Undercollateralization Clause Samples

The Undercollateralization clause defines the situation where the value of collateral provided by a party falls below the required threshold set in an agreement. In practice, this clause typically triggers specific actions, such as requiring the undercollateralized party to post additional collateral or allowing the secured party to take protective measures. Its core function is to manage and mitigate credit risk by ensuring that sufficient collateral is always maintained to cover potential exposures, thereby protecting the interests of the secured party.
Undercollateralization. Because losses on a mortgage loan may be allocated in part to the subordinated component classes of a different group, the scheduled principal balance of a pool’s target-rate strip could differ from the aggregate principal balance of the related group’s target-rate classes. If the scheduled principal balance of a pool’s target-rate strip is less than the aggregate principal balance of the related group’s target-rate classes, the group will be undercollateralized by the amount of the difference; conversely, if the scheduled principal balance of a pool’s target-rate strip is more than the aggregate principal balance of the related group’s target-rate classes, the group will be overcollateralized by the amount of the difference. If a group is undercollateralized, the normal distribution rules will be adjusted as follows: (1) To the extent that scheduled interest payments on the target-rate strip of a pool related to an overcollateralized group exceed the aggregate interest allocations to that groups’ target-rate classes, plus any insurance premium due to an Insurer, that excess, up to the amount of any interest allocation carryforwards that the undercollateralized group would otherwise experience on that distribution day and the insurance premium, will be deducted from the pool distribution amount for the overcollateralized group and added to the pool distribution amounts for the undercollateralized group. If there is more than one such undercollateralized group, or more than one overcollateralized group, then (a) amounts will be deducted from the pool distribution amounts for the groups that are overcollateralized in proportion to such excess interest payments, up to the aggregate amount of such interest allocation carryforwards and the insurance premium for the undercollateralized groups, and (b) amounts will be added to the pool distribution amounts of the undercollateralized groups in proportion to the amount of such interest allocation carryforwards and insurance premium. (2) Before the subordination depletion date, if one or more groups is undercollateralized and the principal balance of each of the groups’ subordinated component classes has been reduced to zero, then (a) all amounts that (after required reimbursements to any ratio-stripped PO classes) would otherwise be distributed as principal to the subordinated component classes of the other groups, up to the aggregate amount by which such undercollateralized groups are undercollateralized, will, in...
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Undercollateralization. If at any time PRF believes that the then current fair market value of the Collateral is less than the then applicable Put/Call Price (an “Undercollateralization”), then PRF, at its sole cost, may deliver to the Company a written statement setting forth its valuation of the Collateral and its determination of the then current Put/Call Price (the “PRF Valuation”). At the time of delivery to the Company of such statement, PRF shall deliver to the Company supporting documentation of such Valuation that sets forth the valuation methodology and all material assumptions underlying the PRF Valuation. Upon receipt of the PRF Valuation and supporting documentation, the Company shall have thirty (30) days to review the PRF Valuation and either accept the PRF Valuation or deliver to PRF a written statement setting forth its valuation of the Collateral and its determination of the then current Put/Call Price (the “Company Valuation” and together with the PRF Valuation, the “Valuations” and each a “Valuation”). At the time of delivery to PRF of such statement, the Company shall deliver to PRF supporting documentation of such Valuation that sets forth the valuation methodology and all material assumptions underlying the Company Valuation. Upon receipt of the Company Valuation and supporting documentation, PRF and the Company shall negotiate to attempt to agree upon a valuation of the Collateral and the then current Put/Call Price. If after thirty (30) days following delivery of the Company Valuation, PRF and the Company shall not have agreed upon
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Related to Undercollateralization

  • Cross-Collateralization; Adjustments to Available Funds (a) If on each Distribution Date after the date on which the aggregate Class Certificate Balance and Component Principal Balance of the Senior Certificates related to a Loan Group has been reduced to zero, the Trustee shall distribute Available Funds on all the Mortgage Loans assuming there is only one group of Mortgage Loans consisting of all of the Mortgage Loans. (b) If on any Distribution Date the aggregate Class Certificate Balance and Component Principal Balance of the Senior Certificates and related Principal Only Component (after all other distributions are made on such Distribution Date) in a Loan Group is greater than the aggregate Stated Principal Balance of the Mortgage Loans in such Loan Group as of the Due Date in the month of such Distribution Date (after giving effect to Principal Prepayments in the Prepayment Period related to that Due Date) (the "Undercollateralized Group"), then the Trustee shall reduce the Available Funds of the other Loan Group to the extent that it is not undercollateralized (the "Overcollateralized Group"), as follows: (i) to the Senior Certificates of the Undercollateralized Group an amount equal to the lesser of (a) the Accrued Interest Amount and (b) Available Funds of the Overcollateralized Group remaining after making distributions to the Senior Certificates of the Overcollateralized Group on such Distribution Date pursuant to Section 4.02; and (ii) to the Senior Certificates of the Undercollateralized Group, to the extent of the principal portion of the Available Funds of the Overcollateralized Group remaining after making distributions to the Senior Certificates of the Overcollateralized Group on such Distribution Date pursuant to Section 4.02 and the Accrued Interest Amount pursuant to clause (i) above, until the Class Certificate Balance and Component Principal Balance of the Senior Certificate Group of such Undercollateralized Group equals the aggregate Stated Principal Balance of the Mortgage Loans in the related Loan Group as of the Due Date in the month of such Distribution Date (after giving effect to Principal Prepayments in the Prepayment Period related to that Due Date).

  • Payments from Available Funds Only All payments to be made by the Borrower under this Agreement shall be made only from the amounts that constitute Scheduled Payments, Special Payments and other payments under the Operative Agreements, including payment under Section 4.02 of the Participation Agreements and payments under Section 2.14 of the Indentures, and only to the extent that the Borrower shall have sufficient income or proceeds therefrom to enable the Borrower to make payments in accordance with the terms hereof after giving effect to the priority of payments provisions set forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will look solely to such amounts to the extent available for distribution to it as provided in the Intercreditor Agreement and this Agreement and that the Borrower, in its individual capacity, is not personally liable to it for any amounts payable or liability under this Agreement except as expressly provided in this Agreement, the Intercreditor Agreement or any Participation Agreement. Amounts on deposit in the Class A Cash Collateral Account shall be available to the Borrower to make payments under this Agreement only to the extent and for the purposes expressly contemplated in Section 3.05(f) of the Intercreditor Agreement.

  • Collateral Shortfalls In the event that amounts on deposit in the Collateral Fund at any time are insufficient to cover any withdrawals therefrom that the Company is then entitled to make hereunder, the Purchaser shall be obligated to pay such amounts to the Company immediately upon demand. Such obligation shall constitute a general corporate obligation of the Purchaser. The failure to pay such amounts within two Business Days of such demand (except for amounts to cover interest on a Mortgage Loan pursuant to Sections 2.02(d) and 2.03 (b)), shall cause an immediate termination of the Purchaser's right to make any Election to Delay Foreclosure or Election to Foreclose and the Company's obligations under this Agreement with respect to all Mortgage Loans to which such insufficiencies relate, without the necessity of any further notice or demand on the part of the Company.

  • Available Funds The Company will distribute its Available Funds to the Member in such amounts and at such times as the Member may determine.

  • Defective Collateralization This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.