on a current basis by the Master Servicer or a
Subservicer, in either case without giving effect to any Debt Service Reduction.
RECORD DATE: With respect to each Distribution Date, the close
of business on the last Business Day of the month next preceding the month in
which the related Distribution Date occurs.
REGULAR INTEREST: Any one of the regular interests in the
Trust Fund.
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code. As used herein, the term "the REMIC" shall
mean the Trust Fund created under this Agreement, excluding the Yield
Maintenance Agreements and the Reserve Fund.
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REMIC ADMINISTRATOR: Residential Funding Corporation. If
Residential Funding Corporation is found by a court of competent jurisdiction to
no longer be able to fulfill its obligations as REMIC Administrator under this
Agreement the Master Servicer or Trustee acting as Master Servicer shall appoint
a successor REMIC Administrator, acceptable to the Insurer, subject to
assumption of the REMIC Administrator obligations under this Agreement.
REMIC I: The segregated pool of assets subject hereto,
constituting a portion of the primary trust created hereby and to be
administered hereunder, with respect to which a separate REMIC election is to be
made (other than with respect to the items in clause (v) and the proceeds
thereof), consisting of:
(i) the Mortgage Loans and the related Mortgage
Files;
(ii) all payments on and collections in respect of
the Mortgage Loans due after the Cut-off Date (other than Monthly
Payments due in September 1999) as shall be on deposit in the Custodial
Account or in the Certificate Account and identified as belonging to
the Trust Fund;
(iii) property which secured a Mortgage Loan and
which has been acquired for the benefit of the Certificateholders by
foreclosure or deed in lieu of foreclosure;
(iv) the hazard insurance policies and Primary
Insurance Policy pertaining to the Mortgage Loans, if any;
(v) the proceeds from the liquidation of Additional
Collateral for any Additional Collateral Loan;
(vi) the interest in the Surety Bond transferred to
the Trustee pursuant to Section 2.01;
(vii) the Policy; and
(viii) all proceeds of clauses (i) through (iv) and
(vii) above.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and temporary and final regulations (or, to the extent not
inconsistent with such temporary or final regulations, proposed regulations) and
published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.
REO ACQUISITION: The acquisition by the Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders of any REO
Property pursuant to Section 3.14.
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REO DISPOSITION: As to any REO Property, a determination by
the Master Servicer that it has received substantially all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
REO IMPUTED INTEREST: As to any REO Property, for any period,
an amount equivalent to interest (at the Net Mortgage Rate and the Certificate
Insurer Premium Rate, if any, that would have been applicable to the related
Mortgage Loan had it been outstanding net of amounts that would have been
Deferred Interest, if any) on the unpaid principal balance of the Mortgage Loan
as of the date of acquisition thereof for such period.
REO PROCEEDS: Proceeds, net of expenses, received in respect
of any REO Property (including, without limitation, proceeds from the rental of
the related Mortgaged Property) which proceeds are required to be deposited into
the Custodial Account only upon the related REO Disposition.
REO PROPERTY: A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed in lieu of foreclosure in connection with a
defaulted Mortgage Loan.
REPURCHASE EVENT: As defined in the Mortgage Loan Purchase
Agreement.
REQUEST FOR RELEASE: A request for release, the forms of which
are attached as Exhibit G hereto, or an electronic request in a form acceptable
to the Custodian.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan,
any insurance policy which is required to be maintained from time to time under
this Agreement, the Program Guide or the related Subservicing Agreement in
respect of such Mortgage Loan.
REQUIRED OVERCOLLATERALIZATION AMOUNT: As of any Distribution
Date, (a) if such Distribution Date is prior to the Stepdown Date, 1.35% of the
Cut-off Date Balance, or (b) if such Distribution Date is on or after the
Stepdown Date, the greatest of (i) 2.70% of the then current aggregate Stated
Principal Balances of the Mortgage Loans as of the end of the related Due
Period, (ii) the aggregate Stated Principal Balance of the Mortgage Loans with
the three largest Stated Principal Balances in the Trust Fund as of such
Distribution Date, (iii) 0.50% of the Cut-off Date Balance and (iv) an amount
equal to (a) 2 (two) times (b) the excess of (x) 50% of the aggregate Stated
Principal Balance of the Mortgage Loans which are 90 days or more Delinquent as
of such Distribution Date over (y) 5 (five) times the Excess Cash Flow for such
Distribution Date.
The Required Overcollateralization Amount may be reduced with the prior
written consent of the Insurer and prior written notice to the Rating Agencies.
REQUIRED SURETY PAYMENT: With respect to any Additional
Collateral Mortgage Loan that becomes a Liquidated Mortgage Loan, the lesser of
(i) principal portion of the Realized Loss
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with respect to such Mortgage Loan and (ii) the excess, if any, of (a) the
amount of Additional Collateral required at origination with respect to such
Mortgage Loan over (b) the net proceeds realized by MLCC from the related
Additional Collateral.
RESERVE FUND: The account established and maintained pursuant
to Section 4.10.
RESERVE FUND ADDITION: With respect to each Yield Maintenance
Agreement and each Distribution Date, the amount equal to the interest accrued
during the related Interest Accrual Period at a rate equal to the excess of (x)
LIBOR (which, on the first Distribution Date, shall equal
5.38%
per annum) over (y) the related Strike Price, on an amount equal to the lesser
of (i) the aggregate Stated Principal Balance of the related Mortgage Loans
(other than the Converted Mortgage Loans) and (ii) the Yield Maintenance
Notional Balance. The Reserve Fund Addition will be payable by BSFP under the
Yield Maintenance Agreements.
RESERVE FUND DEPOSIT: An amount equal to $10,000 which the
Trustee shall deposit into the Trust Fund pursuant to Section 4.10 hereof.
RESERVE FUND RESIDUAL RIGHT: The right to distributions from
the Reserve Fund as described in Section 4.10 hereof.
RESIDENTIAL FUNDING: Residential Funding Corporation, a
Delaware corporation, in its capacity as seller of the Mortgage Loans to the
Depositor and any successor thereto.
RESPONSIBLE OFFICER: When used with respect to the Trustee,
any officer of the Corporate Trust Department of the Trustee, including any
Senior Vice President, any Vice President, any Assistant Vice President, any
Assistant Secretary, any Trust Officer or Assistant Trust Officer, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers to whom, with respect to a
particular matter, such matter is referred.
ROLLING SIX-MONTH DELINQUENCY RATIO: As of any Distribution
Date, the fraction, expressed as a percentage, equal to the average of the
Delinquency Ratio for each of the six (or one, two, three, four and five in the
case of the first, second, third, fourth and fifth Distribution Dates)
immediately preceding Due Periods.
SECURITY AGREEMENT: With respect to a Cooperative Loan, the
agreement creating a security interest in favor of the originator in the related
Cooperative Stock.
SERVICING ACCOUNTS: The account or accounts created and
maintained pursuant to Section 3.08.
SERVICING ADVANCES: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in connection with a default,
delinquency or other unanticipated event by the
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Master Servicer in the performance of its servicing obligations, including, but
not limited to, the cost of (i) the preservation, restoration and protection of
a Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and (iv)
compliance with the obligations under Sections 3.01, 3.08, 3.12(a) and 3.14,
including, if the Master Servicer or any Affiliate of the Master Servicer
provides services such as appraisals and brokerage services that are customarily
provided by Persons other than servicers of mortgage loans, reasonable
compensation for such services.
SERVICING FEE: With respect to any Mortgage Loan and
Distribution Date, the fee payable monthly to the Master Servicer in respect of
master servicing compensation that accrues at an annual rate equal to the
Servicing Fee Rate multiplied by the Stated Principal Balance of such Mortgage
Loan as of the related Due Date in the related Due Period, as may be adjusted
pursuant to Section 3.16(e).
SERVICING FEE RATE: The per annum rate designated on the
Mortgage Loan Schedule as the "MSTR SERV FEE," as may be adjusted with respect
to successor Master Servicers as provided in Section 7.02.
SERVICING MODIFICATION: Any reduction of the interest rate on
or the outstanding principal balance of a Mortgage Loan that is in default or,
in the judgment of the Master Servicer, default is reasonably foreseeable
pursuant to a modification of such Mortgage Loan in accordance with Section
3.07(a).
SERVICING OFFICER: Any officer of the Master Servicer 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 Insurer by the Master Servicer, as such list
may from time to time be amended.
SERVICING TRIGGER: As of any Distribution Date, for purposes
of Section 7.05, "Servicing Trigger; Removal of Master Servicer," the occurrence
of any of the following scenarios:
(i) The aggregate Rolling Six-Month Delinquency Ratio is
greater than 15% for the then-current Distribution Date;
(ii) the aggregate Rolling Six-Month Delinquency Ratio is
greater than 13% for the then-current and two preceding Distribution
Dates;
(iii) the aggregate Twelve-Month Loss Amount is greater than
or equal to 2.75% of the aggregate Stated Principal Balance of the
Mortgage Loans; or
(iv) the aggregate Realized Losses on the Mortgage Loans
exceed (a) with respect to the first 12 Distribution Dates, 2.00% of
the aggregate Cut-off Date Principal Balance of the Mortgage Loans, (b)
with respect to the next 12 Distribution Dates, 3.25% of the
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aggregate Cut-off Date Principal Balance of the Mortgage Loans, (c)
with respect to the next 12 Distribution Dates, 4.50% of the aggregate
Cut-off Date Principal Balance of the Mortgage Loans, (d) with respect
to the next 12 Distribution Dates, 5.50% of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans, and (e) with respect to all
Distribution Dates thereafter, 6.00% of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans.
SPECIAL HAZARD AMOUNT: As of any Distribution Date, an amount
equal to $4,300,000 minus the sum of (i) the aggregate amount of Special Hazard
Losses allocated through Subordination in accordance with Section 4.05 and (ii)
the Adjustment Amount (as defined below) as most recently calculated. For each
anniversary of the Cut-off Date, the "Adjustment Amount" shall be equal to the
amount, if any, by which the amount calculated in accordance with the preceding
sentence (without giving effect to the deduction of the Adjustment Amount for
such anniversary) exceeds the greater of (A) the greatest of (i) twice the
outstanding principal balance of the Mortgage Loan that has the largest
outstanding principal balance on the Distribution Date immediately preceding
such anniversary, (ii) the product of 1.00% multiplied by the outstanding
principal balance of all Mortgage Loans on the Distribution Date immediately
preceding such anniversary and (iii) the aggregate outstanding principal balance
(as of the immediately preceding Distribution Date) of the Mortgage Loans in any
single five-digit California zip code area with the largest amount of Mortgage
Loans by aggregate principal balance as of such anniversary and (B) the greater
of (i) the product of 0.50% multiplied by the outstanding principal balance of
all Mortgage Loans on the Distribution Date immediately preceding such
anniversary multiplied by a fraction, the numerator of which is equal to the
aggregate outstanding principal balance (as of the immediately preceding
Distribution Date) of all of the Mortgage Loans secured by Mortgaged Properties
located in the State of California divided by the aggregate outstanding
principal balance (as of the immediately preceding Distribution Date) of all of
the Mortgage Loans, expressed as a percentage, and the denominator of which is
equal to 36.4% (which percentage is equal to the percentage of Mortgage Loans
initially secured by Mortgaged Properties located in the State of California)
and (ii) the aggregate outstanding principal balance (as of the immediately
preceding Distribution Date) of the largest Mortgage Loan secured by a Mortgaged
Property located in the State of California.
The Special Hazard Amount may be further reduced by the Master
Servicer (including accelerating the manner in which coverage is reduced)
provided that prior to any such reduction, the Master Servicer shall obtain the
written approval of the Insurer and obtain written confirmation from each Rating
Agency that such reduction shall not reduce the rating assigned to each Class of
Class A Certificates without regard to the Policy by such Rating Agency below
the lower of the then-current rating or the rating assigned to such Certificates
as of the Closing Date by such Rating Agency.
SPECIAL HAZARD LOSS: Any Realized Loss not in excess of the
lesser of the cost of repair or the cost of replacement of a Mortgaged Property
suffered by such Mortgaged Property on account of direct physical loss,
exclusive of (i) any loss of a type covered by a hazard policy or a flood
insurance policy required to be maintained in respect of such Mortgaged Property
pursuant to Section 3.12(a), except to the extent of the portion of such loss
not covered as a result of any coinsurance provision and (ii) any Extraordinary
Loss.
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STANDARD & POOR'S: Standard & Poor's, a division of The
McGraw-Hill Companies, or its successor in interest.
STARTUP DATE: The day designated as such pursuant to Article X
hereof.
STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or
related REO Property, at any given time, (i) the Cut-off Date Principal Balance
of the Mortgage Loan, plus (ii) any Deferred Interest added to the principal
balance of the Mortgage Loan pursuant to the terms of the Mortgage Note, minus
(iii) the sum of (a) the principal portion of the Monthly Payments due with
respect to such Mortgage Loan or REO Property during each Due Period ending
prior to the most recent Distribution Date which were received or with respect
to which an Advance was made, and (b) all Principal Prepayments with respect to
such Mortgage Loan or REO Property, and all Insurance Proceeds, Liquidation
Proceeds and REO Proceeds, to the extent applied by the Master Servicer as
recoveries of principal in accordance with Section 3.14 with respect to such
Mortgage Loan or REO Property, in each case which were distributed pursuant to
Section 4.02 or 4.03 on any previous Distribution Date, and (c) any Realized
Loss allocated to Certificateholders with respect thereto for any previous
Distribution Date.
STEPDOWN DATE: The later to occur of (i) the Distribution Date
occurring in October 2001 and (ii) the Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans is less than one-half of the
Cut-off Date Balance.
STRIKE PRICE: With respect to the Fixed Rate Yield Maintenance
Agreement, 7.40% per annum for the first 96 Distribution Dates. With respect to
the 3/1 Yield Maintenance Agreement, 6.00% per annum for the first 36
Distribution Dates. With respect to the 5/1 Yield Maintenance Agreement, 6.00%
per annum for the first 60 Distribution Dates.
SUBORDINATION: The provisions described in Section 4.05
relating to the allocation of Realized Losses (other than any Realized Losses
covered by the Policy).
SUBSERVICED MORTGAGE LOAN: Any Mortgage Loan that, at the time
of reference thereto, is subject to a Subservicing Agreement.
SUBSERVICER: Any Person with whom the Master Servicer has
entered into a Subservicing Agreement and who generally satisfied the
requirements set forth in the Program Guide in respect of the qualification of a
Subservicer as of the date of its approval as a Subservicer by the Master
Servicer.
SUBSERVICER ADVANCE: Any delinquent installment of principal
and interest on a Mortgage Loan which is advanced by the related Subservicer
(net of its Subservicing Fee) pursuant to the Subservicing Agreement.
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SUBSERVICING ACCOUNT: An account established by a Subservicer
in accordance with Section 3.08.
SUBSERVICING AGREEMENT: The written contract between the
Master Servicer and any Subservicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02, generally in the form of the
servicer contract referred to or contained in the Program Guide or in such other
form as has been approved by the Master Servicer and the Depositor.
SUBSERVICING FEE: As to any Mortgage Loan, the fee payable
monthly to the related Subservicer (or, in the case of a Nonsubserviced Mortgage
Loan, to the Master Servicer) in respect of subservicing and other compensation
that accrues with respect to each Distribution Date at an annual rate designated
as "SUBSERV FEE" in Exhibit F-1 and Exhibit F-2.
SURETY: Ambac Assurance Corporation, or its successors in
interest.
SURETY BOND: The Limited Purpose Surety Bond (Policy No.
AB0039BE), dated February 28, 1996, issued by Ambac Assurance Corporation
(formerly known as AMBAC Indemnity Corporation) for the benefit of certain
beneficiaries, including the Trustee for the benefit of the Holders of the
Certificates, but only to the extent that such Limited Purpose Surety Bond
covers any Additional Collateral Mortgage Loans.
TAX RETURNS: 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 REMIC I, REMIC II, REMIC III and REMIC IV due to their
classification as REMICs 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 provisions of federal, state
or local tax laws.
TRANSFER: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
TRANSFEREE: Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
TRANSFEROR: Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
TRUST FUND: Collectively, the assets of REMIC I, REMIC II,
REMIC III, and the Yield Maintenance Agreements Purchase Price and the Reserve
Fund Deposit.
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TWELVE-MONTH LOSS AMOUNT: With respect to any Distribution
Date, an amount equal to the aggregate of all Realized Losses on the Mortgage
Loans during the 12 preceding Due Periods.
UNIFORM SINGLE ATTESTATION PROGRAM FOR MORTGAGE BANKERS: The
Uniform Single Attestation Program for Mortgage Bankers, as published by the
Mortgage Bankers Association of America and effective with respect to fiscal
periods ending on or after December 15, 1995.
UNINSURED CAUSE: Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies.
UNITED STATES PERSON: A citizen or resident of the United
States, a corporation, partnership or other entity (treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States, any state thereof, or the District
of Columbia (except in the case of a partnership, to the extent provided in
Treasury regulations) or an estate that is described in Section 7701(a)(30)(D)
of the Code, or a trust that is described in Section 7701(a)(30)(E) of the Code.
VOTING RIGHTS: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. 97.25% of all of the Voting
Rights shall be allocated among Holders of the Class A Certificates, in
proportion to the outstanding Certificate Principal Balances of their respective
Certificates; 1% and 1% of all of the Voting Rights shall be allocated among the
Holders of the Class SB-I and Class SB-II Certificates, respectively; 0.25%,
0.25% and 0.25% of all of the Voting Rights shall be allocated among the Holders
of the Class R-I, Class R-II and Class R-III Certificates, respectively; in each
case to be allocated among the Certificates of such Class in accordance with
their respective Percentage Interest.
YIELD MAINTENANCE AGREEMENT: Any of the Fixed Rate Yield
Maintenance Agreement, the 3/1 Yield Maintenance Agreement, or the 5/1 Yield
Maintenance Agreement.
YIELD MAINTENANCE AGREEMENTS PURCHASE PRICE: $7,730,000, to be
deposited by the Depositor in the Reserve Fund in order to purchase the Yield
Maintenance Agreements.
YIELD MAINTENANCE NOTIONAL BALANCE: As to each Yield
Maintenance Agreement and each Distribution Date, the lesser of (i) the amount
as set forth on Exhibit R hereto and (ii) the aggregate Stated Principal Balance
of the related Mortgage Loans (other than the Converted
Mortgage Loans) immediately prior to such Distribution Date.
Section 1.02. Determination of LIBOR.
----------------------
LIBOR applicable to the calculation of the Pass-Through Rate
on the Class A Certificates for any Interest Accrual Period will be determined
on each LIBOR Rate Adjustment Date.
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On each LIBOR Rate Adjustment Date, LIBOR shall be established
by the Trustee and, as to any Interest Accrual Period, will equal the rate for
one month United States dollar deposits that appears on the Telerate Screen Page
3750 as of 11:00 a.m., London time, on such LIBOR Rate Adjustment Date.
"Telerate Screen Page 3750" means the display designated as page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that 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 that
page on that service, or if such service is no longer offered, LIBOR shall be so
established by use of such other service for displaying LIBOR or comparable
rates as may be selected by the Trustee after consultation with the Master
Servicer and the Insurer), the rate will be the Reference Bank Rate. The
"Reference Bank Rate" will be determined on the basis of the rates at which
deposits in U.S. Dollars are offered by the reference banks (which shall be any
three major banks that are engaged in transactions in the London interbank
market, selected by the Trustee after consultation with the Master Servicer and
the Insurer) as of 11:00 a.m., London time, on the LIBOR Rate Adjustment Date to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the Certificate Principal Balance of the Class A
Certificates then outstanding. The Trustee will request the principal London
office of each of the reference banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate will be the arithmetic mean of
the quotations rounded up to the next multiple of 1/16%. If on such date fewer
than two quotations are provided as requested, the 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 and the Insurer, as
of 11:00 a.m., New York City 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 aggregate Certificate Principal Balance of the Class A Certificates then
outstanding. If no such quotations can be obtained, the rate will be LIBOR for
the prior Distribution Date; provided however, if, under the priorities
described above, LIBOR for a Distribution Date would be based on LIBOR for the
previous Distribution Date for the third consecutive Distribution Date, the
Trustee, after consultation with the Insurer, shall select an alternative
comparable index (over which the Trustee has no control), used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent party.
The establishment of LIBOR by the Trustee on any LIBOR Rate
Adjustment Date and the Trustee's subsequent calculation of the Pass-Through
Rate applicable to the Class A Certificates for the relevant Interest Accrual
Period, in the absence of manifest error, will be final and
binding.
Promptly following each LIBOR Rate Adjustment Date the Trustee
shall supply the Master Servicer with the results of its determination of LIBOR
on such date. Furthermore, the Trustee will supply to any Certificateholder so
requesting by telephone the Pass-Through Rate on the Class A Certificates for
the current and the immediately preceding Interest Accrual Period.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
---------------------------------
Section 2.01. Conveyance of Mortgage Loans.
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(a) The Depositor, concurrently with the execution and
delivery hereof, does hereby assign to the Trustee without recourse all the
right, title and interest of the Depositor in and to (i) the Mortgage Loans,
including all interest and principal received on or with respect to the Mortgage
Loans after the Cut-off Date (other than payments of principal and interest due
on the Mortgage Loans in the month of September 1999) (ii) the Depositor's
security interest in and to any Additional Collateral, its right to receive
payments in respect of any Additional Collateral Loans pursuant to the Addendum
and Assignment Agreement and the Pledged Asset Mortgage Servicing Agreement, and
its rights as beneficiary under the Surety Bond in respect of any Additional
Collateral Loans; (v) the Yield Maintenance Agreements Purchase Price; (vi) the
Reserve Fund Deposit and (vii) all proceeds of the foregoing.
(b) In connection with such assignment, and contemporaneously
with the delivery of this Agreement, the Depositor delivered or caused to be
delivered hereunder to the Trustee the Policy, and except as set forth in
Section 2.01(c) below, the Depositor does hereby deliver to, and deposit with,
the Trustee, or to and with one or more Custodians, as the duly appointed agent
or agents of the Trustee for such purpose, the following documents or
instruments (or copies thereof as permitted by this Section) (I) with respect to
each Mortgage Loan so assigned (other than a Cooperative Loan):
(i) The original Mortgage Note, endorsed without
recourse to the order of the Trustee and showing an unbroken chain of
endorsements from the originator thereof to the Person endorsing it to
the Trustee, or with respect to any Destroyed Mortgage Note, an
original lost note affidavit from Residential Funding stating that the
original Mortgage Note was lost, misplaced or destroyed, together with
a copy of the related Mortgage Note;
(ii) the original Mortgage with evidence of recording
thereon, or, if the original Mortgage has not yet been returned from
the public recording office, a copy of the original Mortgage certified
by the public recording office in which such original Mortgage has been
recorded;
(iii) assignments (which may be included in one or
more blanket assignments if permitted by applicable law) of the
Mortgage in recordable form to "Bank One, National Association as
trustee" c/o Residential Funding at an address specified by the
Residential Funding;
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(iv) originals of any intervening assignments of the
Mortgage, with evidence of recording thereon, or, if the original of
any such intervening assignment has not yet been returned from the
public recording office, a copy of such original intervening assignment
certified by the public recording office in which such original
intervening assignment has been recorded; and
(v) a true and correct copy of each assumption,
modification, consolidation or substitution agreement, if any, relating
to the Mortgage Loan.
and (II) with respect to each Cooperative Loan so assigned:
(i) The original Mortgage Note, endorsed without recourse to
the order of the Trustee and showing an unbroken chain of endorsements
from the originator thereof to the Person endorsing it to the Trustee,
or with respect to any Destroyed Mortgage Note, an original lost note
affidavit from Residential Funding stating that the original Mortgage
Note was lost, misplaced or destroyed, together with a copy of the
related Mortgage Note;
(ii) A counterpart of the Cooperative Lease and the Assignment
of Proprietary Lease to the originator of the Cooperative Loan with
intervening assignments showing an unbroken chain of title from such
originator to the Trustee;
(iii) The related Cooperative Stock Certificate, representing
the related Cooperative Stock pledged with respect to such Cooperative
Loan, together with an undated stock power (or other similar
instrument) executed in blank;
(iv) The original recognition agreement by the Cooperative of
the interests of the mortgagee with respect to the related Cooperative
Loan;
(v) The Security Agreement;
(vi) Copies of the original UCC-1 financing statement, and any
continuation statements, filed by the originator of such Cooperative
Loan as secured party, each with evidence of recording thereof,
evidencing the interest of the originator under the Security Agreement
and the Assignment of Proprietary Lease;
(vii) Copies of the filed UCC-3 assignments of the security
interest referenced in clause (vi) above showing an unbroken chain of
title from the originator to the Trustee, each with evidence of
recording thereof, evidencing the interest of the originator under the
Security Agreement and the Assignment of Proprietary Lease;
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(viii) An assignment of the interest of the originator in the
Security Agreement, Assignment of Proprietary Lease and the recognition
agreement referenced in clause (iv) above (which may be included in one
or more blanket assignments if permitted by applicable law), in
recordable form to "Bank One, National Association as trustee" c/o
Residential Funding at an address specified by the Residential Funding;
(ix) A true and correct copy of each modification, assumption
agreement or preferred loan agreement, if any, relating to such
Cooperative Loan; and
(x) An executed UCC-1 financing statement showing the Master
Servicer as debtor, the Depositor as secured party and the Trustee as
assignee and an executed UCC-1 financing statement showing the
Depositor as debtor and the Trustee as secured party, each in a form
sufficient for filing, evidencing the interest of such debtors in the
Cooperative Loans.
(c) The Depositor may, in lieu of delivering the documents set
forth in Section 2.01(b)(I)(iv) and (v) and Section 2.01(b)(II)(ii), (iv),
(vii), (ix) and (x) to the Trustee or the Custodian or Custodians, deliver such
documents to the Master Servicer, and the Master Servicer shall hold such
documents in trust for the use and benefit of all present and future
Certificateholders until such time as is set forth below. Within ten Business
Days following the earlier of (i) the receipt of the original of each of the
documents or instruments set forth in Section 2.01(b)(I)(iv) and (v) and Section
2.01(b)(II)(ii), (iv), (vii), (ix) and (x) (or copies thereof as permitted by
such Section) for any Mortgage Loan and (ii) a written request by the Trustee to
deliver those documents with respect to any or all of the Mortgage Loans then
being held by the Master Servicer, the Master Servicer shall deliver a complete
set of such documents to the Trustee or the Custodian or Custodians that are the
duly appointed agent or agents of the Trustee.
On the Closing Date, the Master Servicer shall certify that it
has in its possession an original or copy of each of the documents referred to
in Section 2.01(b)(I)(iv) and (v) and Section 2.01(b)(II)(ii), (iv), (vii), (ix)
and (x) which has been delivered to it by the Depositor.
(d) In connection with any Mortgage Loan, if the Depositor
cannot deliver the Mortgage, any assignment, modification, assumption agreement
or preferred loan agreement (or copy thereof certified by the public recording
office) with evidence of recording thereon concurrently with the execution and
delivery of this Agreement because of (i) a delay caused by the public recording
office where such Mortgage, assignment, modification, assumption agreement or
preferred loan agreement as the case may be, has been delivered for recordation,
or (ii) a delay in the receipt of certain information necessary to prepare the
related assignments, the Depositor shall deliver or cause to be delivered to the
Trustee or the respective Custodian a true and correct photocopy of such
Mortgage, assignment, modification, assumption agreement or preferred loan
agreement.
The Depositor shall promptly cause to be recorded in the
appropriate public office for real property records the Assignment referred to
in clause (I)(iii) of Section 2.01(b), except in states where, in the opinion of
counsel acceptable to the Trustee, the Insurer and the Master Servicer,
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such recording is not required to protect the Trustee's interests in the
Mortgage Loan against the claim of any subsequent transferee or any successor to
or creditor of the Depositor or the originator of such Mortgage Loan and shall
promptly cause to be filed the Form UCC-3 assignment and UCC-1 financing
statement referred to in clause (II)(vii) and (x), respectively, of Section
2.01(b). In connection with its subservicing of the Cooperative Loans, the
Master Servicer will use its best efforts to file timely continuation statements
with regard to each financing statement and assignment relating to Cooperative
Loans as to which the related Cooperative Apartment is located outside the State
of New York.
The Depositor shall deliver to the Trustee or the Custodian
within 120 days of the Closing Date the original or a copy of the title
insurance policy, with respect to each Mortgaged Property that is delivered to
the related seller at origination of the Mortgage Loan, to the extent the
Depositor has such title insurance policy in its possession as of the Closing
Date. The Depositor or the Master Servicer shall hold in trust for the use and
benefit of all present and future Certificateholders and the Insurer, the
original or a copy of the title insurance binder with respect to each Mortgaged
Property that is delivered to the related seller at origination of the Mortgage
Loan, to the extent the Depositor or the Master Servicer, as applicable, has
such title insurance binder in its possession as of the Closing Date.
(e) It is intended that the conveyances by the Depositor to
the Trustee of the Mortgage Loans as provided for in this Section 2.01 be
construed as a sale by the Depositor to the Trustee of the Mortgage Loans and
the Yield Maintenance Agreements Purchase Price for the benefit of the
Certificateholders. Further, it is not intended that any such conveyance be
deemed to be a pledge of the Mortgage Loans by the Depositor to the Trustee to
secure a debt or other obligation of the Depositor. However, in the event that
the Mortgage Loans are held to be property of the Depositor or of Residential
Funding, or if for any reason this Agreement is held or deemed to create a
security interest in the Mortgage Loans, then it is intended that (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the New York Uniform Commercial Code and the Uniform
Commercial Code of any other applicable jurisdiction; (b) the conveyances
provided for in this Section 2.01 shall be deemed to be (1) a grant by the
Depositor to the Trustee of a security interest in all of the Depositor's right
(including the power to convey title thereto), title and interest, whether now
owned or hereafter acquired, in and to (A) the Mortgage Loans, including (i)
with respect to each Cooperative Loan, the related Mortgage Note, Security
Agreement, Assignment of Proprietary Lease, Cooperative Stock Certificate,
Cooperative Lease, any insurance policies and all other documents in the related
Mortgage File and (ii) (1) with respect to each Mortgage Loan other than a
Cooperative Loan, the related Mortgage Note, the Mortgage, any insurance
policies and all other documents in the related Mortgage File, and (2) the Yield
Maintenance Agreements Purchase Price, (B) all amounts payable pursuant to the
Mortgage Loans in accordance with the terms thereof and (C) any and all general
intangibles consisting of, arising from or relating to any of the foregoing, and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts from time to time held or invested in the Certificate Account or the
Custodial Account, whether in the form of cash, instruments, securities or other
property and (2) an assignment by the Depositor to the Trustee of any security
interest in any and all of Residential Funding's right (including the power to
convey title thereto), title and interest, whether now owned or hereafter
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acquired, in and to the property described in the foregoing clauses (1)(A), (B)
and (C) granted by Residential Funding to the Depositor pursuant to the Mortgage
Loan Purchase Agreement; (c) the possession by the Trustee, the Custodian or any
other agent of the Trustee of Mortgage Notes or such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party," or possession by a purchaser or
a person designated by such secured party, for purposes of perfecting the
security interest pursuant to the Minnesota Uniform Commercial Code and the
Uniform Commercial Code of any other applicable jurisdiction (including, without
limitation, Section 9-305, 8-313 or 8-321 thereof); and (d) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Trustee for the purpose of perfecting
such security interest under applicable law.
The Depositor and, at the Depositor's direction, Residential
Funding and the Trustee shall, to the extent consistent with this Agreement,
take such reasonable actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans and
the other property described above, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement. Without limiting the
generality of the foregoing, the Depositor shall prepare and deliver to the
Trustee not less than 15 days prior to any filing date and, the Trustee shall
forward for filing, or shall cause to be forwarded for filing, at the expense of
the Depositor, all filings necessary to maintain the effectiveness of any
original filings necessary under the Uniform Commercial Code as in effect in any
jurisdiction to perfect the Trustee's security interest in or lien on the
Mortgage Loans as evidenced by an Officer's Certificate of the Depositor, with a
copy delivered to the Insurer, including without limitation (x) continuation
statements, and (y) such other statements as may be occasioned by (1) any change
of name of Residential Funding, the Depositor or the Trustee (such preparation
and filing shall be at the expense of the Trustee, if occasioned by a change in
the Trustee's name), (2) any change of location of the place of business or the
chief executive office of Residential Funding or the Depositor or (3) any
transfer of any interest of Residential Funding or the Depositor in any Mortgage
Loan.
Section 2.02. Acceptance by Trustee.
---------------------
The Trustee acknowledges receipt (or, with respect to Mortgage
Loans subject to a Custodial Agreement, and based solely upon a receipt or
certification executed by the Custodian, receipt by the respective Custodian as
the duly appointed agent of the Trustee) of the documents referred to in Section
2.01(b)(I)(i) through (iii) above (except that for purposes of such
acknowledgment only, a Mortgage Note may be endorsed in blank and an Assignment
of Mortgage may be in blank) and declares that it, or a Custodian as its agent,
holds and will hold such documents and the other documents constituting a part
of the Mortgage Files delivered to it, or a Custodian as its agent, and the
rights of Residential Funding with respect to any Additional Collateral and the
Surety Bond assigned to the Trustee pursuant to Section 2.1(a) of the Mortgage
Loan Purchase Agreement, in trust for the use and benefit of all present and
future Certificateholders. The Trustee or Custodian (such Custodian being so
obligated under a Custodial Agreement) agrees, for the benefit of
Certificateholders, to review each Mortgage File delivered to it pursuant to
Section 2.01(b)
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within 45 days after the Closing Date to ascertain that all required documents
(specifically as set forth in Section 2.01(b)), have been executed and received,
and that such documents relate to the Mortgage Loans identified on the Mortgage
Loan Schedule, as supplemented, that have been conveyed to it. Upon delivery of
the Mortgage Files by the Depositor or the Master Servicer, the Trustee shall
acknowledge receipt (or, with respect to Mortgage Loans subject to a Custodial
Agreement, and based solely upon a receipt or certification executed by the
Custodian, receipt by the respective Custodian as the duly appointed agent of
the Trustee) of the documents referred to in Section 2.01(c) above. The Trustee
or Custodian (such Custodian being so obligated under a Custodial Agreement)
agrees to review each Mortgage File delivered to it pursuant to Section 2.01(c)
within 45 days after receipt thereof to ascertain that all documents required to
be delivered pursuant to such Section have been received, and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule,
as supplemented, that have been conveyed to it.
If the Custodian, as the Trustee's agent, finds any document
or documents constituting a part of a Mortgage File to be missing or defective
in any material respect, the Trustee shall promptly so notify the Master
Servicer and the Depositor; provided, that if the Mortgage Loan related to such
Mortgage File is listed on Schedule A of the Mortgage Loan Purchase Agreement,
no notification shall be necessary. Pursuant to Section 2.3 of the Custodial
Agreement, the Custodian will notify the Master Servicer, the Depositor and the
Trustee of any such omission or defect found by it in respect of any Mortgage
File held by it. The Master Servicer shall promptly notify the related
Subservicer of such omission or defect and request that such Subservicer correct
or cure such omission or defect within 60 days from the date the Master Servicer
was notified of such omission or defect and, if such Subservicer does not
correct or cure such omission or defect within such period, that such
Subservicer purchase such Mortgage Loan from the Trust Fund at its Purchase
Price, in either case within 90 days from the date the Master Servicer was
notified of such omission or defect; provided that if the omission or defect
would cause the Mortgage Loan to be other than a "qualified mortgage" as defined
in Section 860G(a)(3) of the Code, any such cure or repurchase must occur within
90 days from the date such breach was discovered; and provided further, that no
cure, substitution or repurchase shall be required if such omission or defect is
in respect of a Mortgage Loan listed on Schedule A of the Mortgage Loan Purchase
Agreement. The Purchase Price for any such Mortgage Loan shall be deposited or
caused to be deposited by the Master Servicer in the Custodial Account
maintained by it pursuant to Section 3.07 and, upon receipt by the Trustee of
written notification of such deposit signed by a Servicing Officer, the Trustee
or any Custodian, as the case may be, shall release to the Master Servicer the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the Subservicer or its designee, as
the case may be, any Mortgage Loan released pursuant hereto and thereafter such
Mortgage Loan shall not be part of the Trust Fund. It is understood and agreed
that the obligation of the Subservicer, to so cure or purchase any Mortgage Loan
as to which a material defect in or omission of a constituent document exists
shall constitute the sole remedy respecting such defect or omission available to
Certificateholders or the Trustee on behalf of Certificateholders (except for
the Insurer's rights under the Insurance Agreement).
Section 2.03. Representations, Warranties and Covenants of the
Master Servicer and the Depositor.
------------------------------------------------
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(a) The Master Servicer hereby represents and warrants to the
Trustee for the benefit of the Certificateholders and the Insurer that:
(i) The Master Servicer is a corporation duly
organized, validly existing and in good standing under the laws
governing its creation and existence and is or will be in compliance
with the laws of each state in which any Mortgaged Property is located
to the extent necessary to ensure the enforceability of each Mortgage
Loan in accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement by
the Master Servicer and its performance and compliance with the terms
of this Agreement will not violate the Master Servicer's Certificate of
Incorporation or Bylaws or constitute a material default (or an event
which, with notice or lapse of time, or both, would constitute a
material default) under, or result in the material breach of, any
material contract, agreement or other instrument to which the Master
Servicer is a party or which may be applicable to the Master Servicer
or any of its assets;
(iii) This Agreement, assuming due authorization,
execution and delivery by the Trustee and the Depositor, constitutes a
valid, legal and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally and to general
principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(iv) The Master Servicer 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, which
default might have consequences that would materially and adversely
affect the condition (financial or other) or operations of the Master
Servicer or its properties or might have consequences that would
materially adversely affect its performance hereunder;
(v) No litigation is pending or, to the best of the
Master Servicer's knowledge, threatened against the Master Servicer
which would prohibit its entering into this Agreement or performing its
obligations under this Agreement;
(vi) The Master Servicer will comply in all material
respects in the performance of this Agreement with all reasonable rules
and requirements of each insurer under each Required Insurance Policy;
(vii) No information, certificate of an officer,
statement furnished in writing or report delivered to the Depositor,
any Affiliate of the Depositor or the Trustee by the Master Servicer
will, to the knowledge of the Master Servicer, contain any untrue
statement
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of a material fact or omit a material fact necessary to make the
information, certificate, statement or report not misleading; and
(viii) The Master Servicer has examined each
existing, and will examine each new, Subservicing Agreement and is or
will be familiar with the terms thereof. The terms of each existing
Subservicing Agreement and each designated Subservicer are acceptable
to the Master Servicer and any new Subservicing Agreements will comply
with the provisions of Section 3.02.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03(a) shall survive delivery of the respective Mortgage Files to
the Trustee or any Custodian.
Upon discovery by either the Depositor, the Master Servicer,
the Insurer, the Trustee or any Custodian of a breach of any representation or
warranty set forth in this Section 2.03(a) which materially and adversely
affects the interests of the Certificateholders or the Insurer in any Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties (any Custodian being so obligated under a Custodial Agreement).
Within 90 days of its discovery or its receipt of notice of such breach, the
Master Servicer shall either (i) cure such breach in all material respects or
(ii) to the extent that such breach is with respect to a Mortgage Loan or a
related document, purchase such Mortgage Loan from the Trust Fund at the
Purchase Price and in the manner set forth in Section 2.02; provided that if the
omission or defect would cause the Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code, any such cure or
repurchase must occur within 90 days from the date such breach was discovered.
The obligation of the Master Servicer to cure such breach or to so purchase such
Mortgage Loan shall constitute the sole remedy in respect of a breach of a
representation and warranty set forth in this Section 2.03(a) available to the
Certificateholders or the Trustee on behalf of the Certificateholders (except
for the Insurer's rights under Section 3.03 of the Insurance Agreement).
(b) The Depositor hereby represents and warrants to the
Trustee for the benefit of the Certificateholders and the Insurer that as of the
Closing Date (or, if otherwise specified below, as of the date so specified):
(i) The information set forth in Exhibit F-1 and
Exhibit F-2 hereto with respect to each Mortgage Loan or the Mortgage
Loans, as the case may be, is true and correct in all material respects
at the respective date or dates which such information is furnished;
(ii) Immediately prior to the conveyance of the
Mortgage Loans to the Trustee, the Depositor had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any pledge,
lien, encumbrance or security interest (other than rights to servicing
and related compensation) and such conveyance validly transfers
ownership of the Mortgage Loans to the Trustee free and clear of any
pledge, lien, encumbrance or security interest; and
(iii) Each Mortgage Loan constitutes a qualified
mortgage under Section 860G(a)(3)(A) of the Code and Treasury
Regulations Section 1.860G-2(a)(1).
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It is understood and agreed that the representations and warranties set forth in
this Section 2.03(b) shall survive delivery of the respective Mortgage Files to
the Trustee or any Custodian.
Upon discovery by any of the Depositor, the Master Servicer, the
Insurer, the Trustee or any Custodian of a breach of any of the representations
and warranties set forth in this Section 2.03(b) which materially and adversely
affects the interests of the Certificateholders or the Insurer in any Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties (including the Insurer) (any Custodian being so obligated under a
Custodial Agreement); provided, however, that in the event of a breach of the
representation and warranty set forth in Section 2.03(b)(iii), the party
discovering such breach shall give such notice within five days of discovery.
Within 90 days of its discovery or its receipt of notice of breach, the
Depositor shall either (i) cure such breach in all material respects or (ii)
purchase such Mortgage Loan from the Trust Fund at the Purchase Price and in the
manner set forth in Section 2.02; provided that the Depositor shall have the
option to substitute a Qualified Substitute Mortgage Loan or Loans for such
Mortgage Loan if such substitution occurs within two years following the Closing
Date; provided that if the omission or defect would cause the Mortgage Loan to
be other than a "qualified mortgage" as defined in Section 860G(a)(3) of the
Code, any such cure, substitution or repurchase must occur within 90 days from
the date such breach was discovered. Any such substitution shall be effected by
the Depositor under the same terms and conditions as provided in Section 2.04
for substitutions by Residential Funding. It is understood and agreed that the
obligation of the Depositor to cure such breach or to so purchase or substitute
for any Mortgage Loan as to which such a breach has occurred and is continuing
shall constitute the sole remedy respecting such breach available to the
Certificateholders (other than the Insurer) or the Trustee on behalf of the
Certificateholders (other than the Insurer). Notwithstanding the foregoing, the
Depositor shall not be required to cure breaches or purchase or substitute for
Mortgage Loans as provided in this Section 2.03(b) if the substance of the
breach of a representation set forth above also constitutes fraud in the
origination of the Mortgage Loan.
Section 2.04. Representations and Warranties of Residential
Funding.
---------------------------------------------
The Depositor, as assignee of Residential Funding under the
Mortgage Loan Purchase Agreement, hereby assigns to the Trustee for the benefit
of the Certificateholders all of its right, title and interest in respect of the
Mortgage Loan Purchase Agreement applicable to a Mortgage Loan. Insofar as the
Mortgage Loan Purchase Agreement relates to the representations and warranties
made by Residential Funding in respect of such Mortgage Loan and any remedies
provided thereunder for any breach of such representations and warranties, such
right, title and interest may be enforced by the Master Servicer on behalf of
the Trustee and the Certificateholders. Upon the discovery by the Depositor, the
Master Servicer, the Trustee, the Insurer or any Custodian of a breach of any of
the representations and warranties made in the Mortgage Loan Purchase Agreement
in respect of any Mortgage Loan or of any Repurchase Event which materially and
adversely affects the interests of the Certificateholders or the Insurer in such
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties (including the Insurer) (any Custodian being so
obligated under a Custodial Agreement). The Master Servicer shall promptly
notify Residential Funding of such breach or Repurchase Event and request that
Residential Funding either (i) cure such breach or Repurchase Event in all
material respects within 90 days from the date the Master Servicer was notified
of such breach or Repurchase Event or (ii) purchase such Mortgage Loan from
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the Trust Fund at the Purchase Price and in the manner set forth in Section
2.02; provided that, in the case of a breach or Repurchase Event under the
Mortgage Loan Purchase Agreement, Residential Funding shall have the option to
substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage Loan
if such substitution occurs within two years following the Closing Date;
provided that if the breach would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure
or substitution must occur within 90 days from the date the breach was
discovered. In the event that Residential Funding elects to substitute a
Qualified Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant
to this Section 2.04, Residential Funding shall deliver to the Trustee for the
benefit of the Certificateholders with respect to such Qualified Substitute
Mortgage Loan or Loans, the original Mortgage Note, the Mortgage, an Assignment
of the Mortgage in recordable form, and such other documents and agreements as
are required by Section 2.01, with the Mortgage Note endorsed as required by
Section 2.01. No substitution will be made in any calendar month after the
Determination Date for such month. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution shall not be
part of the Trust Fund and will be retained by the Master Servicer and remitted
by the Master Servicer to Residential Funding on the next succeeding
Distribution Date. For the month of substitution, distributions to the
Certificateholders will include the Monthly Payment due on a Deleted Mortgage
Loan for such month and thereafter Residential Funding shall be entitled to
retain all amounts received in respect of such Deleted Mortgage Loan. The Master
Servicer shall amend or cause to be amended the Mortgage Loan Schedule for the
benefit of the Certificateholders to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Qualified Substitute Mortgage Loan or
Loans and the Master Servicer shall deliver the amended Mortgage Loan Schedule
to the Trustee. Upon such substitution, the Qualified Substitute Mortgage Loan
or Loans shall be subject to the terms of this Agreement and the related
Subservicing Agreement in all respects, and Residential Funding shall be deemed
to have made the representations and warranties with respect to the Qualified
Substitute Mortgage Loan contained in Section 3.1(b) of the Mortgage Loan
Purchase Agreement, as of the date of substitution, and the covenants,
representations and warranties set forth in this Section 2.04, and in Section
2.03 hereof and in Section 3.1(a) and (b) of the Mortgage Loan Purchase
Agreement, and the Master Servicer shall be obligated to repurchase or
substitute for any Qualified Substitute Mortgage Loan as to which a Repurchase
Event (as defined in the Mortgage Loan Purchase Agreement) has occurred pursuant
to Section 3.1(c) of the Mortgage Loan Purchase Agreement.
In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Stated Principal Balance of all such
Deleted Mortgage Loans (in each case after application of the principal portion
of the Monthly Payments due in the month of substitution that are to be
distributed to the Certificateholders in the month of substitution). Residential
Funding shall deposit the amount of such shortfall into the Custodial Account on
the day of substitution, without any reimbursement therefor. Residential Funding
shall give notice in writing to the Trustee of such event, which notice shall be
accompanied by an Officers' Certificate as to the calculation of such shortfall
and by an Opinion of Counsel to the effect that such substitution will not cause
(a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1)
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of the Code or on "contributions after the startup date" under Section
860G(d)(1) of the Code or (b) any portion of REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC at any time that any
Certificate is outstanding.
It is understood and agreed that the obligation of the
Residential Funding to cure such breach or purchase (or in the case of
Residential Funding to substitute for) such Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Certificateholders (other than the
Insurer) or the Trustee on behalf of the Certificateholders (other than the
Insurer). If the Master Servicer is Residential Funding, then the Trustee shall
also have the right to give the notification and require the purchase or
substitution provided for in the second preceding paragraph in the event of such
a breach of a representation or warranty made by Residential Funding in the
Mortgage Loan Purchase Agreement. In connection with the purchase of or
substitution for any such Mortgage Loan by Residential Funding, the Trustee
shall assign to Residential Funding all of the right, title and interest in
respect of the Mortgage Loan Purchase Agreement applicable to such Mortgage
Loan.
Section 2.05. Execution and Authentication of Certificates.
--------------------------------------------
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery of the Mortgage Files to it, or any Custodian on its
behalf, subject to any exceptions noted, together with the assignment to it of
all other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such delivery and in exchange therefor, the
Trustee, pursuant to the written request of the Depositor executed by an officer
of the Depositor, has executed and caused to be authenticated and delivered to
or upon the order of the Depositor the Certificates in authorized denominations
which evidence ownership of the entire Trust Fund.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
-----------------
Section 3.01. Master Servicer to Act as Servicer.
----------------------------------
(a) The Master Servicer shall service and administer the
Mortgage Loans in accordance with the terms of this Agreement and the respective
Mortgage Loans and in a manner consistent with industry practice and shall have
full power and authority, acting alone or through Subservicers as provided in
Section 3.02, to do any and all things which it may deem necessary or desirable
in connection with such servicing and administration. Without limiting the
generality of the foregoing, the Master Servicer in its own name or in the name
of a Subservicer is hereby authorized and empowered by the Trustee when the
Master Servicer or the Subservicer, as the case may be, believes it appropriate
in its best judgment, to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, or of
consent to assumption or modification in connection with a proposed conveyance,
or of assignment of any Mortgage and Mortgage Note in connection with the
repurchase of a Mortgage Loan and all other comparable instruments, or with
respect to the modification or re-recording of a Mortgage for the purpose of
correcting the Mortgage, the subordination of the lien of the Mortgage in favor
of a public utility company or government agency or unit with powers of eminent
domain, the taking of a deed in lieu of foreclosure, the completion of judicial
or non-judicial foreclosure, the conveyance of a Mortgaged Property to the
related insurer, the acquisition of any property acquired by foreclosure or deed
in lieu of foreclosure, or the management, marketing and conveyance of any
property acquired by foreclosure or deed in lieu of foreclosure with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. Notwithstanding
the foregoing, subject to Section 3.07(a), the Master Servicer shall not permit
any modification with respect to any Mortgage Loan that would both constitute a
sale or exchange of such Mortgage Loan within the meaning of Section 1001 of the
Code and any proposed, temporary or final regulations promulgated thereunder
(other than in connection with a proposed conveyance or assumption of such
Mortgage Loan that is treated as a Principal Prepayment in Full pursuant to
Section 3.13(d) hereof) and cause any of REMIC I, REMIC II or REMIC III to fail
to qualify as a REMIC under the Code. The Trustee shall furnish the Master
Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Master Servicer to service and administer the Mortgage
Loans. The Trustee shall not be liable for any action taken by the Master
Servicer or any Subservicer pursuant to such powers of attorney. In servicing
and administering any Nonsubserviced Mortgage Loan, the Master Servicer shall,
to the extent not inconsistent with this Agreement, comply with the Program
Guide as if it were the originator of such Mortgage Loan and had retained the
servicing rights and obligations in respect thereof. In connection with
servicing and administering the Mortgage Loans, the Master Servicer and any
Affiliate of the Master Servicer (i) may perform services such as appraisals and
brokerage services that are customarily provided by Persons other than servicers
of mortgage loans, and shall be entitled to reasonable compensation therefor in
accordance with Section 3.10 and (ii) may, at its own discretion and on behalf
of the Trustee, obtain credit information in the form of a "credit score" from a
credit repository.
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(b) All costs incurred by the Master Servicer or by
Subservicers in effecting the timely payment of taxes and assessments on the
properties subject to the Mortgage Loans shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
amount owing under the related Mortgage Loans, notwithstanding that the terms of
such Mortgage Loan so permit, and such costs shall be recoverable to the extent
permitted by Section 3.10(a)(ii).
(c) The Master Servicer may enter into one or more agreements
in connection with the offering of pass-through certificates evidencing
interests in one or more of the Certificates providing for the payment by the
Master Servicer of amounts received by the Master Servicer as servicing
compensation hereunder and required to cover certain Prepayment Interest
Shortfalls on the Mortgage Loans, which payment obligation will thereafter be an
obligation of the Master Servicer hereunder.
Section 3.02. Subservicing Agreements Between Master Servicer
and Subservicers; Enforcement of Subservicers'
Obligations; Special Servicing.
-----------------------------------------------
(a) The Master Servicer may continue in effect Subservicing
Agreements entered into by Residential Funding and Subservicers prior to the
execution and delivery of this Agreement, and may enter into new Subservicing
Agreements with Subservicers, for the servicing and administration of all or
some of the Mortgage Loans. Each Subservicer shall be either (i) an institution
the accounts of which are insured by the FDIC or (ii) another entity that
engages in the business of originating or servicing mortgage loans, and in
either case shall be authorized to transact business in the state or states in
which the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Subservicer to perform its
obligations hereunder and under the Subservicing Agreement, and in either case
shall be a Freddie Mac, Fannie Mae or HUD approved mortgage servicer. Each
Subservicer of a Mortgage Loan shall be entitled to receive and retain, as
provided in the related Subservicing Agreement and in Section 3.07, the related
Subservicing Fee from payments of interest received on such Mortgage Loan after
payment of all amounts required to be remitted to the Master Servicer in respect
of such Mortgage Loan. For any Mortgage Loan that is a Nonsubserviced Mortgage
Loan, the Master Servicer shall be entitled to receive and retain an amount
equal to the Subservicing Fee from payments of interest. Unless the context
otherwise requires, references in this Agreement to actions taken or to be taken
by the Master Servicer in servicing the Mortgage Loans include actions taken or
to be taken by a Subservicer on behalf of the Master Servicer. Each Subservicing
Agreement will be upon such terms and conditions as are generally required by,
permitted by or consistent with the Program Guide and are not inconsistent with
this Agreement and as the Master Servicer and the Subservicer have agreed. With
the approval of the Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicer will remain obligated
under the related Subservicing Agreement. The Master Servicer and a Subservicer
may enter into amendments thereto or a different form of Subservicing Agreement,
and the form referred to or included in the Program Guide is merely provided for
information and shall not be deemed to limit in any respect the discretion of
the Master Servicer to modify or enter into different Subservicing Agreements;
PROVIDED, HOWEVER, that any such amendments or different forms shall be
consistent with and not violate the provisions of
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either this Agreement or the Program Guide in a manner which would materially
and adversely affect the interests of the Certificateholders or the Insurer.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee, the Insurer and the
Certificateholders, shall use its best reasonable efforts to enforce the
obligations of each Subservicer under the related Subservicing Agreement, to the
extent that the non-performance of any such obligation would have a material and
adverse effect on a Mortgage Loan, including, without limitation, the obligation
to purchase a Mortgage Loan on account of defective documentation, as described
in Section 2.02, or on account of a breach of a representation or warranty, as
described in Section 2.04. Such enforcement, including, without limitation, the
legal prosecution of claims, termination of Subservicing Agreements, as
appropriate, and the pursuit of other appropriate remedies, shall be in such
form and carried out to such an extent and at such time as the Master Servicer
would employ in its good faith business judgment and which are normal and usual
in its general mortgage servicing activities. The Master Servicer shall pay the
costs of such enforcement at its own expense, and shall be reimbursed therefor
only (i) from a general recovery resulting from such enforcement to the extent,
if any, that such recovery exceeds all amounts due in respect of the related
Mortgage Loan or (ii) from a specific recovery of costs, expenses or attorneys
fees against the party against whom such enforcement is directed.
(c) As to each Mortgage Loan that (i) is subserviced by a
Designated Subservicer as of the Closing Date, and (ii) becomes 90 or more days
Delinquent at any time after the Closing Date:
(i) the Master Servicer shall cause the subservicing
of such Mortgage Loan to be transferred to HomeComings as soon as
reasonably practicable (unless HomeComings is already acting as
subservicer for such Mortgage Loan); and
(ii) subject to the completion of the subservicing
transfer described in (i) above (if applicable), the Master Servicer
shall perform the servicing activities described in Section 3.14,
either directly or through HomeComings or another affiliate.
Section 3.03. Successor Subservicers.
----------------------
The Master Servicer shall be entitled to terminate any
Subservicing Agreement that may exist in accordance with the terms and
conditions of such Subservicing Agreement and without any limitation by virtue
of this Agreement; PROVIDED, HOWEVER, that in the event of termination of any
Subservicing Agreement by the Master Servicer or the Subservicer, the Master
Servicer shall either act as servicer of the related Mortgage Loan or enter into
a Subservicing Agreement with a successor Subservicer which will be bound by the
terms of the related Subservicing Agreement. If the Master Servicer or any
Affiliate of Residential Funding acts as servicer, it will not assume liability
for the representations and warranties of the Subservicer which it replaces. If
the Master Servicer enters into a Subservicing Agreement with a successor
Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the
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event of any such assumption by the successor Subservicer, the Master Servicer
may, in the exercise of its business judgment, release the terminated
Subservicer from liability for such representations
and warranties.
Section 3.04. Liability of the Master Servicer.
--------------------------------
Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer or a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and liable
to the Trustee, the Insurer and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer or the Depositor and to the same extent and under the same terms and
conditions as if the Master Servicer alone were servicing and administering the
Mortgage Loans. The Master Servicer shall be entitled to enter into any
agreement with a Subservicer for indemnification of the Master Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
Section 3.05. No Contractual Relationship Between Subservicer
and Trustee or Certificateholders.
-----------------------------------------------
Any Subservicing Agreement that may be entered into and any
other transactions or services relating to the Mortgage Loans involving a
Subservicer in its capacity as such and not as an originator shall be deemed to
be between the Subservicer and the Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer in
its capacity as such except as set forth in Section 3.06. The foregoing
provision shall not in any way limit a Subservicer's obligation to cure an
omission or defect or to repurchase a Mortgage Loan as referred to in Section
2.02 hereof.
Section 3.06. Assumption or Termination of Subservicing
Agreements by Trustee.
-----------------------------------------
(a) 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, its designee or its successor shall thereupon assume all of the rights
and obligations of the Master Servicer under each Subservicing Agreement that
may have been entered into. The Trustee, its designee or the successor servicer
for the Trustee shall be deemed to have assumed all of the Master Servicer's
interest therein and to have replaced the Master Servicer as a party to the
Subservicing Agreement to the same extent as if the Subservicing Agreement had
been assigned to the assuming party except that the Master Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreement.
(b) The Master Servicer shall, upon request of the Trustee but
at the expense of the Master Servicer, deliver to the assuming party all
documents and records relating to each Subservicing Agreement and the Mortgage
Loans then being serviced and an accounting of amounts
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collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of each Subservicing Agreement to the assuming
party.
(c) Unless an Insurer Default exists, the Master Servicer
will, if it is authorized to do so under the relevant Subservicing Agreement,
upon request of the Insurer at a time when the Insurer may remove the Master
Servicer under the terms hereof, terminate any Subservicing
Agreement.
Section 3.07. Collection of Certain Mortgage Loan Payments;
Deposits to Custodial Account.
---------------------------------------------
(a) The Master Servicer shall make reasonable 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 the terms and provisions of any related Primary Insurance Policy,
follow such collection procedures as it would employ in its good faith business
judgment and which are normal and usual in its general mortgage servicing
activities. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any prepayment charge or penalty
interest in connection with the prepayment of a Mortgage Loan and (ii) extend
the Due Date for payments due on a Mortgage Loan in accordance with the Program
Guide, PROVIDED, HOWEVER, that the Master Servicer shall first determine that
any such waiver or extension will not impair the coverage of any related Primary
Insurance Policy or materially adversely affect the lien of the related
Mortgage. In the event of any such arrangement, the Master Servicer shall make
timely advances on the related Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements unless otherwise agreed to
by the Holders of the Classes of Certificates affected thereby; PROVIDED,
HOWEVER, that no such extension shall be made if any advance would be a
Nonrecoverable Advance. Consistent with the terms of this Agreement, the Master
Servicer may also waive, modify or vary any term of any Mortgage Loan or consent
to the postponement of strict compliance with any such term or in any manner
grant indulgence to any Mortgagor if in the Master Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders or the Insurer (taking into account any
estimated Realized Loss that might result absent such action), PROVIDED,
HOWEVER, that the Master Servicer may not modify materially or permit any
Subservicer to modify any Mortgage Loan, including without limitation any
modification that would change the Mortgage Rate, forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan or except in connection with prepayments to the extent that such
reamortization is not inconsistent with the terms of the Mortgage Loan), or
extend the final maturity date of such Mortgage Loan, unless such Mortgage Loan
is in default or, in the judgment of the Master Servicer, such default is
reasonably foreseeable. In connection with any Curtailment of a Mortgage Loan,
the Master Servicer, to the extent not inconsistent with the terms of the
Mortgage Note and local law and practice, may permit the Mortgage Loan to be
re-amortized such that the Monthly Payment is recalculated as an amount that
will fully amortize the remaining Stated Principal Amount thereof by the
original Maturity Date based on the original Mortgage Rate; provided, that such
reamortization shall not be permitted if it would constitute a reissuance of the
Mortgage Loan for federal income tax purposes.
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(b) The Master Servicer shall establish and maintain a
Custodial Account in which the Master Servicer shall deposit or cause to be
deposited on a daily basis, except as otherwise specifically provided herein,
the following payments and collections remitted by Subservicers or received by
it in respect of the Mortgage Loans subsequent to the Cut-off Date (other than
in respect of principal and interest on the Mortgage Loans due on or before the
Cut-off Date):
(i) All payments on account of principal, including
Principal Prepayments made by Mortgagors on the Mortgage Loans and the
principal component of any Subservicer Advance or of any REO Proceeds
received in connection with an REO Property for which an REO
Disposition has occurred;
(ii) All payments on account of interest at the
Adjusted Mortgage Rate on the Mortgage Loans, and the interest
component of any Subservicer Advance or of any REO Proceeds received in
connection with an REO Property for which an REO Disposition has
occurred;
(iii) Insurance Proceeds and Liquidation Proceeds
(net of any related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased
pursuant to Section 2.02, 2.03, 2.04 or 4.07 and all amounts required
to be deposited in connection with the substitution of a Qualified
Substitute Mortgage Loan pursuant to Section 2.03 or 2.04; and
(v) Any amounts required to be deposited pursuant to
Section 3.07(c) or 3.21; and
(vi) Any amounts realized by MLCC and received by the
Master Servicer in respect of any Additional Collateral.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments on the Mortgage Loans which are not part of the Trust
Fund (consisting of payments in respect of principal and interest on the
Mortgage Loans due on or before the Cut-off Date) and payments or collections in
the nature of prepayment charges or late payment charges or assumption fees may
but need not be deposited by the Master Servicer in the Custodial Account. In
the event any amount not required to be deposited in the Custodial Account is so
deposited, the Master Servicer may at any time withdraw such amount from the
Custodial Account, any provision herein to the contrary notwithstanding. The
Custodial Account may contain funds that belong to one or more trust funds
created for mortgage pass-through certificates of other series and may contain
other funds respecting payments on mortgage loans belonging to the Master
Servicer or serviced or master serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Mortgage Loans.
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With respect to Insurance Proceeds, Liquidation Proceeds, REO
Proceeds and the proceeds of the purchase of any Mortgage Loan pursuant to
Sections 2.02, 2.03, 2.04 and 4.07 received in any calendar month, the Master
Servicer may elect to treat such amounts as included in the related Group I or
Group II Available Distribution Amount for the Distribution Date in the month of
receipt, but is not obligated to do so. If the Master Servicer so elects, such
amounts will be deemed to have been received (and any related Realized Loss
shall be deemed to have occurred) on the last day of the month prior to the
receipt thereof.
(c) The Master Servicer shall use its best efforts to cause
the institution maintaining the Custodial Account to invest the funds in the
Custodial Account attributable to the Mortgage Loans in Permitted Investments
which shall mature not later than the Certificate Account Deposit Date next
following the date of such investment (with the exception of the Amount Held for
Future Distribution) and which shall not be sold or disposed of prior to their
maturities. All income and gain realized from any such investment shall be for
the benefit of the Master Servicer as additional servicing compensation and
shall be subject to its withdrawal or order from time to time. The amount of any
losses incurred in respect of any such investments attributable to the
investment of amounts in respect of the Mortgage Loans shall be deposited in the
Custodial Account by the Master Servicer out of its own funds immediately as
realized.
(d) The Master Servicer shall give notice to the Trustee and
the Depositor of any change in the location of the Custodial Account and the
location of the Certificate Account prior to the use thereof.
Section 3.08. Subservicing Accounts; Servicing Accounts.
-----------------------------------------
(a) In those cases where a Subservicer is servicing a Mortgage
Loan pursuant to a Subservicing Agreement, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to establish and maintain
one or more Subservicing Accounts which shall be an Eligible Account or, if such
account is not an Eligible Account, shall generally satisfy the requirements of
the Program Guide and be otherwise acceptable to the Master Servicer, the
Insurer and each Rating Agency. The Subservicer will be required thereby to
deposit into the Subservicing Account on a daily basis all proceeds of Mortgage
Loans received by the Subservicer, less its Subservicing Fees and unreimbursed
advances and expenses, to the extent permitted by the Subservicing Agreement. If
the Subservicing Account is not an Eligible Account, the Master Servicer shall
be deemed to have received such monies upon receipt thereof by the Subservicer.
The Subservicer shall not be required to deposit in the Subservicing Account
payments or collections in the nature of prepayment charges or late charges or
assumption fees. On or before the date specified in the Program Guide, but in no
event later than the Determination Date, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to remit to the Master
Servicer for deposit in the Custodial Account all funds held in the Subservicing
Account with respect to each Mortgage Loan serviced by such Subservicer that are
required to be remitted to the Master Servicer. The Subservicer will also be
required, pursuant to the Subservicing Agreement, to advance on such scheduled
date of remittance amounts equal to any scheduled monthly installments of
principal and interest less its Subservicing Fees on any Mortgage Loans for
which payment was not received by the Subservicer. This obligation to advance
with respect to each Mortgage Loan will continue up
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to and including the first of the month following the date on which the related
Mortgaged Property is sold at a foreclosure sale or is acquired by the Trust
Fund by deed in lieu of foreclosure or otherwise. All such advances received by
the Master Servicer shall be deposited promptly by it in
the Custodial Account.
(b) The Subservicer may also be required, pursuant to the
Subservicing Agreement, to remit to the Master Servicer for deposit in the
Custodial Account interest at the Adjusted Mortgage Rate (or Modified Net
Mortgage Rate plus the rate per annum at which the Servicing Fee and the
Certificate Insurer Premium Rate, if any, accrues in the case of a Modified
Mortgage loan) on any Curtailment received by such Subservicer in respect of a
Mortgage Loan from the related Mortgagor during any month that is to be applied
by the Subservicer to reduce the unpaid principal balance of the related
Mortgage Loan as of the first day of such month, from the date of application of
such Curtailment to the first day of the following month. Any amounts paid by a
Subservicer pursuant to the preceding sentence shall be for the benefit of the
Master Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time pursuant to Sections 3.10(a)(iv) and (v).
(c) In addition to the Custodial Account and the Certificate
Account, the Master Servicer shall for any Nonsubserviced Mortgage Loan, and
shall cause the Subservicers for Subserviced Mortgage Loans to, establish and
maintain one or more Servicing Accounts and deposit and retain therein all
collections from the Mortgagors (or advances from Subservicers) for the payment
of taxes, assessments, hazard insurance premiums, Primary Insurance Policy
premiums, if applicable, or comparable items for the account of the Mortgagors.
Each Servicing Account shall satisfy the requirements for a Subservicing Account
and, to the extent permitted by the Program Guide or as is otherwise acceptable
to the Master Servicer, may also function as a Subservicing Account. Withdrawals
of amounts related to the Mortgage Loans from the Servicing Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
Primary Insurance Policy premiums, if applicable, or comparable items, to
reimburse the Master Servicer or Subservicer out of related collections for any
payments made pursuant to Sections 3.11 (with respect to the Primary Insurance
Policy) and 3.12(a) (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Account or to clear and
terminate the Servicing Account at the termination of this Agreement in
accordance with Section 9.01 or in accordance with the Program Guide. As part of
its servicing duties, the Master Servicer shall, and the Subservicers will,
pursuant to the Subservicing Agreements, be required to pay to the Mortgagors
interest on funds in this account to the extent required by law.
(d) The Master Servicer shall advance the payments referred to
in the preceding subsection that are not timely paid by the Mortgagors or
advanced by the Subservicers on the date when the tax, premium or other cost for
which such payment is intended is due, but the Master Servicer shall be required
so to advance only to the extent that such advances, in the good faith judgment
of the Master Servicer, will be recoverable by the Master Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise.
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Section 3.09. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
-----------------------------------------------
In the event that compliance with this Section 3.09 shall make
any Class of Certificates legal for investment by federally insured savings and
loan associations, the Master Servicer shall provide, or cause the Subservicers
to provide, to the Trustee, the Office of Thrift Supervision or the FDIC and the
supervisory agents and examiners thereof access to the documentation regarding
the Mortgage Loans required by applicable regulations of the Office of Thrift
Supervision, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices designated by the Master
Servicer. The Master Servicer shall permit such representatives to photocopy any
such documentation and shall provide equipment for that purpose at a charge
reasonably approximating the cost of such photocopying to the Master Servicer.
Section 3.10. Permitted Withdrawals from the Custodial
Account.
----------------------------------------
(a) The Master Servicer may, from time to time as provided
herein, make withdrawals from the Custodial Account of amounts on deposit
therein pursuant to Section 3.07 that are attributable to the Mortgage Loans for
the following purposes:
(i) to make deposits into the Certificate Account in
the amounts and in the manner provided for in Section 4.01;
(ii) to reimburse itself or the related Subservicer
for previously unreimbursed advances or expenses made pursuant to
Sections 3.01, 3.08, 3.12(a), 3.14 and 4.04 or otherwise reimbursable
pursuant to the terms of this Agreement, such withdrawal right being
limited to amounts received on particular Mortgage Loans (including,
for this purpose, REO Proceeds, Insurance Proceeds, Liquidation
Proceeds and proceeds from the purchase of a Mortgage Loan pursuant to
Section 2.02, 2.03, 2.04 or 4.07) which represent (A) Late Collections
of Monthly Payments for which any such advance was made in the case of
Subservicer Advances or Advances pursuant to Section 4.04 and (B) late
recoveries of the payments for which such advances were made in the
case of Servicing Advances;
(iii) to pay to itself or the related Subservicer (if
not previously retained by such Subservicer) out of each payment
received by the Master Servicer on account of interest on a Mortgage
Loan as contemplated by Sections 3.14 and 3.16, an amount equal to that
remaining portion of any such payment as to interest (but not in excess
of the Servicing Fee and the Subservicing Fee, if not previously
retained) which, when deducted, will result in the remaining amount of
such interest being interest at a rate per annum equal to the Net
Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified
Mortgage Loan) plus the Certificate Insurer Premium Rate on the amount
specified in the amortization schedule of the related Mortgage Loan as
the principal balance thereof at the beginning of the period respecting
which such interest was paid after giving effect to any previous
Curtailments;
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(iv) to pay to itself as additional servicing
compensation any interest or investment income earned on funds
deposited in the Custodial Account that it is entitled to withdraw
pursuant to Section 3.07(c);
(v) to pay to itself as additional servicing
compensation any Foreclosure Profits, and any amounts remitted by
Subservicers as interest in respect of Curtailments pursuant to Section
3.08(b);
(vi) to pay to itself, a Subservicer, Residential
Funding, the Depositor or any other appropriate Person, as the case may
be, with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased or otherwise transferred pursuant to
Section 2.02, 2.03, 2.04, 4.07 or 9.01, all amounts received thereon
and not required to be distributed to Certificateholders as of the date
on which the related Stated Principal Balance or Purchase Price is
determined;
(vii) to reimburse itself or the related Subservicer
for any Nonrecoverable Advance or Advances in the manner and to the
extent provided in subsection (c) below, any Advance made in connection
with a modification of a Mortgage Loan that is in default or, in the
judgment of the Master Servicer, default is reasonably foreseeable
pursuant to Section 3.07(a), to the extent the amount of the Advance
has been added to the outstanding principal balance of the Mortgage
Loan;
(viii) to reimburse itself or the Depositor for
expenses incurred by and reimbursable to it or the Depositor pursuant
to Section 3.14(c), 6.03, 10.01 or otherwise;
(ix) to reimburse itself for amounts expended by it
(a) pursuant to Section 3.14 in good faith in connection with the
restoration of property damaged by an Uninsured Cause, and (b) in
connection with the liquidation of a Mortgage Loan or disposition of an
REO Property to the extent not otherwise reimbursed pursuant to clause
(ii) or (viii) above; and
(x) to withdraw any amount deposited in the Custodial
Account that was not required to be deposited therein pursuant to
Section 3.07, including any payoff fees or penalties or any other
additional amounts payable to the Master Servicer or Subservicer
pursuant to the terms of the Mortgage Note.
(b) Since, in connection with withdrawals pursuant to clauses
(ii), (iii), (v) and (vi), the Master Servicer's entitlement thereto is limited
to collections or other recoveries on the related Mortgage Loan, the Master
Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account pursuant to such clauses.
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(c) The Master Servicer shall be entitled to reimburse itself
or the related Subservicer for any advance made in respect of a Mortgage Loan
that the Master Servicer determines to be a Nonrecoverable Advance by withdrawal
from the Custodial Account of amounts on deposit therein attributable to the
Mortgage Loans on any Certificate Account Deposit Date succeeding the date of
such determination. Such right of reimbursement in respect of a Nonrecoverable
Advance on any such Certificate Account Deposit Date shall be limited to an
amount not exceeding the portion of such advance previously paid to
Certificateholders (and not theretofore reimbursed to the Master Servicer or the
related Subservicer).
Section 3.11. Maintenance of Primary Insurance Coverage.
-----------------------------------------
(a) The Master Servicer shall not take, or permit any
Subservicer to take, any action which would result in noncoverage under any
applicable Primary Insurance Policy of any loss which, but for the actions of
the Master Servicer or Subservicer, would have been covered thereunder. To the
extent coverage is available, the Master Servicer shall keep or cause to be kept
in full force and effect each such Primary Insurance Policy until the principal
balance of the related Mortgage Loan secured by a Mortgaged Property is reduced
to 80% or less of the Appraised Value at origination in the case of such a
Mortgage Loan having a Loan-to-Value Ratio at origination in excess of 80%,
provided that such Primary Insurance Policy was in place as of the Cut-off Date
and the Master Servicer had knowledge of such Primary Insurance Policy. The
Master Servicer shall not cancel or refuse to renew any such Primary Insurance
Policy applicable to a Nonsubserviced Mortgage Loan, or consent to any
Subservicer canceling or refusing to renew any such Primary Insurance Policy
applicable to a Mortgage Loan subserviced by it, that is in effect at the date
of the initial issuance of the Certificates and is required to be kept in force
hereunder unless the replacement Primary Insurance Policy for such canceled or
non-renewed policy is maintained with an insurer whose claims-paying ability is
acceptable to each Rating Agency for mortgage pass-through certificates having a
rating equal to or better than the lower of the then-current rating or the
rating assigned to the Certificates as of the Closing Date by such Rating
Agency.
(b) In connection with its activities as administrator and
servicer of the Mortgage Loans, the Master Servicer agrees to present or to
cause the related Subservicer to present, on behalf of the Master Servicer, the
Subservicer, if any, the Trustee and Certificateholders, claims to the insurer
under any Primary Insurance Policies, in a timely manner in accordance with such
policies, and, in this regard, to take or cause to be taken such reasonable
action as shall be necessary to permit recovery under any Primary Insurance
Policies respecting defaulted Mortgage Loans. Pursuant to Section 3.07, any
Insurance Proceeds collected by or remitted to the Master Servicer under any
Primary Insurance Policies shall be deposited in the Custodial Account, subject
to withdrawal pursuant to Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and
Fidelity Coverage.
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(a) The Master Servicer shall cause to be maintained for each
Mortgage Loan (other than a Cooperative Loan) fire insurance with extended
coverage in an amount which is equal
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to the lesser of the principal balance owing on such Mortgage Loan (together
with the principal balance of any mortgage loan secured by a lien that is senior
to the Mortgage Loan) or 100 percent of the insurable value of the improvements;
PROVIDED, HOWEVER, that such coverage may not be less than the minimum amount
required to fully compensate for any loss or damage on a replacement cost basis.
To the extent it may do so without breaching the related Subservicing Agreement,
the Master Servicer shall replace any Subservicer that does not cause such
insurance, to the extent it is available, to be maintained. The Master Servicer
shall also cause to be maintained on property acquired upon foreclosure, or deed
in lieu of foreclosure, of any Mortgage Loan (other than a Cooperative Loan),
fire insurance with extended coverage in an amount which is at least equal to
the amount necessary to avoid the application of any co-insurance clause
contained in the related hazard insurance policy. Pursuant to Section 3.07, any
amounts collected by the Master Servicer under any such policies (other than
amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Master Servicer's normal servicing procedures) shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
3.10. Any cost incurred by the Master Servicer in maintaining any such insurance
shall not, for the purpose of calculating monthly distributions to
Certificateholders, be added to the amount owing under the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Master Servicer out of related late payments by the
Mortgagor or out of Insurance Proceeds and Liquidation Proceeds to the extent
permitted by Section 3.10. It is understood and agreed that no earthquake or
other additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage 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. Whenever the improvements securing a Mortgage
Loan are located at the time of origination of such Mortgage Loan (other than a
Cooperative Loan) in a federally designated special flood hazard area, the
Master Servicer shall cause flood insurance (to the extent available) to be
maintained in respect thereof. Such flood insurance shall be in an amount equal
to the lesser of (i) the amount required to compensate for any loss or damage to
the Mortgaged Property on a replacement cost basis and (ii) the maximum amount
of such insurance available for the related Mortgaged Property under the
national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that the Master Servicer shall obtain and
maintain a blanket fire insurance policy with extended coverage insuring against
hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first sentence of this
Section 3.12(a), 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 Property a policy
complying with the first sentence of this Section 3.12(a) and there shall have
been a loss which would have been covered by such policy, deposit in the
Certificate Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Any such deposit by the Master Servicer shall
be made on the Certificate Account Deposit Date next preceding the Distribution
Date which occurs in the month following the month in which payments under any
such policy would have been deposited in the Custodial Account. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Master Servicer agrees
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to present, on behalf of itself, the Trustee and Certificateholders, claims
under any such blanket policy.
(b) The Master Servicer shall obtain and maintain at its own
expense and keep in full force and effect throughout the term of this Agreement
a blanket fidelity bond and an errors and omissions insurance policy covering
the Master Servicer's officers and employees and other persons acting on behalf
of the Master Servicer in connection with its activities under this Agreement.
The amount of coverage shall be at least equal to the coverage that would be
required by Fannie Mae or Freddie Mac, whichever is greater, with respect to the
Master Servicer if the Master Servicer were servicing and administering the
Mortgage Loans for Fannie Mae or Freddie Mac. In the event that any such bond or
policy ceases to be in effect, the Master Servicer shall obtain a comparable
replacement bond or policy from an issuer or insurer, as the case may be,
meeting the requirements, if any, of the Program Guide and acceptable to the
Depositor. Coverage of the Master Servicer under a policy or bond obtained by an
Affiliate of the Master Servicer and providing the coverage required by this
Section 3.12(b) shall satisfy the requirements of this Section 3.12(b).
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption
and Modification Agreements; Certain
Assignments.
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(a) When any Mortgaged Property is conveyed by the Mortgagor,
the Master Servicer or Subservicer, to the extent it has knowledge of such
conveyance, shall enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing:
(i) the Master Servicer shall not be deemed to be in
default under this Section 3.13(a) by reason of any transfer or
assumption which the Master Servicer is restricted by law from
preventing; and
(ii) if the Master Servicer determines that it is
reasonably likely that any Mortgagor will bring, or if any Mortgagor
does bring, legal action to declare invalid or otherwise avoid
enforcement of a due-on-sale clause contained in any Mortgage Note or
Mortgage, the Master Servicer shall not be required to enforce the
due-on-sale clause or to contest such action.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.13(a), in any case in
which a Mortgaged Property is to be conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption or modification agreement or
supplement to the Mortgage Note or Mortgage which requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Master Servicer
is authorized, subject to the requirements of the sentence next following, to
execute and deliver, on behalf of the Trustee, the assumption agreement with the
Person to whom the Mortgaged Property is to be conveyed and such modification
agreement or supplement to the Mortgage Note or Mortgage or other instruments as
are reasonable or necessary
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to carry out the terms of the Mortgage Note or Mortgage or otherwise to comply
with any applicable laws regarding assumptions or the transfer of the Mortgaged
Property to such Person; PROVIDED, HOWEVER, none of such terms and requirements
shall both constitute a "significant modification" effecting an exchange or
reissuance of such Mortgage Loan under the Code (or final, temporary or proposed
Treasury regulations promulgated thereunder) and cause any of REMIC I, REMIC II
or REMIC III to fail to qualify as REMICs under the Code or the imposition of
any tax on "prohibited transactions" or "contributions" after the startup date
under the REMIC Provisions. The Master Servicer shall execute and deliver such
documents only if it reasonably determines that (i) its execution and delivery
thereof will not conflict with or violate any terms of this Agreement or cause
the unpaid balance and interest on the Mortgage Loan to be uncollectible in
whole or in part, (ii) any required consents of insurers under any Required
Insurance Policies have been obtained and (iii) subsequent to the closing of the
transaction involving the assumption or transfer (A) the Mortgage Loan will
continue to be secured by a first mortgage lien (or junior lien of the same
priority in relation to any senior mortgage loan, with respect to any Mortgage
Loan secured by a junior Mortgage) pursuant to the terms of the Mortgage, (B)
such transaction will not adversely affect the coverage under any Required
Insurance Policies, (C) the Mortgage Loan will fully amortize over the remaining
term thereof, (D) no material term of the Mortgage Loan (including the interest
rate on the Mortgage Loan) will be altered nor will the term of the Mortgage
Loan be changed and (E) if the seller/transferor of the Mortgaged Property is to
be released from liability on the Mortgage Loan, the buyer/transferee of the
Mortgaged Property would be qualified to assume the Mortgage Loan based on
generally comparable credit quality and such release will not (based on the
Master Servicer's or Subservicer's good faith determination) adversely affect
the collectability of the Mortgage Loan. Upon receipt of appropriate
instructions from the Master Servicer in accordance with the foregoing, the
Trustee shall execute any necessary instruments for such assumption or
substitution of liability as directed by the Master Servicer. Upon the closing
of the transactions contemplated by such documents, the Master Servicer shall
cause the originals or true and correct copies of the assumption agreement, the
release (if any), or the modification or supplement to the Mortgage Note or
Mortgage to be delivered to the Trustee or the Custodian and deposited with the
Mortgage File for such Mortgage Loan. Any fee collected by the Master Servicer
or such related Subservicer for entering into an assumption or substitution of
liability agreement will be retained by the Master Servicer or such Subservicer
as additional servicing compensation.
(c) The Master Servicer or the related Subservicer, as the
case may be, shall be entitled to approve a request from a Mortgagor for a
partial release of the related Mortgaged Property, the granting of an easement
thereon in favor of another Person, any alteration or demolition of the related
Mortgaged Property or other similar matters if it has determined, exercising its
good faith business judgment in the same manner as it would if it were the owner
of the related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby
and that each of REMIC I, REMIC II or REMIC III would continue to qualify as a
REMIC under the Code as a result thereof and that no tax on "prohibited
transactions" or "contributions" after the startup day would be imposed on any
of REMIC I, REMIC II or REMIC III as a result thereof. Any fee collected by the
Master Servicer or the related Subservicer for processing such a request will be
retained by the Master Servicer or such Subservicer as additional servicing
compensation.
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(d) Subject to any other applicable terms and conditions of
this Agreement, the Trustee and Master Servicer shall be entitled to approve an
assignment in lieu of satisfaction with respect to any Mortgage Loan, provided
the obligee with respect to such Mortgage Loan following such proposed
assignment provides the Trustee and Master Servicer with a "Lender Certification
for Assignment of Mortgage Loan" in the form attached hereto as Exhibit M, in
form and substance satisfactory to the Trustee and Master Servicer, providing
the following: (i) that the Mortgage Loan is secured by Mortgaged Property
located in a jurisdiction in which an assignment in lieu of satisfaction is
required to preserve lien priority, minimize or avoid mortgage recording taxes
or otherwise comply with, or facilitate a refinancing under, the laws of such
jurisdiction; (ii) that the substance of the assignment is, and is intended to
be, a refinancing of such Mortgage Loan and that the form of the transaction is
solely to comply with, or facilitate the transaction under, such local laws;
(iii) that the Mortgage Loan following the proposed assignment will have a rate
of interest at least 0.25 percent below or above the rate of interest on such
Mortgage Loan prior to such proposed assignment; and (iv) that such assignment
is at the request of the borrower under the related Mortgage Loan. Upon approval
of an assignment in lieu of satisfaction with respect to any Mortgage Loan, the
Master Servicer shall receive cash in an amount equal to the unpaid principal
balance of and accrued interest on such Mortgage Loan and the Master Servicer
shall treat such amount as a Principal Prepayment in Full with respect to such
Mortgage Loan for all purposes hereof.
Section 3.14. Realization Upon Defaulted Mortgage Loans.
-----------------------------------------
(a) The Master Servicer shall foreclose upon or otherwise
comparably convert (which may include an REO Acquisition) 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 3.07. Alternatively, the Master
Servicer may take other actions in respect of a defaulted Mortgage Loan, which
may include (i) accepting a short sale (a payoff of the Mortgage Loan for an
amount less than the total amount contractually owed in order to facilitate a
sale of the Mortgaged Property by the Mortgagor) or permitting a short
refinancing (a payoff of the Mortgage Loan for an amount less than the total
amount contractually owed in order to facilitate refinancing transactions by the
Mortgagor not involving a sale of the Mortgaged Property), (ii) arranging for a
repayment plan or (iii) agreeing to a modification in accordance with Section
3.07. In connection with such foreclosure or other conversion or action, the
Master Servicer shall, consistent with Section 3.11, follow such practices and
procedures as it shall deem necessary or advisable, as shall be normal and usual
in its general mortgage servicing activities and as shall be required or
permitted by the Program Guide; provided that the Master Servicer shall not be
liable in any respect hereunder if the Master Servicer is acting in connection
with any such foreclosure or other conversion or action in a manner that is
consistent with the provisions of this Agreement. The Master Servicer, however,
shall not be required to expend its own funds or incur other reimbursable
charges in connection with any foreclosure, or attempted foreclosure which is
not completed, or towards the correction of any default on a related senior
mortgage loan, or towards the restoration of any property unless it shall
determine (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan to Holders of Certificates of one
or more Classes or the Insurer after reimbursement to itself for such expenses
or charges and (ii) that such expenses and charges will be recoverable to it
through Liquidation Proceeds, Insurance Proceeds, or REO Proceeds (respecting
which it shall have priority
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for purposes of withdrawals from the Custodial Account pursuant to Section 3.10,
whether or not such expenses and charges are actually recoverable from related
Liquidation Proceeds, Insurance Proceeds or REO Proceeds). In the event of such
a determination by the Master Servicer pursuant to this Section 3.14(a), the
Master Servicer shall be entitled to reimbursement of its funds so
expended pursuant to Section 3.10.
In addition to the foregoing, the Master Servicer shall use its best
reasonable efforts to realize upon any Additional Collateral for such of the
Additional Collateral 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 3.07; provided that the Master Servicer shall not, on behalf
of the Trustee, obtain title to any such Additional Collateral as a result of or
in lieu of the disposition thereof or otherwise; and provided further that (i)
the Master Servicer shall not proceed with respect to such Additional Collateral
in any manner that would impair the ability to recover against the related
Mortgaged Property, and (ii) the Master Servicer shall proceed with any REO
Acquisition in a manner that preserves the ability to apply the proceeds of such
Additional Collateral against amounts owed under the defaulted Mortgage Loan.
Any proceeds realized from such Additional Collateral (other than amounts to be
released to the Mortgagor or the related guarantor in accordance with procedures
that the Master Servicer would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage and
Mortgage Note and to the terms and conditions of any security agreement,
guarantee agreement, mortgage or other agreement governing the disposition of
the proceeds of such Additional Collateral) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.10. Any other payment
received by the Master Servicer in respect of such Additional Collateral shall
be deposited in the Custodial Account subject to withdrawal pursuant to Section
3.10. Concurrently with the foregoing, the Master Servicer may pursue any
remedies that may be available in connection with a breach of a representation
and warranty with respect to any such Mortgage Loan in accordance with Sections
2.03 and 2.04. However, the Master Servicer is not required to continue to
pursue both foreclosure (or similar remedies) with respect to the Mortgage Loans
and remedies in connection with a breach of a representation and warranty if the
Master Servicer determines in its reasonable discretion that one such remedy is
more likely to result in a greater recovery as to the Mortgage Loan. Upon the
occurrence of a Cash Liquidation or REO Disposition, following the deposit in
the Custodial Account of all Insurance Proceeds, Liquidation Proceeds and other
payments and recoveries referred to in the definition of "Cash Liquidation" or
"REO Disposition," as applicable, upon receipt by the Trustee of written
notification of such deposit signed by a Servicing Officer, the Trustee or any
Custodian, as the case may be, shall release to the Master Servicer the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the Master Servicer or its designee,
as the case may be, the related Mortgage Loan, and thereafter such Mortgage Loan
shall not be part of the Trust Fund. Notwithstanding the foregoing or any other
provision of this Agreement, in the Master Servicer's sole discretion with
respect to any defaulted Mortgage Loan or REO Property as to either of the
following provisions, (i) a Cash Liquidation or REO Disposition may be deemed to
have occurred if substantially all amounts expected by the Master Servicer to be
received in connection with the related defaulted Mortgage Loan or REO Property
have been received, and (ii) for purposes of determining the amount of any
Liquidation Proceeds, Insurance Proceeds, REO Proceeds or other unscheduled
collections or the amount of any Realized Loss, the
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Master Servicer may take into account minimal amounts of additional receipts
expected to be received or any estimated additional liquidation expenses
expected to be incurred in connection with the related defaulted Mortgage Loan
or REO Property.
(b) In the event that title to any Mortgaged Property is
acquired by the Trust Fund as an REO Property by foreclosure or by deed in lieu
of foreclosure, the deed or certificate of sale shall be issued to the Trustee
or to its nominee on behalf of Certificateholders. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan, such REO
Property shall (except as otherwise expressly provided herein) be considered to
be an Outstanding Mortgage Loan held in the Trust Fund until such time as the
REO Property shall be sold. Consistent with the foregoing for purposes of all
calculations hereunder so long as such REO Property shall be considered to be an
Outstanding Mortgage Loan it shall be assumed that, 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) remain
in effect.
(c) In the event that the Trust Fund acquires any REO Property
as aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer on behalf of the Trust Fund shall dispose of
such REO Property within three full years after the taxable year of its
acquisition by the Trust Fund for purposes of Section 860G(a)(8) of the Code (or
such shorter period as may be necessary under applicable state (including any
state in which such property is located) law to maintain the status of each of
REMIC I, REMIC II or REMIC III as a REMIC under applicable state law and avoid
taxes resulting from such property failing to be foreclosure property under
applicable state law) or, at the expense of the Trust Fund, request, more than
60 days before the day on which such grace period would otherwise expire, an
extension of such grace period unless the Master Servicer obtains for the
Trustee and the Insurer an Opinion of Counsel, addressed to the Trustee, the
Insurer and the Master Servicer, to the effect that the holding by the Trust
Fund of such REO Property subsequent to such period will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code or cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a
REMIC (for federal (or any applicable State or local) income tax purposes) at
any time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such REO Property (subject to any conditions contained in such
Opinion of Counsel). The Master Servicer shall be entitled to be reimbursed from
the Custodial Account for any costs incurred in obtaining such Opinion of
Counsel, as provided in Section 3.10. Notwithstanding any other provision of
this Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the Trust
Fund in such a manner or pursuant to any terms that would (i) cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or (ii) subject REMIC I, REMIC II or REMIC III to
the imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Section 860G(c) of the Code,
unless the Master Servicer has agreed to indemnify and hold harmless the Trust
Fund with respect to the imposition of any such taxes.
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(d) The proceeds of any Cash Liquidation, REO Disposition or
purchase or repurchase of any Mortgage Loan pursuant to the terms of this
Agreement, as well as any recovery resulting from a collection of Liquidation
Proceeds, Insurance Proceeds or REO Proceeds, will be applied in the following
order of priority: first, to reimburse the Master Servicer or the related
Subservicer in accordance with Section 3.10(a)(ii); second, to the
Certificateholders to the extent of accrued and unpaid interest on the Mortgage
Loan, and any related REO Imputed Interest, at the Net Mortgage Rate (or the
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan) (less
Deferred Interest, if any), to the Due Date in the related Due Period prior to
the Distribution Date on which such amounts are to be distributed; third, to the
Certificateholders as a recovery of principal on the Mortgage Loan (or REO
Property) (provided that if any such Class of Certificates to which such
Realized Loss was allocated is no longer outstanding, such subsequent recovery
shall be distributed to the persons who were the Holders of such Class of
Certificates when it was retired); fourth, to all Servicing Fees and
Subservicing Fees payable therefrom (and the Master Servicer and the Subservicer
shall have no claims for any deficiencies with respect to such fees which result
from the foregoing allocation); fifth, to the Insurer for reimbursement for any
payments made pursuant to the Policy to the extent not reimbursed pursuant to
Section 4.02(g)(iv); and sixth, to Foreclosure Profits.
(e) Notwithstanding the foregoing paragraphs of this Section
3.14, in the event that a Foreclosure Restricted Loan goes into foreclosure, if
acquiring title to the related Mortgaged Property by foreclosure or by deed in
lieu of foreclosure would cause the adjusted basis (for federal income tax
purposes) of the Mortgaged Properties underlying the Foreclosure Restricted
Loans in the applicable Loan Group that are currently owned by the related REMIC
after foreclosure (along with any other assets owned by the related REMIC other
than "qualified mortgages" and "permitted investments" within the meaning of
Section 860G of the Code) to exceed 0.75% of the adjusted basis of the assets in
such Loan Group, the Master Servicer shall not be permitted to acquire title to
such Mortgaged Property on behalf of the related REMIC. Instead, the Master
Servicer would have to dispose of the Mortgage Loan for cash in the foreclosure
sale. In addition, if the Master Servicer determines that following a
distribution on any Distribution Date the adjusted bases of the Mortgaged
Properties underlying the Foreclosure Restricted Loans in foreclosure (along
with any other assets owned by the related REMIC other than "qualified
mortgages" and "permitted investments" within the meaning of Section 860G of the
Code) exceed 1.0% of the adjusted bases of the assets of such Loan Group
immediately after the distribution, then prior to such Distribution Date, the
Master Servicer shall dispose of enough of such Mortgaged Properties in
foreclosure, for cash, so that the adjusted bases of such Mortgaged Properties
in foreclosure (along with any other assets owned by the related REMIC other
than "qualified mortgages" and "permitted investments" within the meaning of
Section 860G of the Code) will be less than 1.0% of the adjusted bases of the
assets of such Loan Group. In either event, the Master Servicer is permitted to
acquire (for its own account and not on behalf of the Trust) the Mortgaged
Property at the foreclosure sale for an amount not less than the greater of: (i)
the highest amount bid by any other person at the foreclosure sale, or (ii) the
estimated fair value of the Mortgaged Property, as determined by the Master
Servicer in good faith.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
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(a) Upon becoming aware of the payment in full of any Mortgage
Loan, or upon the receipt by the Master Servicer of a notification that payment
in full will be escrowed in a manner customary for such purposes, the Master
Servicer will immediately notify the Trustee (if it holds the related Mortgage
File) or the Custodian by a certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Custodial Account pursuant to Section 3.07 have been or will be
so deposited), substantially in one of the forms attached hereto as Exhibit G
requesting delivery to it of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall promptly release, or cause the
Custodian to release, the related Mortgage File to the Master Servicer. The
Master Servicer is authorized to execute and deliver to the Mortgagor the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with
the Mortgage Note with, as appropriate, written evidence of cancellation
thereon. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the Custodial Account or the
Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, the Master Servicer shall deliver to the
Custodian, with a copy to the Trustee, a certificate of a Servicing Officer
substantially in one of the forms attached as Exhibit G hereto, requesting that
possession of all, or any document constituting part of, the Mortgage File be
released to the Master Servicer and certifying as to the reason for such release
and that such release will not invalidate any insurance coverage provided in
respect of the Mortgage Loan under any Required Insurance Policy. Upon receipt
of the foregoing, the Trustee shall deliver, or cause the Custodian to deliver,
the Mortgage File or any document therein to the Master Servicer. The Master
Servicer shall cause each Mortgage File or any document therein so released to
be returned to the Trustee, or the Custodian as agent for the Trustee when the
need therefor by the Master Servicer no longer exists, unless (i) the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Custodial Account or (ii) the Mortgage File or
such document has been delivered directly or through a Subservicer to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered directly or through a Subservicer to the
Trustee a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. In the event of the liquidation of
a Mortgage Loan, the Trustee shall deliver the Request for Release with respect
thereto to the Master Servicer upon deposit of the related Liquidation Proceeds
in the Custodial Account.
(c) The Trustee or the Master Servicer on the Trustee's behalf
shall execute and deliver to the Master Servicer, if necessary, any court
pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Together with such documents or pleadings (if signed by the
Trustee), the Master Servicer shall deliver to the Trustee a certificate of a
Servicing Officer requesting that such pleadings or documents be executed by the
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Trustee and certifying as to the reason such documents or pleadings are required
and that the execution and delivery thereof by the Trustee will not invalidate
any insurance coverage under any Required Insurance Policy or invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
Section 3.16. Servicing and Other Compensation; Compensating
Interest.
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(a) The Master Servicer, as compensation for its activities
hereunder, shall be entitled to receive on each Distribution Date the amounts
provided for by clauses (iii), (iv), (v) and (vi) of Section 3.10(a), subject to
clause (e) below. The amount of servicing compensation provided for in such
clauses shall be accounted for on a Mortgage Loan-by-Mortgage Loan basis. In the
event that Liquidation Proceeds, Insurance Proceeds and REO Proceeds (net of
amounts reimbursable therefrom pursuant to Section 3.10(a)(ii)) in respect of a
Cash Liquidation or REO Disposition exceed the unpaid principal balance of such
Mortgage Loan plus unpaid interest accrued thereon (including REO Imputed
Interest) at a per annum rate equal to the related Net Mortgage Rate (or the
Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), the Master
Servicer shall be entitled to retain therefrom and to pay to itself and/or the
related Subservicer, any Foreclosure Profits and any Servicing Fee or
Subservicing Fee considered to be accrued but unpaid.
(b) Additional servicing compensation in the form of
prepayment charges, assumption fees, late payment charges, investment income on
amounts in the Custodial Account or the Certificate Account or otherwise shall
be retained by the Master Servicer or the Subservicer to the extent provided
herein, subject to clause (e) below.
(c) The Master Servicer shall be required to pay, or cause to
be paid, all expenses incurred by it in connection with its servicing activities
hereunder (including payment of premiums for the Primary Insurance Policies, if
any, to the extent such premiums are not required to be paid by the related
Mortgagors, and the fees and expenses of the Trustee and any Custodian) and
shall not be entitled to reimbursement therefor except as specifically provided
in Sections 3.10 and 3.14.
(d) The Master Servicer's right to receive servicing
compensation may not be transferred in whole or in part except in connection
with the transfer of all of its responsibilities and obligations of the Master
Servicer under this Agreement.
(e) Notwithstanding clauses (a) and (b) above, the amount of
servicing compensation that the Master Servicer shall be entitled to receive for
its activities hereunder for the period ending on each Distribution Date shall
be reduced (but not below zero) by an amount equal to Compensating Interest (if
any) for such Distribution Date. Such reduction shall be applied during such
period as follows: first, to any Servicing Fee or Subservicing Fee to which the
Master Servicer is entitled pursuant to Section 3.10(a)(iii); second, to any
income or gain realized from any investment of funds held in the Custodial
Account or the Certificate Account to which the Master Servicer is entitled
pursuant to Sections 3.07(c) or 4.01(b), respectively; and third, to any amounts
of servicing compensation to which the Master Servicer is entitled pursuant to
Section 3.10(a)(v) or (vi). In making such reduction, the Master Servicer will
not withdraw from the Custodial Account
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any such amount representing all or a portion of the Servicing Fee to which it
is entitled pursuant to Section 3.10(a)(iii); (ii) will not withdraw from the
Custodial Account or Certificate Account any such amount to which it is entitled
pursuant to Section 3.07(c) or 4.01(b) and (iii) will not withdraw from the
Custodial Account any such amount of servicing compensation to which it is
entitled pursuant to Section 3.10(a)(v) or (vi).
Section 3.17. Reports to the Trustee and the Depositor.
----------------------------------------
Not later than fifteen days after each Distribution Date, the
Master Servicer shall forward to the Trustee and the Depositor a statement,
certified by a Servicing Officer, setting forth the status of the Custodial
Account as of the close of business on such Distribution Date as it relates to
the Mortgage Loans and showing, for the period covered by such statement, the
aggregate of deposits in or withdrawals from the Custodial Account in respect of
the Mortgage Loans for each category of deposit specified in Section 3.07 and
each category of withdrawal specified in Section 3.10.
Section 3.18. Annual Statement as to Compliance.
---------------------------------
The Master Servicer will deliver to the Depositor, the Trustee
and the Insurer on or before March 31 of each year, beginning with the first
March 31 that occurs at least six months after the Cut-off Date, 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 related to
its servicing of mortgage loans and of its performance under the pooling and
servicing agreements, including this Agreement, has been made under such
officers' supervision, (ii) to the best of such officers' knowledge, based on
such review, the Master Servicer has complied in all material respects with the
minimum servicing standards set forth in the Uniform Single Attestation Program
for Mortgage Bankers and has fulfilled all of its material obligations in all
material respects throughout such year, or, if there has been material
noncompliance with such servicing standards or a default in the fulfillment in
all material respects of any such obligation relating to this Agreement, such
statement shall include a description of such noncompliance or specify each such
default, as the case may be, known to such officer and the nature and status
thereof and that the Master Servicer has met the most recent Annual Servicing
Test, or if such Annual Servicing Test has not been met, specifying the nature
of such failure, such statement with respect to a failure of the Annual
Servicing Test may be delivered as a separate Officers' Certificate, and (iii)
to the best of such officers' knowledge, each Subservicer has complied in all
material respects with the minimum servicing standards set forth in the Uniform
Single Attestation Program for Mortgage Bankers and has fulfilled all of its
material obligations under its Subservicing Agreement in all material respects
throughout such year, or if there has been material noncompliance with such
servicing standards or a material default in the fulfillment of such obligations
relating to this Agreement, specifying such statement shall include a
description of such noncompliance or specify each such default, as the case may
be, known to such officer and the nature and status thereof.
Section 3.19. Annual Independent Public Accountants' Servicing
Report.
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On or before March 31 of each year, beginning with the first
March 31 that occurs at least six months after the Cut-off Date, the Master
Servicer at its expense shall cause a firm of independent public accountants
which is any one of the six major nationally recognized firms of independent
public accountants and which is also a member of the American Institute of
Certified Public Accountants to furnish a report to the Depositor, the Insurer
and the Trustee stating its opinion that, on the basis of an examination
conducted by such firm substantially in accordance with standards established by
the American Institute of Certified Public Accountants, the assertions made
pursuant to Section 3.18 regarding compliance with the minimum servicing
standards set forth in the Uniform Single Attestation Program for Mortgage
Bankers during the preceding calendar year are fairly stated in all material
respects, subject to such exceptions and other qualifications that, in the
opinion of such firm, such accounting standards require it to report. In
rendering such statement, such firm may rely, as to matters relating to the
direct servicing of mortgage loans by Subservicers, upon comparable statements
for examinations conducted by independent public accountants substantially in
accordance with standards established by the American Institute of Certified
Public Accountants (rendered within one year of such statement) with respect to
such Subservicers.
Section 3.20. Right of the Depositor in Respect of the Master
Servicer.
-----------------------------------------------
The Master Servicer shall afford the Depositor, upon
reasonable notice, during normal business hours access to all records maintained
by the Master Servicer in respect of its rights and obligations hereunder and
access to officers of the Master Servicer responsible for such obligations. Upon
request, the Master Servicer shall furnish the Depositor with its most recent
financial statements and such other information as the Master Servicer possesses
regarding its business, affairs, property and condition, financial or otherwise.
The Master Servicer shall also cooperate with all reasonable requests for
information including, but not limited to, notices, tapes and copies of files,
regarding itself, the Mortgage Loans or the Certificates from any Person or
Persons identified by the Depositor or Residential Funding. The Insurer hereby
is so identified. The Depositor may, but is not obligated to perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer hereunder
or exercise the rights of the Master Servicer hereunder; provided that the
Master Servicer shall not be relieved of any of its obligations hereunder by
virtue of such performance by the Depositor or its designee. The Depositor shall
not have the responsibility or liability for any action or failure to act by the
Master Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
------------------------------
Section 4.01. Certificate Account.
-------------------
(a) The Master Servicer acting as agent of the Trustee shall
establish and maintain a Certificate Account in which the Master Servicer shall
cause to be deposited on behalf of the Trustee on or before 2:00 P.M. New York
time on each Certificate Account Deposit Date by wire transfer of immediately
available funds an amount equal to the sum of (i) any Advance for the
immediately succeeding Distribution Date, (ii) any amount required to be
deposited in the Certificate Account pursuant to Section 3.12(a), (iii) any
amount required to be deposited in the Certificate Account pursuant to Section
3.16(e) or Section 4.07, (iv) any amount required to be paid pursuant to Section
9.01, (v) an amount equal to the Certificate Insurer Premium payable on such
Distribution Date and (vi) all other amounts constituting the Available
Distribution Amount for the immediately succeeding Distribution Date. In
addition, as and to the extent required pursuant to Section 4.08(b), the Trustee
shall withdraw from the Insurance Account and deposit into the Certificate
Account the amount necessary to pay the Insured Amount on each Distribution Date
to the extent received from the Insurer.
In addition, as and to the extent required pursuant to Section
4.09, the Trustee shall withdraw from the Reserve Fund and deposit into the
Certificate Account any amounts required to be distributed to the
Certificateholders on the immediately succeeding Distribution Date.
(b) On each Distribution Date, prior to making any other
distributions referred to in Section 4.02 herein, the Trustee shall withdraw
from the Certificate Account and pay to the Insurer, by wire transfer of
immediately available funds to the Insurer Account, the Certificate Insurer
Premium for such Distribution Date, provided that on the Distribution Date in
October 1999, the Trustee shall subtract from the Certificate Insurer Premium
and pay to the Master Servicer an amount equal to $4,208.18 in reimbursement of
certain administrative costs previously paid by the Master Servicer pursuant to
the Insurance Agreement. The Trustee shall make the payments to the designee or
designees of the Insurer as required pursuant to the letter from the Insurer to
the Trustee dated as of the Closing Date. The Trustee shall deposit any amounts
received pursuant to the Policy or the Limited Reimbursement Agreement into the
Certificate Account. Any such amounts shall be distributed on the immediately
following Distribution Date as part of the Available Distribution Amount.
(c) The Trustee shall, upon written request from the Master
Servicer, invest or cause the institution maintaining the Certificate Account to
invest the funds in the Certificate Account in Permitted Investments designated
in the name of the Trustee for the benefit of the Certificateholders and the
Insurer, which shall mature not later than the Business Day next preceding the
Distribution Date next following the date of such investment (except that (i)
any investment in the institution with which the Certificate Account is
maintained may mature on such Distribution
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Date and (ii) any other investment may mature on such Distribution Date if the
Trustee shall advance funds on such Distribution Date to the Certificate Account
in the amount payable on such investment on such Distribution Date, pending
receipt thereof to the extent necessary to make distributions on the
Certificates) and shall not be sold or disposed of prior to maturity. All income
and gain realized from any such investment shall be for the benefit of the
Master Servicer and shall be subject to its withdrawal or order from time to
time. The amount of any losses incurred in respect of any such investments shall
be deposited in the Certificate Account by the Master Servicer out of its own
funds immediately as realized.
Section 4.02. Distributions.
-------------
(a) On each Distribution Date, the Trustee (or the Paying
Agent on behalf of the Trustee) shall allocate and distribute the Principal
Distribution Amount for such date to the interest issued in respect of REMIC I,
REMIC II and REMIC III as specified in this Section.
(b) The initial principal balances of the Class LT1-I, Class
LT2-I and Class LT3-I Interests shall equal 98% of the Stated Principal Balance
of the Group I Loans as of the Cut-off Date, 1% of the Stated Principal Balance
of the Group I Loans as of the Cut-off Date less 1% of the Group I
Overcollateralization Amount on the Closing Date and 1% of the Stated Principal
Balance of the Group I Loans as of the Cut-off Date plus 1% of the Group I
Overcollateralization Amount on the Closing Date, respectively. On each
Distribution Date, 98% of the Principal Distribution Amount in respect of the
Group I Loans for the related Due Period shall be allocated to the Class LT1-I
Interest. Remaining amounts of such Principal Distribution Amount for the
related Due Period shall be allocated, first, to the Class LT3-I Interest up to
an amount equal to 2% of any amounts that represents an Excess
Overcollateralization Amount attributable to the Group I Loans with respect to
such Distribution Date and then equally between the Class LT2-I and Class LT3-I
Interests. Interest accruing on the Class LT3-I Interest in respect of each
Distribution Date in an amount equal to the sum of (i) 1% of the increase in the
Group I Overcollateralization Amount from the immediately preceding Distribution
Date, and (ii) 1% of the Group I Aggregate Net Excess Turbo Amount, shall be
deferred and added to the principal balance of the Class LT3-I Interest. The
amount of interest accrued and deferred on the Class LT3-I Interest in
accordance with the preceding sentence in respect of each Distribution Date
shall be distributed as principal on such date to the Class LT2-I Interest.
On each Distribution Date, Realized Losses with respect to the Class
A-I Certificates for such date shall be allocated 98% to the Class LT1-I
Interest. The remaining 2% of such Realized Losses shall be allocated to the
Class LT3-I Interest to the extent that the principal balance of the Class LT3-
I Interest exceeds 1% of the aggregate of the Stated Principal Balance of the
Group I Loans as of such date and then equally between the Class LT2-I and Class
LT3-I Interests.
(c) The initial principal balances of the Class LT1-II, Class
LT2-II and Class LT3- II Interests shall equal 98% of the Stated Principal
Balance of the Group II Loans as of the Cut-off Date, 1% of the Stated Principal
Balance of the Group II Loans as of the Cut-off Date less 1% of the Group II
Overcollateralization Amount on the Closing Date and 1% of the Stated Principal
Balance
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of the Group II Loans as of the Cut-off Date plus 1% of the Group II
Overcollateralization Amount on the Closing Date, respectively. On each
Distribution Date, 98% of the Principal Distribution Amount in respect of the
Group II Loans for the related Due Period shall be allocated to the Class LT1-II
Interest. Remaining amounts of such Principal Distribution Amount for the
related Due Period shall be allocated, first, to the Class LT3-II Interest up to
an amount equal to 2% of any amount that represents an Excess
Overcollateralization Amount attributable to the Group II Loans with respect to
such Distribution Date and then equally between the Class LT2-II and Class
LT3-II Interests. Interest accruing on the Class LT3-II Interest in respect of
each Distribution Date in an amount equal to the sum of (i) 1% of the increase
in the Group II Overcollateralization Amount from the immediately preceding
Distribution Date, and (ii) 1% of the Group II Aggregate Net Excess Turbo
Amount, shall be deferred and added to the principal balance of the Class LT3-II
Interest. The amount of interest accrued and deferred on the Class LT3-II
Interest in accordance with the preceding sentence in respect of each
Distribution Date shall be distributed as principal on such date to the Class
LT2-II Interest.
On each Distribution Date, Realized Losses with respect to the Class
A-II Certificates for such date shall be allocated 98% to the Class LT1-II
Interest. The remaining 2% of such Realized Losses shall be allocated to the
Class LT3-II Interest to the extent that the principal balance of the Class
LT3-II Interest exceeds 1% of the aggregate of the Stated Principal Balance of
the Group II Loans as of such date and then equally between the Class LT2-II and
Class LT3-II Interests.
(d) The initial principal balances of the Class MT1-I, Class
MT2-I and Class MT3-I Interests shall equal 98% of the Stated Principal Balance
of the Group I Loans as of the Cutoff Date, 1% of the Stated Principal Balance
of the Group I Loans as of the Cut-off Date less 1% of the Group I
Overcollateralization Amount on the Closing Date and 1% of the Stated Principal
Balance of the Group I Loans as of the Cut-off Date plus 1% of the Group I
Overcollateralization Amount on the Closing Date, respectively. The Class MT4-I
Interest shall not have a principal balance. On each Distribution Date, 98% of
the Principal Distribution Amount in respect of the Group I Loans for the
related Due Period shall be allocated to the Class MT1-I Interest. Remaining
amounts of such Principal Distribution Amount for the related Due Period shall
be allocated, first, to the Class MT3-I Interest up to an amount equal to 2% of
any amounts that represents an Excess Overcollateralization Amount attributable
to the Group I Loans with respect to such Distribution Date and then equally
between the Class MT2-I and Class MT3-I Interests. Interest accruing on the
Class MT3-I Interest in respect of each Distribution Date in an amount equal to
the sum of (i) 1% of the increase in the Group I Overcollateralization Amount
from the immediately preceding Distribution Date, and (ii) 1% of the Group I
Aggregate Net Excess Turbo Amount, shall be deferred and added to the principal
balance of the Class MT3-I Interest. The amount of interest accrued and deferred
on the Class MT3-I Interest in accordance with the preceding sentence in respect
of each Distribution Date shall be distributed as principal on such date to the
Class MT2-I Interest.
On each Distribution Date, Realized Losses with respect to the Class
A-I Certificates for such date shall be allocated 98% to the Class MT1-I
Interest. The remaining 2% of such Realized Losses shall be allocated to the
Class MT3-I Interest to the extent that the principal balance of the Class MT3-I
Interest exceeds 1% of the aggregate of the Stated Principal Balance of the
Group I Loans as of such date and then equally between the Class MT2-I and Class
MT3-I Interests.
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(e) The initial principal balances of the Class MT1-II, Class
MT2-II and Class MT3-II Interests shall equal 98% of the Stated Principal
Balance of the Group II Loans as of the Cutoff Date, 1% of the Stated Principal
Balance of the Group II Loans as of the Cut-off Date less 1% of the Group II
Overcollateralization Amount on the Closing Date and 1% of the Stated Principal
Balance of the Group II Loans as of the Cut-off Date plus 1% of the Group II
Overcollateralization Amount on the Closing Date, respectively. The Class MT4-II
Interest shall not have a principal balance. On each Distribution Date, 98% of
the Principal Distribution Amount in respect of the Group II Loans for the
related Due Period shall be allocated to the Class MT1-II Interest. Remaining
amounts of such Principal Distribution Amount for the related Due Period shall
be allocated, first, to the Class MT3-II Interest up to an amount equal to 2% of
any amounts that represents an Excess Overcollateralization Amount attributable
to the Group II Loans with respect to such Distribution Date and then equally
between the Class MT2-II and Class MT3-II Interests. Interest accruing on the
Class MT3-II Interest in respect of each Distribution Date in an amount equal to
the sum of (i) 1% of the increase in the Group II Overcollateralization Amount
from the immediately preceding Distribution Date, and (ii) 1% of the Group II
Aggregate Net Excess Turbo Amount, shall be deferred and added to the principal
balance of the Class MT3-II Interest. The amount of interest accrued and
deferred on the Class MT3-II Interest in accordance with the preceding sentence
in respect of each Distribution Date shall be distributed as principal on such
date to the Class MT2-II Interest.
On each Distribution Date, Realized Losses with respect to the Class
A-II Certificates for such date shall be allocated 98% to the Class MT1-II
Interest. The remaining 2% of such Realized Losses shall be allocated to the
Class MT3-II Interest to the extent that the principal balance of the Class
MT3-II Interest exceeds 1% of the aggregate of the Stated Principal Balance of
the Group II Loans as of such date and then equally between the Class MT2-II and
Class MT3-II Interests. For purposes of Section 4.02(b), (c), (d) and (e),
following the application of Realized Losses on any Distribution Date, the
payment of Excess Cash Flow pursuant to Section 4.02(g)(iii) as principal on the
Class A-I Certificates or Class A-II Certificates to achieve the Required
Overcollateralization Amount will be treated as an increase in the Group I
Overcollateralization Amount or Group II Overcollateralization Amount, as
applicable.
(f) On each Distribution Date, interest accrues with respect
to the Class UT2-I, Class UT3-I, Class UT4-I, Class UT5-I, Class UT2-II, Class
UT3-II, Class UT4-II and Class UT5-II Interests shall be distributed as
principal on the Class UT1-I and Class UT1-II Interest, respectively, to achieve
the Required Overcollateralization Amount for such Distribution Date. To the
extent not needed for this purpose, excess collections of principal and interest
shall be distributed with respect to the Class UT2-I, Class UT3-I, Class UT4-I,
Class UT2-II, Class UT3-II and Class UT4-II Interests in proportion to their
entitlements to current and accrued undistributed interest (the Class UT5-I and
Class UT5-II Interest will receive their entitlements to current and
undistributed principal). Interest that accrues on the Class UT2-I, Class UT3-I,
Class UT4-I, Class UT2-II, Class UT3-II and Class UT4-II Interests shall not
itself bear interest.
(g) On each Distribution Date (x) the Master Servicer on
behalf of the Trustee or (y) the Paying Agent appointed by the Trustee, shall
distribute to each Certificateholder of record
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on the next preceding Record Date (other than as provided in Section 9.01
respecting the final distribution) either in immediately available funds (by
wire transfer or otherwise) to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder has so notified the Master Servicer or the Paying Agent, as
the case may be, or, if such Certificateholder has not so notified the Master
Servicer or the Paying Agent by the Record Date, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register such Certificateholder's share (which share with respect to each Class
of Certificates, shall be based on the aggregate of the Percentage Interests
represented by Certificates of the applicable Class held by such Holder of the
following amounts, in the following order of priority), in each case to the
extent of the Available Distribution Amount:
(i) to the Class A Certificateholders, Accrued
Certificate Interest payable on such Certificates with respect
to such Distribution Date, plus any Accrued Certificate
Interest remaining unpaid from any prior Distribution Date,
less any Prepayment Interest Shortfalls, to the extent not
covered by Compensating Interest pursuant to Section 3.16 (the
"Interest Distribution Amount"), with such amount allocated
among the Class A Certificateholders on a PRO RATA basis;
(ii) to the Class A Certificateholders, the lesser of
(a) the excess of (i) the Available Distribution Amount over
(ii) the Interest Distribution Amount and (b) the Principal
Distribution Amount (other than with respect to clauses (iv)
and (v) thereof), on a pro rata basis in accordance with the
percentage of such amounts derived from the Group I Loans and
Group II Loans, respectively, until the Certificate Principal
Balances of the Class A Certificates have been reduced to
zero;
(iii) to the Class A Certificateholders, from the
amount, if any, of the Available Distribution Amount remaining
after the foregoing distributions (such amount, the "Excess
Cash Flow"), pro rata, based on the Certificate Principal
Balances thereof, an amount equal to the Realized Losses on
the Mortgage Loans during the immediately preceding Due
Period, applied to reduce the Certificate Principal Balances
of the Class A Certificates, but in no event more than the
aggregate of the outstanding Certificate Principal Balances of
the Class A Certificates, until the Certificate Principal
Balances of the Class A Certificates have been reduced to
zero;
(iv) to the Insurer, from the amount, if any, of the
Available Distribution Amount remaining after the foregoing
distributions, in respect of any Cumulative Insurance
Payments;
(v) except on the first Distribution Date, to the
Class A Certificateholders, from the amount, if any, of the
Available Distribution Amount remaining after the foregoing
distributions, the Overcollateralization Increase Amount for
such Distribution Date, on a pro rata basis, based on the
Certificate Principal Balance
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thereof, until the Certificate Principal Balances of the Class
A Certificates have been reduced to zero;
(vi) to the Class A Certificateholders from the
amount, if any, of the Available Distribution Amount remaining
after the foregoing distributions, the amount of any
Prepayment Interest Shortfalls allocated thereto, to the
extent not covered by Compensating Interest on such
Distribution Date, with such amount allocated among the Class
A Certificateholders, pro rata, based on the Accrued
Certificate Interest otherwise due thereon;
(vii) to the Class A Certificateholders from the
amount, if any, of the Available Distribution Amount remaining
after the foregoing distributions, the amount of any
Prepayment Interest Shortfalls allocated thereto remaining
unpaid from prior Distribution Dates together with interest
thereon, with such amount allocated among the Class A
Certificateholders, pro rata, based on the Accrued Certificate
Interest otherwise due thereon;
(viii) to be deposited in the Reserve Fund, to the
extent of any Basis Risk Shortfall Carry-Forward Amount that
would otherwise not be paid from the Reserve Fund;
(ix) to the Class SB Certificates, concurrently on a
pro rata basis, from the amount, if any, of the Available
Distribution Amount remaining after the foregoing
distributions, Accrued Certificate Interest thereon for such
Distribution Date;
(x) to the Class SB Certificates, on a pro rata
basis, based on the Certificate Principal Balance thereof
immediately prior to such Distribution Date, the amount of any
Overcollateralization Reduction Amount for such Distribution
Date; and
(xi) to the Class R-III Certificateholders, the
balance, if any, of the Available Distribution Amount.
(h) Within five Business Days before the related Distribution
Date, the Master Servicer shall notify the Trustee of the amounts, if any,
payable to the Insurer pursuant to Section 4.02(g)(iv).
(i) In addition to the foregoing distributions, with respect
to any Mortgage Loan that was previously the subject of a Cash Liquidation or an
REO Disposition that resulted in a Realized Loss, in the event that within two
years of the date on which such Realized Loss was determined to have occurred
the Master Servicer receives amounts which the Master Servicer reasonably
believes to represent subsequent recoveries (net of any related liquidation
expenses), or determines that it holds surplus amounts previously reserved to
cover estimated expenses specifically
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related to such Mortgage Loan (including, but not limited to, recoveries (net of
any related liquidation expenses) in respect of the representations and
warranties made by the related Seller pursuant to the applicable Seller's
Agreement), the Master Servicer shall distribute such amounts to the Class or
Classes to which such Realized Loss was allocated (with the amounts to be
distributed allocated among such Classes in the same proportions as such
Realized Loss was allocated), and within each such Class to the
Certificateholders of record as of the Record Date immediately preceding the
date of such distribution (or if such Class of Certificates is no longer
outstanding, to the Certificateholders of record at the time that such Realized
Loss was allocated); provided that no such distribution to any Class of
Certificates of subsequent recoveries related to a Mortgage Loan shall exceed,
either individually or in the aggregate and together with any other amounts paid
in reimbursement therefor, the amount of the related Realized Loss that was
allocated to such Class of Certificates. For the purposes of this Section
4.02(i) any allocation of a Realized Loss to Excess Cash Flow will be treated as
an allocation of a Realized Loss to the Class A Certificates. Notwithstanding
the foregoing, to the extent that the Master Servicer receives recoveries with
respect to Realized Losses which were allocated to the related Class A
Certificates and which were paid by the Insurer pursuant to the Policy and not
previously reimbursed pursuant to Section 4.02(g)(iv), such recoveries shall be
paid directly to the Insurer and applied to reduce the Cumulative Insurance
Payments then due to the Insurer prior to any payment of such amounts to any
current Certificateholder or any previous Certificateholder. Any amounts to be
so distributed shall not be remitted to or distributed from the Trust Fund, and
shall constitute subsequent recoveries with respect to Mortgage Loans that are
no longer assets of the Trust Fund.
(j) Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(k) Except as otherwise provided in Section 9.01, if the
Master Servicer anticipates that a final distribution with respect to any Class
of Certificates will be made on the next Distribution Date, the Master Servicer
shall, no later than the Determination Date in the month of such final
distribution, notify the Trustee and the Trustee shall, no later than two (2)
Business Days after such Determination Date, mail on such date to each Holder of
such Class of Certificates a notice to the effect that: (i) the Trustee
anticipates that the final distribution with respect to such Class of
Certificates will be made on such Distribution Date but only upon presentation
and surrender of such Certificates at the office of the Trustee or as otherwise
specified therein, and (ii) no interest shall accrue on such Certificates from
and after the end of the prior calendar month. In the event that
Certificateholders required to surrender their Certificates pursuant to Section
9.01(c) do not surrender their Certificates for final cancellation, the Trustee
shall cause funds distributable with respect to such Certificates to be
withdrawn from the Certificate Account and credited to a separate escrow account
for the benefit of such Certificateholders as provided in Section 9.01(d).
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(l) To the extent on any Distribution Date the Available
Distribution Amount is less than Accrued Certificate Interest on the Class A-I
Certificates or Class A-II Certificates, as applicable, on such Distribution
Date (without regard to clause (iii) of the definition thereof) and Deferred
Interest exists on such Distribution Date, the lesser of such excess and the
amount of Deferred Interest shall result in a reduction in Accrued Certificate
Interest on the Class A-I Certificates or Class A-II Certificates and an
increase in the Certificate Principal Balance of the Class A-I Certificates or
Class A-II Certificates, as applicable.
Section 4.03. Statements to Certificateholders.
--------------------------------
(a) Concurrently with each distribution charged to the
Certificate Account and with respect to each Distribution Date the Master
Servicer shall forward to the Trustee and the Trustee shall forward by mail to
each Holder, the Insurer, BSFP, Bear, Stearns Capital Markets, Inc., the Limited
Reimbursement Counterparty and the Depositor a statement setting forth the
following information as to each Class of Certificates, in each case to the
extent applicable:
(i) (A) the amount of such distribution to the
Certificateholders of such Class applied to reduce
the Certificate Principal Balance thereof, and (B)
the aggregate amount included therein representing
Principal Prepayments;
(ii) the amount of such distribution to Holders of such
Class of Certificates allocable to interest;
(iii) the amount of the Reserve Fund Addition, the amount
of any amounts removed from the Reserve Fund, and
whether such amounts were used to reimburse the
Insurer for Cumulative Insurance Payments, to cover
Basis Risk Shortfalls, or to pay the Class R
Certificates;
(iv) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would
be distributable to such Holders if there were
sufficient funds available therefor, the amount of
the shortfall;
(v) the amount of any Advance by the Master Servicer with
respect to the Group I Loans and Group II Loans
pursuant to Section 4.04;
(vi) the number of Group I and Group II Loans and the
Stated Principal Balance after giving effect to the
distribution of principal on such Distribution
Date;
(vii) the aggregate Certificate Principal Balance of each
Class of the Certificates, after giving effect to the
amounts distributed on such Distribution Date,
separately identifying any reduction thereof due to
Realized Losses other than pursuant to an actual
distribution of principal;
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(viii) on the basis of the most recent reports furnished to
it by Subservicers, the number and aggregate
principal balances of Group I Loans and Group II
Loans that are Delinquent (A) one month, (B) two
months and (C) three or more months and the number
and aggregate principal balance of Group I Loans and
Group II Loans that are in foreclosure;
(ix) the number, aggregate principal balance and book
value of any REO Properties;
(x) the aggregate Accrued Certificate Interest remaining
unpaid, if any, for each Class of Certificates, after
giving effect to the distribution made on such
Distribution Date;
(xi) the aggregate amount of Realized Losses for such
Distribution Date and the aggregate amount of
Realized Losses on the Group I Loans and Group II
Loans incurred since the Cut-off Date;
(xii) the Special Hazard Amount, Fraud Loss Amount and
Bankruptcy Amount as of the close of business on such
Distribution Date and a description of any change in
the calculation of such amounts;
(xiii) the amount of any Insured Amount paid on such
Distribution Date, the amount of any reimbursement
payment made to the Insurer on such Distribution Date
pursuant to Section 4.02(g)(iv) and the amount of
Cumulative Insurance Payments after giving effect to
any such Insured Amount or any such reimbursement
payment to the Insurer;
(xiv) the Pass-Through Rate on each Class of Certificates,
the Group I and Group II Weighted Average Net
Mortgage Rate and the Net Weighted Average Cap
Rate;
(xv) the weighted average of the Maximum Net Mortgage
Rates on the Group I Loans and Group II Loans;
(xvi) the related Basis Risk Shortfall, Basis Risk
Shortfall Carry-Forward Amount and Prepayment
Interest Shortfalls;
(xvii) the Overcollateralization Amount and the Required
Overcollateralization Amount following such
Distribution Date;
(xviii) the number and aggregate principal balance of Group I
and Group II Loans repurchased under Section 4.07;
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(xix) the aggregate amount of Deferred Interest added to
the Stated Principal Balance of the Group I Loans and
Group II Loans;
(xx) the aggregate amount of any recoveries on previously
foreclosed loans from Residential Funding due to a
breach of representation or warranty;
(xxi) the weighted average remaining term to maturity of
the Group I and Group II Loans after giving effect to
the amounts distributed on such Distribution Date;
(xxii) the weighted average Mortgage Rates of the Group I
and Group II Loans after giving effect to the amounts
distributed on such Distribution Date;
(xxiii) the aggregate of any deposits to and withdrawals from
the Reserve Fund for such Distribution Date and the
remaining amount on deposit in the Reserve Fund after
such deposits and withdrawals; and
(xxiv) amounts rendered under each Yield Maintenance
Agreement.
In the case of information furnished pursuant to clauses (i) and (ii) above, the
amounts shall be expressed as a dollar amount per Certificate with a $1,000
denomination. In addition to the statement provided to the Trustee as set forth
in this Section 4.03(a), the Master Servicer shall provide to any manager of a
trust fund consisting of some or all of the Certificates, upon reasonable
request, such additional information as is reasonably obtainable by the Master
Servicer at no additional expense to the Master Servicer.
(b) Within a reasonable period of time after the end of each
calendar year, the Master Servicer shall prepare, or cause to be prepared, and
the Trustee shall forward, or cause to be forwarded, to each Person who at any
time during the calendar year was the Holder of a Certificate, other than a
Class R Certificate, a statement containing the information set forth in clauses
(i) and (ii) of subsection (a) above aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Master Servicer and Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer and Trustee pursuant to any requirements of the
Code.
(c) As soon as reasonably practicable, upon the written
request of any Certificateholder, the Master Servicer shall provide the
requesting Certificateholder with such information as is necessary and
appropriate, in the Master Servicer's sole discretion, for purposes of
satisfying applicable reporting requirements under Rule 144A.
Section 4.04. Distribution of Reports to the Trustee and the
Depositor; Advances by the Master Servicer.
----------------------------------------------
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(a) Prior to the close of business on the Business Day next
succeeding each Determination Date, the Master Servicer shall furnish a written
statement to the Trustee, the Insurer and BSFP, any Paying Agent and the
Depositor (the information in such statement to be made available to
Certificateholders by the Master Servicer on request) (provided that the Master
Servicer will use its best efforts to deliver such written statement not later
than 12:00 p.m. New York time on the second Business Day prior to the
Distribution Date) setting forth (i) the Group I or Group II Available
Distribution Amounts, (ii) the amounts required to be withdrawn from the
Custodial Account and deposited into the Certificate Account on the immediately
succeeding Certificate Account Deposit Date pursuant to clause (iii) of Section
4.01(a), (iii) the Certificate Insurer Premium and, if the Master Servicer
determines that a Deficiency Amount exists for such Distribution Date, the
amount necessary to complete the notice in the form of Exhibit A to the Policy
(the "Notice"), (iv) the amount of Prepayment Interest Shortfalls and Basis Risk
Shortfalls, (v) to the extent required, a report detailing the Stated Principal
Balance, Mortgage Rate, Modified Mortgage Rate, remaining term to maturity and
Monthly Payment for any Modified Mortgage Loan pursuant to Section 3.13 and (vi)
the amounts to be deposited or withdrawn from the Reserve Fund pursuant to
Section 4.10. The determination by the Master Servicer of such amounts shall, in
the absence of obvious error, be presumptively deemed to be correct for all
purposes hereunder and the Trustee shall be protected in relying upon the same
without any independent check or verification.
(b) On or before 2:00 P.M. New York time on each Certificate
Account Deposit Date, the Master Servicer shall either (i) deposit in the
Certificate Account from its own funds, or funds received therefor from the
Subservicers, an amount equal to the Advances to be made by the Master Servicer
in respect of the related Distribution Date, which shall be in an aggregate
amount equal to the sum of (A) the aggregate amount of Monthly Payments other
than Balloon Payments (with each interest portion thereof adjusted to a per
annum rate equal to the Net Mortgage Rate plus the Certificate Insurer Premium
Rate, if applicable), less the amount of any related Servicing Modifications,
Deferred Interest, if any, Debt Service Reductions or reductions in the amount
of interest collectable from the Mortgagor pursuant to the Relief Act or similar
legislation or regulations then in effect, on the Outstanding Mortgage Loans as
of the related Due Date in the related Due Period, which Monthly Payments were
due during the related Due Period and not received as of the close of business
as of the related Determination Date; provided that no Advance shall be made if
it would be a Nonrecoverable Advance and (B) with respect to each Balloon Loan
delinquent in respect of its Balloon Payment as of the close of business on the
related Determination Date, an amount equal to the excess, if any, of interest
on the unpaid principal balance thereof (with each interest portion thereof
adjusted to a per annum rate equal to the Net Mortgage Rate), over any payments
of interest (with each interest portion thereof adjusted to a per annum rate
equal to the Net Mortgage Rate) received from the related Mortgagor as of the
close of business on the related Determination Date and allocable to the Due
Date during the related Due Period for each month until such Balloon Loan is
finally liquidated, (ii) withdraw from amounts on deposit in the Custodial
Account and deposit in the Certificate Account all or a portion of the Amount
Held for Future Distribution in discharge of any such Advance, or (iii) make
advances in the form of any combination of (i) and (ii) aggregating the amount
of such Advance. Any portion of the Amount Held for Future Distribution so used
shall be replaced by the Master Servicer by deposit in the Certificate Account
on or before 11:00 A.M. New York time on any future Certificate Account Deposit
Date to the extent that funds attributable to the Mortgage Loans that are
available in the
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Custodial Account for deposit in the Certificate Account on such Certificate
Account Deposit Date shall be less than payments to Certificateholders required
to be made on the following Distribution Date. The Master Servicer shall be
entitled to use any Advance made by a Subservicer as described in Section
3.07(b) that has been deposited in the Custodial Account on or before such
Distribution Date as part of the Advance made by the Master Servicer pursuant to
this Section 4.04.
The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing
Officer delivered to the Depositor, the Insurer and the
Trustee.
In the event that the Master Servicer determines as of the
Business Day preceding any Certificate Account Deposit Date that it will be
unable to deposit in the Certificate Account an amount equal to the Advance
required to be made for the immediately succeeding Distribution Date, it shall
give notice to the Trustee and the Insurer of its inability to advance (such
notice may be given by telecopy), not later than 3:00 P.M., New York time, on
such Business Day, specifying the portion of such amount that it will be unable
to deposit. Not later than 3:00 P.M., New York time, on the Certificate Account
Deposit Date the Trustee shall, unless by 12:00 Noon, New York time, on such day
the Trustee shall have been notified in writing (by telecopy) that the Master
Servicer shall have directly or indirectly deposited in the Certificate Account
such portion of the amount of the Advance as to which the Master Servicer shall
have given notice pursuant to the preceding sentence, pursuant to Section 7.01,
(a) terminate all of the rights and obligations of the Master Servicer under
this Agreement in accordance with Section 7.01 and (b) assume the rights and
obligations of the Master Servicer hereunder, including the obligation to
deposit in the Certificate Account an amount equal to the Advance for the
immediately succeeding Distribution Date.
The Trustee shall deposit all funds it receives pursuant to
this Section 4.04 into the Certificate Account.
Section 4.05. Allocation of Realized Losses.
-----------------------------
(a) Prior to each Distribution Date, the Master Servicer shall
determine the total amount of Realized Losses, if any, that resulted from any
Cash Liquidation, Servicing Modifications, Debt Service Reduction, Deficient
Valuation or REO Disposition that occurred during the related Prepayment Period
or, in the case of a Servicing Modification that constitutes a reduction of the
interest rate on a Mortgage Loan, the amount of the reduction in the interest
portion of the Monthly Payment due in the month in which such Distribution Date
occurs. The amount of each Realized Loss shall be evidenced by an Officers'
Certificate. All Realized Losses on the Mortgage Loans (other than Excess
Losses) shall be allocated as follows: first, to the Excess Cash Flow as
provided in Section 4.02(g)(iii), to the extent of the Excess Cash Flow for such
Distribution Date; second to the Reserve Fund, in accordance with Section 4.10
of this Agreement, until the balance in the Reserve Fund has been reduced to
zero, third, in reduction of the Overcollateralization Amount, until such amount
has been reduced to zero; and thereafter, to the extent not covered by the
Policy, to the Class A Certificates, to the extent of Realized Losses on the
Group I Loans and Group II Loans,
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respectively. Any Excess Losses on the Mortgage Loans, to the extent not covered
by the Policy, will be allocated to the Class A Certificates, PRO RATA, based on
the Principal Distribution Amount attributable to each Loan Group for the
related Distribution Date, in an amount equal to a fraction of such losses equal
to (x) the aggregate Certificate Principal Balance of the Class A Certificates
over (y) the aggregate Stated Principal Balance of the Mortgage Loans, and the
remainder of such losses shall be allocated to the Overcollateralization Amount
in reduction of the amount thereof.
(b) Any allocation of the principal portion of Realized Losses
(other than Debt Service Reductions) to the Class A Certificates shall be made
by reducing the Certificate Principal Balance thereof by the amount so
allocated, which allocation shall be deemed to have occurred on such
Distribution Date. Allocations of the interest portions of Realized Losses shall
be made by operation of the definition of "Accrued Certificate Interest" and by
operation of the provisions of Section 4.02(g). All Realized Losses and all
other losses allocated to a Class of Certificates hereunder will be allocated
among the Certificates of such Class in proportion to the Percentage Interests
evidenced thereby.
Section 4.06. Reports of Foreclosures and Abandonment of
Mortgaged Property.
------------------------------------------
The Master Servicer or the Subservicers shall file information
returns with respect to the receipt of mortgage interest received in a trade or
business, the reports of foreclosures and abandonments of any Mortgaged Property
and the informational returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property required by Sections 6050H, 6050J and
6050P of the Code, respectively, and deliver to the Trustee an Officers'
Certificate on or before March 31 of each year stating that such reports have
been filed. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code.
Section 4.07. Optional Purchase of Defaulted Mortgage Loans.
---------------------------------------------
As to any Mortgage Loan which is delinquent in payment by 90
days or more, the Master Servicer may, at its option, purchase such Mortgage
Loan from the Trustee at the Purchase Price therefor. If at any time the Master
Servicer makes a payment to the Certificate Account covering the amount of the
Purchase Price for such a Mortgage Loan, and the Master Servicer provides to the
Trustee a certification signed by a Servicing Officer stating that the amount of
such payment has been deposited in the Certificate Account, then the Trustee
shall execute the assignment of such Mortgage Loan at the request of the Master
Servicer without recourse to the Master Servicer which shall succeed to all the
Trustee's right, title and interest in and to such Mortgage Loan, and all
security and documents relative thereto. Such assignment shall be an assignment
outright and not for security. The Master Servicer will thereupon own such
Mortgage, and all such security and documents, free of any further obligation to
the Trustee or the Certificateholders with respect thereto.
Section 4.08. The Policy.
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(a) If pursuant to Section 4.04(a)(iii), the Master Servicer
determines that a Deficiency Amount exists for such Distribution Date, the
Trustee shall complete the Notice and submit such Notice in accordance with the
Policy to the Insurer no later than 12:00 P.M., New York City time, on the
Business Day immediately preceding each Distribution Date, as a claim for an
Insured Amount (provided that the Trustee shall submit such notice on the second
Business Day immediately preceding such Distribution Date if it is able to do
so) in an amount equal to such Deficiency Amount.
(b) The Trustee shall establish and maintain the Insurance
Account on behalf of the Holders of the Class A Certificates. Upon receipt of an
Insured Amount from the Insurer on behalf of the Class A Certificateholders, the
Trustee shall deposit such Insured Amount in the Insurance Account. All amounts
on deposit in the Insurance Account shall remain uninvested. On each
Distribution Date, the Trustee shall transfer any Insured Amount then on deposit
in the Insurance Account to the Certificate Account. The Trustee shall
distribute on each Distribution Date the Deficiency Amount for such Distribution
Date from the Certificate Account, together with the distributions due to the
Class A Certificateholders on such Distribution Date, as follows: (i) the
portion of any such Deficiency Amount related to clauses (i) and (ii) of the
definition of Deficiency Amount shall be distributed among the related Class A
Certificateholders on a pro rata basis in accordance with their respective
shortfalls or allocations of Realized Losses; and (ii) the portion of any such
Deficiency Amount related to clause (iii) of the definition of Deficiency Amount
shall be distributed to the related Class A Certificateholders in accordance
with Section 9.01(c).
(c) The Trustee shall (i) receive as attorney-in-fact of each
Class A Certificateholder any Insured Amount from the Insurer and (ii)
distribute such Insured Amount to such Class A Certificateholders as set forth
in subsection (b) above; provided, that if the Trustee receives the amount of
such draw from the Limited Reimbursement Counterparty on the Limited
Reimbursement Agreement, the Trustee shall not make a draw on the Policy.
Notwithstanding the foregoing, to the extent (i) a demand is made on the Trustee
for reimbursement or other payment of such amounts paid in error or otherwise
not in accordance with the terms of this Agreement, in each case with the
consent of the Insurer, which consent shall not be unreasonably withheld, or
(ii) a court of competent jurisdiction orders the repayment by the Trustee to
the Limited Reimbursement Counterparty on the Limited Reimbursement Agreement of
the amount of such draw, the Trustee shall make a draw on the Policy pursuant to
the terms hereof as if the Limited Reimbursement Counterparty on the Limited
Reimbursement Agreement had not made any payment to the Trustee.
Insured Amounts disbursed by the Trustee from proceeds of the
Policy shall not be considered payment by the Trust Fund with respect to the
Class A Certificates, nor shall such disbursement of such Insured Amounts
discharge the obligations of the Trust Fund with respect to the amounts thereof,
and the Insurer shall become owner of such amounts to the extent covered by such
Insured Amounts as the deemed assignee of such Class A Certificateholders. The
Trustee hereby agrees on behalf of each Class A Certificateholder (and each
Class A Certificateholder, by its acceptance of its Class A Certificates, hereby
agrees) for the benefit of the Insurer that the Trustee shall recognize that to
the extent the Insurer pays Insured Amounts, either directly or indirectly (as
by paying through the Trustee), to the Class A Certificateholders, the Insurer
will be entitled to be subrogated to the rights of the Class A
Certificateholders to the extent of such payments.
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Section 4.09. Surety Bond.
-----------
(a) If a Required Surety Payment is payable pursuant to the
Surety Bond with respect to any Additional Collateral Loan, the Master Servicer
shall so notify the Trustee as soon as reasonably practicable and the Trustee
shall promptly complete the notice in the form of Attachment 1 to the Surety
Bond and shall promptly submit such notice to the Surety as a claim for a
Required Surety. The Master Servicer shall upon request assist the Trustee in
completing such notice and shall provide any information requested by the
Trustee in connection therewith.
(b) Upon receipt of a Required Surety Payment from the Surety
on behalf of the Holders of Certificates, the Trustee shall deposit such
Required Surety Payment in the Certificate Account and shall distribute such
Required Surety Payment, or the proceeds thereof, in accordance
with the provisions of Section 4.02.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Holder of a Certificate any Required Surety Payment from the Surety and (ii)
disburse the same to the Holders of such
Certificates as set forth in Section 4.02.
Section 4.10. Reserve Fund.
------------
On the Closing Date, the Trustee, as trustee for the benefit
of the Insurer and the Certificateholders, shall purchase the Yield Maintenance
Agreements from BSFP for the Yield Maintenance Agreements Purchase Price. In
addition, on the Closing Date, the Trustee shall deposit into the Reserve Fund
the Reserve Fund Deposit. Immediately prior to each Distribution Date, the
Trustee shall deposit into the Reserve Fund an amount equal to the Reserve Fund
Addition. On each Distribution Date, to the extent of the balance of deposits in
the Reserve Fund in excess of $10,000, the Trustee shall withdraw from the
Reserve Fund (to the extent of funds available on deposit therein) amounts to
cover the following items in the following order of priority: first, as
reimbursement to the Certificate Insurer with respect to Cumulative Insurance
Payments; and second, to pay the Class A Certificates, on a pro rata basis,
pursuant to Section 4.05, in respect of any Realized Losses to the extent not
covered by the Excess Cash Flow.
In addition, if following any Distribution Date and the
allocation of Realized Losses with respect to such Distribution Date, the sum of
the Overcollateralization Amount and the amount on deposit in the Reserve Fund
is greater than the Required Overcollateralization Amount plus $10,000, the
Trustee shall withdraw from the Reserve Fund (to the extent of funds available
on deposit therein), until the sum of the Overcollateralization Amount and the
amount on deposit in the Reserve Fund is equal to the Required
Overcollateralization Amount plus $10,000, and pay first, to the holders of the
Class A Certificates, on a pro rata basis, any Basis Risk Shortfall
Carry-Forward Amount; and second, to the holders of the Reserve Fund Residual
Right. The Reserve Fund shall be an Eligible Account. Amounts held in the
Reserve Fund from time to time shall continue to constitute assets of the Trust
Fund, but not of the REMICs, until released from the Reserve Fund pursuant to
this Section 4.10. Each of the Yield Maintenance Agreements and the Reserve Fund
constitute an "outside reserve fund" within the meaning of Treasury Regulation
ss.1.860G-2(h) and
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are not assets of the REMICs. The Holders of the Class SB-I Certificates are the
owners of the Reserve Fund and the Yield Maintenance Agreements and for all
federal tax purposes, amounts transferred by the REMICs to the Reserve Fund are
treated as amounts distributed by the REMICs to the Holders of the Class SB-I
Certificates. The Trustee shall keep records that accurately reflect the funds
on deposit in the Reserve Fund. The Trustee shall invest the Reserve Fund in
Permitted Investments. On each Distribution Date, the Trustee shall distribute
any interest on the Reserve Fund to Residential Funding.
The holder of the Reserve Fund Residual Right shall initially
be Residential Funding, as initial holder of the Class SB-I Certificates. The
Reserve Fund Residual Rights shall at all times be owned by and allocated among
the Class SB-I Certificateholders on a pro rata basis; provided, that in the
event of a transfer of any of the Class SB-I Certificates by Residential
Funding, the related Reserve Fund Residual Rights may be transferred along with
such Class SB-I Certificates, or they may be retained by Residential Funding.
For each Distribution Date and each Yield Maintenance
Agreement, the Trustee shall pay to Residential Funding, or to Residential
Funding's designee, the excess of the amount paid by BSFP to the Trustee
pursuant to such Yield Maintenance Agreement over the Reserve Fund Addition for
the same Yield Maintenance Agreement. In the event of the early termination of
any Yield Maintenance Agreement, the Trustee shall pay to Residential Funding,
or to Residential Funding's designee, the excess of the aggregate amount paid by
BSFP to the Trustee pursuant to such early termination over the portion of such
aggregate amount which represents the interest of the Certificate Owners in
Reserve Fund Additions for the same Yield Maintenance Agreement (which portion
will be calculated by BSFP or another party with experience valuing instruments
such as the Yield Maintenance Agreements, and chosen by the Trustee for this
purpose).
Section 4.11. Additional Servicing Fee.
------------------------
REMIC III shall pay to the Special Servicer the Additional
Special Servicing Fee as an additional fee for services rendered as Special
Servicer. Such fee shall be due and payable on any Distribution Date only to the
extent that there are amounts remaining after all amounts required to be
distributed with respect to the REMIC III regular interests have been made for
that Distribution Date. With respect to each Distribution Date, the Additional
Special Servicing Fee shall equal the sum of the following:
(i) the product of the Group I Standard Rate and the
Group I Aggregate Net Excess Turbo Amount; and
(ii) the product of the Group II Standard Rate and the
Group II Aggregate Net Excess Turbo Amount.
The Special Servicer will deposit the Additional Servicing Fee
in the Reserve Fund to be paid: first, as reimbursement of the Certificate
Insurer with respect to Cumulative Insurance Payments; second, to pay the Class
A Certificates, pursuant to Section 4.05, in respect of any
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Realized Losses to the extent not covered by Excess Cash Flow; third, to the
holders of the Class A Certificates, any Basis-Risk Shortfall Carryforward
Amount; and fourth, to the Special Servicer.
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ARTICLE V
THE CERTIFICATES
----------------
Section 5.01. The Certificates.
----------------
(a) The Class A Certificates, Class SB Certificates and Class
R Certificates shall be substantially in the forms set forth in Exhibits A, B
and D, respectively, and shall, on original issue, be executed and delivered by
the Trustee to the Certificate Registrar for authentication and delivery to or
upon the order of the Depositor upon receipt by the Trustee or one or more
Custodians of the documents specified in Section 2.01. The Class A Certificates
shall be issuable in minimum dollar denominations of $25,000 and integral
multiples of $1 in excess thereof. The Class SB Certificates shall be issuable
in registered, certificated form in minimum percentage interests of 5.00% and
integral multiples of 0.01% in excess thereof. Each Class of Class R
Certificates shall be issued in registered, certificated form in minimum
percentage interests of 20.00% and integral multiples of 0.01% in excess
thereof; PROVIDED, HOWEVER, that one Class R Certificate of each Class will be
issuable to the REMIC Administrator as "tax matters person" pursuant to Section
10.01(c) in a minimum denomination representing a Percentage Interest of not
less than 0.01%.
The Certificates shall be executed by manual or facsimile
signature on behalf of an authorized officer of the Trustee. Certificates
bearing the manual or facsimile signatures of individuals who were at any time
the proper 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
authentication and delivery of such Certificate or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by the Certificate Registrar by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
(b) The Class A Certificates shall initially be issued as one
or more Certificates registered in the name of the Depository or its nominee
and, except as provided below, registration of such Certificates may not be
transferred by the Trustee except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests
therein. The Certificate Owners shall hold their respective Ownership Interests
in and to each Class A Certificate, through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to Definitive
Certificates in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Certificate Owner.
Each Depository Participant shall transfer the Ownership Interests only in the
Book-Entry Certificates of Certificate Owners it represents or of brokerage
firms for which it acts as agent in accordance with the Depository's normal
procedures.
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The Trustee, the Master Servicer and the Depositor may for all
purposes (including the making of payments due on the respective Classes of
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the respective Classes
of Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the respective Classes of Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of any Class of Book- Entry Certificates with respect to any particular
matter shall not be deemed inconsistent if they are made with respect to
different Certificate Owners. The Trustee may establish a reasonable record date
in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Depositor is unable to locate a
qualified successor or (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall issue the Definitive Certificates. Neither the
Depositor, the Master Servicer nor the Trustee shall be liable for any actions
taken by the Depository or its nominee, including, without limitation, any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depositor in connection with the issuance of the Definitive
Certificates pursuant to this Section 5.01 shall be deemed to be imposed upon
and performed by the Trustee, and the Trustee and the Master Servicer shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
Section 5.02. Registration of Transfer and Exchange of
Certificates.
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(a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. The Trustee is initially appointed Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. The Certificate Registrar, or the Trustee, shall provide the
Master Servicer with a certified list of Certificateholders as of each Record
Date prior to the related Determination Date.
(b) Upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee maintained for such purpose
pursuant to Section 8.12 and, in the case of any Class SB or R Certificate, upon
satisfaction of the conditions set forth below, the Trustee shall execute and
the Certificate Registrar shall authenticate and deliver, in the name of the
designated
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transferee or transferees, one or more new Certificates of a like Class and
aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may
be exchanged for other Certificates of authorized denominations of a like Class
and aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate Registrar
shall authenticate and deliver the Certificates of such Class which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee or the Certificate Registrar) be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.
(d) No transfer, sale, pledge or other disposition of a Class
SB or Class R Certificate shall be made unless such transfer, sale, pledge or
other disposition is exempt from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and any applicable state securities
laws or is made in accordance with said Act and laws. Except as otherwise
provided in this Section 5.02(d), in the event that a transfer of a Class SB or
Class R Certificate is to be made, (i) unless the Depositor directs the Trustee
otherwise, the Trustee shall require a written Opinion of Counsel acceptable to
and in form and substance satisfactory to the Trustee and the Depositor that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense
of the Trustee, the Trust Fund, the Depositor or the Master Servicer, and (ii)
the Trustee shall require the transferee to execute a representation letter,
substantially in the form of Exhibit I hereto, and the Trustee shall require the
transferor to execute a representation letter, substantially in the form of
Exhibit J hereto, each acceptable to and in form and substance satisfactory to
the Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which representation letters shall not be an
expense of the Trustee, the Trust Fund, the Depositor or the Master Servicer. In
lieu of the requirements set forth in the preceding sentence, transfers of Class
SB or Class R Certificates may be made in accordance with this Section 5.02(d)
if the prospective transferee of such a Certificate provides the Trustee and the
Master Servicer with an investment letter substantially in the form of Exhibit N
attached hereto, which investment letter shall not be an expense of the Trustee,
the Depositor, or the Master Servicer, and which investment letter states that,
among other things, such transferee (i) is a "qualified institutional buyer" as
defined under Rule 144A, acting for its own account or the accounts of other
"qualified institutional buyers" as defined under Rule 144A, and (ii) is aware
that the proposed transferor intends to rely on the exemption from registration
requirements under the 1933 Act provided by Rule 144A. The Holder of a Class SB
or Class R Certificate desiring to effect any transfer, sale, pledge or other
disposition shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer and the Certificate Registrar against any
liability that may result if the transfer, sale, pledge or other disposition is
not so exempt or is not made in accordance with such federal and state laws and
this Agreement.
(e) In the case of any Class SB or Class R Certificate
presented for registration in the name of any Person, either (i) the Trustee
shall require an Opinion of Counsel acceptable to
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and in form and substance satisfactory to the Trustee, the Depositor and the
Master Servicer to the effect that the purchase or holding of such Class SB or
Class R Certificate is permissible under applicable law, will not constitute or
result in any non-exempt prohibited transaction under Section 406 of ERISA, or
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), and will not subject the Trustee, the Depositor or the Master
Servicer to any obligation or liability (including obligations or liabilities
under ERISA or Section 4975 of the Code) in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee, the
Depositor or the Master Servicer or (ii) the prospective transferee shall be
required to provide the Trustee, the Depositor and the Master Servicer with a
certification to the effect set forth in paragraph fourteen of Exhibit H-1,
which the Trustee may rely upon without further inquiry or investigation, or
such other certifications as the Trustee may deem desirable or necessary in
order to establish that such transferee or the Person in whose name such
registration is requested is not an employee benefit plan or other plan subject
to the prohibited transaction provisions of ERISA or Section 4975 of the Code,
or any Person (including an investment manager, a named fiduciary or a trustee
of any such plan) who is using "plan assets" of any such plan to effect such
acquisition.
(f) (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 authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly subject
to the following provisions:
(A) Each Person holding or acquiring any
Ownership Interest in a Class R
Certificate shall be a Permitted
Transferee and shall promptly notify
the Trustee of any change or
impending change in its status as a
Permitted Transferee.
(B) 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, (I) an
affidavit and agreement (a "Transfer
Affidavit and Agreement," in the
form attached hereto as Exhibit H-1)
from the proposed Transferee, in
form and substance satisfactory to
the Master Servicer, representing
and warranting, among other things,
that it 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 who
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 5.02(f) and agrees
to be bound by
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them, and (II) a certificate, in the
form attached hereto as Exhibit H-2,
from the Holder wishing to transfer
the Class R Certificate, in form and
substance satisfactory to the Master
Servicer, representing and
warranting, among other things, that
no purpose of the proposed Transfer
is to impede the assessment or
collection of tax.
(C) Notwithstanding the delivery of a
Transfer Affidavit and Agreement by
a proposed Transferee under clause
(B) above, if a Responsible Officer
of the Trustee who is assigned to
this Agreement 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.
(D) 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 to
the Trustee in the form attached
hereto as Exhibit H-2.
(E) 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 Regulations 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."
(i) The Trustee will register the Transfer of any
Class R Certificate only if it shall have received the Transfer
Affidavit and Agreement, a certificate of the Holder requesting such
transfer in the form attached hereto as Exhibit H-2 and all of such
other documents as shall have been reasonably required by the Trustee
as a condition to such registration. Transfers of the Class R
Certificates to Non-United States Persons and Disqualified
Organizations (as defined in Section 860E(e)(5) of the Code) are
prohibited.
(A) If any Disqualified Organization
shall become a holder of a Class R
Certificate, then the last preceding
Permitted Transferee shall be
restored, to the extent permitted by
law, to all rights and obligations
as Holder thereof retroactive to the
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date of registration of such
Transfer of such Class R
Certificate. If a Non-United States
Person shall become a holder of a
Class R Certificate, then the last
preceding United States Person shall
be restored, to the extent permitted
by law, to all rights and
obligations as Holder thereof
retroactive to the date of
registration of such Transfer of
such Class R Certificate. If a
transfer of a Class R Certificate is
disregarded pursuant to the
provisions of Treasury Regulations
Section 1.860E-1 or Section
1.860G-3, then the last preceding
Permitted Transferee shall be
restored, to the extent permitted by
law, to all rights and obligations
as Holder thereof retroactive to the
date of registration of such
Transfer of such Class R
Certificate. 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
5.02(f) or for making any payments
due on such Certificate to the
holder thereof or for taking any
other action with respect to such
holder under the provisions of this
Agreement.
(B) If any purported Transferee shall
become a Holder of a Class R
Certificate in violation of the
restrictions in this Section 5.02(f)
and to the extent that the
retroactive restoration of the
rights of the Holder of such Class R
Certificate as described in clause
(iii)(A) above shall be invalid,
illegal or unenforceable, then the
Master Servicer 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 on such terms
as the Master Servicer may choose.
Such purported Transferee shall
promptly endorse and deliver each
Class R Certificate in accordance
with the instructions of the Master
Servicer. Such purchaser may be the
Master Servicer itself or any
Affiliate of the Master Servicer.
The proceeds of such sale, net of
the commissions (which may include
commissions payable to the Master
Servicer or its Affiliates),
expenses and taxes due, if any, will
be remitted by the Master Servicer
to such purported Transferee. The
terms and conditions of any sale
under this clause (iii)(B) shall be
determined in the sole discretion of
the Master Servicer, and the Master
Servicer 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.
(ii) The Master Servicer, on behalf of the Trustee,
shall make available, upon written request from the Trustee, all
information necessary to compute any tax imposed
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(A) as a result of the Transfer of an Ownership Interest in a Class R
Certificate to any Person who is a Disqualified Organization, including
the information regarding "excess inclusions" of such Class R
Certificates required to be provided to the Internal Revenue Service
and certain Persons as described in Treasury Regulations Sections
1.860D-1(b)(5) and 1.860E-2(a)(5), 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 who is a
Disqualified Organization. Reasonable compensation for providing such
information may be required by the Master Servicer from such Person.
(iii) The provisions of this Section 5.02(f) set
forth prior to this clause (v) may be modified, added to or eliminated,
provided that there shall have been delivered to the
Trustee the following:
(A) Written consent of the Insurer and
written notification from each
Rating Agency to the effect that the
modification, addition to or
elimination of such provisions will
not cause such Rating Agency to
downgrade its then-current ratings,
if any, of the Class A Certificates
below the lower of the then- current
rating or the rating assigned to
such Certificates as of the Closing
Date by such Rating Agency; and
(B) a certificate of the Master Servicer
stating that the Master Servicer has
received an Opinion of Counsel, in
form and substance satisfactory to
the Master Servicer, to the effect
that such modification, addition to
or absence of such provisions will
not cause any of REMIC I, REMIC II
or REMIC III to cease to qualify as
a REMIC and will not cause (x) any
of REMIC I, REMIC II or REMIC III to
be subject to an entity- level tax
caused by the Transfer of any Class
R Certificate to a Person that is a
Disqualified Organization or (y) a
Certificateholder or another Person
to be subject to a REMIC- related
tax caused by the Transfer of a
Class R Certificate to a Person that
is not a Permitted Transferee.
(g) No service charge shall be made for any transfer or
exchange of Certificates of any Class, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of
Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be destroyed by the Certificate Registrar.
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Section 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
------------------------------------
If (i) any mutilated Certificate is surrendered to the
Certificate Registrar, or the Trustee and the Certificate Registrar receive
evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor, Class and Percentage
Interest but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section, the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee and the Certificate Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. Persons Deemed Owners.
---------------------
Prior to due presentation of a Certificate for registration of
transfer, the Depositor, the Master Servicer, the Insurer, the Trustee, the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Insurer, the Trustee or the Certificate Registrar may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.02 and for all other
purposes whatsoever, except as and to the extent provided in the definition of
"Certificateholder" and in Section 4.08, and neither the Depositor, the Master
Servicer, the Insurer, the Trustee, the Certificate Registrar nor any agent of
the Depositor, the Master Servicer, the Trustee or the Certificate Registrar
shall be affected by notice to the contrary except as provided in Section
5.02(g).
Section 5.05. Appointment of Paying Agent.
---------------------------
The Trustee may, with the consent of the Insurer (so long as
no Insurer Default exists), which consent shall not be unreasonably withheld,
appoint a Paying Agent for the purpose of making distributions to
Certificateholders pursuant to Section 4.02. In the event of any such
appointment, on or prior to each Distribution Date the Master Servicer on behalf
of the Trustee shall deposit or cause to be deposited with the Paying Agent a
sum sufficient to make the payments to Certificateholders in the amounts and in
the manner provided for in Section 4.02 and 4.03, such sum to be held in trust
for the benefit of Certificateholders.
The Trustee shall cause each Paying Agent to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee that such Paying Agent will hold all sums held by it for the payment
to Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. Any
sums
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so held by such Paying Agent shall be held only in Eligible Accounts to the
extent such sums are not distributed to the Certificateholders on the date of
receipt by such Paying Agent.
Section 5.06. Optional Purchase of Certificates.
---------------------------------
(a) On any Distribution Date on or after the Optional
Termination Date, the Master Servicer shall have the right, at its option, to
purchase the Class A Certificates in whole, but not in part, at a price equal to
the sum of the outstanding Certificate Principal Balance of such Certificates
plus the sum of one month's Accrued Certificate Interest thereon and any
previously unpaid Accrued Certificate Interest.
(b) The Master Servicer shall give the Trustee not less than
60 days' prior notice of the Distribution Date on which the Master Servicer
anticipates that it will purchase the related Certificates pursuant to Section
5.06(a). Notice of any such purchase, specifying the Distribution Date upon
which the Holders may surrender their Certificates to the Trustee for payment in
accordance with this Section 5.06, shall be given promptly by the Master
Servicer by letter to Certificateholders (with a copy to the Certificate
Registrar, the Insurer and each Rating Agency) mailed not earlier than the 15th
day and not later than the 25th day of the month next preceding the month of
such final distribution specifying:
(i) the Distribution Date upon which purchase of the
related Certificates is anticipated to be made upon presentation and
surrender of such Certificates at the office or agency of the Trustee
therein designated,
(ii) the purchase price therefor, if known, and
(iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office or agency
of the Trustee therein specified.
If the Master Servicer gives the notice specified above, the Master Servicer
shall deposit in the Certificate Account before the Distribution Date on which
the purchase pursuant to Section 5.06(a) is to be made, in immediately available
funds, an amount equal to the purchase price for the Certificates computed as
provided above.
(c) Upon presentation and surrender of the Certificates to be
purchased pursuant to Section 5.06(a) by the Holders thereof, the Trustee shall
distribute to such Holders an amount equal to the outstanding Certificate
Principal Balance thereof plus one month's Accrued Certificate Interest thereon
and any previously unpaid Accrued Certificate Interest with respect thereto.
(d) In the event that any Certificateholders do not surrender
their Certificates on or before the Distribution Date on which a purchase
pursuant to this Section 5.06 is to be made, the Trustee shall on such date
cause all funds in the Certificate Account deposited therein by the Master
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Servicer pursuant to Section 5.06(b) to be withdrawn therefrom and deposited in
a separate escrow account for the benefit of such Certificateholders, and the
Master Servicer shall give a second written notice to such Certificateholders to
surrender their Certificates for payment of the purchase price therefor. If
within six months after the second notice any Certificate shall not have been
surrendered for cancellation, the Trustee shall take appropriate steps as
directed by the Master Servicer to contact the Holders of such Certificates
concerning surrender of their Certificates. The costs and expenses of
maintaining the escrow account and of contacting Certificateholders shall be
paid out of the assets which remain in the escrow account. If within nine months
after the second notice any Certificates shall not have been surrendered for
cancellation in accordance with this Section 5.06, the Trustee shall pay to the
Master Servicer all amounts distributable to the Holders thereof and the Master
Servicer shall thereafter hold such amounts until distributed to such Holders.
No interest shall accrue or be payable to any Certificateholder on any amount
held in the escrow account or by the Master Servicer as a result of such
Certificateholder's failure to surrender its Certificate(s) for payment in
accordance with this Section 5.06. Any Certificate that is not surrendered on
the Distribution Date on which a purchase pursuant to this Section 5.06 occurs
as provided above will be deemed to have been purchased and the Holder as of
such date will have no rights with respect thereto except to receive the
purchase price therefor minus any costs and expenses associated with such escrow
account and notices allocated thereto. Any Certificates so purchased or deemed
to have been purchased on such Distribution Date shall remain outstanding
hereunder. The Master Servicer shall be for all purposes the Holder thereof as
of such date subject to any rights of the Insurer hereunder with respect
thereto.
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ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
-------------------------------------
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicer.
-----------------------------------------------
The Depositor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Depositor and the Master
Servicer herein. By way of illustration and not limitation, the Depositor is not
liable for the servicing and administration of the Mortgage Loans, nor is it
obligated by Section 7.01 or 10.01 to assume any obligations of the Master
Servicer or to appoint a designee to assume such obligations, nor is it liable
for any other obligation hereunder that it may, but is not obligated to, assume
unless it elects to assume such obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the
Master Servicer; Assignment of Rights and
Delegation of Duties by Master Servicer.
-----------------------------------------------
(a) The Depositor and the Master Servicer will each keep in
full effect its existence, rights and franchises as a corporation under the laws
of the state of its incorporation, and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
(b) Any Person into which the Depositor or the Master Servicer
may be merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; PROVIDED, HOWEVER, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Fannie Mae or Freddie Mac; and provided further that each Rating Agency's
ratings, if any, of the Class A Certificates without taking into account the
Policy in effect immediately prior to such merger or consolidation will not be
qualified, reduced or withdrawn as a result thereof (as evidenced by a letter to
such effect from each Rating Agency).
(c) Notwithstanding anything else in this Section 6.02 and
Section 6.04 to the contrary, the Master Servicer may assign its rights and
delegate its duties and obligations under this Agreement; provided that the
Person accepting such assignment or delegation shall be a Person which is
qualified to service mortgage loans on behalf of Fannie Mae or Freddie Mac, is
reasonably satisfactory to the Trustee, the Insurer and the Depositor, is
willing to service the Mortgage Loans
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and executes and delivers to the Depositor, the Insurer and the Trustee an
agreement, in form and substance reasonably satisfactory to the Depositor, the
Insurer and the Trustee, which contains an assumption by such Person of the due
and punctual performance and observance of each covenant and condition to be
performed or observed by the Master Servicer under this Agreement; provided
further that each Rating Agency's rating of the Classes of Certificates (without
taking into account the Policy) that have been rated in effect immediately prior
to such assignment and delegation will not be qualified, reduced or withdrawn as
a result of such assignment and delegation (as evidenced by a letter to such
effect from each Rating Agency). In the case of any such assignment and
delegation, the Master Servicer shall be released from its obligations under
this Agreement, except that the Master Servicer shall remain liable for all
liabilities and obligations incurred by it as Master Servicer hereunder prior to
the satisfaction of the conditions to such assignment and delegation set forth
in the next preceding sentence.
Section 6.03. Limitation on Liability of the Depositor, the
Master Servicer and Others.
---------------------------------------------
Neither the Depositor, 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 Fund or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; PROVIDED, HOWEVER, that
this provision shall not protect the Depositor, the Master Servicer or any such
Person against any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the 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 prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer shall be indemnified
by the Trust Fund and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
Neither the Depositor nor the Master Servicer shall be under
any obligation to appear in, prosecute or defend any legal or administrative
action, proceeding, hearing or examination that is not incidental to its
respective duties under this Agreement and which in its opinion may involve it
in any expense or liability; PROVIDED, HOWEVER, that the Depositor or the Master
Servicer may in its discretion undertake any such action, proceeding, hearing or
examination that it may deem necessary or desirable in respect to this Agreement
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action, proceeding, hearing or examination and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor and the Master Servicer shall be entitled to be reimbursed therefor
out of amounts attributable to the Mortgage Loans on deposit in the
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Custodial Account as provided by Section 3.10 and, on the Distribution Date(s)
following such reimbursement, the aggregate of such expenses and costs shall be
allocated in reduction of the Accrued Certificate Interest on each Class
entitled thereto in the same manner as if such expenses
and costs constituted a Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicer Not to Resign.
-------------------------------------------
Subject to the provisions of Section 6.02, neither the
Depositor nor the Master Servicer shall resign from its respective obligations
and duties hereby imposed on it except upon determination that its duties
hereunder are no longer permissible under applicable law. Any such determination
permitting the resignation of the Depositor or the Master Servicer shall be
evidenced by an Opinion of Counsel (at the expense of the resigning party) to
such effect delivered to the Trustee and the Insurer. No such resignation by the
Master Servicer shall become effective until the Trustee or a successor servicer
shall have assumed the Master Servicer's responsibilities and obligations in
accordance with Section 7.02.
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ARTICLE VII
DEFAULT
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Section 7.01. Events of Default.
-----------------
Event of Default, wherever used herein, means any one of the
following events (whatever reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(i) the Master Servicer shall fail to distribute or cause
to be distributed to Holders of Certificates of any
Class any distribution required to be made under the
terms of the Certificates of such Class and this
Agreement and, in either case, such failure shall
continue unremedied for a period of 5 days after the
date upon which written notice of such failure,
requiring such failure to be remedied, shall have
been given to the Master Servicer by the Trustee, the
Insurer or the Depositor or to the Master Servicer,
the Depositor and the Trustee by the Holders of
Certificates of such Class evidencing Percentage
Interests aggregating not less than 25%; or
(ii) the Master Servicer shall fail to observe or perform
in any material respect any other of the covenants or
agreements on the part of the Master Servicer
contained in the Certificates of any Class or in this
Agreement and such failure shall continue unremedied
for a period of 30 days (except that such number of
days shall be 15 in the case of a failure to pay the
premium for any Required Insurance Policy) after the
date on which written notice of such failure,
requiring the same to be remedied, shall have been
given to the Master Servicer by the Trustee, the
Insurer or the Depositor, or to the Master Servicer,
the Depositor and the Trustee by the Holders of
Certificates of any Class evidencing, as to such
Class, Percentage Interests aggregating not less than
25%; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an
involuntary case under any present or future federal
or state bankruptcy, insolvency or similar law or
appointing 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; or
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(iv) 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 property of the
Master Servicer; or
(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become
due, file a petition to take advantage of, or
commence a voluntary case under, any applicable
insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(vi) the Master Servicer shall notify the Trustee pursuant
to Section 4.04(b) that it is unable to deposit in
the Certificate Account an amount equal to the
Advance.
If an Event of Default described in clauses (i)-(v) of this
Section shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, either the Depositor or the
Trustee shall at the direction of the Insurer (unless an Insurance Default is
continuing) or at the direction of Holders of Certificates entitled to at least
51% of the Voting Rights (which Voting Rights of the Class A Certificateholders
may be exercised by the Insurer without the consent of such Holders and may only
be exercised by such Holders with the prior written consent of the Insurer so
long as there does not exist a failure by the Insurer to make a required payment
under the Policy), by notice in writing to the Master Servicer (and to the
Depositor and the Insurer if given by the Trustee or to the Trustee and the
Insurer if given by the Depositor), terminate all of the rights and obligations
of the Master Servicer under this Agreement and in and to the Mortgage Loans and
the proceeds thereof, other than its rights as a Certificateholder hereunder;
provided, however, that unless an Insurer Default is continuing the successor to
the Master Servicer appointed pursuant to Section 7.02 shall be acceptable to
the Insurer and shall have accepted the duties of Master Servicer effective upon
the resignation of the Master Servicer. If an Event of Default described in
clause (vi) hereof shall occur, the Trustee with the consent of the Insurer
shall, by notice to the Master Servicer, the Insurer and the Depositor,
immediately terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder as provided in Section
4.04(b). On or after the receipt by the Master Servicer of such written notice,
all authority and power of the Master Servicer under this Agreement, whether
with respect to the Certificates (other than as a Holder thereof) or the
Mortgage Loans or otherwise, shall subject to Section 7.02 pass to and be vested
in the Trustee or the Trustee's designee appointed pursuant to Section 7.02;
and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. The Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee or its designee for administration by it
of
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all cash amounts which shall at the time be credited to the Custodial Account or
the Certificate Account or thereafter be received with respect to the Mortgage
Loans. No such termination shall release the Master Servicer for any liability
that it would otherwise have hereunder for any act or omission prior to the
effective time of such termination.
Notwithstanding any termination of the activities of
Residential Funding in its capacity as Master Servicer hereunder, Residential
Funding shall be entitled to receive, out of any late collection of a Monthly
Payment on a Mortgage Loan which was due prior to the notice terminating
Residential Funding's rights and obligations as Master Servicer hereunder and
received after such notice, that portion to which Residential Funding would have
been entitled pursuant to Sections 3.10(a)(ii), (vi) and (vii) as well as its
Servicing Fee in respect thereof, and any other amounts payable to Residential
Funding hereunder the entitlement to which arose prior to the termination of its
activities hereunder. Upon the termination of Residential Funding as Master
Servicer hereunder the Depositor shall deliver to the Trustee a copy of the
Program Guide and upon the request of the Insurer, a copy of the Program Guide
to the Insurer.
Section 7.02. Trustee or Depositor to Act; Appointment of
Successor.
-------------------------------------------
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section 6.04,
the Insurer may appoint a successor Master Servicer and if the Insurer fails to
do so within 30 days, the Trustee or, upon notice to the Insurer and the
Depositor and with the Depositor's and the Insurer's consent (which shall not be
unreasonably withheld) a designee (which meets the standards set forth below) of
the Trustee, shall be the successor in all respects to the Master Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer (except for the
responsibilities, duties and liabilities contained in Sections 2.02 and 2.03(a),
excluding the duty to notify related Subservicers as set forth in such Sections,
and its obligations to deposit amounts in respect of losses incurred prior to
such notice or termination on the investment of funds in the Custodial Account
or the Certificate Account pursuant to Sections 3.07(c) and 4.01(c) by the terms
and provisions hereof); PROVIDED, HOWEVER, that any failure to perform such
duties or responsibilities caused by the preceding Master Servicer's failure to
provide information required by Section 4.04 shall not be considered a default
by the Trustee hereunder. As compensation therefor, the Trustee shall be
entitled to all funds relating to the Mortgage Loans which the Master Servicer
would have been entitled to charge to the Custodial Account or the Certificate
Account if the Master Servicer had continued to act hereunder and, in addition,
shall be entitled to the income from any Permitted Investments made with amounts
attributable to the Mortgage Loans held in the Custodial Account or the
Certificate Account. If the Trustee has become the successor to the Master
Servicer in accordance with Section 6.04 or Section 7.01, then notwithstanding
the above, the Insurer may appoint a successor Master Servicer and if the
Insurer fails to do so within 30 days, the Trustee may, if it shall be unwilling
to so act, or shall, if it is unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, which is also a Fannie Mae- or Freddie Mac-approved mortgage
servicing institution, having a net worth of not less than $10,000,000 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.
Pending appointment of a successor to the Master
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Servicer hereunder, the Trustee shall become successor to the Master Servicer
and 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 initial Master Servicer hereunder. The Depositor,
the Trustee, the Custodian and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
The Servicing Fee for any successor Master Servicer appointed pursuant to this
Section 7.02 will be lowered with respect to those Mortgage Loans, if any, where
the Subservicing Fee accrues at a rate of less than 0.50% per annum in the event
that the successor Master Servicer is not servicing such Mortgage Loans directly
and it is necessary to raise the related Subservicing Fee to a rate of 0.50% per
annum in order to hire a Subservicer with respect to such Mortgage Loans.
Section 7.03. Notification to Certificateholders.
----------------------------------
(a) Upon any such termination or appointment of a successor to
the Master Servicer, the Trustee shall give prompt written notice thereof to the
Insurer and to the Certificateholders at their respective addresses appearing in
the Certificate Register.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Holders of Certificates and
the Insurer notice of each such Event of Default hereunder known to the Trustee,
unless such Event of Default shall have been cured or waived as provided in
Section 7.04 hereof.
Section 7.04. Waiver of Events of Default.
---------------------------
The Insurer or the Holders representing at least 66% of the
Voting Rights of Certificates affected by a default or Event of Default
hereunder may waive any default or Event of Default, with the written consent of
the Insurer, which consent shall not be unreasonably withheld; PROVIDED,
HOWEVER, that (a) a default or Event of Default under clause (i) of Section 7.01
may be waived with the written consent of the Insurer, only by all of the
Holders of Certificates affected by such default or Event of Default (which
Voting Rights of the Class A Certificateholders may be exercised by the Insurer
without the consent of such Holders and may only be exercised by such Holders
with the prior written consent of the Insurer so long as there does not exist a
failure by the Insurer to make a required payment under the Policy) and (b) no
waiver pursuant to this Section 7.04 shall affect the Holders of Certificates in
the manner set forth in Section 11.01(b)(i), (ii) or (iii). Upon any such waiver
of a default or Event of Default by the Insurer or the Holders representing the
requisite percentage of Voting Rights of Certificates affected by such default
or Event of Default with the consent of the Insurer, which consent shall not be
unreasonably withheld, such default or Event of Default shall cease to exist and
shall be deemed to have been remedied for every purpose hereunder. No such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon except to the extent expressly so waived.
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Section 7.05. Servicing Trigger; Removal of Master Servicer.
---------------------------------------------
(a) Upon determination by the Insurer that a Servicing Trigger
has occurred, the Insurer shall give notice of such Servicing Trigger to the
Master Servicer, the Depositor, the Trustee and to each Rating Agency.
(b) At any time after such determination and while a Servicing
Trigger is continuing, the Insurer may direct the Trustee to remove the Master
Servicer if the Insurer makes a determination that the manner of master
servicing was a factor contributing to the size of the delinquencies or losses
incurred in the Trust Fund.
(c) Upon receipt of directions to remove the Master Servicer
pursuant to the preceding clause (b), the Trustee shall notify the Master
Servicer that it has been terminated and the Master Servicer shall be terminated
in the same manner as specified in Sections 7.01 and 7.02.
(d) After notice of occurrence of a Servicing Trigger has been
given and while a Servicing Trigger is continuing, until and unless the Master
Servicer has been removed as provided in clause (b), the Master Servicer
covenants and agrees to act as the Master Servicer for a term from the
occurrence of the Servicing Trigger to the end of the calendar quarter in which
such Servicing Trigger occurs, which term may at the Insurer's discretion be
extended by notice to the Trustee for successive terms of three (3) calendar
months each, until the termination of the Trust Fund. The Master Servicer will,
upon the receipt of each such notice of extension (a "Master Servicer Extension
Notice") become bound for the duration of the term covered by such Master
Servicer Extension Notice to continue as Master Servicer subject to and in
accordance with this Agreement. If, as of the fifteenth (15th) day prior to the
last day of any term as the Master Servicer, the Trustee shall not have received
any Master Servicer Extension Notice from the Insurer, the Trustee shall, within
five (5) days thereafter, give written notice of such nonreceipt to the Insurer
and the Master Servicer. If any such term expires without a Master Servicer
Extension Notice then the Trustee shall act as Master Servicer as provided in
Section 7.02.
(e) No provision of this Section 7.05 shall have the effect of
limiting the rights of the Depositor, the Trustee, the Certificateholders or the
Insurer under Section 7.01.
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ARTICLE VIII
CONCERNING THE TRUSTEE
----------------------
Section 8.01. 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. In case an Event of Default has occurred (which has not
been cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise as a prudent investor would exercise or use under the
circumstances in the conduct of such investor'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 to the requirements of this Agreement. The
Trustee shall notify the Insurer and the Certificateholders of any such
documents which do not materially conform to the requirements of this Agreement
in the event that the Trustee, after so requesting, does not receive
satisfactorily corrected documents.
The Trustee shall forward or cause to be forwarded in a timely
fashion the notices, reports and statements required to be forwarded by the
Trustee pursuant to Sections 4.03, 4.06, 7.03, and 10.01. The Trustee shall
furnish in a timely fashion to the Master Servicer such information as the
Master Servicer may reasonably request from time to time for the Master Servicer
to fulfill its duties as set forth in this Agreement and the Trustee shall
furnish in a timely fashion to the Insurer such information as the Insurer may
reasonably request from time to time for the Insurer to protect its interests
and to fulfill its duties under the Policy. The Trustee covenants and agrees
that it shall perform its obligations hereunder in a manner so as to maintain
the status of each of REMIC I, REMIC II or REMIC III as a REMIC under the REMIC
Provisions and to prevent the imposition of any federal, state or local income,
prohibited transaction (except as provided in Section 3.22(d) herein),
contribution or other tax on the Trust Fund to the extent that maintaining such
status and avoiding such taxes are reasonably within the control of the Trustee
and are reasonably within the scope of its duties under this Agreement.
(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 or waiver of all such Events of Default which may
have occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are
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specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee by the Depositor or the Master
Servicer and which on their face, do not contradict 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
Responsible 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 Insurer or the
Certificateholders holding Certificates which evidence, Percentage
Interests aggregating not less than 25% of the affected classes as 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 charged with knowledge
of any default (other than a default in payment to the Trustee)
specified in clauses (i) and (ii) of Section 7.01 or an Event of
Default under clauses (iii), (iv) and (v) of Section 7.01 unless a
Responsible Officer of the Trustee assigned to and working in the
Corporate Trust Office obtains actual knowledge of such failure or
event or the Trustee receives written notice of such failure or event
at its Corporate Trust Office from the Master Servicer, the Insurer,
the Depositor or any Certificateholder; and
(v) Except to the extent provided in Section 7.02, no
provision in this Agreement shall require the Trustee to expend or risk
its own funds (including, without limitation, the making of any
Advance) or otherwise incur any personal financial liability in the
performance of any of its duties as Trustee hereunder, or in the
exercise of any of its rights or powers, if the Trustee shall have
reasonable grounds for believing that repayment of funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) The Trustee shall timely pay, from its own funds, the
amount of any and all federal, state and local taxes imposed on the Trust Fund
or its assets or transactions including, without limitation, (A) "prohibited
transaction" penalty taxes as defined in Section 860F of the
Code,
if, when and as the same shall be due and payable, (B) any tax on contributions
to a REMIC after the Closing Date imposed by Section 860G(d) of the Code and (C)
any tax on "net income from foreclosure property" as defined in Section 860G(c)
of the Code, but only if such taxes arise out of a breach by the Trustee of its
obligations hereunder, which breach constitutes negligence or willful misconduct
of the Trustee.
Section 8.02. Certain Matters Affecting the Trustee.
-------------------------------------
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(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(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 any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Certificateholders or the Insurer, pursuant to the provisions of this
Agreement, unless such Certificateholders or the Insurer shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby and the Insurer has given its consent; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured), to
exercise such of the rights and powers vested in it by this Agreement,
and to use the same degree of care and skill in their exercise as a
prudent investor would exercise or use under the circumstances in the
conduct of such investor's own affairs;
(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 so to do
by the Insurer or the Holders of Certificates of any Class evidencing,
as to such Class, Percentage Interests, aggregating not less than 50%
with the written consent of the Insurer; 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 so proceeding. The reasonable
expense of every such examination shall be paid by the Master Servicer,
if an Event of Default shall have occurred and is continuing, and
otherwise by the Certificateholder or the Insurer requesting the
investigation;
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(vi) 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 provided that the Trustee shall remain
liable for any acts of such agents or attorneys; and
(vii) To the extent authorized under the Code and the
regulations promulgated thereunder, each Holder of a Class R
Certificate hereby irrevocably appoints and authorizes the Trustee to
be its attorney-in-fact for purposes of signing any Tax Returns
required to be filed on behalf of the Trust Fund. The Trustee shall
sign on behalf of the Trust Fund and deliver to the Master Servicer in
a timely manner any Tax Returns prepared by or on behalf of the Master
Servicer that the Trustee is required to sign as determined by the
Master Servicer pursuant to applicable federal, state or local tax
laws, provided that the Master Servicer shall indemnify the Trustee for
signing any such Tax Returns that contain errors or omissions.
(b) Following the issuance of the Certificates (and except as
provided for in Section 3.22(d)), the Trustee shall not accept any contribution
of assets to the Trust Fund unless it shall have obtained or been furnished with
an Opinion of Counsel to the effect that such contribution will not (i) cause
any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time
that any Certificates are outstanding or (ii) cause the Trust Fund to be subject
to any federal tax as a result of such contribution (including the imposition of
any federal tax on "prohibited transactions" imposed under Section 860F(a) of
the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage
Loans.
-----------------------------------------------
The recitals contained herein and in the Certificates (other
than the execution of the Certificates and relating to the acceptance and
receipt of the Mortgage Loans) shall be taken as the statements of the Depositor
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 the Certificates (except
that the Certificates shall be duly and validly executed and authenticated by it
as Certificate Registrar) or of any Mortgage Loan or related document. Except as
otherwise provided herein, the Trustee shall not be accountable for the use or
application by the Depositor or the Master Servicer of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Depositor or the Master Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Account or the Certificate
Account by the Depositor or the Master Servicer.
Section 8.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates with the same rights it would have if it
were not Trustee.
Section 8.05. Master Servicer to Pay Trustee's Fees and
Expenses; Indemnification.
-----------------------------------------
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(a) The Master Servicer covenants and agrees to pay to the
Trustee and any co-trustee from time to time, and the Trustee and any co-trustee
shall be entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by each of them in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee and any co-trustee, and the Master Servicer will pay or
reimburse the Trustee and any co-trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee or any
co-trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ, and the expenses incurred by the
Trustee or any co-trustee in connection with the appointment of an office or
agency pursuant to Section 8.12) except any such expense, disbursement or
advance as may arise from its negligence or bad faith.
(b) The Master Servicer agrees to indemnify the Trustee for,
and to hold the Trustee harmless against, any loss, liability or expense
incurred without negligence or willful misconduct on its part, arising out of,
or in connection with, the acceptance and administration of the Trust Fund,
including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against any claim in connection with the exercise or
performance of any of its powers or duties under this Agreement, provided that:
(i) with respect to any such claim, the Trustee shall
have given the Master Servicer written notice thereof promptly after
the Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense,
the Trustee shall cooperate and consult fully with the Master Servicer
in preparing such defense; and
(iii) notwithstanding anything in this Agreement to
the contrary, the Master Servicer shall not be liable for settlement of
any claim by the Trustee entered into without the prior consent of the
Master Servicer which consent shall not be unreasonably withheld.
No termination of this Agreement shall affect the obligations created by this
Section 8.05(b) of the Master Servicer to indemnify the Trustee under the
conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by
the Master Servicer in this Section 8.05(b) shall not pertain to any loss,
liability or expense of the Trustee, including the costs and expenses of
defending itself against any claim, incurred in connection with any actions
taken by the Trustee at the direction of Certificateholders pursuant to the
terms of this Agreement.
Section 8.06. Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall at all times be a national banking
association or a New York banking corporation having its principal office in a
state and city acceptable to the Depositor
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and the Insurer and organized and doing business under the laws of such state or
the United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authority. If such
corporation or national 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 the
combined capital and surplus of such corporation 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 8.07.
Section 8.07. 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 Depositor, the
Master Servicer and the Insurer. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee acceptable to the Insurer
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation then the Insurer
may appoint a successor trustee and if the Insurer fails to do so within 30
days, 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 8.06 and shall fail to resign after
written request therefor by the Insurer or the Depositor with the consent of the
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 Insurer or the Depositor with the consent
of the Insurer may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee. In addition, in the
event that the Insurer or the Depositor determines that the Trustee has failed
(i) to distribute or cause to be distributed to Certificateholders any amount
required to be distributed hereunder, if such amount is held by the Trustee or
its Paying Agent (other than the Master Servicer or the Depositor) for
distribution or (ii) to otherwise observe or perform in any material respect any
of its covenants, agreements or obligations hereunder, and such failure shall
continue unremedied for a period of 5 days (in respect of clause (i) above) or
30 days (in respect of clause (ii) above) after the date on which written notice
of such failure, requiring that the same be remedied, shall have been given to
the Trustee by the Depositor or the Insurer, then the Depositor with the consent
of the Insurer, which consent shall not be unreasonably withheld, may remove the
Trustee and appoint a successor trustee by written instrument delivered as
provided in the preceding sentence. In connection with the appointment of a
successor trustee pursuant to the preceding sentence, the Depositor shall, on or
before the date on which any such appointment becomes effective, obtain from
each Rating Agency written confirmation that the appointment of any such
successor trustee will not result in the reduction of the ratings on any class
of the Certificates
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below the lesser of the then current or original ratings on such Certificates
without taking into account the Policy.
(c) During the continuance of an Insurer Default, the Holders
of Certificates entitled to at least 51% of the Voting Rights may at any time
remove the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor 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 8.08.
Section 8.08. Successor Trustee.
-----------------
(a) Any successor trustee appointed as provided in Section
8.07 shall execute, acknowledge and deliver to the Depositor and the Insurer 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 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 (other than any
Mortgage Files at the time held by a Custodian, which shall become the agent of
any successor trustee hereunder), and the Depositor, the Master Servicer and the
predecessor trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
(b) 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 8.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
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Section 8.09. Merger or Consolidation of Trustee.
----------------------------------
Any corporation or national banking association 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 8.06, 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 Trustee shall mail notice of any such merger or
consolidation to the Certificateholders at their address as shown in the
Certificate Register.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
(a) 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 8.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request 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 8.06
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 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.
(c) 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 VIII. Each separate trustee and co-trustee, upon
its acceptance of
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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.
(d) Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11. Appointment of Custodians.
-------------------------
The Trustee may, with the consent of the Master Servicer, the
Insurer and the Depositor, appoint one or more Custodians who are not Affiliates
of the Depositor or the Master Servicer to hold all or a portion of the Mortgage
Files as agent for the Trustee, by entering into a Custodial Agreement. Subject
to Article VIII, the Trustee agrees to comply with the terms of each Custodial
Agreement and to enforce the terms and provisions thereof against the Custodian
for the benefit of the Certificateholders. Each Custodian shall be a depository
institution subject to supervision by federal or state authority, shall have a
combined capital and surplus of at least $15,000,000 and shall be qualified to
do business in the jurisdiction in which it holds any Mortgage File. Each
Custodial Agreement may be amended only as provided in Section 11.01. The
Trustee shall notify the Certificateholders of the appointment of any Custodian
(other than the Custodian appointed as of the Closing Date) pursuant to this
Section 8.11.
Section 8.12. Appointment of Office or Agency.
-------------------------------
The Trustee will maintain an office or agency in the City of
New York where Certificates may be surrendered for registration of transfer or
exchange. The Trustee initially designates its offices located at 14 Wall
Street, 8th Floor, New York, New York 10005 for the purpose of keeping the
Certificate Register. The Trustee will maintain an office at the address stated
in Section 11.05(c) hereof where notices and demands to or upon the Trustee in
respect of this Agreement may be served.
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ARTICLE IX
TERMINATION
-----------
Section 9.01. Termination Upon Purchase by the Master Servicer
or Liquidation of All Mortgage Loans.
------------------------------------------------
(a) Subject to Section 9.02, the respective obligations and
responsibilities of the Depositor, the Master Servicer and the Trustee created
hereby in respect of the Certificates (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to Certificateholders
and the obligation of the Depositor to send certain notices as hereinafter set
forth) shall terminate upon the last action required to be taken by the Trustee
on the Final Distribution Date pursuant to this Article IX following the earlier
of:
(i) the later of the final payment or other
liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, or
(ii) the purchase by the Master Servicer of all
Mortgage Loans and all property acquired in respect of any Mortgage
Loan remaining in the Trust Fund (other than the Policy) at a price
equal to 100% of the unpaid principal balance of each Mortgage Loan
(or, if less than such unpaid principal balance, the fair market value
of the related underlying property of such Mortgage Loan with respect
to Mortgage Loans as to which title has been acquired if such fair
market value is less than such unpaid principal balance) (net of any
unreimbursed Advances attributable to principal) on the day of
repurchase, plus accrued interest thereon at the Net Mortgage Rate (or
Modified Net Mortgage Rate in the case of any Modified Mortgage Loan),
plus the Certificate Insurer Premium Rate, to, but not including, the
first day of the month in which such repurchase price is distributed,
including the payment of any amounts due to the Insurer under the
Insurance Agreement; PROVIDED, HOWEVER, that in no event shall the
trust created hereby continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Joseph P. Kennedy,
the late ambassador of the United States to the Court of St. James,
living on the date hereof and provided further that the purchase price
set forth above shall be increased as is necessary, as determined by
the Master Servicer, to avoid disqualification of any of REMIC I, REMIC
II or REMIC III as a REMIC.
The right of the Master Servicer to purchase all the assets of
the Trust Fund relating to the Mortgage Loans, pursuant to clause (ii) above is
conditioned upon the occurrence of the Optional Termination Date. If such right
is exercised by the Master Servicer, the Master Servicer shall be deemed to have
been reimbursed for the full amount of any unreimbursed Advances theretofore
made by it with respect to the Mortgage Loans being purchased. In addition, the
Master Servicer shall provide to the Trustee the certification required by
Section 3.15 and the Trustee and
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any Custodian shall, promptly following payment of the purchase price, release
to the Master Servicer the Mortgage Files pertaining to the Mortgage Loans being
purchased. No purchase pursuant to clause (ii) of this Section 9.01(a) is
permitted if it would result in a draw on the Policy unless the Insurer consents
in writing.
(b) The Master Servicer shall give the Trustee and the Insurer
not less than 60 days' prior notice of the Distribution Date on which the Master
Servicer anticipates that the final distribution will be made to
Certificateholders (whether as a result of the exercise by the Master Servicer
of its right to purchase the assets of the Trust Fund or otherwise). Notice of
any termination, specifying the anticipated Final Distribution Date (which shall
be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Master Servicer (if it is exercising its right to purchase the assets of the
Trust Fund), or by the Trustee (in any other case) by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution
specifying:
(i) the anticipated Final Distribution Date upon
which final payment of the Certificates is anticipated to be made upon
presentation and surrender of Certificates at the office or agency of
the Trustee therein designated,
(ii) the amount of any such final payment, if known,
and
(iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, and that payment will be made
only upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified.
If the Master Servicer is obligated to give notice to Certificateholders as
aforesaid, it shall give such notice to the Certificate Registrar at the time
such notice is given to Certificateholders. In the event such notice is given by
the Master Servicer, the Master Servicer shall deposit in the Certificate
Account before the Final Distribution Date in immediately available funds an
amount equal to the purchase price for the assets of the Trust Fund computed as
above provided.
(c) Upon presentation and surrender of the Certificates by the
Certificateholders, the Trustee shall distribute to the Certificateholders and
the Insurer (i) the amount otherwise distributable on such Distribution Date, if
not in connection with the Master Servicer's election to repurchase, or (ii) if
the Master Servicer elected to so repurchase, an amount determined as follows:
(A) with respect to the Class A Certificates, the outstanding Certificate
Principal Balance thereof, plus Accrued Certificate Interest thereon for the
related Interest Accrual Period and any previously unpaid Accrued Certificate
Interest, and (B) with respect to the Insurer, any amounts owed to it pursuant
to the Insurance Agreement.
(d) In the event that any Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before the
Final Distribution Date, the Trustee shall on such date cause all funds in the
Certificate Account not distributed in final distribution to
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Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders, and the Master Servicer (if it exercised its
right to purchase the assets of the Trust Fund), or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within six months after the second notice any
Certificate shall not have been surrendered for cancellation, the Trustee shall
take appropriate steps as directed by the Master Servicer to contact the
remaining Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the escrow account and of contacting
Certificateholders shall be paid out of the assets which remain in the escrow
account. If within nine months after the second notice any Certificates shall
not have been surrendered for cancellation, the Trustee shall pay to the Master
Servicer all amounts distributable to the holders thereof and the Master
Servicer shall thereafter hold such amounts until distributed to such holders.
No interest shall accrue or be payable to any Certificateholder on any amount
held in the escrow account or by the Master Servicer as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 9.01 and the Certificateholders shall
look only to the Master Servicer for such payment.
Section 9.02. Additional Termination Requirements.
-----------------------------------
(a) Each of REMIC I, REMIC II and REMIC III, as the case may
be, shall be terminated in accordance with the following additional
requirements, unless the Trustee and the Master Servicer have received an
Opinion of Counsel (which Opinion of Counsel shall not be an expense of the
Trustee) to the effect that the failure of any of REMIC I, REMIC II and REMIC
III, as the case may be, to comply with the requirements of this Section 9.02
will not (i) result in the imposition on the Trust Fund of taxes on "prohibited
transactions," as described in Section 860F of the Code, or (ii) cause any of
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time that
any Certificate is outstanding:
(i) The Master Servicer shall establish a 90-day
liquidation period for each of REMIC I, REMIC II and REMIC III, and
specify the first day of such period in a statement attached to the
Trust Fund's final Tax Return pursuant to Treasury regulations Section
1.860F-1. The Master Servicer also shall satisfy all of the
requirements of a qualified liquidation for each of REMIC I, REMIC II
and REMIC III, under Section 860F of the Code and the regulations
thereunder;
(ii) The Master Servicer shall notify the Trustee at
the commencement of such 90-day liquidation period and, at or prior to
the time of making of the final payment on the Certificates, the
Trustee shall sell or otherwise dispose of all of the remaining assets
of the Trust Fund in accordance with the terms hereof; and
(iii) If the Master Servicer is exercising its right
to purchase the assets of the Trust Fund, the Master Servicer shall,
during the 90-day liquidation period and at or prior to the Final
Distribution Date, purchase all of the assets of the Trust Fund for
cash; PROVIDED, HOWEVER, that in the event that a calendar quarter ends
after the commencement of the 90-day
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liquidation period but prior to the Final Distribution Date, the Master
Servicer shall not purchase any of the assets of the Trust Fund prior
to the close of that calendar quarter.
(b) Each Holder of a Certificate and the Trustee hereby
irrevocably approves and appoints the Master Servicer as its attorney-in-fact to
adopt a plan of complete liquidation for each of REMIC I, REMIC II and REMIC III
at the expense of the Trust Fund in accordance with the terms and conditions of
this Agreement.
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ARTICLE X
REMIC PROVISIONS
----------------
Section 10.01. REMIC Administration.
--------------------
(a) The REMIC Administrator shall make an election to treat
each of REMIC I, REMIC II and REMIC III as a REMIC under the Code and, if
necessary, under applicable state law. Such election will be made on Form 1066
or other appropriate federal tax or information return (including Form 8811) or
any appropriate state return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. The REMIC I Regular
Interests shall be designated as the "regular interests" and the Class R-I
Certificates shall be designated as the sole class of "residual interests" in
the REMIC I. The REMIC II Regular Interests shall be designated as the "regular
interests" and the Class R-II Certificates shall be designated as the sole class
of "residual interests" in REMIC II. The Class A-I, Class A-II, Class SB-I and
Class SB-II Certificates shall be designated as the "regular interests" in REMIC
III and the Class R-III Certificates shall be designated the sole class of
"residual interests" in REMIC III. The REMIC Administrator and the Trustee shall
not permit the creation of any "interests" (within the meaning of Section 860G
of the Code) in the REMIC other than the Certificates.
(b) The Closing Date is hereby designated as the "startup day"
of each of REMIC I, REMIC II and REMIC III within the meaning of Section
860G(a)(9) of the Code.
(c) The REMIC Administrator shall hold a Class R Certificate
in each REMIC representing a 0.01% Percentage Interest of the Class R
Certificates in each REMIC and shall be designated as the "tax matters person"
with respect to each of REMIC I, REMIC II and REMIC III in the manner provided
under Treasury regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1. The REMIC Administrator, as tax matters person, shall (i) act
on behalf of each of REMIC I, REMIC II and REMIC III in relation to any tax
matter or controversy involving the Trust Fund and (ii) represent the Trust Fund
in any administrative or judicial proceeding relating to an examination or audit
by any governmental taxing authority with respect thereto. The legal expenses,
including without limitation attorneys' or accountants' fees, and costs of any
such proceeding and any liability resulting therefrom shall be expenses of the
Trust Fund and the REMIC Administrator shall be entitled to reimbursement
therefor out of amounts attributable to the Mortgage Loans on deposit in the
Custodial Account as provided by Section 3.10 unless such legal expenses and
costs are incurred by reason of the REMIC Administrator's willful misfeasance,
bad faith or gross negligence. If the REMIC Administrator is no longer the
Master Servicer hereunder, at its option the REMIC Administrator may continue
its duties as REMIC Administrator and shall be paid reasonable compensation not
to exceed $3,000 per year by any successor Master Servicer hereunder for so
acting as the REMIC Administrator.
(d) The REMIC Administrator shall prepare or cause to be
prepared all of the Tax Returns that it determines are required with respect to
the REMIC created hereunder and deliver such
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Tax Returns in a timely manner to the Trustee and the Trustee shall sign and
file such Tax Returns in a timely manner. The expenses of preparing such returns
shall be borne by the REMIC Administrator without any right of reimbursement
therefor. The REMIC Administrator agrees to indemnify and hold harmless the
Trustee with respect to any tax or liability arising from the Trustee's signing
of Tax Returns that contain errors or omissions. The Trustee and Master Servicer
shall promptly provide the REMIC Administrator with such information as the
REMIC Administrator may from time to time request for the purpose of enabling
the REMIC Administrator to prepare Tax Returns.
(e) The REMIC Administrator shall provide (i) to any
Transferor of a Class R Certificate such information as is necessary for the
application of any tax relating to the transfer of a Class R Certificate to any
Person who is not a Permitted Transferee, (ii) to the Trustee and the Trustee
shall forward to the Certificateholders such information or reports as are
required by the Code or the REMIC Provisions including reports relating to
interest, original issue discount, if any, and market discount or premium (using
the Prepayment Assumption) and (iii) to the Internal Revenue Service the name,
title, address and telephone number of the person who will serve as the
representative of each REMIC created hereunder.
(f) The Master Servicer and the REMIC Administrator shall take
such actions and shall cause each REMIC created hereunder to take such actions
as are reasonably within the Master Servicer's or the REMIC Administrator's
control and the scope of its duties more specifically set forth herein as shall
be necessary or desirable to maintain the status thereof as a REMIC under the
REMIC Provisions (and the Trustee shall assist the Master Servicer and the REMIC
Administrator, to the extent reasonably requested by the Master Servicer and the
REMIC Administrator to do so). In performing their duties as more specifically
set forth herein, the Master Servicer and the REMIC Administrator shall not
knowingly or intentionally take any action, cause the Trust Fund to take any
action or fail to take (or fail to cause to be taken) any action reasonably
within their respective control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, could (i) endanger the status of any of REMIC I, REMIC II or REMIC
III as a REMIC or (ii) result in the imposition of a tax upon any of REMIC I,
REMIC II or REMIC III (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code (except as provided in
Section 3.22(d)) and the tax on contributions to a REMIC set forth in Section
860G(d) of the Code) (either such event, in the absence of an Opinion of Counsel
or the indemnification referred to in this sentence, an "Adverse REMIC Event")
unless the Master Servicer or the REMIC Administrator, as applicable, has
received an Opinion of Counsel (at the expense of the party seeking to take such
action or, if such party fails to pay such expense, and the Master Servicer or
the REMIC Administrator, as applicable, determines that taking such action is in
the best interest of the Trust Fund and the Certificateholders and is not
adverse to the interest of the Insurer, at the expense of the Trust Fund, but in
no event at the expense of the Master Servicer, the REMIC Administrator or the
Trustee) to the effect that the contemplated action will not, with respect to
the Trust Fund created hereunder, endanger such status or, unless the Master
Servicer or the REMIC Administrator or both, as applicable, determine in its or
their sole discretion to indemnify the Trust Fund against the imposition of such
a tax, result in the imposition of such a tax. Wherever in this Agreement a
contemplated action may not be taken because the timing of such action might
result in the imposition of a tax on the Trust Fund, or may only be taken
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pursuant to an Opinion of Counsel that such action would not impose a tax on the
Trust Fund, such action may nonetheless be taken provided that the indemnity
given in the preceding sentence with respect to any taxes that might be imposed
on the Trust Fund has been given and that all other preconditions to the taking
of such action have been satisfied. The Trustee shall not take or fail to take
any action (whether or not authorized hereunder) as to which the Master Servicer
or the REMIC Administrator, as applicable, 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. In addition, prior to taking any action with
respect to the Trust Fund or its assets, or causing the Trust Fund to take any
action, which is not expressly permitted under the terms of this Agreement, the
Trustee will consult with the Master Servicer or the REMIC Administrator, as
applicable, or its designee, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to the Trust Fund and
the Trustee shall not take any such action or cause the Trust Fund to take any
such action as to which the Master Servicer or the REMIC Administrator, as
applicable, has advised it in writing that an Adverse REMIC Event could occur.
The Master Servicer or the REMIC Administrator, as applicable, 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 expressly permitted by this Agreement, but
in no event at the expense of the Master Servicer or the REMIC Administrator. At
all times as may be required by the Code, the Master Servicer or the REMIC
Administrator, as applicable, will to the extent within its control and the
scope of its duties more specifically set forth herein, maintain substantially
all of the assets of the REMIC as "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.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on "net income from foreclosure property" of any REMIC as defined in
Section 860G(c) of the Code, on any contributions to any REMIC after the startup
day therefor pursuant to Section 860G(d) of the Code, or any other tax imposed
by the Code or any applicable provisions of state or local tax laws, such tax
shall be charged (i) to 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 the Master Servicer has in its sole discretion determined to
indemnify the Trust Fund against such tax, (ii) to the Trustee, if such tax
arises out of or results from a breach by the Trustee of any of its obligations
under this Article X, or (iii) otherwise against amounts on deposit in the
Custodial Account as provided by Section 3.10 and on the Distribution Date(s)
following such reimbursement the aggregate of such taxes shall be allocated in
reduction of the Accrued Certificate Interest on each Class entitled thereto in
the same manner as if such taxes constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicer shall, for federal
income tax purposes, maintain books and records with respect to each REMIC on a
calendar year and on an accrual basis or as otherwise may be required by the
REMIC Provisions.
(i) Following the startup day, neither the Master Servicer nor
the Trustee shall accept any contributions of assets to any REMIC unless
(subject to Section 10.01(f)) the Master Servicer and the Trustee shall have
received an Opinion of Counsel (at the expense of the party seeking to make such
contribution) to the effect that the inclusion of such assets in any REMIC will
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not cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at
any time that any Certificates are outstanding or subject any such REMIC to any
tax under the REMIC Provisions or other applicable provisions of federal, state
and local law or ordinances.
(j) Neither the Master Servicer nor the Trustee shall (subject
to Section 10.01(f)) enter into any arrangement by which any of REMIC I, REMIC
II or REMIC III will receive a fee or other compensation for services nor permit
any of REMIC I, REMIC II or REMIC III to receive any income from assets other
than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code.
(k) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of
the Treasury Regulations, the "latest possible maturity date" by which the
principal balance of each regular interest in each REMIC would be reduced to
zero is October 25, 2032.
(l) Within 30 days after the Closing Date, the REMIC
Administrator shall prepare and file with the Internal Revenue Service Form
8811, "Information Return for Real Estate Mortgage Investment Conduits (REMIC)
and Issuers of Collateralized Debt Obligations" for the Trust Fund.
(m) Neither the Trustee nor the Master Servicer shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the default, imminent default or foreclosure of a Mortgage Loan,
including but not limited to, the acquisition or sale of a Mortgaged Property
acquired by deed in lieu of foreclosure, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of any REMIC pursuant to Article IX of this Agreement or
(iv) a purchase of Mortgage Loans pursuant to Article II or III of this
Agreement) or acquire any assets for any REMIC or sell or dispose of any
investments in the Custodial Account or the Certificate Account for gain, or
accept any contributions to any REMIC after the Closing Date unless it has
received an Opinion of Counsel that such sale, disposition, substitution or
acquisition will not (a) affect adversely the status of any of REMIC I, REMIC II
or REMIC III as a REMIC or (b) unless the Master Servicer has determined in its
sole discretion to indemnify the Trust Fund against such tax, cause any REMIC to
be subject to a tax on "prohibited transactions" or "contributions" pursuant to
the REMIC Provisions.
The Trustee shall treat the Reserve Fund as an outside reserve fund
within the meaning of Treasury Regulation 1.860G-2(h) that is owned by the Class
SB Certificateholders and that is not an asset of the REMIC. The Trustee shall
treat the rights of the Class A-I Certificateholders and Class A-II
Certificateholders to receive payments from the Reserve Fund as rights in the
Yield Maintenance Agreements written by the Class SB Certificateholders in favor
of the Class A-I Certificateholders and Class A-II Certificateholders. Thus,
each Class A-1 Certificate and Class A-II Certificate shall be treated as
representing ownership of not only REMIC III regular interests, but also
ownership of an interest in an interest rate cap contract. For purposes of
determining the issue price of the REMIC III regular interests, the Trustee
shall assume that the Yield Maintenance Agreements has a value of $7,730,000.
Section 10.02. Master Servicer, REMIC Administrator and
Trustee Indemnification.
----------------------------------------
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(a) The Trustee agrees to indemnify the Trust Fund, the
Insurer, the Depositor, the REMIC Administrator and the Master Servicer for any
taxes and costs including, without limitation, any reasonable attorneys fees
imposed on or incurred by the Trust Fund, the Insurer, the Depositor or the
Master Servicer, as a result of a breach of the Trustee's covenants set forth in
Article VIII or this Article X. In the event that Residential Funding is no
longer the Master Servicer, the Trustee shall indemnify Residential Funding for
any taxes and costs including, without limitation, any reasonable attorneys fees
imposed on or incurred by Residential Funding as a result of a breach of the
Trustee's covenants set forth in Article VIII or this Article X.
(b) The REMIC Administrator agrees to indemnify the Trust
Fund, the Insurer, the Depositor, the Master Servicer and the Trustee for any
taxes and costs (including, without limitation, any reasonable attorneys' fees)
imposed on or incurred by the Trust Fund, the Insurer, the Depositor, the Master
Servicer or the Trustee, as a result of a breach of the REMIC Administrator's
covenants set forth in this Article X with respect to compliance with the REMIC
Provisions, including without limitation, any penalties arising from the
Trustee's execution of Tax Returns prepared by the REMIC Administrator that
contain errors or omissions; provided, however, that such liability will not be
imposed to the extent such breach is a result of an error or omission in
information provided to the REMIC Administrator by the Master Servicer in which
case Section 10.02(c) will apply.
(c) The Master Servicer agrees to indemnify the Trust Fund,
the Insurer, the Depositor, the REMIC Administrator and the Trustee for any
taxes and costs (including, without limitation, any reasonable attorneys' fees)
imposed on or incurred by the Trust Fund, the Insurer, the Depositor or the
Trustee, as a result of a breach of the Master Servicer's covenants set forth in
this Article X or in Article III with respect to compliance with the REMIC
Provisions, including without limitation, any penalties arising from the
Trustee's execution of Tax Returns prepared by the Master Servicer that contain
errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
---------
(a) This Agreement or any Custodial Agreement may be amended
from time to time by the Depositor, the Master Servicer and the Trustee, with
the consent of the Insurer and
without the consent of any of the Certificateholders:
(i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein
or therein, which may be inconsistent with any other provisions herein
or therein or to correct any error,
(iii) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or desirable to
maintain the qualification of REMIC I, REMIC II or REMIC III as REMICs
at all times that any Certificate is outstanding or to avoid or
minimize the risk of the imposition of any tax on the Trust Fund
pursuant to the Code that would be a claim against the Trust Fund,
provided that the Trustee has received an Opinion of Counsel to the
effect that (A) such action is necessary or desirable to maintain such
qualification or to avoid or minimize the risk of the imposition of any
such tax and (B) such action will not adversely affect in any material
respect the interests of any Certificateholder,
(iv) to change the timing and/or nature of deposits
into the Custodial Account or the Certificate Account or to change the
name in which the Custodial Account is maintained, provided that (A)
the Certificate Account Deposit Date shall in no event be later than
the related Distribution Date, (B) such change shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder and (C) such change shall not result
in a reduction of the rating assigned to any Class of Certificates
below the lower of the then-current rating or the rating assigned to
such Certificates as of the Closing Date (without taking into account
the Policy), as evidenced by a letter from each Rating Agency to such
effect,
(v) to modify, eliminate or add to the provisions of
Section 5.02(g) or any other provision hereof restricting transfer of
the Class R Certificates by virtue of their being the "residual
interests" in the Trust Fund provided that (A) such change shall not
result in reduction of the rating assigned to any such Class of
Certificates below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date, as evidenced by a
letter from each Rating Agency to such effect, and (B) such change
shall not, as evidenced by an Opinion of Counsel (at the expense of the
party seeking so to modify, eliminate or add such provisions), cause
the Trust Fund or any of the Certificateholders
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(other than the transferor) to be subject to a federal tax caused by a
transfer to a Person that is not a Permitted Transferee, or
(vi) to make any other provisions with respect to
matters or questions arising under this Agreement or such Custodial
Agreement which shall not be materially inconsistent with the
provisions of this Agreement, provided that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder and is authorized or
permitted under Section 11.09(d).
(b) This Agreement or any Custodial Agreement may also be
amended from time to time with the consent of the Insurer by the Depositor, the
Master Servicer, the Trustee and the Holders of Certificates evidencing in the
aggregate not less than 66% of the Percentage Interests of each Class of
Certificates affected thereby for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
such Custodial Agreement or of modifying in any manner the rights of the Holders
of Certificates of such Class; PROVIDED, HOWEVER, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the
timing of, payments which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate,
(ii) adversely affect in any material respect the
interest of the Holders of Certificates of any Class in a manner other
than as described in clause (i) hereof without the consent of Holders
of Certificates of such Class evidencing, as to such Class, Percentage
Interests aggregating not less than 66%, or
(iii) reduce the aforesaid percentage of Certificates
of any Class the Holders of which are required to consent to any such
amendment, in any such case without the consent of the Holders of all
Certificates of such Class then outstanding.
(c) Notwithstanding any contrary provision of this Agreement,
the Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (at the expense of the party seeking
such amendment) to the effect that such amendment or the exercise of any power
granted to the Master Servicer, the Depositor or the Trustee in accordance with
such amendment will not result in the imposition of a federal tax on the Trust
Fund or cause REMIC I, REMIC II or REMIC III to fail to qualify as REMICs at any
time that any Certificate is outstanding. The Trustee may but shall not be
obligated to enter into any amendment pursuant to this Section that affects its
rights, duties and immunities and this agreement or otherwise; provided however,
such consent shall not be unreasonably withheld.
(d) Promptly after the execution of any such amendment the
Trustee shall furnish written notification of the substance of such amendment to
each Certificateholder. It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the
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substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
(e) The Depositor shall have the option, in its sole
discretion, to obtain and deliver to the Trustee any corporate guaranty, payment
obligation, irrevocable letter of credit, surety bond, insurance policy or
similar instrument or a reserve fund, or any combination of the foregoing, for
the purpose of protecting the Holders of the Class R Certificates against any or
all Realized Losses or other shortfalls. Any such instrument or fund shall be
held by the Trustee for the benefit of the Class R Certificateholders, but shall
not be and shall not be deemed to be under any circumstances included in the
REMIC. To the extent that any such instrument or fund constitutes a reserve fund
for federal income tax purposes, (i) any reserve fund so established shall be an
outside reserve fund and not an asset of the REMIC, (ii) any such reserve fund
shall be owned by the Depositor, and (iii) amounts transferred by the REMIC to
any such reserve fund shall be treated as amounts distributed by the REMIC to
the Depositor or any successor, all within the meaning of Treasury regulations
Section 1.860G-2(h). In connection with the provision of any such instrument or
fund, this Agreement and any provision hereof may be modified, added to, deleted
or otherwise amended in any manner that is related or incidental to such
instrument or fund or the establishment or administration thereof, such
amendment to be made by written instrument executed or consented to by the
Depositor and such related insurer but without the consent of any
Certificateholder and without the consent of the Master Servicer or the Trustee
being required unless any such amendment would impose any additional obligation
on, or otherwise adversely affect the interests of the Certificateholders, the
Master Servicer or the Trustee, as applicable; provided that the Depositor
obtains an Opinion of Counsel (which need not be an opinion of Independent
counsel) to the effect that any such amendment will not cause (a) any federal
tax to be imposed on the Trust Fund, including without limitation, any federal
tax imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or
on "contributions after the startup date" under Section 860G(d)(1) of the Code
and (b) any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at
any time that any Certificate is outstanding. In the event that the Depositor
elects to provide such coverage in the form of a limited guaranty provided by
General Motors Acceptance Corporation, the Depositor may elect that the text of
such amendment to this Agreement shall be substantially in the form attached
hereto as Exhibit K (in which case Residential Funding's Subordinate Certificate
Loss Obligation as described in such exhibit shall be established by Residential
Funding's consent to such amendment) and that the limited guaranty shall be
executed in the form attached hereto as Exhibit L, with such changes as the
Depositor shall deem to be appropriate; it being understood that the Trustee has
reviewed and approved the content of such forms and that the Trustee's consent
or approval to the use thereof is not required.
Section 11.02. Recordation of Agreement; Counterparts.
--------------------------------------
(a) To the extent permitted by applicable law, this Agreement
is subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer and at its expense on direction by the Trustee
(pursuant to the request of the
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Insurer or the Holders of Certificates entitled to at least 25% of the Voting
Rights), but only upon direction accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts
shall constitute but one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
------------------------------------------
(a) 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 heirs 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 any
of the parties hereto.
(b) No Certificateholder shall have any right to vote (except
as expressly provided herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee and the Insurer a written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of Certificates of any Class evidencing in the aggregate
not less than 25% of the related Percentage Interests of such Class, shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Insurer shall have
given its written consent and the Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
of any Class shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates of such Class or any other Class, or
to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the common benefit of Certificateholders of such Class
or all Classes, as the case may be. For the protection and enforcement of the
provisions of this Section 11.03, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
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Section 11.04. Governing Law.
-------------
This agreement and the Certificates shall be governed by and
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 11.05. Notices.
-------
All demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of the
Depositor, 8400 Normandale Lake Boulevard, Suite 700, Minneapolis, Minnesota
55437, Attention: President, or such other address as may hereafter be furnished
to the Master Servicer and the Trustee in writing by the Depositor; (b) in the
case of the Master Servicer, 10 Universal City Plaza, Suite 2100, Universal
City, California 91608, Attention: Bond Administration or such other address as
may be hereafter furnished to the Depositor and the Trustee by the Master
Servicer in writing; (c) in the case of the Trustee, One First National Plaza,
Suite 0126, Chicago, Illinois 60670-0126, Attention: Bear Stearns Asset Backed
Securities, Inc. Series 1999-RS3 or such other address as may hereafter be
furnished to the Depositor and the Master Servicer in writing by the Trustee;
(d) in the case of Standard & Poor's, 55 Water Street, New York, New York 10041
Attention: Mortgage Surveillance or such other address as may be hereafter
furnished to the Depositor, Trustee and Master Servicer by Standard & Poor's;
(e) in the case of Moody's, 99 Church Street, 4th Floor, New York, New York
10007 or such other address as may be hereafter furnished to the Depositor, the
Trustee and the Master Servicer in writing by Moody's; (f) in the case of the
Insurer, Ambac Assurance Corporation, One State Street Plaza, New York, New York
10004, Attention: Structured Finance--Mortgage Backed Securities or such other
address as may be hereafter furnished to the Depositor, the Trustee and the
Master Servicer in writing by the Insurer; and (g) in the case of BSFP or Bear,
Stearns Capital Markets Inc., 245 Park Avenue, New York, New York 10167,
Attention: Joe Jurkowski. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Section 11.06. Notices to Rating Agencies and the Insurer.
------------------------------------------
The Depositor, the Master Servicer or the Trustee, as
applicable, shall notify each Rating Agency, the Insurer and each Subservicer at
such time as it is otherwise required pursuant to this Agreement to give notice
of the occurrence of, any of the events described in clause (a), (b), (c), (d),
(g), (h), (i) or (j) below or provide a copy to each Rating Agency and the
Insurer at such time as otherwise required to be delivered pursuant to this
Agreement of any of the statements described in clauses (e) and (f) below:
(i) a material change or amendment to this Agreement,
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(ii) the occurrence of an Event of Default,
(iii) the termination or appointment of a successor Master
Servicer or Trustee or a change in the majority
ownership of the Trustee,
(iv) the filing of any claim under the Master Servicer's
blanket fidelity bond and the errors and omissions
insurance policy required by Section 3.12 or the
cancellation or modification of coverage under any
such instrument,
(v) the statement required to be delivered to the Holders
of each Class of Certificates pursuant to Section
4.03,
(vi) the statements required to be delivered pursuant to
Sections 3.18 and 3.19,
(vii) a change in the location of the Custodial Account or
the Certificate Account,
(viii) the occurrence of any monthly cash flow shortfall to
the Holders of any Class of Certificates resulting
from the failure by the Master Servicer to make an
Advance pursuant to Section 4.04 or the failure by
the Master Servicer to
meet the Annual Servicing Test,
(ix) the occurrence of the Final Distribution Date, and
(x) the repurchase of or substitution for any Mortgage
Loan,
PROVIDED, HOWEVER, that with respect to notice of the occurrence of the events
described in clauses (d), (g) or (h) above, the Master Servicer shall provide
prompt written notice to each Rating Agency, the Insurer and the Subservicer of
any such event known to the Master Servicer.
In addition to the above delivery requirements, the Depositor,
the Master Servicer or the Trustee, as applicable, shall provide a copy to the
Insurer, at such time as it otherwise is required to deliver pursuant to this
Agreement, of any other written confirmation, written notice or legal
opinion.
Section 11.07. Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof or
the Insurer.
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Section 11.08. Supplemental Provisions for Resecuritization.
--------------------------------------------
(a) This Agreement may be supplemented by means of the
addition of a separate Article hereto (a "Supplemental Article") for the purpose
of resecuritizing any of the Certificates issued hereunder, under the following
circumstances. With respect to any Class or Classes of Certificates issued
hereunder, or any portion of any such Class, as to which the Depositor or any of
its Affiliates (or any designee thereof) is the registered Holder (the
"Resecuritized Certificates"), the Depositor may deposit such Resecuritized
Certificates into a new REMIC, grantor trust, FASIT or custodial arrangement (a
"Restructuring Vehicle") to be held by the Trustee pursuant to a Supplemental
Article. The instrument adopting such Supplemental Article shall be executed by
the Depositor, the Master Servicer and the Trustee; provided, that neither the
Master Servicer nor the Trustee shall withhold their consent thereto if their
respective interests would not be materially adversely affected thereby. To the
extent that the terms of the Supplemental Article do not in any way affect any
provisions of this Agreement as to any of the Certificates initially issued
hereunder, the adoption of the Supplemental Article shall not constitute an
"amendment" of this Agreement.
Each Supplemental Article shall set forth all necessary
provisions relating to the holding of the Resecuritized Certificates by the
Trustee, the establishment of the Restructuring Vehicle, the issuing of various
classes of new certificates by the Restructuring Vehicle and the distributions
to be made thereon, and any other provisions necessary to the purposes thereof.
In connection with each Supplemental Article, the Depositor shall deliver to the
Trustee an Opinion of Counsel to the effect that (i) the Restructuring Vehicle
will qualify as a REMIC, grantor trust, FASIT or other entity not subject to
taxation for federal income tax purposes and (ii) the adoption of the
Supplemental Article will not endanger the status of any of REMIC I, REMIC II or
REMIC III as a REMIC or result in the imposition of a tax upon the Trust Fund
(including but not limited to the tax on prohibited transaction as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC as set
forth in Section 860G(d) of the Code.
Section 11.09. Rights of the Insurer.
---------------------
(a) The Insurer is an express third-party beneficiary of this
Agreement.
(b) On each Distribution Date the Trustee shall forward to the
Insurer a copy of the reports furnished to the Class A Certificateholders and
the Depositor on such Distribution Date.
(c) The Trustee shall provide to the Insurer copies of any
report, notice, Opinion of counsel, Officer's Certificate, request for consent
or request for amendment to any document related hereto promptly upon the
Trustee's production or receipt thereof.
(d) Unless an Insurer Default exists, the Trustee and the
Depositor shall not agree to any amendment to this Agreement without first
having obtained the prior written consent of the Insurer, which consent shall
not be unreasonably withheld.
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(e) So long as there does not exist a failure by the Insurer
to make a required payment under the Policy, the Insurer shall have the right to
exercise all rights of the Holders of the Class A Certificates under this
Agreement without any consent of such Holders, and such Holders may exercise
such rights only with the prior written consent of the Insurer, except as
provided herein.
(f) The Insurer shall not be entitled to exercise any of its
rights hereunder so long as there exists a failure by the Insurer to make a
required payment under the Policy.
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IN WITNESS WHEREOF, the Depositor, the Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized and their respective seals, duly attested, to be
hereunto affixed, all as of the date and year first above written.
BEAR STEARNS ASSET BACKED
SECURITIES, INC.
[Seal] By: /s/ Matthew Perkins
--------------------------------
Name: Matthew Perkins
Title: Vice President
RESIDENTIAL FUNDING CORPORATION
[Seal] By: /s/ Stephen Hynes
--------------------------------
Name: Stephen Hynes
Title: Director
Attest: /s/ Diane Wold
--------------------------
Name: Diane Wold
Title: Managing Director
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
[Seal] By: /s/ Steven M. Wagner
--------------------------------
Name: Steven M. Wagner
Title: First Vice President
Attest: /s/ P.J. Bruner
--------------------------
Name: P.J. Bruner
Title: Vice President
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STATE OF MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
On the 29th day of September, 1999 before me, a notary public in and
for said State, personally appeared __________________, known to me to be a
_____________ of Bear Stearns Asset Backed Securities, Inc., Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
<PAGE>
STATE OF MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
On the 29th day of September, 1999 before me, a notary public in and
for said State, personally appeared Stephen Hynes, known to me to be a Director
of Residential Funding Corporation, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the 29th day of September, 1999 before me, a notary public in and
for said State, personally appeared ________________, known to me to be a First
Vice President of Bank One, National Association, a national banking corporation
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
