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Equity One ABS, Inc.
Depositor
Equity One, Inc. (DE)
A Seller and the Servicer
Equity One, Incorporated (PA), Equity One Mortgage Company (NC),
Equity One Mortgage, Inc. (DE), Equity One, Inc. (MN), Equity One Consumer
Loan Company, Inc. (NH), Equity One of West Virginia, Inc. (WV)
and Equity One Mortgage, Inc. (NY)
Sellers
and
The Chase Manhattan Bank
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of August 31, 1998
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MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-1
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TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENT.........................................................1
ARTICLE I.....................................................................3
DEFINITIONS...................................................................3
Adjusted Mortgage Rate...................................................3
Adjusted Net Mortgage Rate...............................................3
Advance..................................................................3
Agreement................................................................3
Amount Held for Future Distribution......................................3
Available Funds..........................................................3
Bankruptcy Code..........................................................3
Beneficial Owner.........................................................4
Book-Entry Certificates..................................................4
Business Day.............................................................4
Call Option Date.........................................................4
Certificates.............................................................4
Certificate Account......................................................4
Certificate Balance......................................................4
Certificate Formula Principal Amount.....................................4
Certificate Register.....................................................4
Certificate Registrar....................................................5
Certificateholder or Holder..............................................5
Class....................................................................5
Class A Certificates.....................................................5
Class R Certificates.....................................................5
Class Certificate Balance................................................5
Class Interest Shortfall.................................................5
Class Unpaid Interest Amounts............................................5
Closing Date.............................................................5
Closing Place............................................................5
Code.....................................................................6
Corporate Trust Office...................................................6
Custodial Agreement......................................................6
i
Custodian................................................................6
Cut-off Date.............................................................6
Cut-off Date Pool Principal Balance......................................6
Cut-off Date Principal Balance...........................................6
Defective Loan...........................................................6
Definitive Certificates..................................................6
Deleted Loan.............................................................6
Denomination.............................................................6
Depositor................................................................6
Depository...............................................................6
Depository Participant...................................................7
Determination Date.......................................................7
Distributable Funds......................................................7
Distribution Account.....................................................7
Distribution Account Deposit Date........................................7
Distribution Date........................................................7
Due Date.................................................................7
Eligible Account.........................................................7
Equity One-Delaware......................................................8
Equity One-Florida.......................................................8
Equity One-Minnesota.....................................................8
Equity One-New Hampshire.................................................8
Equity One-New York......................................................8
Equity One-North Carolina................................................8
Equity One-Pennsylvania..................................................8
Equity One-West Virginia.................................................8
ERISA....................................................................8
Event of Default.........................................................8
Excess Proceeds..........................................................8
Expense Rate.............................................................8
FDIC.....................................................................9
FHLMC....................................................................9
FIRREA...................................................................9
FNMA.....................................................................9
I&I Payments.............................................................9
Indirect Participant.....................................................9
Insurance Agreement......................................................9
Insurance Policy.........................................................9
Insurance Proceeds.......................................................9
Insured Amount...........................................................9
Insured Expenses.........................................................9
ii
Insurer..................................................................9
Insurer Default..........................................................9
Insurer's Monthly Premium...............................................10
Interest Accrual Period.................................................10
Interest Distribution Amount............................................10
Investment Letter.......................................................10
Latest Possible Maturity Date...........................................10
Liquidated Loan.........................................................10
Liquidation Proceeds....................................................10
Loan Losses.............................................................10
Loan-to-Value Ratio.....................................................10
Loans...................................................................11
Loan Schedule...........................................................11
Majority in Interest....................................................11
Monthly Spread Account Deposit Amount...................................11
Monthly Statement.......................................................11
Xxxxx'x.................................................................11
Mortgage................................................................12
Mortgage File...........................................................12
Mortgage Note...........................................................12
Mortgage Rate...........................................................12
Mortgaged Property......................................................12
Mortgagor...............................................................12
Net Available Funds.....................................................12
Net Prepayment Interest Shortfalls......................................12
Nonrecoverable Advance..................................................12
Notice..................................................................12
Notice of Final Distribution............................................12
Officer's Certificate...................................................13
Opinion of Counsel......................................................13
Optional Termination....................................................13
Original Loan...........................................................13
OTS.....................................................................13
Outstanding.............................................................13
Outstanding Loan........................................................13
Ownership Interest......................................................13
Pass-Through Rate.......................................................13
Paying Agent............................................................14
Percentage Interest.....................................................14
Permitted Investments...................................................14
Permitted Transferee....................................................15
iii
Person..................................................................15
Policy..................................................................15
Pool Principal Balance..................................................16
Preference Claim........................................................16
Prepayment Interest Excess..............................................16
Prepayment Interest Shortfall...........................................16
Prepayment Period.......................................................16
Primary Mortgage Insurance Policy.......................................16
Principal Prepayment....................................................16
Principal Prepayment in Full............................................16
Prospectus Supplement...................................................16
Purchase Price..........................................................16
PTCE 95-60..............................................................17
Qualified Insurer.......................................................17
Rating Agency...........................................................17
Record Date.............................................................17
Refinance Loan..........................................................17
Relief Act..............................................................17
Relief Act Reductions...................................................17
REMIC...................................................................18
REMIC Change of Law.....................................................18
REMIC Provisions........................................................18
Remittance Amount.......................................................18
REO Property............................................................18
Request for Release.....................................................18
Required Insurance Policy...............................................18
Responsible Officer.....................................................18
Rule 144A Letter........................................................18
Scheduled Payment.......................................................18
Securities Act..........................................................18
Sellers.................................................................18
Servicer................................................................19
Servicer Advance Date...................................................19
Servicing Advances......................................................19
Servicing Amount........................................................19
Servicing Fee...........................................................19
Servicing Fee Rate......................................................19
Servicing Officer.......................................................19
S&P.....................................................................19
Specified Spread Account Requirement....................................19
Spread Account..........................................................20
iv
Spread Account Deposit Amount...........................................20
Spread Account Draw.....................................................20
Spread Account Excess...................................................20
Startup Day.............................................................20
Stated Principal Balance................................................20
Step-down Date..........................................................20
Streamlined Documentation Loan..........................................21
Subservicer.............................................................21
Substitute Loan.........................................................21
Substitution Adjustment Amount..........................................21
Tax Matters Person......................................................21
Tax Matters Person Certificate..........................................21
Transfer................................................................21
Transfer Affidavit......................................................21
Transferor Certificate..................................................21
Trustee.................................................................21
Trustee Fee.............................................................21
Trustee Fee Rate........................................................21
Trust Fund..............................................................22
Voting Rights...........................................................22
Weighted Average Adjusted Net Mortgage Rate.............................22
ARTICLE II CONVEYANCE OF LOANS; REPRESENTATIONS AND WARRANTIES..............22
SECTION 2.01. Conveyance of Loans......................................22
SECTION 2.02. Acceptance by Trustee of the Loans.......................25
SECTION 2.03. Representations, Warranties and Covenants of
the Sellers and the Servicer.............................27
SECTION 2.03A. Additional Obligations of Equity One-Delaware............29
SECTION 2.04. Representations and Warranties of the
Depositor as to the Loans ...............................30
SECTION 2.05. Delivery of Opinion of Counsel in Connection
with Substitutions ......................................30
SECTION 2.06. Execution and Delivery of Certificates...................31
SECTION 2.07. REMIC Matters............................................31
SECTION 2.08. Covenants of the Servicer................................31
ARTICLE III ADMINISTRATION AND SERVICING OF LOANS...........................32
SECTION 3.01. Servicer to Service Loans................................32
SECTION 3.02. Subservicing; Enforcement of the Obligations
of Servicers.............................................33
SECTION 3.03. Rights of the Depositor and the Trustee in
Respect of the Servicer..................................34
SECTION 3.04. Trustee to Act as Servicer...............................34
SECTION 3.05. Collection of Loan Payments; Certificate Account;
v
Distribution Account; Spread Account.....................35
SECTION 3.06. Payment of Taxes, Assessments, Hazard Insurance
Premiums and Similar Items...............................37
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Loans......................................38
SECTION 3.08. Permitted Withdrawals from the Certificate
Account and Distribution Account.........................39
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance
of Primary Insurance Policies............................40
SECTION 3.10. Enforcement of Due-on-Sale Clauses;
Assumption Agreements....................................41
SECTION 3.11. Realization Upon Defaulted Loans;
Repurchase of Certain Loans..............................42
SECTION 3.12. Trustee to Cooperate; Release of Mortgage Files..........44
SECTION 3.13. Documents Records and Funds in Possession of
Servicer to be Held for the Trustee......................45
SECTION 3.14. Servicing Compensation...................................46
SECTION 3.15. Access to Certain Documentation..........................46
SECTION 3.16. Annual Statement as to Compliance........................46
SECTION 3.17. Annual Independent Public Accountants' Servicing
Statement; Financial Statements..........................47
SECTION 3.18. Errors and Omissions Insurance; Fidelity Bonds...........47
SECTION 3.19. Optional Removal of Servicer by the Insurer..............47
ARTICLE IIIA SPREAD ACCOUNT; POLICY.........................................48
SECTION 3A.01 Establishment of Spread Account; Deposits in Spread
Account; Permitted Withdrawals from Spread Account.......48
SECTION 3A.02 Policy...................................................50
ADVANCES BY THE SERVICER.....................................................51
SECTION 4.01. Advances.................................................51
SECTION 4.02. Priorities of Distribution...............................52
SECTION 4.03. Monthly Statements to Certificateholders.................53
ARTICLE V THE CERTIFICATES..................................................54
SECTION 5.01. The Certificates.........................................54
SECTION 5.02. Certificate Register; Registration of Transfer
and Exchange of Certificates.............................55
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates........60
SECTION 5.04. Persons Deemed Owners....................................60
SECTION 5.05. Access to List of Certificateholders' Names
and Addresses............................................60
SECTION 5.06. Maintenance of Office or Agency..........................61
ARTICLE VI THE DEPOSITOR AND THE SERVICER...................................61
vi
SECTION 6.01. Respective Liabilities of the Depositor
and the Servicer................................. .......61
SECTION 6.02. Merger or Consolidation of the Depositor
or the Servicer..........................................61
SECTION 6.03. Limitation on Liability of the Depositor,
the Sellers, the Servicer and Others.....................62
SECTION 6.04. Limitation on Resignation of Servicer....................62
SECTION 6.05. Indemnification..........................................63
ARTICLE VII DEFAULT.........................................................63
SECTION 7.01. Events of Default........................................63
SECTION 7.02. Trustee to Act; Appointment of Successor.................65
SECTION 7.03. Notification to Certificateholders.......................66
ARTICLE VIII CONCERNING THE TRUSTEE........................................67
SECTION 8.01. Duties of Trustee........................................67
SECTION 8.02 Certain Matters Affecting the Trustee....................68
SECTION 8.03. Trustee Not Liable for Certificates or Loans.............70
SECTION 8.04. Trustee May Own Certificates.............................70
SECTION 8.05. Trustee's Fees and Expenses..............................70
SECTION 8.06. Eligibility Requirements for Trustee.....................71
SECTION 8.07. Resignation and Removal of Trustee.......................71
SECTION 8.08. Successor Trustee........................................72
SECTION 8.09. Merger or Consolidation of Trustee.......................73
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee............73
SECTION 8.11. Tax Matters..............................................74
SECTION 8.12. Periodic Filings.........................................76
SECTION 8.13. Appointment of Custodians................................77
SECTION 8.14. Trustee May Enforce Claims Without Possession of
Certificates............................ ................77
SECTION 8.15. Suits for Enforcement....................................77
ARTICLE IX TERMINATION......................................................77
SECTION 9.01. Termination upon Liquidation or Purchase
of all Loans.................................... ........77
SECTION 9.02. Final Distribution on the Certificates...................78
SECTION 9.03. Additional Termination Requirements......................79
ARTICLE X MISCELLANEOUS PROVISIONS..........................................80
SECTION 10.01. Amendment...............................................80
SECTION 10.02. Recordation of Agreement; Counterparts..................81
SECTION 10.03. Governing Law...........................................82
SECTION 10.04. Intention of Parties....................................82
SECTION 10.05. Notices.................................................84
SECTION 10.06. Severability of Provisions..............................86
vii
SECTION 10.07. Assignment..............................................86
SECTION 10.08. Limitation on Rights of Certificateholders..............86
SECTION 10.09. Inspection and Audit Rights.............................87
SECTION 10.10. Certificates Nonassessable and Fully Paid...............87
SECTION 10.11. The Closing.............................................87
SECTION 10.12. Interpretation..........................................87
SECTION 10.13. Rights of the Insurer...................................88
SECTION 10.14. No Partnership..........................................88
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SCHEDULES
SCHEDULE I.................................................................S-I-1
SCHEDULE IIA.............................................................S-IIA-1
SCHEDULE IIB.............................................................S-IIB-1
SCHEDULE IIC.............................................................S-IIC-1
SCHEDULE IID.............................................................S-IID-1
SCHEDULE IIE.............................................................S-IIE-1
SCHEDULE IIF.............................................................S-IIF-1
SCHEDULE IIG.............................................................S-IIG-1
SCHEDULE IIH.............................................................S-IIH-1
SCHEDULE IIX.............................................................S-IIX-1
SCHEDULE IIIA...........................................................S-IIIA-1
SCHEDULE IIIB...........................................................S-IIIB-1
SCHEDULE IIIC...........................................................S-IIIC-1
SCHEDULE IIID...........................................................S-IIID-1
SCHEDULE IIIE..........................................................S-III-E-1
SCHEDULE IIIF..........................................................S-III-F-1
SCHEDULE IIIG..........................................................S-III-G-1
SCHEDULE IIIH..........................................................S-III-H-1
SCHEDULE IV...............................................................S-IV-1
SCHEDULE V.................................................................S-V-1
EXHIBITS
EXHIBIT A....................................................................A-1
EXHIBIT B....................................................................B-1
EXHIBIT C....................................................................C-1
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EXHIBIT D....................................................................D-1
EXHIBIT E....................................................................E-1
EXHIBIT F....................................................................F-1
EXHIBIT G....................................................................G-1
EXHIBIT H....................................................................H-1
EXHIBIT I....................................................................I-1
EXHIBIT J....................................................................J-1
EXHIBIT K....................................................................K-1
x
THIS POOLING AND SERVICING AGREEMENT, dated as of August 31, 1998, by and
among Equity One ABS, Inc., a Delaware corporation, as depositor (the
"Depositor"), Equity One, Inc., a Delaware corporation, as a seller (in such
capacity, "Equity One-Delaware") and as servicer (in such capacity, the
"Servicer"), Equity One, Incorporated, a Pennsylvania corporation ("Equity
One-Pennsylvania"), Equity One Mortgage Company, a North Carolina corporation
("Equity One-North Carolina"), Equity One Mortgage, Inc., a Delaware corporation
("Equity One-Florida"), Equity One, Inc., a Minnesota corporation ("Equity
One-Minnesota"), Equity One Consumer Loan Company, Inc., a New Hampshire
corporation ("Equity One-New Hampshire"), Equity One of West Virginia, Inc., a
West Virginia corporation ("Equity One-West Virginia"), Equity One Mortgage,
Inc., a New York corporation ("Equity One-New York and, together with Equity
One-Delaware, Equity One-Pennsylvania, Equity One-North Carolina, Equity
One-Florida, Equity One-Minnesota, Equity One-New Hampshire and Equity One-West
Virginia, the "Sellers") and The Chase Manhattan Bank, a New York banking
corporation organized under the laws of the State of New York, as trustee (the
"Trustee").
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates. The Trust Fund for federal income tax
purposes will consist of a single REMIC. The Certificates will represent the
entire beneficial ownership interest in the Trust Fund. The Class A Certificates
will represent the "regular interests" in the Trust Fund and the Class R
Certificates will represent the single "residual interest" in the Trust Fund.
The "latest possible maturity date" for federal income tax purposes of all
interests created hereby will be the Latest Possible Maturity Date.
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess thereof
in which such Classes shall be issuable (except that one Certificate of each
Class of Certificates may be issued in a different amount and, in addition, one
Class R Certificate representing the Tax Matters Person Certificate may be
issued in a different amount):
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Integral
Initial Class Multiples
Certificate Pass-Through Minimum in Excess of
Balance Rate Denomination Minimum
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Class A-1
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Class A-2
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Class A-3
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Class A-4
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Class A-5
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Class R $ 0 N/A N/A
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(1) On any Distribution Date following the Call Option Date, the Pass-Through
Rate for the Class A-5 Certificates shall be [ %]
All interest rates set forth in this Agreement are calculated based on a
year consisting of twelve 30-day months (30/360).
2
ARTICLE
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Adjusted Mortgage Rate: As to each Loan, and at any time, the per annum
rate equal to the Mortgage Rate less the Servicing Fee Rate.
Adjusted Net Mortgage Rate: As to each Loan, and at any time, the per annum
rate equal to the Mortgage Rate less the related Expense Rate.
Advance: The payment required to be made by the Servicer with respect to
any Distribution Date pursuant to Section 4.01, the amount of any such payment
being equal to the aggregate of payments of principal and interest (net of the
Servicing Fee) on the Loans that were due on such Loans' respective Due Dates in
the calendar month preceding the month of such Distribution Date and not
received as of the close of business on the Determination Date in the month of
such Distribution Date, less the aggregate amount of any such delinquent
payments that the Servicer, in its good faith judgment, has determined would not
be recoverable out of Insurance Proceeds, Liquidation Proceeds or otherwise.
Agreement: This Pooling and Servicing Agreement, together with all of the
exhibits and schedules hereto, and all amendments or supplements of any of the
foregoing.
Amount Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Certificate Account at the close of business on the
related Determination Date on account of (i) Principal Prepayments received
after the Prepayment Period corresponding to such Distribution Date and
Liquidation Proceeds received in the month of such Distribution Date and (ii)
all Scheduled Payments due after the Loans' respective Due Dates in the calendar
month preceding the month of such Distribution Date.
Available Funds: As to any Distribution Date, the sum of (a) the aggregate
amount held in the Certificate Account at the close of business on the related
Determination Date net of the Amount Held for Future Distribution and net of
amounts permitted to be withdrawn from the Certificate Account pursuant to
clauses (i)-(viii), inclusive, of Section 3.08(a) and amounts permitted to be
withdrawn from the Distribution Account pursuant to clauses (i)-(iii) inclusive
of Section 3.08(b), (b) the amount of the related Advance and (c) in connection
with Defective Loans, as applicable, the aggregate of the Purchase Prices and
Substitution Adjustment Amounts deposited in the Distribution Account on the
related Distribution Account Deposit Date.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, as
amended, and related rules promulgated thereunder.
Beneficial Owner: With respect to any Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate.
3
Book-Entry Certificates: The Class A Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in New York City, or in the city where the chief
executive office of the Servicer is located, are authorized or obligated by law
or executive order to be closed.
Call Option Date: The first Distribution Date following the date on which
the Optional Termination may be exercised by the Servicer.
Certificates: The Class A Certificates and the Class R Certificates in
substantially the forms attached hereto as Exhibits A and B.
Certificate Account: The separate Eligible Account created and maintained
by the Servicer pursuant to Section 3.05 with a depository institution in the
name of the Servicer for the benefit of the Trustee on behalf of
Certificateholders and the Insurer and designated "Certificate Account, Equity
One, Inc., as trustee for the registered holders of Equity One ABS, Inc.,
Mortgage Pass-Through Certificates Series 1998-1."
Certificate Balance: With respect to any Class A Certificate at any time,
the maximum dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the Denomination thereof minus
all distributions of principal previously made with respect thereto.
Certificate Formula Principal Amount: As to any Distribution Date, the sum
of (a) the principal portion of each Scheduled Payment due on each Loan on each
Loan's Due Date in the calendar month preceding the month of such Distribution
Date, (b) the Stated Principal Balance of each Loan that was repurchased by the
Seller or the Servicer pursuant to this Agreement as of such Distribution Date,
(c) the Substitution Adjustment Amount in connection with any Deleted Loan
received with respect to such Distribution Date, (d) any Insurance Proceeds or
Liquidation Proceeds allocable to recoveries of principal of Loans that are not
yet Liquidated Loans received during the calendar month preceding the month of
such Distribution Date, (e) with respect to each Loan that became a Liquidated
Loan during the calendar month preceding the month of such Distribution Date,
the amount of Liquidation Proceeds allocable to principal received during the
calendar month preceding the month of such Distribution Date with respect to
such Loan, (f) all Principal Prepayments received during the related Prepayment
Period and (g) the principal portion of any Loan Losses incurred during the
calendar month preceding the month of such Distribution Date.
Certificate Register: The register maintained pursuant to Section 5.02.
4
Certificate Registrar: The Chase Manhattan Bank and its successors and, if
a successor certificate registrar is appointed hereunder, such successor.
Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or any affiliate of the Depositor shall be deemed not to
be Outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such consent has been obtained; provided, however, that if
any such Person (including the Depositor) owns 100% of the Percentage Interests
evidenced by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking
of any action hereunder. The Trustee is entitled to rely conclusively on a
certification of the Depositor or any affiliate of the Depositor in determining
which Certificates are registered in the name of an affiliate of the Depositor.
Class: All Certificates bearing the same class designation as set forth in
the Preliminary Statement.
Class A Certificates: The certificates representing the "regular interests"
in the Trust Fund, which are designated as the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates.
Class R Certificates: The certificates representing the single "residual
interest" in the Trust Fund.
Class Certificate Balance: With respect to any Class of Class A
Certificates and as to any Distribution Date, the aggregate of the Certificate
Balances of all Certificates of such Class as of such date. The Class
Certificate Balance of the Class R Certificates shall be zero.
Class Interest Shortfall: As to any Distribution Date and Class of Class A
Certificates, the amount by which the amount described in clause (i) of the
definition of Interest Distribution Amount for such Class exceeds the amount of
interest actually distributed on such Class on such Distribution Date pursuant
to such clause (i).
Class Unpaid Interest Amounts: As to any Distribution Date and any Class of
Class A Certificates, the amount by which the aggregate Class Interest
Shortfalls for such Class on prior Distribution Dates exceeds the amount
distributed on such Class on prior Distribution Dates pursuant to clause (ii) of
the definition of Interest Distribution Amount.
Closing Date: September ___, 1998.
Closing Place: The offices of Messrs. Stradley, Ronon, Xxxxxxx and Xxxxx,
LLP, 0000 Xxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
5
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Corporate Trust Office: The designated office of the Trustee in the State
of New York at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (Attention: Structured Finance Services (ABS), facsimile
number: 212-946-8191) and which is the address to which notices to and
correspondence with the Trustee should be directed.
Custodial Agreement: As defined in Section 8.12.
Custodian: As defined in Section 8.12.
Cut-off Date: August 31, 1998.
Cut-off Date Pool Principal Balance: $[ ].
Cut-off Date Principal Balance: As to any Loan, the Stated Principal
Balance thereof as of the close of business on the Cut-off Date.
Defective Loan: Any Loan which is required to be repurchased pursuant to
Section 2.02 or 2.03.
Definitive Certificates: Any Certificate issued in lieu of a Book-Entry
Certificate pursuant to Section 5.02(e).
Deleted Loan: As defined in Section 2.03(c).
Denomination: With respect to each Class A Certificate, the amount set
forth on the face thereof as the "Initial Certificate Balance of this
Certificate" or the Percentage Interest appearing on the face thereof.
Depositor: Equity One ABS, Inc., a Delaware corporation, or its successor
in interest.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is CEDE & Co., as the registered Holder of the Book-Entry
Certificates. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York.
6
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the 21st day of each month
or, if such day is not a Business Day, the next preceding Business Day;
provided, however, that the Determination Date in each month will be at least
two Business Days preceding the related Distribution Date.
Distributable Funds: The sum of (i) Available Funds, (ii) the Spread
Account Draw and (iii) any Insured Amounts.
Distribution Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05 in the name of the Trustee for the
benefit of the Certificateholders and the Insurer and designated "Distribution
Account, The Chase Manhattan Bank, as trustee for the registered holders of
Equity One ABS, Inc. Mortgage Pass-Through Certificates, Series 1998-1." Funds
in the Distribution Account shall be held uninvested in trust for the
Certificateholders and the Insurer for the uses and purposes set forth in this
Agreement.
Distribution Account Deposit Date: As to any Distribution Date, 9:00 a.m.
New York City Time on the Business Day immediately preceding such Distribution
Date.
Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such day is not a Business Day, the next
succeeding Business Day, commencing in [October], 1998.
Due Date: With respect to any Loan, the date on which scheduled payments of
interest and/or principal are due thereon, which date is a set day, but not
necessarily the first day, of each month.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
(a) the trust department of a federal or state chartered depository institution
or (b) a trust company,
7
acting in its fiduciary capacity or (iv) any other account acceptable to
each Rating Agency and the Insurer, as evidenced by a letter from such Rating
Agency and Insurer to the Trustee, without reduction or withdrawal of the then
current ratings of the Certificates. Eligible Accounts may bear interest, and
may include, if otherwise qualified under this definition, accounts maintained
with the Trustee.
Equity One-Delaware: Equity One, Inc., a Delaware corporation.
Equity One-Florida: Equity One Mortgage, Inc., a Delaware corporation.
Equity One-Minnesota: Equity One, Inc., a Minnesota corporation.
Equity One-New Hampshire: Equity One Consumer Loan Company, Inc., a New
Hampshire corporation.
Equity One-New York: Equity One Mortgage, Inc., a New York corporation.
Equity One-North Carolina: Equity One Mortgage Company, a North Carolina
corporation.
Equity One-Pennsylvania: Equity One, Incorporated, a Pennsylvania
corporation.
Equity One-West Virginia: Equity One of West Virginia, Inc., a West
Virginia corporation.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Escrow Account: The Eligible Account or Eligible Accounts established and
maintained by the Servicer pursuant to Section 3.06(a).
Event of Default: As defined in Section 7.01.
Excess Proceeds: With respect to any Liquidated Loan, the amount, if any,
by which the sum of any Liquidation Proceeds of such Loan received in the
calendar month in which such Loan became a Liquidated Loan, net of any amounts
previously reimbursed to the Servicer as Nonrecoverable Advance(s) with respect
to such Loan pursuant to Section 3.08(a)(iii), exceeds (i) the unpaid principal
balance of such Liquidated Loan as of the Due Date in the calendar month in
which such Loan became a Liquidated Loan plus (ii) accrued interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
(and not reimbursed) to Certificateholders up to the Due Date in the calendar
month in which such Loan became a Liquidated Loan.
Expense Rate: As to each Loan, the sum of the related Servicing Fee Rate,
the Trustee Fee Rate and the rate at which the Insurer's Monthly Premium
accrues.
8
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act
of 1989.
FNMA: The Federal National Mortgage Association, a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act, or any successor thereto.
I&I Payments: Any payments due and owing to the Insurer under the Insurance
Agreement other than the Insurer's Monthly Premium.
Indirect Participant: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Depository Participant.
Insurance Agreement: The Insurance and Indemnity Agreement dated as of
September [ ], 1998 among the Depositor, Equity One-Delaware (in its capacity as
both a Seller and the Servicer), the Trustee and the Insurer, including any
amendments and supplements thereto.
Insurance Policy: With respect to any Loan included in the Trust Fund, any
insurance policy, including all riders and endorsements thereto in effect,
including any replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid by an insurer (other than the Insurer)
pursuant to any Insurance Policy, in each case other than any amount included in
such Insurance Proceeds in respect of Insured Expenses.
Insured Amount: A payment by the Insurer under the Policy.
Insured Expenses: Expenses covered by an Insurance Policy.
Insurer: AMBAC Indemnity Corporation, a stock insurance company organized
and created under the laws of the State of Wisconsin, and any successor thereto.
Insurer Default: Either (i) a continuance of any failure by the Insurer to
make a required payment under the Policy or (ii) the existence of a proceeding
in bankruptcy by or against the Insurer.
9
Insurer's Monthly Premium: The premium payable to the Insurer on each
Distribution Date in an amount equal to one-twelfth of the product of the per
annum rate specified in the Insurance Agreement and the aggregate Certificate
Balance of the Class A Certificates on each Distribution Date (after giving
effect to any distributions of principal to be made on the Certificates on such
Distribution Date).
Interest Accrual Period: With respect to the Class A Certificates and any
Distribution Date, the calendar month prior to the month of such Distribution
Date.
Interest Distribution Amount: With respect to any Distribution Date and any
Class of Class A Certificates, the sum of (i) interest accrued during the
related Interest Accrual Period at the Pass-Through Rate for such Class on the
related Class Certificate Balance and (ii) any Class Unpaid Interest Amounts for
such Class.
Investment Letter: As defined in Section 5.02(b).
Latest Possible Maturity Date: The Distribution Date following the third
anniversary of the scheduled maturity date of the Loan having the latest
scheduled maturity date as of the Cut-off Date.
Liquidated Loan: With respect to any Distribution Date, a defaulted Loan
(including any REO Property) which was liquidated in a calendar month preceding
the month of such Distribution Date and as to which the Servicer has determined
(in accordance with this Agreement) that it has received all amounts it expects
to receive in connection with the liquidation of such Loan, including the final
disposition of an REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of defaulted Loans, whether
through trustee's sale, foreclosure sale or otherwise or amounts received in
connection with any condemnation or partial release of a Mortgaged Property and
any other proceeds received in connection with an REO Property, less the
Servicing Amount.
Loan Losses: The aggregate sum of the amount, if any, by which (i) the
outstanding principal balance of each Loan that became a Liquidated Loan during
the calendar month preceding the month of the related Distribution Date (such
principal balance determined immediately before such Loan became a Liquidated
Loan) exceeds (ii) the Liquidation Proceeds received during the calendar month
preceding the month of the related Distribution Date in connection with the
liquidation of such Loan which have not theretofore been used to reduce the
Stated Principal Balance of such Loan.
Loan-to-Value Ratio: With respect to any Loan and as to any date of
determination, (i) the principal balance of such Loan at the date of origination
divided by (ii) the appraised value of the related Mortgaged Property based on
an appraisal made for the related Seller by an independent fee appraiser at the
time of the origination of the related Loan.
10
Loans: The mortgage loans identified on the Loan Schedule.
Loan Schedule: The list of Loans (as from time to time amended by the
Servicer to reflect the addition of Substitute Loans and the deletion of Deleted
Loans pursuant to the provisions of this Agreement) transferred to the Trustee
as part of the Trust Fund and from time to time subject to this Agreement,
attached hereto as Schedule I, setting forth the following information with
respect to each Loan:
(i) the loan number;
(ii) the Mortgagor's name and the state in which the Mortgaged Property is
located, including the zip code;
(iii) the maturity date;
(iv) the Cut-off Date Principal Balance;
(v) the first payment date of the Loan;
(vi) lien position (either first or second);
(vii) the Scheduled Payment in effect as of the Cut-off Date; and
(viii) the Mortgage Rate.
Such schedule shall also set forth the total of the amounts described under
(iv) above for all of the Loans.
Majority in Interest: As to any Class of Class A Certificates, the Holders
of Certificates of such Class evidencing, in the aggregate, at least 51% of the
Percentage Interests evidenced by all Certificates of such Class.
Monthly Spread Account Deposit Amount: On any Distribution Date, the amount
equal to the product of (i) 100% and (ii) the amount of the Spread Account
Deposit Amount as of such Distribution Date; provided, however, that the
percentage set forth in clause (i) above may be reduced, solely at the
discretion of the Insurer, at which time written notice shall be sent to each
Seller, the Trustee, the Servicer, S&P and Moody's.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.03.
Moody's: Xxxxx'x Investors Service, Inc., or any successor thereto. For
purposes of Section 10.05(b) the address for notices to Moody's shall be Moody's
Investors
11
Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Residential Mortgage Monitoring Department, or such other address as Moody's may
hereafter furnish to the Depositor or the Servicer.
Mortgage: The mortgage, deed of trust or other instrument creating a first
or subordinate lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Loan and any additional documents delivered to the
Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Note: The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Loan, together with any
amendment or modification thereto.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note as set
forth therein.
Mortgaged Property: The underlying property securing a Loan.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Available Funds: As to any Distribution Date, the amount equal to
Available Funds less the amounts required to be distributed on such Distribution
Date pursuant to Section 4.02(a)(i)-(iii).
Net Prepayment Interest Shortfalls: As to any Distribution Date, the amount
by which the aggregate of Prepayment Interest Shortfalls during the calendar
month preceding the month of such Distribution Date exceeds an amount equal to
the aggregate Servicing Fee for such Distribution Date before reduction of the
Servicing Fee in respect of such Prepayment Interest Shortfalls.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise.
Notice: As defined in Section 3A.02.
Notice of Final Distribution: The notice to be provided pursuant to Section
9.02 to the effect that final distribution on any of the Certificates shall be
made only upon presentation and surrender thereof.
12
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Managing Director, a
Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor or the Servicer, or (ii), if provided for in this
Agreement, signed by a Servicing Officer, as the case may be, and delivered to
the Depositor and the Trustee, as the case may be, as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, including, in-house counsel, reasonably
acceptable to the Trustee and the Insurer; provided, however, that with respect
to the interpretation or application of the REMIC Provisions, such counsel must
(i) in fact be independent of the Depositor and the Servicer, (ii) not have any
direct financial interest in the Depositor or the Servicer or in any affiliate
of either, and (iii) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Optional Termination: The termination of the trust created hereunder in
connection with the purchase of the Loans pursuant to Section 9.01(a) hereof.
Original Loan: The mortgage loan refinanced in connection with the
origination of a Refinance Loan.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered to the
Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
Outstanding Loan: As of any Due Date, a Loan with a Stated Principal
Balance greater than zero, which was not the subject of a Principal Prepayment
in Full prior to such Due Date and which did not become a Liquidated Loan prior
to such Due Date.
Ownership Interest: As to any Class R Certificate, any ownership interest
in such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: For the Class A Certificates, the per annum rates set
forth or calculated in the manner described in the Preliminary Statement.
13
Paying Agent: The Chase Manhattan Bank and its successors and, if a
successor paying agent is appointed hereunder, such successor.
Percentage Interest: As to any Class A Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Permitted Investments: (i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full faith and credit of
the United States; (ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency rating the Class A Certificates, or
such lower rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Class A Certificates, without taking into account
the Policy, by each such Rating Agency; (iii) commercial or finance company
paper which is then receiving the highest commercial or finance company paper
rating of each such Rating Agency, or such lower rating as will not result in
the downgrading or withdrawal of the ratings then assigned to the Class A
Certificates, without taking into account the Policy, by each such Rating
Agency; (iv) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States or of any state thereof and subject to
supervision and examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured debt obligations
of such depository institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial paper or
long-term unsecured debt obligations of such holding company, but only if
Xxxxx'x is not a Rating Agency) are then rated one of the two highest long-term
and the highest short-term ratings of each such Rating Agency for such
securities, or such lower ratings as will not result in the downgrading or
withdrawal of the rating then assigned to the Class A Certificates, without
taking into account the Policy, by any such Rating Agency; (v) demand or time
deposits or certificates of deposit issued by any bank or trust company or
savings institution to the extent that such deposits are fully insured by the
FDIC; (vi) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation containing, at the time of the issuance of such
agreements, such terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Class A Certificates, without
taking into account the Policy, by any such Rating Agency; (vii) repurchase
obligations with respect to any security described in clauses (i) and (ii)
above, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (iv) above; (viii) securities
(other than stripped bonds, stripped coupons or instruments sold at a purchase
price in excess of 115% of the face amount thereof) bearing interest or sold at
a discount issued by any corporation incorporated under the laws of the United
States or any state thereof which, at the time of such investment, have one of
the two highest ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of Moody's for
any such securities), or such lower rating as will not result in the downgrading
or withdrawal of the rating then assigned to the Class A Certificates, without
taking into account the
14
Policy, by any such Rating Agency, as evidenced by a signed writing
delivered by each such Rating Agency; and (ix) such other investments having a
specified stated maturity and bearing interest or sold at a discount acceptable
to each Rating Agency and the Insurer as will not result in the downgrading or
withdrawal of the rating then assigned to the Class A Certificates by any such
Rating Agency, as evidenced by a signed writing to such effect delivered by each
such Rating Agency and the Insurer; provided that no such instrument shall be a
Permitted Investment if such instrument evidences the right to receive interest
only payments with respect to the obligations underlying such instrument.
Permitted Transferee: Any person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in section 860E(c)(l) of the Code) with respect to
any Class R Certificate, (iv) rural electric and telephone cooperatives
described in section 1381(a)(2)(C) of the Code, (v) a Person that is not a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate whose income from sources without
the United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States fiduciaries have authority to control all
substantial decisions of the trust, unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
4224 and (vi) any other Person so designated by the Depositor based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class R
Certificate to such Person may cause the REMIC hereunder to fail to qualify as a
REMIC at any time that the Certificates are outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Policy: The Certificate Guaranty Insurance Policy (No. ________) with
respect to the Class A Certificates, and all endorsements thereto dated the
Closing Date, issued by the Insurer for the benefit of the Holders of each Class
of Class A Certificates, a copy of which is attached hereto as Exhibit K.
15
Pool Principal Balance: As to any Distribution Date, the aggregate of the
Stated Principal Balances of the Loans which were Outstanding Loans on their Due
Dates in the calendar month preceding the month of such Distribution Date.
Preference Claim: As defined in Section 3A.02(e).
Prepayment Interest Excess: As to any Principal Prepayment received by the
Servicer from the first day through the fifteenth day of any calendar month
beginning in [October], 1998, all amounts paid by the related Mortgagor in
respect of interest on such Principal Prepayment. All Prepayment Interest Excess
shall be paid to the Servicer as additional servicing compensation
Prepayment Interest Shortfall: As to any Distribution Date and any
Principal Prepayment received on or after the sixteenth day of the month
preceding the month of such Distribution Date (or, in the case of the first
Distribution Date, on or after the Cut-off Date) and on or before the last day
of the month preceding the month of such Distribution Date, the amount, if any,
by which one month's interest at the related Mortgage Rate on such Principal
Prepayment, net of the Servicing Fee Rate, exceeds the amount of interest paid
in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period from the 16th
day of the calendar month preceding the month of such Distribution Date (or, in
the case of the first Distribution Date, from the Cut-off Date) through the 15th
day of the month of such Distribution Date.
Primary Mortgage Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any Loan.
Principal Prepayment: Any payment of principal by a Mortgagor on a Loan
that is received in advance of its scheduled Due Date and is not accompanied by
an amount representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment. Partial Principal Prepayments
shall be applied by the Servicer in accordance with the terms of the related
Mortgage Note.
Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor
of the entire principal balance of a Loan.
Prospectus Supplement: The Prospectus Supplement dated [________________],
1998 relating to the Class A Certificates.
Purchase Price: With respect to any Loan required to be repurchased by a
Seller pursuant to Section 2.02 or 2.03 hereof or purchased at the option of the
Servicer pursuant to Section 3.11 hereof, an amount equal to the sum of (i) 100%
of the Stated Principal Balance of the Loan on the date of such purchase, and
(ii) accrued interest thereon at the applicable
16
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the
purchaser is the Servicer or (y) the purchaser is a Seller and Equity
One-Delaware is the Servicer) from the date through which interest was last paid
by the Mortgagor or advanced (and not reimbursed) by the Servicer to the
Determination Date in the month in which the Purchase Price is to be distributed
to Certificateholders.
PTCE 95-60: As defined in Section 5.02(b).
Qualified Insurer: A mortgage guaranty insurance company duly qualified as
such under the laws of the state of its principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states and to write the
insurance provided by the insurance policy issued by it, approved as a
FNMA-approved mortgage insurer and having a claims paying ability rating of at
least "AA" or equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Loan must have at least
as high a claims paying ability rating as the insurer it replaces had on the
Closing Date
Rating Agency: Xxxxx'x and S&P. If either organization or a successor
thereof is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization, or other comparable Person, as is
designated by the Depositor with the consent of the Insurer, notice of which
designation shall be given to the Trustee. References herein to a given rating
category of a Rating Agency shall mean such rating category without giving
effect to any modifiers.
Record Date: With respect to any Distribution Date for so long as the Class
A Certificates are not Definitive Certificates, the close of business on the
Business Day immediately preceding such Distribution Date. With respect to any
Distribution Date on which any Definitive Certificates are outstanding, the last
Business Day of the calendar month immediately preceding such Distribution Date.
Refinance Loan: Any Loan originated in connection with the refinancing of
an existing mortgage loan.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Reductions: With respect to any Distribution Date and any Loan
as to which there has been a reduction in the amount of interest collectible
thereon for the most recently ended calendar month as a result of the
application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Loan for the most recently ended calendar month is less than
(ii) interest accrued thereon for such month pursuant to the Mortgage Note
without taking into account the application of the Relief Act.
17
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC Change of Law: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to REMICs and the REMIC Provisions issued after the Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time, as well as provisions of applicable state laws.
Remittance Amount: As to any Distribution Date, the sum of the Interest
Distribution Amount and Certificate Formula Principal Amount for such
Distribution Date.
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Loan.
Request for Release: The Request for Release submitted by the Servicer to
the Trustee, substantially in the form of Exhibit J.
Required Insurance Policy: With respect to any Loan, any insurance policy
that is required to be maintained from time to time under this Agreement.
Responsible Officer: When used with respect to the Trustee, any officer
assigned to the Corporate Trust Division of the Trustee (or any successor
thereto), including any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, any Trust Officer or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers and having direct responsibility for the
administration of this Agreement.
Rule 144A Letter: As defined in Section 5.02(b).
Scheduled Payment: The scheduled monthly payment on a Loan due on any Due
Date allocable to principal and/or interest on such Loan.
Securities Act: The Securities Act of 1933, as amended.
Sellers: Collectively, the following corporations, their successors and
assigns, each in its capacity as a Seller of the Loans to the Depositor: Equity
One-Delaware; Equity One-Florida; Equity One-Minnesota; Equity One-New
Hampshire; Equity One-New York; Equity One-Pennsylvania; Equity One-North
Carolina; and Equity One-West Virginia.
18
Servicer: Equity One, Inc., a Delaware corporation, and its successors and
assigns, in its capacity as servicer hereunder.
Servicer Advance Date: As to any Distribution Date, the third Business Day
following the end of the related Prepayment Period.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) the foreclosure,
trustee's sale, or other liquidation of any Mortgage or Mortgaged Property,
(iii) any expenses reimbursable to the Servicer pursuant to Section 3.11 and any
enforcement or judicial proceedings, including foreclosures, (iv) the management
and liquidation of any REO Property, (v) compliance with the obligations
described in Section 3.06 and (vi) any payments made by the Servicer pursuant to
Section 3.09.
Servicing Amount: The sum of (i) the Servicing Fee (ii) unreimbursed
Advances and (iii) unreimbursed Servicing Advances.
Servicing Fee: As to each Loan and any Distribution Date, an amount payable
out of each full payment of interest received on such Loan and equal to
one-twelfth of the Servicing Fee Rate multiplied by the Stated Principal Balance
of such Loan as of the Due Date in the month of such Distribution Date (prior to
giving effect to any Scheduled Payments due on such Loan on such Due Date),
subject to reduction as provided in Section 3.14.
Servicing Fee Rate: With respect to each Loan, 0.5% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Loans whose name and facsimile
signature appear on a list of servicing officers furnished to the Trustee (with
a copy to the Insurer) by the Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
S&P: Standard & Poor's Ratings Group, a division of The XxXxxx-Xxxx
Companies, Inc. For purposes of Section 10.05(b) the address for notices to S&P
shall be Standard & Poor's Ratings Group, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Residential Mortgage Surveillance, or such other address
as S&P may hereafter furnish to the Depositor and the Servicer.
Specified Spread Account Requirement: As of:
(x) any date on or prior to the Step-Down Date, the greatest of (a)
[$______________ (2.50% times the Cut-off Date Pool Principal Balance)]; (b) the
greater of (1) the sum of the principal balances of the three largest Loans as
of such date and (2) 0.50% times the Cut-off Date Pool Principal Balance; and
(c) two times the excess of (i) one-half the aggregate principal balance of the
Loans which are 90 or more days delinquent (including Loans in foreclosure and
REO
19
Properties) over (ii) five times the Monthly Spread Account Deposit Amount
as of such Distribution Date; and
(y) any date after the Step-Down Date, the greatest of (a) the lesser of (A)
[$______________ (2.50% times the Cut-off Date Pool Principal Balance)] and (B)
5.00% times the outstanding Pool Principal Balance as of such date; (b) the
greater of (1) the sum of the principal balances of the three largest Loans as
of such date and (2) 0.50% times the Cut-off Date Pool Principal Balance; and
(c) two times the excess of (i) one-half the aggregate principal balance of the
Loans which are 90 or more days delinquent (including Loans in foreclosure and
REO Properties) over (ii) five times the Monthly Spread Account Deposit Amount
as of such Distribution Date.
Spread Account: The separate Eligible Account or Accounts created and
maintained by the Trustee pursuant to Section 3A.01 in the name of the Trustee
for the benefit of the Insurer and the Certificateholders and designated "Spread
Account, The Chase Manhattan Bank, as trustee for the registered holders of
Equity One ABS, Inc. Mortgage Pass-Through Certificates, Series 1998-1." Funds
in the Spread Account shall be held in trust for the Insurer and the
Certificateholders for the uses and purposes set forth in this Agreement.
Spread Account Deposit Amount: As to any Distribution Date, the amount by
which (A) Distributable Funds exceeds (B) the sum of (i) the Insurer's Monthly
Premium, (ii) the Trustee Fee, (iii) the Servicing Amount, (iv) the aggregate
Interest Distribution Amount for all Classes of the Class A Certificates, (v)
the aggregate Certificate Formula Principal Amount for all Classes of the Class
A Certificates, and (vi) any I&I Payments due to the Insurer.
Spread Account Draw: As defined in Section 3A.01(b)(i).
Spread Account Excess: As to any Distribution Date, any amount in the
Spread Account in excess of the Specified Spread Account Requirement.
Startup Day: The Closing Date.
Stated Principal Balance: As to any Loan and Due Date, the unpaid principal
balance of such Loan as of such Due Date as specified in the amortization
schedule at the time relating thereto (before any adjustment to such
amortization schedule by reason of any moratorium or similar waiver or grace
period) after giving effect to any previous partial Principal Prepayments and
Liquidation Proceeds allocable to principal (other than with respect to any
Liquidated Loan) and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor.
Step-down Date: The Distribution Date occurring on the later of (a) the
thirtieth Distribution Date or (b) the date upon which the outstanding Pool
Principal Balance is less than 50% of the Cut-off Date Pool Principal Balance.
20
Streamlined Documentation Loan: Any Loan originated pursuant to the
Seller's no income verification loan documentation program.
Subservicer: Any person to whom the Servicer has contracted for the
servicing of all or a portion of the Loans pursuant to Section 3.02.
Substitute Loan: A Loan substituted by a Seller for a Deleted Loan(s) which
must, on the date of such substitution, as confirmed in a Request for Release,
substantially in the form of Exhibit J, (i) have a Stated Principal Balance,
after deduction of the principal portion of the Scheduled Payment due in the
month of substitution, not in excess of, and not more than 10% less than, the
Stated Principal Balance(s) of the Deleted Loans; (ii) be accruing interest at a
rate no lower than the rate of the Deleted Loan(s) and not more than 1% per
annum higher than the rate of the Deleted Loan(s); (iii) have a Loan-to-Value
Ratio no higher than that of the Deleted Loan(s); (iv) have a remaining term to
maturity no greater than (and not more than one year less than that of) the
Deleted Loan(s); and (v) comply as of the date of substitution with each
representation and warranty set forth or referred to in Section 2.03.
Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03.
Tax Matters Person: The person designated as "tax matters person" in the
manner provided under Treasury regulation ss.1.860F-4(d) and temporary Treasury
regulation ss.301.6231(a)(7)1T. Initially, the Tax Matters Person shall be the
Trustee.
Tax Matters Person Certificate: The Class R Certificate with a Denomination
of .00001%.
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Class R Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trustee: The Chase Manhattan Bank and its successors and, if a successor
trustee is appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to one-twelfth of
the Trustee Fee Rate multiplied by the Pool Principal Balance with respect to
such Distribution Date.
Trustee Fee Rate: With respect to each Loan, the per annum rate agreed upon
in writing on or prior to the Closing Date by the Trustee and the Depositor.
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Trust Fund: The corpus of the trust created hereunder consisting of (i) the
Loans and all interest and principal received, or receivable, on or with respect
thereto after the Cut-off Date to the extent not applied in computing the
Cut-off Date Principal Balance thereof and all interest and principal payments
on such Loans received prior to the Cut-off Date in respect of installments of
interest and principal due thereafter; (ii) the Certificate Account, the
Distribution Account, the Spread Account, and all amounts deposited therein
pursuant to the applicable provisions of this Agreement; (iii) property that
secured a Loan and has been acquired by foreclosure, deed-in-lieu of foreclosure
or otherwise; (iv) the Policy; and (v) all proceeds of the conversion, voluntary
or involuntary, of any of the foregoing.
Voting Rights: The portion of the voting rights of all of the Certificates
which is allocated to any Certificate. As of any date of determination, the
percentage of all the Voting Rights allocated to each Class of Certificates
shall be the fraction, expressed as a percentage, the numerator of which is the
Class Certificate Balance of such Class then outstanding and the denominator of
which is the aggregate stated Principal Balance of the Loans then outstanding.
The Voting Rights allocated to each Class of Certificates shall be allocated
among all Holders of each such Class in proportion to the outstanding
Certificate Balances of their respective Certificates on such date.
Weighted Average Adjusted Net Mortgage Rate: As to any Distribution Date,
the weighted average of the Adjusted Net Mortgage Rates of the Outstanding
Loans, such weighted average to be calculated based on the Stated Principal
Balances of such Outstanding Loans on such Distribution Date.
ARTICLE II
CONVEYANCE OF LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Loans.
(a) Each Seller, concurrently with the execution and delivery hereof,
hereby sells, transfers, grants, bargains, assigns, sets over and otherwise
conveys to the Depositor, without recourse, all the right, title and interest of
such Seller in and to that portion of the Loans listed on the Loan Schedule that
pertains to such Seller, including all interest and principal received or
receivable by such Seller on or with respect to such Loans after the Cut-off
Date and all interest and principal payments on such Loans received prior to the
Cut-off Date in respect of installments of interest and principal due
thereafter, but not including payments of principal and interest due and payable
on such Loans on or before the Cut-off Date. On or prior to the Closing Date,
each Seller shall deliver to the Depositor or, at the Depositor's direction, to
the Trustee or other designee of the Depositor, the Mortgage File for each Loan
listed in that portion of the Loan Schedule that pertains to such Seller. Such
delivery of the Mortgage Files shall be made against payment by the Depositor of
the purchase price, previously agreed to by such Seller and
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the Depositor, for the Loans listed on the Loan Schedule that pertains to
such Seller. With respect to any Loan that does not require the first payment of
principal or interest thereon to be made on or before such Loan's Due Date in
the month of the first Distribution Date, such Seller shall deposit into the
Distribution Account on or before the Distribution Account Deposit Date relating
to the first Distribution Date, an amount equal to one month's interest at the
related Adjusted Mortgage Rate on the Cut-off Date Principal Balance of such
Loan. In addition, on or prior to the Closing Date, the Depositor shall cause
the Insurer to deliver the Policy to the Trustee.
(b) The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, grants, bargains, assigns, sets over and otherwise
conveys to the Trustee for the benefit of the Insurer and the
Certificateholders, without recourse, all the right, title and interest of the
Depositor in and to the Trust Fund together with the Depositor's right to
require the Sellers to cure any breach of a representation or warranty made
herein by the Sellers or to repurchase or substitute for any affected Loan in
accordance herewith.
(c) In connection with the sale, transfer and assignment set forth in
clause (b) above, the Depositor has delivered or caused to be delivered to the
Trustee or a Custodian for the Trustee on or before the Closing Date or shall
deliver or cause to be delivered to the Trustee or a Custodian for the Trustee
on or before such later date as is set forth below, for the benefit of the
Insurer and the Certificateholders the following documents or instruments with
respect to each Loan so sold, transferred and assigned:
(i) the original Mortgage Note endorsed (by manual or facsimile
signature) as follows: "Pay to the order of The Chase Manhattan Bank as
trustee for the benefit of the Certificateholders of Equity One ABS, Inc.
Mortgage Pass-Through Certificates Series 1998-1 without recourse," with
all intervening endorsements and all riders and modifications showing a
complete chain of endorsement from the originator to the Person endorsing
it to the Trustee (each such endorsement being sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or
assignee thereof, in and to that Mortgage Note);
(ii) except as provided below, the original recorded Mortgage;
(iii) an original recorded assignment of the Mortgage (which may be
included in a blanket assignment or assignments), duly executed by the
appropriate Seller and the Depositor, which assignment will not be
delivered on or before the Closing Date but shall be delivered within the
time period set forth in this Section 2.01, together with, except as
provided below, all interim recorded assignments of such Mortgage, if any,
all riders or modifications to such Mortgage, if any, (each such assignment
to be in recordable form and sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the
assignment relates, with the original to be recorded by the Servicer
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as follows: the Servicer shall promptly send such assignments for
recording, and shall return the original recorded assignment to the Trustee
once returned as recorded by the applicable recording office);
(iv) the original of each assumption, modification, written assurance
or substitution agreement, if any; and
(v) except as provided below, the original or duplicate original
lender's title policy and all riders thereto.
In the event that in connection with any Loan the Depositor
cannot deliver (a) the original recorded Mortgage, (b) all interim recorded
assignments or (c) the lender's title policy (together with all riders thereto)
satisfying the requirements of clause (ii), (iii) or (v) above, respectively,
concurrently with the execution and delivery hereof because such document or
documents have not been returned from the applicable public recording office in
the case of clause (ii) or (iii) above, or because the title policy has not been
delivered to either the Servicer or the Depositor by the applicable title
insurer in the case of clause (v) above, and, in the case of the assignments of
the Mortgage to the Trustee as required under (iii) above, the Depositor shall
promptly deliver to the Trustee, in the case of clause (ii) or (iii) above, such
original Mortgage or such assignment, as the case may be, with evidence of
recording indicated thereon upon receipt thereof from the public recording
office, or a copy thereof, certified, if appropriate, by the relevant recording
office, but in no event shall any such delivery of the original Mortgage and
each such assignment or a copy thereof, certified, if appropriate, by the
relevant recording office, and each title policy as required by clause (v) above
be made later than one year following the Closing Date; provided, however, in
the event the Depositor is unable to deliver by such date each Mortgage, and
each such assignment or each such title policy by reason of the fact that any
such documents have not been returned by the appropriate recording office, or,
in the case of each such assignment, because the related Mortgage or any related
interim assignment have not been returned by the appropriate recording office
or, in the case of each title policy, because the title insurer has not received
the recording information from the appropriate recording office for such
mortgage or assignment, has not been returned by the appropriate recording
office, the Depositor shall deliver such documents to the Trustee as promptly as
possible upon receipt thereof and, in any event, within 720 days following the
Closing Date. The Depositor shall forward or cause to be forwarded to the
Trustee (a) from time to time additional original documents evidencing an
assumption or modification of a Loan and (b) any other documents required to be
delivered by the Depositor or the Servicer to the Trustee. In the event that the
original Mortgage is not delivered and in connection with the payment in full of
the related Loan and the public recording office requires the presentation of a
"lost instruments affidavit and indemnity" or any equivalent document, because
only a copy of the Mortgage can be delivered with the instrument of satisfaction
or reconveyance, the Servicer shall execute and deliver or cause to be executed
and delivered such a document to the public recording office. In the case where
a public recording office retains the original recorded Mortgage or in the case
where a Mortgage is lost after recordation in a public recording office, the
appropriate Seller shall deliver
24
to the Trustee a copy of such Mortgage certified by such public recording
office to be a true and complete copy of the original recorded Mortgage.
As promptly as practicable subsequent to such transfer and assignment, and
in any event, within thirty (30) days thereafter, the Servicer shall (i) affix
the Trustee's name to each assignment of Mortgage, as the assignee thereof as
Trustee for the benefit of the Certificateholders, (ii) cause such assignment to
be in proper form for recording in the appropriate public office for real
property records and (iii) cause to be delivered for recording in the
appropriate public office for real property records the assignments of the
Mortgages to the Trustee, except that, with respect to any assignments of
Mortgages as to which the information required to prepare such assignment in
recordable form has not yet been received, the Servicer's obligation to do so
and to deliver the same for such recording shall be as soon as practicable after
receipt of such information and in any event within thirty (30) days after
receipt thereof.
In the case of Loans that have been prepaid in full as of the Closing Date,
the Depositor, in lieu of delivering the above documents to the Trustee, will
deposit in the Certificate Account the portion of such payment that is required
to be deposited in the Certificate Account pursuant to Section 3.05 hereof.
SECTION 2.02. Acceptance by Trustee of the Loans.
The Trustee acknowledges receipt of the documents identified in the initial
certification in the form annexed hereto as Exhibit D and declares that it holds
and will hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold such other
assets as are included in the Trust Fund, in trust for the exclusive use and
benefit of all present and future Certificateholders and the Insurer. The
Trustee acknowledges that it will maintain possession of the Mortgage Notes in
the State of New York, unless otherwise permitted by the Rating Agencies and the
Insurer. In the event that the Trustee desires to maintain possession of the
Mortgage Notes in a state constituting one of the United States of America, the
Trustee shall, at least thirty (30) days prior to discontinuing possession of
the Mortgage Notes in the State of New York, provide (i) a Notice of such
intention to the Rating Agencies, the Insurer and the Sellers and (ii) an
Opinion of Counsel stating that such relocation of the Mortgage Notes and the
possession by the Trustee of the Mortgage Notes in such other state will not
destroy or impair the perfection by the Trustee of the security interests
assigned and granted to the Trustee pursuant to the provisions of Section 10.04.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Insurer, the Servicer and the Sellers an initial certification in
the form annexed hereto as Exhibit D. Based on its review and examination, and
only as to the documents identified in such initial certification, the Trustee
shall acknowledge that such documents appear regular on their face and relate to
the Loans listed in the Loan Schedule or shall indicate any noted deviations.
The Trustee, at the time of delivery of the initial certification, shall be
under no duty or obligation (i) to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented
25
purpose or that they have actually been recorded in the real estate records
or that they are other than what they purport to be on their face or (ii) to
determine whether the Mortgage File shall include any of the documents listed in
Section 2.01(c), except for the Mortgage Note. Should there be any exceptions to
the Trustee's initial certification, the appropriate Seller shall have thirty
(30) days from the Closing Date to cure such exception or deliver a Mortgage
File or Mortgage Files for a Substitute Loan or Substitute Loans in accordance
with Section 2.03(c).
Not later than 90 days after the Closing Date, the Trustee shall deliver to
the Depositor, the Servicer and the Sellers a final certification in the form
annexed hereto as Exhibit E, with any applicable exceptions noted thereon.
If the Trustee or the Insurer finds any document constituting a part of a
Mortgage File which does not meet the requirements of Section 2.01, the Trustee
shall list such as an exception in the final certification; provided, however
that the Trustee shall not make any determination as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or is sufficient to effect the
assignment of and transfer to the assignee thereof under the mortgage to which
the assignment relates. In performing any such review, the Trustee may
conclusively rely on the Depositor as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Trustee's review of the Mortgage Files is limited solely to confirming that the
documents listed in Section 2.01(c) have been received and further confirming
that any and all documents delivered pursuant to Section 2.01(c) have been
executed and relate to the Loans identified in the Loan Schedule. The Trustee
shall have no responsibility for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form, whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction, or whether a blanket assignment is
permitted in any applicable jurisdiction. The appropriate Seller shall promptly
correct or cure such defect within 90 days from the date it was so notified of
such defect and, if such Seller does not correct or cure such defect within such
period, such Seller shall either (a) substitute for the related Loan a
Substitute Loan, which substitution shall be accomplished in the manner and
subject to the conditions set forth in Section 2.03, or (b) purchase such Loan
from the Trustee within 90 days from the date such Seller was notified of such
defect in writing at the Purchase Price of such Loan; provided, however, that in
no event shall such substitution or purchase occur more than 540 days from the
Closing Date, except that if the substitution or purchase of a Loan pursuant to
this provision is required by reason of a delay in delivery of any comments by
the appropriate recording office, and there is a dispute between either the
Servicer or such Seller and the Trustee over the location or status of the
recorded document, then such substitution or purchase shall occur within 720
days from the Closing Date. The Trustee shall deliver a report to each Rating
Agency and the Insurer within 720 days from the Closing Date indicating a list
of all documents in each Mortgage File in the possession of the Trustee. Any
such substitution pursuant to (a) above or purchase pursuant to (b) above shall
not be effected prior to the delivery to the Trustee of the Opinion of Counsel
required by Section 2.05 hereof, if any, and any substitution pursuant to (a)
above shall not be effected prior to the additional delivery to the Trustee of a
Request for Release
26
substantially in the form of Exhibit J. No substitution is permitted to be
made in any calendar month after the Determination Date for such month. The
Purchase Price for any such Loan shall be deposited by such Seller in the
Certificate Account on or prior to the Distribution Account Deposit Date for the
Distribution Date in the month following the month of repurchase and, upon
receipt of such deposit and certification with respect thereto in the form of
Exhibit J, the Trustee shall release the related Mortgage File to such Seller
and shall execute and deliver at such Seller's request such instruments of
transfer or assignment prepared by such Seller, in each case without recourse,
as shall be necessary to vest in such Seller, or a designee, the Trustee's
interest in any Loan released pursuant hereto.
The Trustee shall retain possession and custody of each Mortgage File in
accordance with and subject to the terms and conditions set forth herein. The
Servicer shall promptly deliver to the Trustee, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting the
Mortgage File as come into the possession of the Servicer from time to time.
It is understood and agreed that the obligation of the appropriate Seller
to substitute for or to purchase any Loan which does not meet the requirements
of Section 2.01 above shall constitute the sole and exclusive remedy respecting
such defect available to the Trustee, the Depositor and any Certificateholder
against any Seller.
SECTION 2.03. Representations, Warranties and Covenants of the Sellers and
the Servicer.
(a) (i) Equity One-Delaware, Equity One-Florida, Equity One-Minnesota,
Equity One-New Hampshire, Equity One-New York, Equity One-Pennsylvania,
Equity One-North Carolina and Equity One-West Virginia, in their capacities
as Sellers, hereby make the representations and warranties set forth in
Schedules IIA-H respectively, and by this reference incorporated herein, to
the Depositor, the Insurer and the Trustee, as of the Closing Date, or if
so specified therein, as of the Cut-off Date; and
(ii) Equity One-Delaware, in its capacity as Servicer, hereby makes
the representations and warranties set forth in Schedule IIX, and by this
reference incorporated herein, to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified therein, as of the
Cut-Off Date.
(b) Equity One-Delaware, Equity One-Florida, Equity One-Minnesota, Equity
One-New Hampshire, Equity One-New York, Equity One-Pennsylvania, Equity
One-North Carolina and Equity One-West Virginia, in their capacities as Sellers,
hereby make the representations and warranties set forth in Schedule IIIA-H
respectively, and by this reference incorporated herein, to the Depositor, the
Insurer and the Trustee, as of the Closing Date, or if so specified therein, as
of the Cut-off Date.
27
(c) Upon discovery by any of the parties hereto or the Insurer of a breach
of a representation or warranty made pursuant to Section 2.03(b) that materially
and adversely affects the interests of the Certificateholders or the Insurer in
any Loan, the party discovering such breach shall give prompt notice thereof to
the other parties. Each Seller, for itself and not jointly and severally for all
other Sellers, hereby covenants that within 90 days of the earlier of its
discovery or its receipt of written notice from any party of a breach of any
representation or warranty made pursuant to Section 2.03(b) which materially and
adversely affects the interests of the Certificateholders or the Insurer in any
Loan listed on the Loan Schedule that pertains to such Seller, such Seller shall
cure such breach in all material respects, and if such breach is not so cured,
shall, (i) if such 90-day period expires prior to the second anniversary of the
Closing Date, remove such Loan (a "Deleted Loan") from the Trust Fund and
substitute in its place a Substitute Loan, in the manner and subject to the
conditions set forth in this Section or (ii) repurchase the affected Loan or
Loans from the Trustee at the Purchase Price in the manner set forth below;
provided, however, that any such substitution pursuant to (i) above shall not be
effected prior to the delivery to the Trustee of the Opinion of Counsel required
by Section 2.05 hereof, if any, and any such substitution pursuant to (i) above
shall not be effected prior to the additional delivery to the Trustee of a
Request for Release substantially in the form of Exhibit J and the Mortgage File
for any such Substitute Loan. The appropriate Seller shall promptly reimburse
the Servicer and the Trustee for any expenses reasonably incurred by the
Servicer or the Trustee in respect of enforcing the remedies for such breach.
With respect to the representations and warranties described in this Section
which are made to the best of a Seller's knowledge, if it is discovered by
either the Depositor, the appropriate Seller or the Trustee that the substance
of such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Loan or the interests of the
Certificateholders or the Insurer therein, notwithstanding such Seller's lack of
knowledge with respect to the substance of such representation or warranty, such
inaccuracy shall be deemed a breach by such Seller of the applicable
representation or warranty.
With respect to any Substitute Loan or Loans, such Seller shall deliver to
the Trustee for the benefit of the Certificateholders and the Insurer the
Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such
other documents and agreements as are required by Section 2.01, with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01. No
substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Substitute Loans in the month of substitution shall not be part of the Trust
Fund and will be retained by the appropriate Seller on the next succeeding
Distribution Date. For the month of substitution, distributions to
Certificateholders will include the monthly payment due on any Deleted Loan for
such month and thereafter the appropriate Seller shall be entitled to retain all
amounts received in respect of such Deleted Loan. The Servicer shall amend the
Loan Schedule for the benefit of the Certificateholders and the Insurer to
reflect the removal of such Deleted Loan and the substitution of the Substitute
Loan or Loans and the Servicer shall deliver the amended Loan Schedule to the
Trustee. Upon such substitution, the Substitute Loan or Loans shall be subject
to the terms of this Agreement in all respects, and the appropriate Seller shall
be deemed to have made with respect to such Substitute Loan or Loans, as of the
date of substitution, the
28
representations and warranties made pursuant to Section 2.03(b). Upon any
such substitution and the deposit to the Certificate Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph, the Trustee shall release the Mortgage
File held for the benefit of the Certificateholders and the Insurer relating to
such Deleted Loan to the appropriate Seller and shall execute and deliver at the
appropriate Seller's direction such instruments of transfer or assignment
prepared by such Seller, in each case without recourse, as shall be necessary to
vest title in such Seller, or its designee, with respect to the Trustee's
interest in any Deleted Loan substituted for pursuant to this Section 2.03.
For any month in which the appropriate Seller substitutes one or more
Substitute Loans for one or more Deleted Loans, the Servicer will determine the
amount (if any) by which the aggregate principal balance of all such Substitute
Loans as of the date of substitution is less than the aggregate Stated Principal
Balance of all such Deleted Loans (after application of the scheduled principal
portion of the monthly payments due in the month of substitution). The amount of
such shortage (the "Substitution Adjustment Amount") plus an amount equal to the
aggregate of any unreimbursed Advances with respect to such Deleted Loans shall
be deposited in the Certificate Account by such Seller on or before the
Distribution Account Deposit Date for the Distribution Date in the month
succeeding the calendar month during which the related Loan became required to
be purchased or replaced hereunder.
In the event that the appropriate Seller shall have repurchased a Loan, the
Purchase Price therefor shall be deposited in the Certificate Account pursuant
to Section 3.05 on or before the Distribution Account Deposit Date for the
Distribution Date in the month following the month during which such Seller
became obligated hereunder to repurchase or replace such Loan and upon such
deposit of the Purchase Price, the delivery of the Opinion of Counsel required
by Section 2.05 and receipt of a Request for Release in the form of Exhibit J,
the Trustee shall release the related Mortgage File held for the benefit of the
Certificateholders and the Insurer to such Seller, and the Trustee shall execute
and deliver at such Seller's direction such instruments of transfer or
assignment prepared by such Seller, in each case without recourse, as shall be
necessary to transfer title from the Trustee. It is understood and agreed that
the obligation under this Agreement of any Seller to cure, repurchase or replace
any Loan as to which a breach of a representation or warranty has occurred and
is continuing shall constitute the sole and exclusive remedy against such
Sellers respecting such breach of a representation and warranty available to
Certificateholders, the Depositor or the Trustee on their behalf.
The representations and warranties made pursuant to this Section 2.03 shall
survive delivery of the respective Mortgage Files to the Trustee for the benefit
of the Certificateholders and the Insurer.
Section 2.03A. Additional Obligations of Equity One-Delaware.
(a) In addition to the representations and warranties made by Equity
One-Delaware in its capacity as a Seller, as described in Section 2.03 and set
forth in Schedules IIA and IIIA, Equity One-Delaware hereby represents and
warrants to the Depositor, the Insurer and
29
the Trustee that all of the representations and warranties of the other
Sellers described in Section 2.03 and set forth in Schedules IIB-H and IIIB-H
are true and accurate in all respects.
(b) Equity One-Delaware hereby covenants that it shall comply with the
repurchase and substitution obligations described in Section 2.02 and 2.03 in
the event that (i) a breach of any of the representations and warranties set
forth in Schedules IIIB-H occurs and (ii) the related Seller defaults on its
repurchase and substitution obligations under Sections 2.02 and 2.03.
SECTION 2.04. Representations and Warranties of the Depositor as to the
Loans.
The Depositor hereby represents and warrants to the Trustee and the Insurer
with respect to each Loan that as of the Closing Date, and following the
transfer of the Loans to it by the Sellers, the Depositor had good title to the
Loans and the Mortgage Notes were subject to no offsets, defenses or
counterclaims.
The Depositor, concurrently with the execution and delivery hereof, hereby
sells, transfers, assigns, sets over, grants, bargains and otherwise conveys to
the Trustee for the benefit of the Certificateholders and the Insurer, without
recourse, all of its rights, title and interest with respect to the Loans
including, without limitation, the representations and warranties of the Sellers
made pursuant to Sections 2.03(a) and 2.03(b) hereof, together with all rights
of the Depositor to require any applicable Seller to cure any breach thereof or
to repurchase or substitute for any affected Loan in accordance with this
Agreement.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee. Upon discovery by the Depositor, the Insurer or the Trustee of a breach
of any of the foregoing representations and warranties set forth in this Section
2.04, which breach materially and adversely affects the interest of the
Certificateholders or the Insurer, the party discovering such breach shall give
prompt written notice to the other parties and to each Rating Agency.
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions.
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or Section 2.03 shall be made more than 90
days after the Closing Date unless the appropriate Seller delivers to the
Trustee and the Insurer an Opinion of Counsel, which Opinion of Counsel shall
not be at the expense of either the Trustee or the Trust Fund, addressed to the
Trustee, to the effect that such substitution will not (i) result in the
imposition of the tax on "prohibited transactions" on the Trust Fund or
contributions after the Startup Day, as defined in Sections 860F(a)(2) and
860G(d) of the Code, respectively, or (ii) cause the Trust Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding.
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(b) Upon discovery by the Depositor, the appropriate Seller, the Servicer,
the Insurer or the Trustee that any Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall promptly (and in any event within five (5) Business
Days of discovery) give written notice thereof to the other parties. In
connection therewith, the Trustee shall require the appropriate Seller, at such
Seller's option, to either (i) substitute, if the conditions in Section 2.03(c)
with respect to substitutions are satisfied, a Substitute Loan for the affected
Loan or (ii) repurchase the affected Loan within 90 days of such discovery in
the same manner as it would repurchase a Loan for a breach of representation or
warranty made pursuant to Section 2.03. The Trustee shall reconvey to such
Seller the Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would release a Loan repurchased for breach of
a representation or warranty contained in Section 2.03.
SECTION 2.06. Execution and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment and in payment
therefor, has executed and delivered to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing directly or indirectly the
entire ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund
and exercise the rights referred to above for the benefit of all present and
future Certificateholders and to perform the duties set forth in this Agreement
to the best of its ability, to the end that the interests of the
Certificateholders may be adequately and effectively protected.
SECTION 2.07. REMIC Matters.
The Preliminary Statement sets forth the designations and "latest possible
maturity date" for federal income tax purposes of all interests created hereby.
The "Startup Day" for purposes of the REMIC Provisions shall be the Closing
Date. The "tax matters person" with respect to the Trust Fund shall be the
Trustee and the Trustee shall hold the Tax Matters Person Certificate. The Trust
Fund's fiscal year shall be the calendar year.
SECTION 2.08. Covenants of the Servicer.
The Servicer hereby covenants to the Depositor, the Insurer and the Trustee
as follows:
(a) the Servicer shall comply in the performance of its obligations under
this Agreement with all reasonable rules and requirements of the insurer under
each Required Insurance Policy; and
(b) no written information, certificate of an officer, statement furnished
in writing or written report delivered to the Depositor, any affiliate of the
Depositor, the Insurer or the Trustee and prepared by the Servicer pursuant to
this Agreement will contain any untrue
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statement of a material fact or omit to state a material fact necessary to
make such information, certificate, statement or report not misleading.
ARTICLE III
ADMINISTRATION AND SERVICING
OF LOANS
SECTION 3.01. Servicer to Service Loans.
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For and on behalf of the Certificateholders and the Insurer, the Servicer
shall service and administer the Loans in accordance with the terms of this
Agreement and customary and usual standards of practice of prudent mortgage loan
servicers. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through Subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof, (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any Loan;
provided that the Servicer shall not take any action that is inconsistent with
or prejudices the interests of the Trust Fund, the Insurer or the
Certificateholders in any Loan or the rights and interests of the Depositor, the
Insurer, the Trustee and the Certificateholders under this Agreement. The
Servicer shall represent and protect the interests of the Trust Fund in the same
manner as it protects its own interests in mortgage loans in its own portfolio
in any claim, proceeding or litigation regarding a Loan, and shall not make or
permit any modification, waiver or amendment of any Loan which would cause the
Trust Fund to fail to qualify as a REMIC or result in the imposition of any tax
under Section 860F(a) or Section 860G(d) of the Code. Without limiting the
generality of the foregoing, the Servicer, in its own name or in the name of the
Depositor and the Trustee, is hereby authorized and empowered by the Depositor
and the Trustee, when the Servicer believes it appropriate in its reasonable
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Loans, and with respect to the
Mortgaged Properties held for the benefit of the Certificateholders. The
Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by either or both of them as are
necessary or appropriate to enable the Servicer to service and administer the
Loans to the extent that the Servicer is not permitted to execute and deliver
such documents pursuant to the preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Servicer.
SECTION 3.02. Subservicing; Enforcement of the Obligations of Servicers.
(a) The Servicer may arrange for the subservicing of any Loan
by a Subservicer pursuant to a subservicing agreement; provided, however, that
such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Unless the context
otherwise requires, references in this Agreement to actions taken or to be taken
by the Servicer in servicing the Loans include actions taken or to be taken by a
Subservicer on behalf of the Servicer. Notwithstanding the provisions of any
subservicing agreement, any of
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the provisions of this Agreement relating to agreements or arrangements
between the Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Servicer shall remain obligated and liable to the
Depositor, the Trustee, the Insurer and the Certificateholders for the servicing
and administration of the Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Loans. All actions of
each Subservicer performed pursuant to the related subservicing agreement shall
be performed as an agent of the Servicer with the same force and effect as if
performed directly by the Servicer.
(b) For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the Loans that
are received by a Subservicer regardless of whether such payments are remitted
by the Subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
The Depositor may, but is not obligated to, enforce the obligations of the
Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Servicer hereunder and in
connection with any such defaulted obligation to exercise the related rights of
the Servicer hereunder; provided that the Servicer shall not be relieved of any
of its obligations hereunder by virtue of such performance by the Depositor or
its designee. Neither the Trustee nor the Depositor shall have any
responsibility or liability for any action or failure to act by the Servicer nor
shall the Trustee or the Depositor be obligated to supervise the performance of
the Servicer hereunder or otherwise.
SECTION 3.04. Trustee to Act as Servicer.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the Servicer pursuant to Section 3.09 hereof or any acts or
omissions of the predecessor Servicer hereunder, (ii) obligated to make Advances
if it is prohibited from doing so by applicable law, (iii) obligated to
effectuate repurchases or substitutions of Loans hereunder including, but not
limited to, repurchases or substitutions of Loans pursuant to Section 2.02 or
2.03 hereof, (iv) responsible for expenses of the Servicer pursuant to Section
2.03 or (v) deemed to have made any representations and warranties of the
Servicer hereunder). Any such assumption shall be subject to Section 7.02
hereof. If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee or its successor
shall succeed to any rights and obligations of the Servicer under each
subservicing agreement.
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The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer, deliver to the assuming party all documents and records relating to
each subservicing agreement or substitute subservicing agreement and the Loans
then being serviced thereunder and an accounting of amounts collected or held by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the substitute subservicing agreement to the assuming party.
SECTION 3.05. Collection of Loan Payments; Certificate Account; Distribution
Account; Spread Account.
(a) The Servicer shall make reasonable efforts in accordance with the
customary and usual standards of practice of prudent mortgage servicers to
collect all payments called for under the terms and provisions of the Loans to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any related Required Insurance Policy. Consistent with the
foregoing, the 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 Loan and (ii) extend the due dates for payments due on a Mortgage Note for
a period not greater than 180 days; provided, however, that the Servicer cannot
extend the maturity of any such Loan past the date on which the final payment is
due on the latest maturing Loan as of the Cut-off Date. In the event of any such
arrangement, the Servicer shall make Advances on the related Loan in accordance
with the provisions of Section 4.01 during the scheduled period in accordance
with the amortization schedule of such Loan without modification thereof by
reason of such arrangements. The Servicer shall not be required to institute or
join in litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if it reasonably believes
that enforcing the provision of the Mortgage or other instrument pursuant to
which such payment is required is prohibited by applicable law.
(b) The Servicer shall establish and maintain a Certificate Account into
which the Servicer shall deposit or cause to be deposited within one Business
Day of receipt, except as otherwise specifically provided herein, the following
payments and collections remitted by Subservicers or received by it in respect
of the Loans subsequent to the Cut-off Date (other than in respect of principal
and interest due on the Loans on or before the Cut-off Date) and the following
amounts required to be deposited hereunder:
(i) all payments on account of principal on the Loans, including
Principal Prepayments;
(ii) all payments on account of interest on the Loans, net of the
related Servicing Fee;
(iii) all Insurance Proceeds and Liquidation Proceeds, other than
proceeds to be applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Servicer's
normal servicing procedures;
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(iv) any amount required to be deposited by the Servicer pursuant to
Section 3.05(d) in connection with any losses on Permitted Investments;
(v) any amounts required to be deposited by the Servicer pursuant to
Section 3.09(c) and, in respect of net monthly rental income from REO
Property, pursuant to Section 3.11 hereof;
(vi) all Substitution Adjustment Amounts;
(vii) all Advances made by the Servicer pursuant to Section 4.01; and
(viii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment penalties, late payment
charges or assumption fees, if collected, need not be remitted by the Servicer.
In the event that the Servicer shall remit any amount not required to be
remitted, it may at any time withdraw or direct the institution maintaining the
Certificate Account to withdraw such amount from the Certificate Account, any
provision herein to the contrary notwithstanding. Such withdrawal or direction
may be accomplished by delivering written notice thereof to the Trustee or such
other institution maintaining the Certificate Account which describes the
amounts deposited in error in the Certificate Account. The Servicer shall
maintain adequate records with respect to all withdrawals made pursuant to this
Section. All funds deposited in the Certificate Account shall be held in trust
for the Certificateholders and the Insurer until withdrawn in accordance with
Section 3.08.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders and the Insurer, the Distribution Account. The Trustee shall,
promptly upon receipt, deposit in the Distribution Account and retain therein
the following:
(i) the aggregate amount remitted by the Servicer to the Trustee
pursuant to Section 3.08(a)(ix); and
(ii) any other amounts deposited hereunder which are required to be
deposited in the Distribution Account.
In the event that the Servicer shall remit any amount not required to be
remitted, it may at any time direct the Trustee to withdraw such amount from the
Distribution Account, any provision herein to the contrary notwithstanding. Such
direction may be accomplished by delivering an Officer's Certificate to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee uninvested in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08. In
no event shall the Trustee incur liability for withdrawals from the Distribution
Account at the direction of the Servicer.
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(d) Each institution at which the Certificate Account and the Spread
Account is maintained shall invest the funds therein as directed in writing by
the Servicer in Permitted Investments, which shall mature not later than, in the
case of the Certificate Account, the second Business Day preceding each
Distribution Account Deposit Date (except that if such Permitted Investment is
an obligation of the institution that maintains such account, then such
Permitted Investment shall mature not later than the Business Day next preceding
such Distribution Account Deposit Date) and shall not be sold or disposed of
prior to its maturity. All such Permitted Investments shall be made in the name
of the Trustee, for the benefit of the Certificateholders and the Insurer. So
long as no Event of Default shall have occurred and be continuing, all income
and gain net of any losses realized from any such investment of funds on deposit
in the Certificate Account shall be for the benefit of the Servicer as servicing
compensation and shall be remitted to it monthly as provided herein. All income
and gain net of any losses realized from Permitted Investments made with funds
on deposit in the Spread Account and, if an Event of Default shall have occurred
and be continuing, from all other Permitted Investments shall be deposited into
the Spread Account. The amount of any realized losses in the Certificate Account
or the Spread Account incurred in any such account in respect of any such
investments shall promptly be deposited by the Servicer in the Certificate
Account or remitted to the Trustee for deposit into the Spread Account, as
applicable. The Trustee in its fiduciary capacity shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in the Certificate Account or Spread Account and made in
accordance with this Section 3.05.
(e) The Servicer shall give notice to the Trustee, the Insurer, each
Seller, each Rating Agency and the Depositor of any proposed change of the
location of the Certificate Account prior to any change thereof. The Trustee
shall give notice to the Servicer, each Seller, each Rating Agency and the
Depositor of any proposed change of the location of the Distribution Account
prior to any change thereof.
(f) Amounts on deposit in the Spread Account may be invested in Permitted
Investments which shall mature no later than the Business Day immediately
preceding the next Distribution Date; provided, however, that amounts on deposit
in the Spread Account may mature at a later date than that set forth above, upon
receipt by the Trustee of the Insurer's consent and confirmation in writing from
each Rating Agency that such investment's maturity shall not result in a
downgrade of the Class A Certificates.
SECTION 3.06. Payment of Taxes, Assessments, Hazard Insurance Premiums and
Similar Items; Escrow Accounts.
(a) The Servicer shall require Mortgagors to pay all taxes, assessments,
hazard insurance premiums, flood insurance premiums, condominium association
dues or comparable items for the account of the Mortgagors. To the extent
required by the Seller at the time the related Loan was originated and not
violative of current law, the Servicer shall establish and maintain one or more
accounts (each, an "Escrow Account") and deposit and retain therein
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all collections from the Mortgagors (or advances by the Servicer) for the
payment of taxes, assessments, hazard insurance premiums, condominium
association dues or comparable items for the account of the Mortgagors. Nothing
herein shall require the Servicer to compel a Mortgagor to establish an Escrow
Account in violation of applicable law or if the Seller of the related Loan did
not require the establishment of an Escrow Account at the time the Loan was
originated.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium association dues, or comparable items, to reimburse the Servicer out
of related collections for any payments made pursuant to Sections 3.01 hereof
(with respect to taxes and assessments and insurance premiums) and 3.09 hereof
(with respect to hazard insurance), to refund to any Mortgagors any sums
determined to be overages, to pay interest, if required by law or the terms of
the related Mortgage or Mortgage Note, to Mortgagors on balances in the Escrow
Account or to clear and terminate the Escrow Account at the termination of this
Agreement in accordance with Section 9.01 hereof. The Escrow Accounts shall not
be a part of the Trust Fund.
(b) The Servicer shall advance any payments referred to in Section 3.06(a)
that are not timely paid by the Mortgagors on the date when the tax, premium or
other cost for which such payment is intended is due, but the Servicer shall be
required so to advance only to the extent that such advances, in the good faith
judgment of the Servicer, are required to be made to protect the lien of the
Mortgage and will be recoverable by the Servicer out of Insurance Proceeds,
Liquidation Proceeds or otherwise. The amount of any such advances made by the
Servicer for the purpose of maintaining any hazard or flood insurance shall not,
for the purpose of calculating monthly distributions to the Certificateholders
or remittances to the Trustee for their benefit, be added to the principal
balance of the related Loan, notwithstanding that the terms of the Loan so
permit. Any advance made by the Servicer pursuant to this Section 3.06 shall be
recoverable as a Servicing Advance to the extent permitted by Section 3.08.
SECTION 3.07. Access to Certain Documentation and Information Regarding the
Loans.
The Servicer shall afford the Depositor, the Insurer, the Trustee and each
Rating Agency reasonable access to all records and documentation regarding the
Loans and all accounts, insurance information and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the office designated by the
Servicer.
Upon reasonable advance notice in writing, the Servicer will provide to
each Certificateholder which is a savings and loan association, bank or
insurance company certain reports and reasonable access to information and
documentation regarding the Loans sufficient to permit such Certificateholder to
comply with applicable regulations of the OTS or other regulatory authorities
with respect to investment in the Certificates; provided that the Servicer
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shall be entitled to be reimbursed by each such Certificateholder for
actual expenses incurred by the Servicer in providing such reports and access.
SECTION 3.08. Permitted Withdrawals from the Certificate Account and
Distribution Account.
(a) The Servicer may from time to time make withdrawals from the
Certificate Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously retained by
the Servicer) the servicing compensation to which it is entitled pursuant
to Section 3.14, and, subject to Section 3.05(d), to pay to the Servicer,
as additional servicing compensation, or to the Spread Account, as the case
may be, earnings on or investment income with respect to funds in or
credited to the Certificate Account;
(ii) to reimburse the Servicer for unreimbursed Advances made by it,
such right of reimbursement pursuant to this subclause (ii) being limited
to amounts received on the Loan(s) in respect of which any such Advance was
made;
(iii) to reimburse the Servicer for any Nonrecoverable Advance
previously made;
(iv) to reimburse the Servicer for Insured Expenses from the related
Insurance Proceeds;
(v) to reimburse the Servicer for (a) unreimbursed Servicing Advances,
the Servicer's right to reimbursement pursuant to this clause (a) with
respect to any Loan being limited to amounts received on such Loan(s) which
represent late recoveries of the payments for which such Servicing Advances
were made pursuant to Section 3.01 or Section 3.06 and (b) for unpaid
Servicing Fees as provided in Section 3.11 hereof;
(vi) to pay to the purchaser, with respect to each Loan or property
acquired in respect thereof that has been purchased pursuant to Section
2.02, 2.03 or 3.11, all amounts received thereon after the date of such
purchase;
(vii) to reimburse the Sellers, the Servicer or the Depositor for
expenses incurred by any of them and reimbursable pursuant to Section 6.03
hereof;
(viii) to withdraw any amount deposited in the Certificate Account and
not required to be deposited therein;
39
(ix) on or prior to the Distribution Account Deposit Date, to withdraw
an amount equal to the related Available Funds for such Distribution Date
and remit such amount to the Trustee for deposit in the Distribution
Account; and
(x) to clear and terminate the Certificate Account upon termination of
this Agreement pursuant to Section 9.01 hereof.
The Servicer shall keep and maintain separate accounting, on a Loan by Loan
basis, for the purpose of justifying any withdrawal from the Certificate Account
pursuant to such subclauses (i), (ii), (iv), (v) and (vi). Prior to making any
withdrawal from the Certificate Account pursuant to subclause (iii), the
Servicer shall deliver to the Trustee an Officer's Certificate of a Servicing
Officer indicating the amount of any previous Advance determined by the Servicer
to be a Nonrecoverable Advance and identifying the related Loans(s), and their
respective portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account for
distributions to Certificateholders in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to withhold pursuant to the last paragraph of Section 8.11). In
addition, the Trustee may from time to time make withdrawals from the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee and certain expenses for the
related Distribution Date;
(ii) to withdraw and return to the Servicer any amount deposited in
the Distribution Account and not required to be deposited therein; and
(iii) to clear and terminate the Distribution Account upon termination
of the Agreement pursuant to Section 9.01 hereof.
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of Primary Insurance
Policies.
(a) The Servicer shall require Mortgagors to maintain, for each Loan,
hazard insurance with extended coverage (i) in the case of a Loan secured by a
Mortgage creating a first lien on the related Mortgaged Property, in an amount
that is at least equal to the original principal balance of such Loan or the
maximum insurable value of the improvements on such Mortgaged Property,
whichever is less, and (ii) in the case of a Loan which is subject to a prior
loan or prior loans, in an amount equal to the lesser of the combined principal
balances of such Loan and the prior loan(s) or the maximum insurable value of
the improvements on the related Mortgaged Property. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause. Any amounts collected by the Servicer
under any such policies (other than the amounts to be applied to the restoration
or repair of the improvements on the related Mortgaged Property or amounts
released to the
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Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Certificate Account. It is understood and agreed that
no earthquake or other additional insurance is to be required of any Mortgagor
or maintained on property acquired in respect of a Mortgage other than pursuant
to such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Mortgaged Property is located at
the time of origination of the Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Servicer shall require the related Mortgagor to maintain flood
insurance with respect to such Loan. Such flood insurance shall be in an amount
equal to the original principal balance of the related Loan.
(b) The Servicer shall not be required to have Mortgagors maintain any
Primary Mortgage Insurance Policy with respect to any Loan, but may do so. The
Servicer shall not take any action which would result in non-coverage under any
applicable Primary Mortgage Insurance Policy of any loss which, but for the
actions of the Servicer, would have been covered thereunder. If any Mortgagor
fails to pay the premiums for its Primary Mortgage Insurance Policy, if any, the
Servicer may, but shall not be required to, pay such premiums. Any payment made
by the Servicer pursuant to this Section 3.09(b) shall be recoverable as a
Servicing Advance to the extent permitted by Section 3.08.
(c) In connection with its activities as Servicer of the Loans, the
Servicer agrees to present on behalf of itself, the Trustee, the Insurer and
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policies
respecting defaulted Loans. Any amounts collected by the Servicer under any
Primary Mortgage Insurance Policies shall be deposited in the Certificate
Account.
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
(a) When any property subject to a Mortgage has been conveyed by the
Mortgagor, the Servicer, to the extent that it has knowledge of such conveyance,
may, at its discretion, but is not required to, enforce any due-on-sale clause
contained in any Mortgage Note or Mortgage, to the extent permitted under
applicable law and governmental regulations, but only to the extent that such
enforcement will not adversely affect or jeopardize coverage under any Required
Insurance Policy. The Servicer is authorized, subject to Section 3.10(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Loan shall continue to be covered (if so covered before the Servicer enters such
agreement) by the applicable Required Insurance Policies. The Servicer, subject
to Section 3.10(b), is also authorized with the prior approval of the insurers
under any Required Insurance Policies to enter into a substitution of liability
agreement with such Person, pursuant to which the original Mortgagor is released
from liability and such Person is substituted as Mortgagor and becomes liable
under the Mortgage Note. Notwithstanding the foregoing, the Servicer shall not
be deemed to be in default under this Section by reason of any transfer or
41
assumption which the Servicer reasonably believes it is restricted by law from
preventing, for any reason whatsoever.
(b) In any case in which a Mortgaged Property has been conveyed to a Person
by a Mortgagor, and such Person is to enter into an assumption agreement or
modification agreement or supplement to the Mortgage Note or Mortgage that
requires the signature of the Trustee, or if an instrument of release signed by
the Trustee is required releasing the Mortgagor from liability on the Loan, the
Servicer shall prepare and deliver or cause to be prepared and delivered to the
Trustee for signature and shall direct, in writing, the Trustee to execute the
assumption agreement with the Person to whom the Mortgaged Property is to be
conveyed and such modification agreement or supplement to the Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of the
Mortgage Note may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Servicer in accordance with its
underwriting standards as then in effect. Together with each such substitution,
assumption or other agreement or instrument delivered to the Trustee for
execution by it, the Servicer shall deliver an Officer's Certificate signed by a
Servicing Officer stating that the requirements of this subsection have been met
in connection therewith. The Servicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in the
case of the original shall be added to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. Any fee
collected by the Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation.
SECTION 3.11. Realization Upon Defaulted Loans; Repurchase of Certain
Loans.
The Servicer shall use reasonable efforts to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Loans as
come into and continue in default and as to which no satisfactory arrangements
can be made for collection of delinquent payments. In connection with such
foreclosure or other conversion, the Servicer shall follow such practices and
procedures as it shall deem necessary or advisable and as shall be normal and
usual in its general mortgage servicing activities and meet the requirements of
the insurer under any Required Insurance Policy; provided, however, that the
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of any property unless it shall determine
(i) that such restoration and/or foreclosure will increase the proceeds of
liquidation of the Loan after reimbursement to itself of such expenses and (ii)
that such expenses will be recoverable to it through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Certificate Account). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the liquidation proceeds with
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respect to the related Mortgaged Property, as provided in the definition of
Liquidation Proceeds. If the Servicer has knowledge that a Mortgaged Property
which the Servicer is contemplating acquiring in foreclosure or by deed in lieu
of foreclosure is located within a one mile radius of any site with
environmental or hazardous waste risks known to the Servicer, the Servicer will,
prior to acquiring the Mortgaged Property, (i) consider such risks and only take
action in accordance with its established environmental review procedures and
(ii) consult with the Insurer and obtain the Insurer's consent to such action.
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee for the benefit of the Certificateholders, or
its nominee, on behalf of the Certificateholders. The Trustee's name shall be
placed on the title to such REO Property solely as the Trustee hereunder and not
in its individual capacity. The Servicer shall ensure that the title to such REO
Property references this Agreement and the Trustee's capacity thereunder.
Pursuant to its efforts to sell such REO Property, the Servicer shall either
itself or through an agent selected by the Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Servicer deems to be in the best interest of
the Certificateholders for the period prior to the sale of such REO Property.
The Servicer shall prepare for and deliver to the Trustee a statement with
respect to each REO Property that has been rented showing the aggregate rental
income received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions. The
net monthly income, if any, from such REO Property shall be deposited in the
Certificate Account no later than the close of business on each Determination
Date. The Servicer shall perform the tax reporting and withholding required by
Sections 1445 and 6050J of the Code with respect to foreclosures and
abandonments, the tax reporting required by Section 6050H of the Code with
respect to the receipt of mortgage interest from individuals and any tax
reporting required by Section 6050P of the Code with respect to the cancellation
of indebtedness by certain financial entities, by preparing such tax and
information returns as may be required, in the form required, and delivering the
same to the Trustee for filing.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Loan, the Servicer shall dispose of such Mortgaged Property prior to three years
after its acquisition by the Trust Fund unless the Trustee shall have been
supplied with an Opinion of Counsel (which Opinion of Counsel shall not be at
the expense of the Trustee) to the effect that the holding by the Trust Fund of
such Mortgaged Property subsequent to such three-year period will not result in
the imposition of taxes on "prohibited transactions" of the REMIC hereunder as
defined in section 860F of the Code or cause the REMIC to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case the Trust
Fund may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel). Notwithstanding any other provision of
this Agreement, no Mortgaged Property acquired by the Trust Fund shall be rented
(or allowed to continue to be rented) or otherwise used for the production of
income by or on
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behalf of the Trust Fund in such a manner or pursuant to any terms that
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code or (ii) subject
the REMIC to the imposition of any federal, state or local income taxes on the
income earned from such Mortgaged Property under Section 860G(c) of the Code or
otherwise, unless the Servicer has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Loan shall be
subject to a determination by the Servicer that the proceeds of such foreclosure
would exceed the costs and expenses of bringing such a proceeding.
The proceeds from any liquidation of a Loan, as well as any income from an
REO Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees related to such Liquidated Loan; second, to reimburse the
Servicer for any unreimbursed Advances; third, to accrued and unpaid interest
(to the extent no Advance has been made for such amount or any such Advance has
been reimbursed) on the Loan or related REO Property, at the Adjusted Net
Mortgage Rate to the Due Date occurring in the calendar month preceding the
month in which such amounts are required to be distributed; and fourth, as a
recovery of principal of the Loan. Excess Proceeds, if any, from the liquidation
of a Liquidated Loan will be retained by the Servicer as additional servicing
compensation pursuant to Section 3.14.
The Servicer, in its sole discretion, shall have the right to purchase for
its own account or for resale as set forth herein from the Trust Fund any Loan
which is 91 days or more delinquent at a price equal to the Purchase Price. The
Purchase Price for any Loan purchased hereunder shall be deposited in the
Certificate Account and the Trustee, upon receipt of a Request for Release from
the Servicer substantially in the form of Exhibit J, shall release or cause to
be released to the Servicer the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment prepared by the purchaser of
such Loan, in each case without recourse, as shall be necessary to vest in the
Servicer any Loan released pursuant hereto and the Servicer shall succeed to all
the Trustee's right, title and interest in and to such Loan and all security and
documents related thereto. Such assignment shall be a sale and assignment
outright and not for security. The Servicer shall thereupon own such Loan, and
all security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
SECTION 3.12. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer will immediately notify the Trustee by delivering,
or causing to be delivered, a Request for Release substantially in the form of
Exhibit J. Upon receipt of such request, the Trustee shall promptly release the
related Mortgage File to the Servicer, and the Trustee shall at the Servicer's
direction execute and deliver to the Servicer the request for reconveyance, deed
of reconveyance
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or release or satisfaction of mortgage or such instrument releasing the
lien of the Mortgage in each case provided by the Servicer. Expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the related Mortgagor. From time to time and as shall be
appropriate for the servicing or foreclosure of any Loan, including for such
purpose, collection under any policy of flood insurance, any fidelity bond or
errors or omissions policy, or for the purposes of effecting a partial release
of any Mortgaged Property from the lien of the Mortgage or the making of any
corrections to the Mortgage Note or the Mortgage or any of the other documents
included in the Mortgage File, the Trustee shall, upon delivery to the Trustee
of a Request for Release substantially in the form of Exhibit J signed by a
Servicing Officer, release the Mortgage File to the Servicer. Subject to the
further limitations set forth below, the Servicer shall cause the Mortgage File
or documents so released to be returned to the Trustee when the need therefor by
the Servicer no longer exists, unless the Loan is liquidated and the proceeds
thereof are deposited in the Certificate Account, in which case the Servicer
shall deliver to the Trustee a Request for Release substantially in the form of
Exhibit J, signed by a Servicing Officer.
If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
shall deliver or cause to be delivered to the Trustee, for signature, as
appropriate, any court pleadings, requests for trustee's sale or other documents
necessary to effectuate such foreclosure or any legal action brought to obtain
judgment against the Mortgagor on the Mortgage Note or the Mortgage or to obtain
a deficiency judgment or to enforce any other remedies or rights provided by the
Mortgage Note or the Mortgage or otherwise available at law or in equity.
SECTION 3.13. Documents Records and Funds in Possession of Servicer to be
Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the Servicer shall
transmit to the Trustee as required by this Agreement all documents and
instruments in respect of a Loan coming into the possession of the Servicer from
time to time and shall account fully to the Trustee for any funds received by
the Servicer or which otherwise are collected by the Servicer as Liquidation
Proceeds or Insurance Proceeds in respect of any Loan. All Mortgage Files and
funds collected or held by, or under the control of, the Servicer in respect of
any Loans, whether from the collection of principal and interest payments or
from Liquidation Proceeds, including but not limited to, any funds on deposit in
the Certificate Account, shall be held by the Servicer for and on behalf of the
Trustee and shall be and remain the sole and exclusive property of the Trustee,
subject to the applicable provisions of this Agreement. The Servicer also agrees
that it shall not create, incur or subject any Mortgage File or any funds that
are deposited in the Certificate Account, Distribution Account, or any funds
that otherwise are or may become due or payable to the Trustee for the benefit
of the Certificateholders or the Insurer, to any claim, lien, security interest,
judgment, levy, writ of attachment or other encumbrance, or assert by legal
action or otherwise any claim or right of setoff against any Mortgage File or
any funds collected on, or in connection with, a Loan, except, however, that the
Servicer shall be entitled to set off
45
against and deduct from any such funds any amounts that are properly due
and payable to the Servicer under this Agreement.
SECTION 3.14. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Certificate Account an amount equal to
the Servicing Fee for each Loan, provided that the aggregate Servicing Fee with
respect to any Distribution Date shall be reduced (i) by an amount equal to the
aggregate of the Prepayment Interest Shortfalls, if any, with respect to such
Distribution Date, up to the full amount of the aggregate Servicing Fee, and
(ii) with respect to the first Distribution Date, an amount equal to any amount
to be deposited into the Distribution Account by the Depositor pursuant to
Section 2.01(a) and not so deposited. Notwithstanding the preceding sentence,
the Servicer shall, on each Distribution Date after the Call Option Date, reduce
its Servicing Fee to the extent necessary to maintain the Weighted Average
Adjusted Net Mortgage Rate at a rate no less than [_____%].
Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties, assumption fees, late payment
charges and all income and gain net of any losses realized from Permitted
Investments made with funds on deposit in the Certificate Account shall be
retained by the Servicer to the extent not required to be deposited in the
Certificate Account pursuant to Section 3.05 hereof. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided in this Agreement.
SECTION 3.15. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising certain Certificateholders and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Loans required by applicable regulations of
the OTS and the FDIC. Such access shall be afforded without charge, but only
upon reasonable and prior written request and during normal business hours at
the offices designated by the Servicer. Nothing in this Section shall limit the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
SECTION 3.16. Annual Statement as to Compliance.
The Servicer shall deliver to the Depositor, the Insurer and the Trustee on
or before 120 days after the end of the Servicer's fiscal year, commencing with
its 1998 fiscal year, an Officer's Certificate stating, as to the signer
thereof, that (i) a review of the activities of the Servicer during the
preceding fiscal year and of the performance of the Servicer under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this
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Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. The Trustee shall forward a copy of
each such statement to each Rating Agency and to the Insurer.
SECTION 3.17. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
On or before 120 days after the end of the Servicer's fiscal year,
commencing with its 1998 fiscal year, the Servicer at its expense shall cause a
nationally or regionally recognized firm of independent public accountants (who
may also render other services to the Servicer, the Seller or any affiliate
thereof) which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Trustee, the Insurer and the Depositor
to the effect that such firm has examined certain documents and records relating
to the servicing of the Loans under this Agreement and that, on the basis of
such examination, conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FNMA and FHLMC, such servicing has been conducted in compliance
with this Agreement except for such significant exceptions or errors in records
that, in the opinion of such firm, the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FNMA and FHLMC
requires it to report. In rendering such statement, such firm may rely, as to
matters relating to direct servicing of mortgage loans by Subservicers, upon
comparable statements for examinations conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages serviced for FNMA and FHLMC (rendered within one year of
such statement) of independent public accountants with respect to the related
Subservicer. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided such
statement is delivered by the Servicer to the Trustee.
SECTION 3.18. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of FNMA or FHLMC for persons performing servicing
for mortgage loans purchased by FNMA or FHLMC. In the event that any such policy
or bond ceases to be in effect, the Servicer shall obtain a comparable
replacement policy or bond from an insurer or issuer, meeting the requirements
set forth above as of the date of such replacement.
SECTION 3.19. Optional Removal of Servicer by the Insurer.
If any of the following occur, the Insurer shall have the option (but not
the obligation), by notice in writing to the Servicer (with a copy to each
Rating Agency), to
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terminate all of the rights and obligations of the Servicer under this
Agreement and in and to the Loans and the proceeds thereof, other than its
rights as a Certificateholder hereunder:
(i) if on three consecutive Distribution Dates, the aggregate
outstanding principal balance of Loans more than 60 days contractually
delinquent (including Loans in foreclosure and REO Properties) as of the
end of the related Interest Accrual Period exceeds (a) prior to the
Step-Down Date, 6.00% of the Pool Principal Balance as of the end of the
related Interest Accrual Period or (b) on or after the Step-Down Date,
7.50% of the Pool Principal Balance as of the end of the related Interest
Accrual Period;
(ii) if on any Distribution Date, the cumulative Loan Losses over the
prior twelve month period exceed 1.00% of the average Pool Principal
Balance as of the end of the twelve preceding Interest Accrual Periods; or
(iii) if on any Distribution Date, the cumulative Loan Losses since
the Cut-Off Date exceed 2.50% of the Cut-off Date Pool Principal Balance.
On and after the receipt by the Servicer of the notice described in this
Section, all authority and power of the Servicer hereunder, whether with respect
to the Loans or otherwise, shall pass to and be vested in the Trustee, which
shall act as servicer in accordance with the duties and obligations described in
Sections 7.02 and 7.03.
ARTICLE IIIA
SPREAD ACCOUNT; POLICY
SECTION 3A.01 Establishment of Spread Account; Deposits in Spread Account;
Permitted Withdrawals from Spread Account.
(a) No later than the Closing Date, the Trustee will establish and maintain
for the benefit of the Certificateholders and the Insurer an Eligible Account
titled "Spread Account, The Chase Manhattan Bank, as trustee for the registered
holders of Equity One ABS, Inc. Mortgage Pass-Through Certificates, Series
1998-1." The Spread Account will be initially funded by a deposit in the amount
of $[__________]. The Spread Account shall be treated as a "qualified reserve
fund" under applicable Treasury regulations. Except as set forth in clause (d)
of this Section 3A.01, the Trustee shall, promptly upon receipt, deposit into
the Spread Account and retain therein:
(i) on each Distribution Date, the Monthly Spread Account Deposit
Amount transferred by the Trustee pursuant to Section 4.02(a)(vi); and
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(ii) upon receipt, amounts required to be deposited or to be paid by
the Servicer pursuant to Section 3.05(d) and (f) in connection with losses
and gains on investments of amounts in the Spread Account.
(b) Amounts on deposit in the Spread Account shall be withdrawn on each
Distribution Date by the Trustee in the following order of priority:
(i) to deposit in the Distribution Account, an amount equal to the
excess of the Remittance Amount for such Distribution Date over the Net
Available Funds for such Distribution Date (any such amount, the "Spread
Account Draw"); and
(ii) to the extent that the amount then on deposit in the Spread
Account exceeds the Specified Spread Account Requirement as of such
Distribution Date (such excess, a "Spread Account Excess"), an amount equal
to such Spread Account Excess shall be distributed to the Class R
Certificateholders.
(c) The Trustee shall also be entitled to take the following actions with
respect to the Spread Account:
(i) invest amounts on deposit in the Spread Account in Eligible
Investments pursuant to Section 3.05(f);
(ii) withdraw any amount not required to be deposited in the Spread
Account or deposited therein in error at any time; and
(iii) clear and terminate the Spread Account upon the termination of
this Agreement and, upon such termination, to distribute the balance, if
any, to the Class R Certificateholders.
(d) On the Distribution Date on which all amounts due have been paid to the
Class A Certificateholders, including the Insurer as subrogee of the Class A
Certificateholders, and all I&I Payments have been paid to the Insurer, the
Trustee, after making any withdrawals from the Spread Account required pursuant
to Section 3A.01(b) or (c), shall:
(i) clear and terminate the Spread Account, liquidate any investments
therein and distribute any uninvested funds therein or the proceeds of such
liquidation to the Class R Certificateholders; and
(ii) distribute future receipts of the Spread Account Deposit Amount
to the Class R Certificateholders.
(e) The Spread Account may be terminated at any time with the prior written
approval of the Insurer and the Rating Agencies and written confirmation that
such termination will not result in a downgrade of the Class A Certificates
without taking the Policy into account.
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SECTION 3A.02 Policy.
(a) As soon as possible, and in no event later than 12:00 p.m. New York
City time on the second Business Day immediately preceding the Distribution
Date, the Trustee shall furnish the Insurer and the Servicer with a completed
notice in the form set forth as Exhibit A to the Endorsement to the Policy (the
"Notice") in the event that the sum of Net Available Funds and the Spread
Account Draw is insufficient to pay the Remittance Amount on such Distribution
Date. The Notice shall specify the Insured Amount required and shall constitute
a claim for an Insured Amount pursuant to the Policy. Upon receipt of Insured
Amounts on behalf of the Class A Certificateholders under the Policy, the
Trustee shall deposit such Insured Amounts in the Distribution Account and shall
distribute such Insured Amounts pursuant to Section 4.02.
(b) The Trustee shall receive, as attorney-in-fact of each Holder of a
Class A Certificate, any Insured Amount from the Insurer and disburse the same
to each Holder of a Class A Certificate in accordance with the provisions of
Section 4.02. Insured Amounts disbursed by the Trustee from proceeds of the
Policy shall not be considered payment by the Trust nor shall such payments
discharge the obligation of the Trust with respect to the related Class of Class
A Certificates, and the related Class Certificate Balance shall be deemed not
reduced for such purposes and the Insurer shall become the owner of such unpaid
amounts due from the Trust in respect of such Class of Class A Certificates. The
Trustee hereby agrees on behalf of each Holder of a Class A Certificate for the
benefit of the Insurer that it recognizes 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 subrogated to
the rights of such Class A Certificateholders, as applicable, with respect to
such Insured Amount, shall be deemed to the extent of the payments so made to be
a registered Class A Certificateholder for purposes of payment and shall receive
all future related Remittance Amounts until all such Insured Amounts paid by the
Insurer have been fully reimbursed, subject to the following paragraph. To
evidence such subrogation, the Trustee shall note the Insurer's rights as
subrogee on the registration books maintained by the Trustee and on any related
Class A Certificates surrendered for payment upon receipt from the Insurer of
proof of payment of any Insured Amount. Except as otherwise described herein,
the Insurer shall not acquire any voting rights hereunder as a result of such
subrogation. The effect of the foregoing provisions is that, to the extent of
Insured Amounts paid by it, the Insurer shall be paid before payment of the
balance of the related Remittance Amount is made to the other Holders of the
related Class of Class A Certificates subject to the following paragraph.
(c) It is understood and agreed that the intention of the parties is that
the Insurer shall not be entitled to reimbursement on any Distribution Date for
amounts previously paid by it unless on such Distribution Date the Class of
Class A Certificateholders shall also have received the full amount of the
related Remittance Amount for such Distribution Date.
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(d) The Trustee shall keep complete and accurate records of the amount of
Insured Amounts paid and the Insurer shall have the right to inspect such
records at reasonable times upon one Business Day's prior notice to the Trustee.
(e) The Trustee shall promptly notify the Insurer of any proceeding or the
institution of any action seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class A Certificates. Each
Holder, by its purchase of Class A Certificates, and the Trustee hereby agree
that the Insurer (so long as no Insurer Default exists) may at any time during
the continuation of any proceeding relating to a Preference Claim direct all
matters relating to such Preference Claim, including, without limitation, (i)
the direction of any appeal of any order relating to any Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Insurer shall
be subrogated to the rights of the Trustee and each such Holder in the conduct
of any such Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any order issued in
connection with any such Preference Claim. Insured Amounts paid by the Insurer
to the Trustee shall be received by the Trustee, as agent to the
Certificateholders. The Trustee is not permitted to make a claim on the Trust or
on any Certificateholder for payments made to Certificateholders under the
Policy which are characterized as preference payments by any federal bankruptcy
court having jurisdiction over any bankrupt Mortgagor unless ordered to do so by
such bankruptcy court.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
SECTION 4.01. Advances.
The Servicer shall determine on or before each Servicer Advance Date
whether it is required to make an Advance pursuant to the definition thereof. If
the Servicer determines it is required to make an Advance, it shall, on or
before the Servicer Advance Date, either (i) deposit into the Certificate
Account an amount equal to the Advance or (ii) make an appropriate entry in its
records relating to the Certificate Account that any Amount Held for Future
Distribution has been used by the Servicer in discharge of its obligation to
make any such Advance. Any funds so applied shall be replaced by the Servicer by
deposit in the Certificate Account no later than the close of business on the
next Servicer Advance Date. The Servicer shall be entitled to be reimbursed from
the Certificate Account for all Advances of its own funds made pursuant to this
Section as provided in Section 3.08. The obligation to make Advances with
respect to any Loan shall continue if such Loan has been foreclosed or otherwise
terminated and the Mortgaged Property has not been liquidated.
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SECTION 4.02. Priorities of Distribution.
(a) Except with respect to certain Distribution Dates following the
depletion of the Spread Account as described below, on each Distribution Date,
the Trustee shall distribute the following amounts from Distributable Funds, to
the extent available, in the priority indicated:
(i) first, to the Insurer, the Insurer's Monthly Premium;
(ii) second, to the Trustee, the Trustee Fee, except to the extent
previously paid by withdrawals under Section 3.08;
(iii) third, to the Servicer, an amount equal to the sum of (i) the
Servicing Fee, except to the extent previously paid by withdrawals under
Section 3.08, and (ii) any other amounts expended by the Servicer and
reimbursable thereto under this Agreement but not previously reimbursed;
(iv) fourth, to each Class of Class A Certificates, the related
Interest Distribution Amount pro rata based on each such Class' Interest
Distribution Amount;
(v) fifth, to the Class A Certificates as follows: to the Class X-0,
Xxxxx X-0, Class A-3, Class A-4, and Class A-5 Certificates, in that order,
until the Class Certificate Balance of each such Class is reduced to zero,
the Certificate Formula Principal Amount;
(vi) sixth, to the Insurer, any I&I Payments;
(vii) seventh, for deposit into the Spread Account, the Monthly Spread
Account Deposit Amount up to the Specified Spread Account Requirement; and
(viii) eighth, to the Class R Certificateholders, the sum of (i) the
Spread Account Excess, if any, and (ii) any remaining Available Funds.
Notwithstanding the foregoing, if on any Distribution Date following the
depletion of the Spread Account, the Insurer fails to pay an Insured Amount when
due, the Certificate Formula Principal Amount will be distributed to each Class
of Class A Certificates on a pro rata basis in proportion to the respective
Class Certificate Balances for each such Class.
(b) On each Distribution Date, the amount referred to in clause (i) of the
definition of Interest Distribution Amount for each Class of Certificates for
such Distribution Date shall be reduced by the related Class' pro rata share of
(i) Net Prepayment Interest Shortfalls (based on such Class' Interest
Distribution Amount for such Distribution Date without taking into account such
Net Prepayment Interest Shortfalls) and (ii) each Relief Act Reduction incurred
during the calendar month preceding the month of such Distribution Date.
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SECTION 4.03. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall prepare and
cause to be forwarded by first class mail to each Certificateholder, the
Insurer, the Servicer, the Depositor and each Rating Agency a statement setting
forth with respect to the related distribution:
(i) the amount thereof allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments and Liquidation Proceeds
included therein;
(ii) the amount thereof allocable to interest, any Class Unpaid
Interest Amount included in such distribution and any remaining Class
Unpaid Interest Amount after giving effect to such distribution;
(iii) if the distribution to the Holders of such Class of Certificates
is less than the full amount that would be distributable to such Holders if
there were sufficient funds available therefor, the amount of the shortfall
and the allocation thereof as between principal and interest;
(iv) the Class Certificate Balance of each Class of Certificates after
giving effect to the distribution of principal on such Distribution Date;
(v) the Pool Principal Balance for the following Distribution Date;
(vi) the amount of the Servicing Fee paid to or retained by the
Servicer with respect to such Distribution Date;
(vii) the Pass-Through Rate for each such Class of Certificates with
respect to such Distribution Date;
(viii) the amount of Advances included in the distribution on such
Distribution Date and the aggregate amount of Advances outstanding as of
the close of business on such Distribution Date;
(ix) the number and aggregate principal amounts of Loans (A)
delinquent (exclusive of Loans in foreclosure) (1) 1 to 30 days (2) 31 to
60 days (3) 61 to 90 days and (4) 91 or more days and (B) in foreclosure
and delinquent (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4)
91 or more days, as of the close of business on the last day of the
Prepayment Period preceding such Distribution Date;
(x) with respect to any Loan that became an REO Property during the
preceding calendar month, the loan number and Stated Principal Balance of
such Loan as
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of the close of business on the last day of the Prepayment Period preceding
such Distribution Date and the date of acquisition thereof;
(xi) the total number and principal balance of any REO Properties (and
market value, if available) as of the close of business on the last day of
the Prepayment Period preceding such Distribution Date;
(xii) the Spread Account Draw;
(xiii) the Monthly Spread Account Deposit Amount, the percentage of
the Spread Account Deposit Amount used to determine such Monthly Spread
Account Deposit Amount, the Spread Account Deposit Amount, the Spread
Account Excess and the allocation of such Spread Account Excess to Class R
Certificateholders pursuant to Section 3A.01;
(xiv) the amount on deposit in the Spread Account after the
Distribution Date; and
(xv) the Specified Spread Account Requirement.
(b) The Trustee's responsibility for disbursing the above information to
the Certificateholders is limited to the availability, timeliness and accuracy
of the information provided by the Servicer. On or before the third Business Day
following the end of each Prepayment Period, the Servicer shall deliver to the
Trustee a report, in a form acceptable to the Trustee, containing all of the
necessary information for the Trustee to complete items (i), (v), (vi) and
(viii)-(xi) of the statement described in (a) above. The Trustee shall be
responsible for obtaining the necessary information to complete items (ii),
(iii), (iv), (vii) and (xii)-(xv) of the statement described in (a) above. The
Trustee will send a copy of each statement provided pursuant to this Section
4.03 to each Rating Agency.
(c) Within a reasonable period of time after the end of each calendar year,
the Trustee shall cause to be furnished to each Person who at any time during
the calendar year was a Certificateholder, a statement containing the
information set forth in clauses (a)(i), (a)(ii) and (a)(vii) of this Section
4.03 aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time in effect.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
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The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in the minimum denominations,
integral multiples in excess thereof (except that one Certificate in each Class
may be issued in a different amount which must be in excess of the applicable
minimum denomination) and aggregate denominations per Class set forth in the
Preliminary Statement.
Subject to Section 9.02 hereof respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (a) by wire
transfer in immediately available funds to the account of such Holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least five Business Days prior to the related Record
Date and (ii) such Holder shall hold (A) 100% of the Class Certificate Balance
of any Class of Certificates or (B) Certificates of any Class with an aggregate
principal Denomination of not less than $1,000,000 or (b) by check mailed by
first class mail to such Certificateholder at the address of such Holder
appearing in the Certificate Register.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the countersignature and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless countersigned by the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their countersignature. On the
Closing Date, the Trustee shall countersign the Certificates to be issued at the
direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee on a
continuous basis, an adequate inventory of Certificates to facilitate transfers.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.06 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. Upon surrender for registration of transfer of any
Certificate, the Trustee shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and aggregate Percentage Interest.
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At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute, authenticate, and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in the form of Exhibit G duly executed by the Holder thereof or his attorney
duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of transfer or exchange shall
be canceled and subsequently destroyed by the Trustee in accordance with the
Trustee's customary procedures.
(b) No transfer of a Class R Certificate shall be made unless such transfer
is made pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such state securities laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
(i) the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer, the Certificateholder by delivering
a certificate in substantially the form set forth in Exhibit G (the "Transferor
Certificate") and the Certificateholder's prospective transferee by delivering a
letter in substantially the form of either Exhibit H (the "Investment Letter")
or Exhibit I (the "Rule 144A Letter") or (ii) there shall be delivered to the
Trustee at the expense of the transferor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Securities Act. The
Depositor shall provide to any Holder of a Class R Certificate and any
prospective transferee designated by any such Holder, information regarding the
related Certificates and the Loans and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
for transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A. The
Trustee and the Servicer shall cooperate with the Depositor in providing the
Rule 144A information referenced in the preceding sentence, including providing
to the Depositor such information regarding the Certificates, the Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation under the preceding sentence. Each Holder of a Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Depositor, the Sellers and the Servicer against
any liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
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No transfer of an Class R Certificate shall be made unless the Trustee
shall have received (i) a representation letter from the transferee
substantially in the form of Exhibit H or Exhibit I, to the effect that such
transferee is not an employee benefit plan or arrangement subject to Section 406
of ERISA or a plan or arrangement subject to Section 4975 of the Code, nor a
person acting on behalf of any such plan or arrangement, nor using the assets of
any such plan or arrangement to effect such transfer, (ii) if the purchaser is
an insurance company, a representation that the purchaser is an insurance
company which is purchasing such Certificates with funds contained in an
"insurance company general account" (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60 or (iii)
in the case of any such Class R Certificate presented for registration in the
name of an employee benefit plan subject to ERISA, or a plan or arrangement
subject to Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement, or using such plan's or arrangement's assets,
an Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel
shall not be an expense of either the Trustee or the Trust Fund, addressed to
the Trustee to the effect that the purchase or holding of such Class R
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee to any obligation in addition to those
expressly undertaken in this Agreement or to any liability. Notwithstanding
anything else to the contrary herein, any purported transfer of a Class R
Certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trustee shall be under no liability to any Person for any
registration of transfer of any Class R Certificate that is in fact not
permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.
(c) Each Person who has or who acquires any Ownership Interest in a 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 the rights
of each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate must be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Ownership Interest in a Class R Certificate may be registered
on the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Class R Certificate unless, in addition to the
certificates required to be delivered to the Trustee under subparagraph (b)
above, the Trustee shall have been
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furnished with an affidavit (a "Transfer Affidavit") of the initial owner
or the proposed transferee in the form attached hereto as Exhibit F.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Class R Certificate and (C) not to
Transfer its Ownership Interest in a Class R Certificate or to cause the
Transfer of an Ownership Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section
5.02(b) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Class R Certificate in violation of the provisions of this Section
5.02(b), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall 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 or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement
so long as the Transfer was registered after receipt of the related
Transfer Affidavit, Transferor Certificate and either the Rule 144A Letter
or the Investment Letter. The Trustee shall be entitled but not obligated
to recover from any Holder of a Class R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such subsequent
time as it became other than a Permitted Transferee, all payments made on
such Class R Certificate at and after either such time. Any such payments
so recovered by the Trustee shall be paid and delivered by the Trustee to
the last preceding Permitted Transferee of such Certificate.
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Class R Certificate to any Holder
who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(b) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
shall not be an expense of the Trust Fund, the Trustee, the Sellers or the
Servicer, to the effect that the elimination of such restrictions will not cause
the Trust Fund hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the Trust
Fund, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class R
58
Certificate hereby consents to any amendment of this Agreement which, based
on an Opinion of Counsel furnished to the Trustee, is reasonably necessary (a)
to ensure that the record ownership of, or any beneficial interest in, a Class R
Certificate is not transferred, directly or indirectly, to a Person that is not
a Permitted Transferee and (b) to provide for a means to compel the Transfer of
a Class R Certificate which is held by a Person that is not a Permitted
Transferee to a Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions referred
to above in this Section 5.02 in connection with transfer shall be at the
expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Beneficial Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Beneficial Owners of the Book-Entry Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Beneficial Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Beneficial Owners.
All transfers by Beneficial Owners of Book-Entry Certificates shall be made
in accordance with the procedures established by the Depository Participant or
brokerage firm representing such Beneficial Owner. Each Depository Participant
shall only transfer Book-Entry Certificates of Beneficial Owners it represents
or of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures.
If (x) (i) the Servicer advises the Trustee in writing that the Depository
is no longer willing or able to properly discharge its responsibilities as
Depository, and (ii) the Trustee is unable to locate a qualified successor, (y)
the Servicer at its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Depository or (z) after the
occurrence of an Event of Default or the resignation or removal of the Servicer,
Beneficial Owners representing at least 51% of the aggregate Certificate Balance
of all Book-Entry Certificates together advise the Depository, either directly
or through the Depository Participants, in writing (with instructions to notify
the Trustee in writing) that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Beneficial Owners. Upon the
occurrence of any of the events described in the immediately preceding sentence,
59
the Trustee shall notify all Beneficial Owners of the occurrence of any such
event and of the availability through the Depository of definitive,
fully-registered Certificates (the "Definitive Certificates") to Beneficial
Owners requesting the same. Upon surrender to the Trustee of the related Class
of Certificates by the Depository, accompanied by the instructions from the
Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Servicer, the Depositor nor the Trustee shall be
liable for any delay in delivery of such instruction and each may conclusively
rely on, and shall be protected in relying on, such instructions. The Servicer
shall provide the Trustee with an adequate inventory of certificates to
facilitate the issuance and transfer of Definitive Certificates. Upon the
issuance of Definitive Certificates all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder; provided that the
Trustee shall not by virtue of its assumption of such obligations become liable
to any party for any act or failure to act of the Depository.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Servicer and the Trustee
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 that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute,
countersign and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and Percentage Interest. In connection with the issuance of any new Certificate
under this Section 5.03, the Trustee may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith. Any replacement Certificate issued pursuant to this Section
5.03 shall constitute complete and indefeasible evidence of ownership, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Servicer, the Trustee and any agent of the Servicer or the Trustee may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and neither the Servicer, the
Trustee nor any agent of the Servicer or the Trustee shall be affected by any
notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing
from the Trustee, (b) state that such Certificateholders desire to communicate
with other
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Certificateholders with respect to their rights under this Agreement or
under the Certificates and (c) provide a copy of the communication which such
Certificateholders propose to transmit, or if the Depositor or Servicer shall
request such information in writing from the Trustee, then the Trustee shall,
within ten Business Days after the receipt of such request, provide the
Depositor, the Servicer or such Certificateholders at such recipients' expense
the most recent list of the Certificateholders of such Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City where Certificates may
be surrendered for registration of transfer or exchange. The Trustee initially
designates its Corporate Trust Office for such purposes. The Trustee will give
prompt written notice to the Certificateholders of any change in such location
of any such office or agency.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.
The Depositor and the Servicer will each keep in full effect their
respective existence, rights and franchises as a corporation under the laws of
the United States or under the laws of one of the states thereof and will each
obtain and preserve their respective qualifications to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or any
of the Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or
61
surviving Person to the Servicer shall be qualified to sell mortgage loans
to, and to service mortgage loans on behalf of, FNMA or FHLMC and shall be
reasonably acceptable to the Insurer.
SECTION 6.03. Limitation on Liability of the Depositor, the Sellers, the
Servicer and Others.
None of the Depositor, the Sellers, the Servicer or any of the directors,
officers, employees or agents of the Depositor, the Sellers or the Servicer
shall be under any liability to the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Sellers, the Servicer or any such Person
against any breach of representations or warranties made by it herein or protect
the Depositor, the Sellers, the Servicer or any such Person from any liability
which would otherwise be imposed by reasons of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Depositor, the Sellers, the Servicer
and any director, officer, employee or agent of the Depositor, the Sellers or
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Sellers, the Servicer and any director, officer,
employee or agent of the Depositor, the Sellers or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense related to any specific Loan or Loans (except as any such loss,
liability or expense shall be otherwise reimbursable pursuant to this Agreement)
and any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties hereunder. None of the
Depositor, the Sellers or the Servicer shall be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its
respective duties hereunder and which in its opinion may involve it in any
expense or liability; provided, however, that any of the Depositor, the Sellers
or the Servicer may in its discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto and interests of the Trustee and the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund, and the Depositor, the Sellers and the Servicer shall be entitled to
be reimbursed therefor out of the Certificate Account.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon appointment of a successor servicer acceptable to
the Insurer and receipt by the Trustee of a letter from each Rating Agency that
such a resignation and appointment will not result in a downgrading of the
rating of any of the Certificates without taking the Policy into account or (b)
upon determination that its duties hereunder are no longer permissible under
62
applicable law. Any such determination under clause (b) permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor servicer reasonably acceptable to the Insurer
shall have assumed the Servicer's responsibilities, duties, liabilities and
obligations hereunder.
SECTION 6.05. Indemnification.
The Servicer agrees to indemnify and hold the Trustee, the Depositor, the
Insurer and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Depositor, the Insurer or
any Certificateholder may sustain directly resulting from the gross negligence
or willful misconduct of the Servicer in the performance of its duties hereunder
or in the servicing of the Mortgage Loans in compliance with the terms of this
Agreement. The Servicer shall not be liable or responsible for any of the
representations, covenants, warranties, responsibilities, duties or liabilities
of any prior servicer. The Servicer shall immediately notify the Trustee, the
Depositor, the Insurer and each Certificateholder if a claim is made by a third
party for which any of such parties could require indemnification from the
Servicer under this Section 6.05, and the Servicer shall assume (with the
consent of the Trustee and the Insurer) the defense of any such claim and
advance all expenses in connection therewith, including reasonable counsel fees,
and promptly advance funds to pay, discharge and satisfy any non-appealable,
final judgment or decree which may be entered against the Servicer, the Trustee,
the Depositor, the Insurer and/or the Certificateholder in respect of such
claim. Anything in this Agreement to the contrary notwithstanding, in no event
shall the Trustee be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action. The indemnity provided for in this Section
6.05 shall survive the termination of the Agreement.
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Servicer to deposit in the Certificate Account
or remit to the Trustee any payment (other than a payment required to be
made under Section 4.01 hereof) required to be made with respect to any
Class of Certificates under the terms of this Agreement, which failure
shall continue unremedied for five days after the date upon which written
notice of such failure shall have been given (a) to the Servicer by the
Trustee or the Depositor or (b) to the Servicer, the Depositor and the
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Trustee by the Insurer or the Holders of Certificates of such Class
evidencing not less than 25% of the Voting Rights allocated to such Class;
(ii) any failure by the Servicer to duly observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer contained in this Agreement, which failure shall continue
unremedied for a period of thirty days after the date on which written
notice of such failure shall have been given (a) to the Servicer by the
Trustee or the Depositor or (b) to the Servicer, the Depositor and the
Trustee by the Insurer or the Holders of Certificates of any Class
evidencing not less than 25% of the Voting Rights allocated to such Class;
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceeding, or for the winding-up or liquidation
of its affairs, shall have been entered against the Servicer and such
decree or order shall have remained in force undischarged or unstayed for a
period of 60 consecutive days;
(iv) the Servicer shall consent to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Servicer or
all or substantially all of the property of the Servicer;
(v) the 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;
(vi) so long as the Servicer is a Seller, any failure by any Seller to
observe or perform in any material respect any of the other covenants or
agreements on the part of any Seller contained in this Agreement, which
failure shall continue unremedied for a period of 60 days after the date on
which written notice of such failure shall have been given to such Seller
by the Trustee or the Depositor, or to such Seller and the Trustee by the
Insurer or the Holders of Certificates of any Class evidencing not less
than 25% of the Voting Rights allocated to such Class; or
(vii) any failure of the Servicer to make any Advance in the manner
and at the time required to be made pursuant to Section 4.01 which
continues unremedied for a period of one Business Day after the date of
such failure.
If an Event of Default described in clauses (i) to (vi) 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, the Trustee shall, at the direction of the
64
Insurer, or may, or at the direction of the Holders of Certificates of any Class
evidencing not less than 25% of the Voting Rights allocated to such Class and
with the consent of the Insurer, the Trustee shall by notice in writing to the
Servicer (with a copy to each Rating Agency), terminate all of the rights and
obligations of the Servicer under this Agreement and in and to the Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. If an
Event of Default described in clause (vii) hereof shall occur, the Trustee
shall, at the direction of the Insurer, by notice in writing to the Servicer and
the Depositor, terminate all of the rights and obligations of the Servicer under
this Agreement and in and to the Loans and the proceeds thereof, other than its
rights as a Certificateholder hereunder. On and after the receipt by the
Servicer of such written notice, all authority and power of the Servicer
hereunder, whether with respect to the Loans or otherwise, shall pass to and be
vested in the Trustee. The Trustee shall, subject to Section 3.04 hereof,
thereupon make any Advance described in clause (vii) hereof. The Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Loans and related
documents, or otherwise. Unless expressly provided in such written notice, no
such termination shall affect any obligation of the Servicer to pay amounts owed
pursuant to Article VIII. The Servicer agrees to cooperate with the Trustee in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee of all
cash amounts which shall at the time be credited to the Certificate Account, or
thereafter be received with respect to the Loans.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Loan which was due prior to the notice terminating
such Servicer's rights and obligations as Servicer hereunder and received after
such notice, that portion thereof to which such Servicer would have been
entitled pursuant to Sections 3.08(a)(i) through (viii), and any other amounts
payable to such Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, subject to and to the extent
provided in Section 3.04, be the successor to the Servicer in its capacity as
servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof and
applicable law including the obligation to make Advances pursuant to Section
4.01. As compensation therefor, the Trustee shall be entitled to all funds
relating to the Loans that the Servicer would have been entitled to charge to
the Certificate Account or Distribution Account if the Servicer had continued to
act hereunder. Notwithstanding the foregoing, if the Trustee has become the
successor to the Servicer in accordance with Section 7.01 hereof, the Trustee
may, if it shall be unwilling to so act, or shall, if it is prohibited by
applicable law from making
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Advances pursuant to Section 4.01 hereof or if it is otherwise unable to so
act, appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution the appointment of which does
not adversely affect the then current rating of the Certificates by each Rating
Agency as the successor to the Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Any successor to the Servicer shall be reasonably acceptable to the
Insurer and shall be an institution which is a FNMA and FHLMC approved
seller/servicer in good standing, which has a net worth of at least $10,000,000,
and which is willing to service the Loans and executes and delivers to the
Depositor and the Trustee an agreement accepting such delegation and assignment,
which contains an assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer (other than
liabilities of the Servicer under Section 6.03 hereof incurred prior to
termination of the Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; and provided further that each
Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation without taking the Policy
into account. Pending appointment of a successor to the Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3.04 hereof, 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 Loans as
it and such successor shall agree; provided, however, that no such compensation
shall be in excess of the Servicing Fee permitted the Servicer hereunder. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither the
Trustee nor any other successor servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination or appointment of a successor to the Servicer, the
Trustee shall give prompt written notice thereof to Certificateholders, the
Insurer and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge has occurred and remains uncured 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 Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that the Trustee shall not be
responsible for the accuracy or content of any such resolution, certificate,
statement, opinion, report, document, order or other instrument.
Unless an Event of Default of which a Responsible Officer of the Trustee
shall have actual knowledge shall have occurred and be continuing, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this Agreement
against the Trustee and the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement which it believed in good faith to be genuine and
to have been duly executed by the proper authorities respecting any matters
arising hereunder.
The Trustee shall not be liable for an error of judgment made in good faith
by a Responsible Officer or other officers of the Trustee, unless it shall be
finally proven that the Trustee was negligent in ascertaining the pertinent
facts.
The Trustee shall not be liable with respect to any action taken, suffered
or omitted to be taken by it in good faith in accordance with this Agreement or
with the direction of the Insurer or Holders of Certificates evidencing not less
than 25% of the Voting Rights of the Certificates relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee under this
Agreement.
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Subject to the other provisions of this Agreement and without limiting the
generality of this Section 8.01, the Trustee shall have no duty (A) to see to
any recording, filing, or depositing of this Agreement or any agreement referred
to herein or any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against any part of the Trust Fund
other than from funds available in the Certificate Account or (D) to confirm or
verify the contents of any reports or certificates of the Servicer delivered to
the Trustee pursuant to this Agreement believed by the Trustee to be genuine and
to have been signed or presented by the proper party or parties; provided
however, that the provisions of this Section 8.01(iv) shall not apply during any
period during which the Trustee is acting in the capacity of servicer.
Notwithstanding anything contained in this Section 8.01 to the contrary, 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.
SECTION 8.02 Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) the Trustee (acting as Trustee or as agent of the Tax Matters
Person for the REMIC) may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, Opinion of Counsel, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties and the Trustee shall have no responsibility to ascertain or
confirm the genuineness of any signature of any such party or parties;
(ii) the Trustee (acting as Trustee or as agent of the Tax Matters
Person for the REMIC) may consult with counsel, financial advisers or
accountants and the advice of any such counsel, financial advisers or
accountants and any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such Opinion
of Counsel;
(iii) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Agreement;
(iv) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion,
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report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing so to do by Holders of Certificates
evidencing not less than 25% of the Voting Rights allocated to each Class
of Certificates; 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 cost, expense or liability as a condition to taking
any such action. The reasonable expense of every such examination shall be
paid by the Servicer or if paid by the Trustee, shall be repaid by the
Servicer upon demand from the Servicer's own funds;
(v) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants, custodians or attorneys, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
accountant, custodian or attorney appointed by the Trustee with due care;
(vi) the Trustee shall not be required to risk or expend its own funds
or otherwise incur any financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers hereunder if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not assured to it, and
none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Trustee shall be the successor to,
and be vested with the rights, duties, powers and privileges of the
Servicer in accordance with the terms of this Agreement;
(vii) the Trustee shall not be liable for any loss on any investment
of funds pursuant to this Agreement (other than as issuer of the investment
security);
(viii) the Trustee shall not be required to take notice or be deemed
to have knowledge of any Event of Default (except an event of nonpayment by
the Servicer) until a Responsible Officer of the Trustee shall have
received written notice thereof, and in the absence of receipt of such
notice, the Trustee may conclusively assume that there is no default or
Event of Default;
(ix) the Trustee shall be under no obligation to exercise any of the
trusts, rights or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which may be incurred
therein or thereby;
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(x) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act; and
(xi) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Fund created hereby or the powers
granted hereunder.
SECTION 8.03. Trustee Not Liable for Certificates or Loans.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor or the Sellers, as the case may be, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates or of any Loan or related document other than with respect to the
Trustee's execution and counter-signature of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any of the Certificates or of the proceeds of such Certificates or for the
use and application of any funds paid to the Depositor or the Servicer in
respect of the Loans or deposited in or withdrawn from the Certificate Account
by the Depositor or the Servicer. The Trustee shall not be responsible for the
legality or validity of this Agreement or the validity, priority, perfection or
sufficiency of the security for the Certificates issued or intended to be issued
hereunder; provided however, that the foregoing language shall not apply to the
Trustee's obligations under this Agreement.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates, and may otherwise deal with the parties hereto with the
same rights as it would have if it were not the Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
The Trustee, as compensation for its activities hereunder, shall be
entitled to withdraw from the Distribution Account on each Distribution Date an
amount equal to the Trustee Fee (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust) for such
Distribution Date. The Trustee and any director, officer, employee or agent of
the Trustee shall be indemnified by the Servicer and held harmless against any
loss, liability or expense (including reasonable attorney's fees) (i) incurred
in connection with any claim or legal action relating to (a) this Agreement, (b)
the Certificates or (c) in connection with the performance of any of the
Trustee's duties hereunder, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance of
any of the Trustee's duties hereunder and (ii) resulting from any error in any
tax
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or information return prepared by the Servicer. Such indemnity shall survive
the termination of this Agreement or the resignation or removal of the Trustee
hereunder. Without limiting the foregoing, the Servicer covenants and agrees,
except as otherwise agreed upon in writing by the Depositor and the Trustee, and
except for any such expense, disbursement or advance as may arise from the
Trustee's negligence, bad faith or willful misconduct, to pay or reimburse the
Trustee, for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of this Agreement
with respect to the following: (A) the reasonable compensation and the expenses
and disbursements of its counsel not associated with the closing of the issuance
of the Certificates, (B) the reasonable compensation, expenses and disbursements
of any accountant, engineer or appraiser that is not regularly employed by the
Trustee, to the extent that the Trustee must engage such persons to perform acts
or services hereunder and (C) printing and engraving expenses in connection with
preparing any Definitive Certificates. Except as otherwise provided herein, the
Trustee shall not be entitled to payment or reimbursement for any routine
ongoing expenses incurred by the Trustee in the ordinary course of its duties as
Trustee, Certificate Registrar, Tax Matters Person or Paying Agent hereunder or
for any other expenses.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 subject to supervision or
examination by federal or state authority and with a credit rating which would
not cause either of the Rating Agencies to reduce their respective then current
ratings of the Certificates (or having provided such security from time to time
as is sufficient to avoid such reduction) without taking the Policy into
account. If such corporation or association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 8.06
the combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 8.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
8.07 hereof. The entity serving as Trustee may have normal banking and trust
relationships with the Depositor and its affiliates or the Servicer and its
affiliates; provided, however, that such entity cannot be an affiliate of the
Servicer other than the Trustee in its role as successor to the Servicer.
SECTION 8.07. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice of resignation to the Depositor, the Insurer
and the Servicer and each Rating Agency not less than 60 days before the date
specified in such notice when, subject to Section 8.08, such resignation is to
take effect, and acceptance by a successor trustee in accordance with Section
8.08 meeting the qualifications set forth in Section 8.06. If no successor
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trustee meeting such qualifications shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice or
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 hereof and shall fail to resign after written
request thereto by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or a tax
is imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different trustee, then the Depositor or the Servicer may
remove the Trustee, and shall, within 30 days after such removal, appoint a
successor trustee by written instrument, in triplicate, one copy of which
instrument shall be delivered to the Trustee, one copy of which shall be
delivered to the Servicer and one copy to the successor trustee.
The Insurer or 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 the Insurer or
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered by the successor trustee to the Servicer,
one complete set to the Trustee so removed and one complete set to the successor
so appointed. Notice of any removal of the Trustee shall be given to each Rating
Agency by the successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.07 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The Depositor, the Servicer and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties, and obligations.
No successor trustee shall accept appointment as provided in this Section
8.08 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions
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of Section 8.06 hereof, is approved in writing by the Insurer and its
appointment shall not adversely affect the then current rating of the
Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.08, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates 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.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation shall be eligible under
the provisions of Section 8.06 hereof without the execution or filing of any
paper or further act on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request to do so, or in the case an Event of Default shall have occurred
and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 8.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) to the extent necessary to effectuate the purposes of this Section
8.10, all rights, powers, duties and obligations conferred or imposed upon
the Trustee, except for the obligation of the Trustee under this Agreement
to advance funds on behalf of the Servicer, shall be conferred or imposed
upon and exercised or performed by the
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Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor
to the Servicer hereunder), the Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the applicable Trust Fund or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder and such appointment
shall not, and shall not be deemed to, constitute any such separate trustee
or co-trustee as agent of the Trustee;
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee; and
(iv) the Servicer, and not the Trustee, shall be liable for the
payment of reasonable compensation, reimbursement and indemnification to
any such separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the separate trustees and co-trustees, when and as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the Trustee
its agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.11. Tax Matters.
It is intended that the assets with respect to which any REMIC election is
to be made, as set forth in the Preliminary Statement, shall constitute, and
that the conduct of matters
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relating to such assets shall be such as to qualify such assets as, a "real
estate mortgage investment conduit" as defined in and in accordance with the
REMIC Provisions. In furtherance of such intention, the Trustee covenants and
agrees that it shall act as agent (and the Trustee is hereby appointed to act as
agent) on behalf of the REMIC and that in such capacity it shall: (a) prepare
and file, or cause to be prepared and filed, in a timely manner, a U.S. Real
Estate Mortgage Investment Conduit Income Tax Return (Form 1066 or any successor
form adopted by the Internal Revenue Service) and prepare and file or cause to
be prepared and filed with the Internal Revenue Service and applicable state or
local tax authorities income tax or information returns for each taxable year
with respect to the REMIC, containing such information and at the times and in
the manner as may be required by the Code or state or local tax laws,
regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code; (c) make or cause to be made elections
that such assets be treated as a REMIC on the federal tax return for its first
taxable year (and, if necessary, under applicable state law); (d) prepare and
forward, or cause to be prepared and forwarded, to the Certificateholders and to
the Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Class R Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control, conduct matters relating to such assets
at all times that any Certificates are outstanding so as to maintain the status
as a REMIC under the REMIC Provisions; (g) not knowingly or intentionally take
any action or omit to take any action that would cause the termination of the
REMIC status; (h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited
transaction taxes as described below, imposed on the REMIC prior to its
termination when and as the same shall be due and payable (but such obligation
shall not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (i) ensure that federal, state or local income tax or
information returns shall be signed by the Trustee or such other person as may
be required to sign such returns by the Code or state or local laws, regulations
or rules; (j) maintain records relating to the REMIC, including, but not limited
to, the income, expenses, assets and liabilities thereof and the fair market
value and adjusted basis of the assets determined at such intervals as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information; and (k) as and when necessary and
appropriate, represent the REMIC in any administrative or judicial
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proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to any taxable year of the
REMIC, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of the REMIC, and
otherwise act on behalf of the REMIC in relation to any tax matter or
controversy involving it.
In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within ten
(10) days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Loans. Thereafter, the Depositor shall provide to the
Trustee promptly upon written request therefor, any such additional information
or data that the Trustee may, from time to time, reasonably request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the REMIC as defined in Section 860G(c) of the Code, on
any contribution to the REMIC after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax is imposed, if not paid as otherwise provided for
herein, such tax shall be paid by (i) the Trustee, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Agreement, (ii) the Servicer, or if such tax arises out of or results from a
breach by the Servicer or a Seller of any of their obligations under this
Agreement, (iii) the Sellers, if any tax arises out of or results from any
Seller's obligation to repurchase a Loan pursuant to Section 2.02 or 2.03 or
(iv) in all other cases, or in the event that the Trustee, the Servicer or a
Seller fails to honor its obligations under the preceding clause (i),(ii) or
(iii), such tax will be paid with amounts otherwise to be distributed to the
Certificateholders, as provided in Section 3.08(b).
SECTION 8.12. Periodic Filings.
The Depositor shall prepare, execute and file all periodic reports required
under the Securities Exchange Act of 1934. In connection with the preparation
and filing of such periodic reports, the Servicer shall timely provide to the
Depositor all material information available to it which is required to be
included in such reports and not known to it to be in the possession of the
Depositor and such other information as the Depositor reasonably may request
from it and otherwise reasonably shall cooperate with the Depositor. The
Depositor shall have no liability with respect to any failure to properly
prepare or file such periodic reports resulting from or relating to the
Depositor's inability or failure to obtain any information not resulting from
its own negligence or willful misconduct.
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SECTION 8.13. Appointment of Custodians.
The Trustee may, with the consent of the Servicer, appoint one or more
Custodians to hold all or a portion of the Trustee's Mortgage Files as agent for
the Trustee, by entering into a Custodial Agreement. 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 and the Insurer. The Trustee shall be liable for the fees of
any Custodian appointed hereunder. Each Custodian shall be a depository
institution subject to supervision by federal or state authority and shall be
qualified to do business in the jurisdiction in which it holds any Trustee's
Mortgage File.
SECTION 8.14. Trustee May Enforce Claims Without Possession of
Certificates.
All rights of action and claims under this Agreement or the Certificates
may be prosecuted and enforced by the Trustee without the possession of any of
the Certificates or the production thereof in any proceeding relating thereto,
any such proceeding instituted by the Trustee shall be brought in its own name
or in its capacity as Trustee. Any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Insurer or the Certificateholders in respect of which such judgment has been
recovered.
SECTION 8.15. Suits for Enforcement.
In case an Event of Default or other default by the Servicer hereunder
shall occur and be continuing, the Trustee, in its discretion, may proceed to
protect and enforce its rights and the rights of the Insurer and the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee, the
Insurer or the Certificateholders.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Purchase of all Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the purchase by the Servicer of all
Loans (and REO Properties) remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Stated Principal Balance of each Loan plus accrued and
unpaid interest thereon at the applicable Pass-Through Rate and (ii) 100% of
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the Stated Principal Balance of each Loan related to any REO Property plus
accrued and unpaid interest thereon at the applicable Pass-Through Rate or (b)
the later of (i) the maturity or other liquidation (or any Advance with respect
thereto) of the last Loan remaining in the Trust Fund and the disposition of all
REO Property and (ii) the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to this Agreement. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the survivor of the descendants of Xxxxxx X. Xxxxxxx,
the late Ambassador of the United States to the Court of St. Xxxxx, living on
the date hereof or (ii) the Latest Possible Maturity Date. The right to purchase
all Loans and REO Properties pursuant to clause (a) above shall be conditioned
upon the Pool Principal Balance, at the time of any such repurchase, aggregating
less than or equal to five percent (5%) of the aggregate Cut-off Date Principal
Balance of the Loans.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, the Servicer determines that there are no
Outstanding Loans and no other funds or assets in the Trust Fund other than the
funds in the Certificate Account, the Servicer shall direct the Trustee promptly
to send a final distribution notice to each Certificateholder. If the Servicer
elects to terminate the Trust Fund pursuant to clause (a) of Section 9.01, at
least 20 days prior to the date notice is to be mailed to the affected
Certificateholders, the Servicer shall notify the Depositor, the Insurer and the
Trustee of the date the Servicer intends to terminate the Trust Fund and of the
applicable repurchase price of the Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed not earlier than the 10th day and not
later than the 15th day of the month next preceding the month of such final
distribution. Any such notice shall specify (a) the Distribution Date upon which
final distribution on the Certificates will be made upon presentation and
surrender of Certificates at the office therein designated, (b) the amount of
such final distribution, (c) the location of the office or agency at which such
presentation and surrender must be made, and (d) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of the Certificates at the office therein
specified. The Servicer will give such notice to each Rating Agency at the time
such notice is given to Certificateholders.
In the event such notice is given, the Servicer shall cause all funds in
the Certificate Account to be remitted to the Trustee for deposit in the
Distribution Account on the Business Day prior to the applicable Distribution
Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Servicer the Mortgage Files for the Loans.
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Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, in the order set
forth in Section 4.02 hereof, on the final Distribution Date and in proportion
to their respective Percentage Interests, with respect to Certificateholders of
the same Class, an amount equal to (i) as to each Class of Class A Certificates,
the Certificate Balance thereof plus accrued interest thereon, and (ii) as to
the Class R Certificates, the amount, if any, which remains on deposit in the
Distribution Account (other than the amounts retained to meet claims) after
application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund
which remain subject hereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Servicer exercises its purchase option as provided in
Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been supplied with an
Opinion of Counsel, at the expense of the Servicer, to the effect that the
failure to comply with the requirements of this Section 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" on the REMIC as defined
in section 860F of the Code, or (ii) cause the Trust Fund to fail to qualify as
a REMIC at any time that any Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date set forth in
the notice given by the Servicer under Section 9.02, the Servicer shall
prepare and the Trustee, at the expense of the Tax Matters Person, shall
adopt a plan of complete liquidation within the meaning of section
860F(a)(4) of the Code which, as evidenced by an Opinion of Counsel (which
opinion shall not be an expense of the Trustee or the Tax Matters Person),
meets the requirements of a qualified liquidation; and
(2) Within 90 days after the time of adoption of such a plan of
complete liquidation, the Trustee shall sell all of the assets of the Trust
Fund to the Servicer for cash in accordance with Section 9.01.
(b) The Trustee as agent for any REMIC hereby agrees to adopt and sign such
a plan of complete liquidation upon the written request of the Servicer, and the
receipt of the
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Opinion of Counsel referred to in Section 9.03(a)(1) and to take such other
action in connection therewith as may be reasonably requested by the Servicer.
(c) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Servicer to prepare and the Trustee to adopt and sign a plan of
complete liquidation.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Sellers, the Servicer and the Trustee with the consent of the Insurer, but
without the consent of any of the Certificateholders, to cure any ambiguity, or
to correct or supplement any provisions herein, or to make such other provisions
with respect to matters or questions arising under this Agreement as shall not
be inconsistent with any other provisions herein; provided that such action
shall not, as evidenced by an Opinion of Counsel (which Opinion of Counsel shall
not be an expense of the Trustee or the Trust Fund), adversely affect in any
material respect the interests of any Certificateholder; provided, however, that
the amendment shall not be deemed to adversely affect in any material respect
the interests of the Certificateholders if the Person requesting the amendment
obtains a letter from each Rating Agency stating that the amendment would not
result in the downgrading or withdrawal of the respective ratings then assigned
to the Certificates; it being understood and agreed that any such letter in and
of itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. The Trustee, the Depositor, the Sellers, and the
Servicer also may at any time and from time to time amend this Agreement without
the consent of the Certificateholders to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or helpful to maintain the
qualification of the Trust Fund as a REMIC under the Code or to avoid or
minimize the risk of the imposition of any tax on the REMIC pursuant to the Code
that would be a claim at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such opinion but in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or helpful to maintain such qualification or to
avoid or minimize the risk of the imposition of such a tax.
This Agreement may be amended from time to time by the Seller, the
Servicer, the Depositor and the Trustee, without the consent of any of the
Certificateholders, to provide for termination of the Spread Account as
contemplated in Section 3A.01(e).
This Agreement may also be amended from time to time by the Depositor, the
Sellers, the Servicer and the Trustee with the consent of the Insurer and the
Holders of a Majority
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in Interest of each Class of Certificates affected thereby for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing, as
to such Class, Percentage Interests aggregating 66%, or (iii) reduce the
aforesaid percentages of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all such
Certificates then outstanding. Prior to the execution of any amendment to this
Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel (which Opinion of Counsel shall not be at the expense of the Trustee or
the Trust Fund) stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall not be an expense of the
Trustee or the Trust Fund, to the effect that such amendment will not cause the
imposition of any tax on the REMIC or the Certificateholders or cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders or the Insurer, the Trustee shall furnish
written notification of the substance or a copy of such amendment to each
Certificateholder, the Insurer and each Rating Agency.
It shall not be necessary for the consent of Certificateholders or the
Insurer under this Section to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund) satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with and (ii) either
(A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or the Insurer or (B) the conclusion set
forth in the immediately preceding clause (A) is not required to be reached
pursuant to this Section 10.01.
SECTION 10.02. Recordation of Agreement; Counterparts.
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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 Servicer at its expense, but only upon direction by the
Trustee accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts, taken together, shall constitute one and the
same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND
THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Loans by the Sellers to the Depositor pursuant to Article II of this Agreement
be, and be construed as, an absolute sale thereof to the Depositor. It is,
further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Sellers to the Depositor to secure a borrowing by the
Sellers from the Depositor. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Sellers or
any one of them, or if this Agreement is held or deemed to constitute or have
created a loan, lending transaction or an extension of credit by the Depositor
to the Sellers or any one of them, then and only then (i) this Agreement shall
be deemed, effective as of August 31, 1998, to be a security agreement within
the meaning of the Uniform Commercial Code of the State of New York and (ii) the
conveyance by the Sellers to the Depositor provided for in this Agreement shall
be deemed, effective as of August 31, 1998, to be an assignment and a grant by
the Sellers to the Depositor, and each of the Sellers does hereby grant and
assign to the Depositor, a security interest in, and lien upon, all of the
assets that constitute the Mortgage Notes and the Trust Fund, and all of the
proceeds thereof, whether now owned or hereafter acquired.
The Sellers, for the benefit of the Depositor, shall, in connection with
the perfection of the security interest described in the preceding paragraph of
this Section 10.04, deliver to the Depositor on the Closing Date the financing
statements described in Schedule IV.
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The Sellers shall also arrange for the delivery to the Depositor of any
appropriate Uniform Commercial Code continuation statements as may be necessary
or appropriate to continue the perfection of the security interest of the
Depositor in the Mortgage Notes and the Trust Fund, and all of the proceeds
thereof, whether now owned or hereafter acquired. The Sellers, for the benefit
of the Depositor, shall, to the extent consistent with this Agreement, take such
actions as may be necessary to ensure that, if this Agreement is held or deemed
to constitute or have created a loan, lending transaction or an extension of
credit by the Depositor to the Sellers or any one of them, then and only then
(i) this Agreement shall be deemed, effective as of August 31, 1998, to be a
security agreement within the meaning of the Uniform Commercial Code of the
State of New York and (ii) the conveyance by the Sellers to the Depositor
provided for in this Agreement shall be deemed, effective as of August 31, 1998,
to be an assignment and a grant by the Sellers to the Depositor, and each of the
Sellers does hereby grant and assign to the Depositor, a security interest in,
and lien upon, all of the assets that constitute the Mortgage Notes and the
Trust Fund, and all of the proceeds thereof, whether now owned or hereafter
acquired, such security interest shall 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. The Sellers shall arrange for filing any
appropriate Uniform Commercial Code financing statements, continuation
statements or other appropriate forms, notices or documents in connection with
any security interest granted or assigned to the Depositor.
The Depositor does hereby assign the security interest in and lien on the
Mortgage Notes and the Trust Fund, and all proceeds thereof, whether now owned
or hereafter acquired, to the Trustee for the benefit of the Certificateholders
and the Insurer. The Depositor shall arrange for filing of such Uniform
Commercial Code financing statements as are necessary to effect the assignment
of the security interest and lien to the Trustee for the benefit of the
Certificateholders and the Insurer.
It is the express intent of the parties hereto that the conveyance of the
Trust Fund by the Depositor to the Trustee pursuant to Article II of this
Agreement be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee to secure a borrowing by the
Depositor from the Trustee. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Depositor,
or if this Agreement is held or deemed to constitute or have created a loan,
lending transaction or an extension of credit by the Trustee to the Depositor,
then and only then (i) this Agreement shall be deemed, effective as of August
31, 1998, to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance by the
Depositor to the Trustee provided for in this Agreement shall be deemed,
effective as of August 31, 1998, to be an assignment and a grant by the
Depositor to the Trustee, and the Depositor does hereby grant and assign to the
Trustee, for the benefit of the Certificateholders, a security interest in, and
lien upon, all of the assets that constitute the Mortgage Notes and the Trust
Fund, and all of the proceeds thereof, whether now owned or hereafter acquired.
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The Depositor, for the benefit of the Trustee, the Insurer and the
Certificateholders, shall, in connection with the perfection of the security
interest described in the preceding paragraph of this Section 10.04, deliver to
the Trustee on the Closing Date the financing statements described in Schedule
V. The Depositor shall also arrange for the delivery to the Trustee of any
appropriate Uniform Commercial Code continuation statements as may be necessary
or appropriate to continue the perfection of the security interest of the
Trustee in the Trust Fund, and all of the proceeds thereof, whether now owned or
hereafter acquired. The Depositor, for the benefit of the Trustee and the
Certificateholders, shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement is held or
deemed to constitute or have created a loan, lending transaction or an extension
of credit by the Trustee to the Depositor, then and only then (i) this Agreement
shall be deemed, effective as of August 31, 1998, to be a security agreement
within the meaning of the Uniform Commercial Code of the State of New York and
(ii) the conveyance by the Depositor to the Trustee provided for in this
Agreement shall be deemed, effective as of August 31, 1998, to be an assignment
and a grant by the Depositor to the Trustee, and the Depositor does hereby grant
and assign to the Trustee, for the benefit of the Certificateholders, a security
interest in, and lien upon, all of the assets that constitute the Mortgage Notes
and the Trust Fund, and all of the proceeds thereof, whether now owned or
hereafter acquired, such security interest shall 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. The Servicer shall, within ten
(10) days of the Closing Date, present to the appropriate filing offices in the
jurisdictions set forth on Schedules IV and V all of the financing statements
delivered on the Closing Date by the Sellers to the Depositor, the assignments
thereof delivered by the Depositor to the Trustee on the Closing Date and the
financing statements delivered by the Depositor to the Trustee on the Closing
Date. The Servicer shall arrange for filing any appropriate Uniform Commercial
Code continuation statements or other appropriate forms, notices or documents in
connection with any security interest granted or assigned to the Trustee.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to
the Insurer and each Rating Agency with respect to each of the following of
which it has actual knowledge:
1. any material change or amendment to this Agreement;
2. the occurrence of any Event of Default that has not been cured;
3. the resignation or termination of the Servicer or the Trustee and
the appointment of any successor;
4. the repurchase or substitution of Loans pursuant to Section 2.03;
and
5. the final payment to Certificateholders.
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In addition, the Trustee shall promptly furnish to each Rating Agency
copies of the following:
1. each report to Certificateholders described in Section 4.03;
2. each annual statement as to compliance described in Section 3.16;
3. each annual independent public accountants' servicing report
described in Section 3.17; and
4. any notice of a purchase of a Loan pursuant to Section 2.02, 2.03
or 3.11.
(b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, Equity One ABS, Inc., 000 Xxxxxxxx Xxxxxxxx, 0000 Xxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President, facsimile number: (302)
478-3667, (b) in the case of the Servicer, Equity One, Inc., 000 Xxxxxxxxxx
Xxxx, Xxxxx 000, Xx. Xxxxxx, Xxx Xxxxxx 00000, Attention: President, facsimile
number: (000) 000-0000, or such other address as may be hereafter furnished to
the Depositor and the Trustee by the Servicer in writing, (c) in the case of
Equity One-Florida, Equity One Mortgage, Inc., 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx,
XX 00000, Attention: President, facsimile number: (000) 000-0000, (d) in the
case of Equity One-Minnesota, Equity One, Inc., 0000 Xxxx 00xx Xxxxxx, 0xx
Xxxxx/Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: President, facsimile
number: (000) 000-0000, (e) in the case of Equity One-New Hampshire, Equity One
Consumer Loan Company, Inc., 00 Xxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX 00000,
Attention: President, facsimile number: (000) 000-0000, (f) in the case of
Equity One-New York, Equity One Mortgage, Inc., 000 Xxxxxxxx Xxxx, Xxxxxxxx, XX
00000, Attention: President, facsimile number: (000) 000-0000, (g) in the case
of Equity One-North Carolina, Equity One Mortgage Company, 0000 X Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, XX 00000, Attention: President, facsimile number: (910)
854-7794, (h) in the case of Equity One-Pennsylvania, Equity One, Incorporated,
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attention: President,
facsimile number: (000) 000-0000, (i) in the case of Equity One-West Virginia,
Equity One of West Virginia, Inc., 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000,
Attention: President, facsimile number: (000) 000-0000, (j) in the case of the
Trustee, The Chase Manhattan Bank, 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Structured Finance Services (ABS), facsimile number:
000-000-0000, or such other address as the Trustee may hereafter furnish to the
Depositor or Servicer, (k) in the case of the Insurer, AMBAC Indemnity
Corporation, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Structured Finance Department - MBS, facsimile number: (000) 000-0000 and (l) in
the case of the Rating Agencies, the address specified therefor in the
definition corresponding to the name of such Rating Agency. Notices to
Certificateholders shall be deemed given when
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mailed, first class postage prepaid, to their respective addresses
appearing in the Certificate Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may not be assigned by the Servicer
without the prior written consent of the Trustee, Insurer and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as herein provided, and unless the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by
86
each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 10.08, each
and every Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit and
will cause each Subservicer to permit any representative of the Depositor, the
Insurer or the Trustee during the Servicer's normal business hours, to examine
all the books of account, records, reports and other papers of the Servicer
relating to the Loans, to make copies and extracts therefrom, to cause such
books to be audited by independent certified public accountants selected by the
Depositor or the Trustee and to discuss its affairs, finances and accounts
relating to the Loans with its officers, employees and independent public
accountants (and by this provision the Servicer hereby authorizes said
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the Depositor
or the Trustee of any right under this Section 10.09 shall be borne by the party
requesting such inspection; all other such expenses shall be borne by the
Servicer or the related Subservicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.
SECTION 10.11. The Closing.
The closing of the transactions contemplated by this Agreement shall occur
at 10:00 a.m. Philadelphia Time on the Closing Date at the Closing Place.
SECTION 10.12. Interpretation.
Unless the context of this Agreement clearly requires otherwise, (a)
references to the plural include the singular, the singular the plural, the part
the whole, (b) references to one gender includes all genders, (c) "or" has the
inclusive meaning frequently identified with the phrase "and/or," (d)
"including" has the inclusive meaning frequently identified with the phrase "but
not limited to" and (e) references to "hereunder," "hereof" or "herein" relate
to this
87
Agreement. The section and other headings contained in this Agreement are
for reference purposes only and shall not control or affect the construction of
this Agreement or the interpretation thereof in any respect. Section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
SECTION 10.13. 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, if such consent is not unreasonably
withheld.
(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.
SECTION 10.14. No Partnership.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Trustee and the Servicer shall be rendered as an independent contractor and
not as agent for the Certificateholders.
* * * * * *
88
IN WITNESS WHEREOF, the Depositor, the Trustee, each of the Sellers and the
Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
Equity One ABS, Inc., as Depositor
By:
----------------------------------------------
Name:
Title:
The Chase Manhattan Bank, as Trustee
By:
----------------------------------------------
Name:
Title:
Equity One, Inc. (DE), as a Seller and Servicer
By:
----------------------------------------------
Name:
Title:
Equity One, Incorporated (PA), as a Seller
By:
----------------------------------------------
Name:
Title:
Equity One Mortgage Company (NC), as a Seller
By:
----------------------------------------------
Name:
Title:
89
Equity One Mortgage, Inc. (DE), as a Seller
By:
----------------------------------------------
Name:
Title:
Equity One, Inc. (MN), as a Seller
By:
----------------------------------------------
Name:
Title:
Equity One Consumer Loan Company, Inc. (NH), as a Seller
By:
----------------------------------------------
Name:
Title:
Equity One of West Virginia, Inc. (WV), as a Seller
By:
----------------------------------------------
Name:
Title:
Equity One Mortgage, Inc. (NY), as a Seller
By:
----------------------------------------------
Name:
Title:
90
SCHEDULE I
Loan Schedule
[TO BE PROVIDED BY EQUITY ONE, INC. AT CLOSING]
S-I-1
SCHEDULE IIA
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of Equity One-Delaware
Equity One-Delaware ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIA to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans related to Seller as set forth in Schedule I.
Capitalized terms used but not otherwise defined in this Schedule IIA shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and The Chase Manhattan Bank, as trustee.
(1) Seller is duly organized as a Delaware corporation and is validly
existing and in good standing under the laws of the State of Delaware and
is duly authorized and qualified to transact any and all business
contemplated by the Pooling and Servicing Agreement to be conducted by
Seller in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such state, to the extent necessary to ensure its ability to enforce each
Loan and to perform any of its other obligations under the Pooling and
Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Pooling and Servicing Agreement and
has duly authorized by all necessary corporate action on the part of Seller
the execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale of the Loans by Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions contemplated
by the Pooling and Servicing Agreement, and the fulfillment of or
compliance with the terms thereof are in the ordinary course of business of
Seller and will not (a) result in a material
S-IIA-1
breach of any term or provision of the charter or by-laws of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which Seller is a party or by
which it may be bound or (c) constitute a material violation of any
statute, order or regulation applicable to Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair Seller's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell the Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
(7) Seller is not insolvent nor is Seller aware of any pending
insolvency, and Seller will not become insolvent as a result of its sale of
the Loans under the Pooling and Servicing Agreement, and Seller's sale of
the Loans to the Depositor under the Pooling and Servicing Agreement will
not be made with any intent to hinder, delay or defraud any of its
creditors.
S-IIA-2
SCHEDULE IIB
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of Equity One-Florida
Equity One-Florida ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIB to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans related to Seller as set forth in Schedule I.
Capitalized terms used but not otherwise defined in this Schedule IIB shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and The Chase Manhattan Bank, as trustee.
(1) Seller is duly organized as a Delaware corporation and is validly
existing and in good standing under the laws of the State of Delaware and
is duly authorized and qualified to transact any and all business
contemplated by the Pooling and Servicing Agreement to be conducted by
Seller in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such state, to the extent necessary to ensure its ability to enforce each
Loan and to perform any of its other obligations under the Pooling and
Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Pooling and Servicing Agreement and
has duly authorized by all necessary corporate action on the part of Seller
the execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale of the Loans by Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions contemplated
by the Pooling and Servicing Agreement, and the fulfillment of or
compliance with the terms
S-IIB-1
thereof are in the ordinary course of business of Seller and will not (a)
result in a material breach of any term or provision of the charter or
by-laws of Seller or (b) materially conflict with, result in a material
breach, violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument to which
Seller is a party or by which it may be bound or (c) constitute a material
violation of any statute, order or regulation applicable to Seller of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over Seller; and Seller is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
it which breach or violation may materially impair Seller's ability to
perform or meet any of its obligations under the Pooling and Servicing
Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell the Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
(7) Seller is not insolvent nor is Seller aware of any pending
insolvency, and Seller will not become insolvent as a result of its sale of
the Loans under the Pooling and Servicing Agreement, and Seller's sale of
the Loans to the Depositor under the Pooling and Servicing Agreement will
not be made with any intent to hinder, delay or defraud any of its
creditors.
S-IIB-2
SCHEDULE IIC
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of Equity One-Minnesota
Equity One-Minnesota ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIC to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans related to Seller as set forth in Schedule I.
Capitalized terms used but not otherwise defined in this Schedule IIC shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and The Chase Manhattan Bank, as trustee.
(1) Seller is duly organized as a Minnesota corporation and is validly
existing and in good standing under the laws of the State of Minnesota and
is duly authorized and qualified to transact any and all business
contemplated by the Pooling and Servicing Agreement to be conducted by
Seller in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such state, to the extent necessary to ensure its ability to enforce each
Loan and to perform any of its other obligations under the Pooling and
Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Pooling and Servicing Agreement and
has duly authorized by all necessary corporate action on the part of Seller
the execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale of the Loans by Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions contemplated
by the Pooling and Servicing Agreement, and the fulfillment of or
compliance with the terms thereof are in the ordinary course of business of
Seller and will not (a) result in a material
S-IIC-1
breach of any term or provision of the charter or by-laws of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which Seller is a party or by
which it may be bound or (c) constitute a material violation of any
statute, order or regulation applicable to Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair Seller's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell the Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
(7) Seller is not insolvent nor is Seller aware of any pending
insolvency, and Seller will not become insolvent as a result of its sale of
the Loans under the Pooling and Servicing Agreement, and Seller's sale of
the Loans to the Depositor under the Pooling and Servicing Agreement will
not be made with any intent to hinder, delay or defraud any of its
creditors.
S-IIC-2
SCHEDULE IID
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of Equity One-New Hampshire
Equity One-New Hampshire ("Seller") hereby makes the representations and
warranties set forth in this Schedule IID to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans related to Seller as set forth in Schedule I.
Capitalized terms used but not otherwise defined in this Schedule IID shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and The Chase Manhattan Bank, as trustee.
(1) Seller is duly organized as a New Hampshire corporation and is
validly existing and in good standing under the laws of the State of New
Hampshire and is duly authorized and qualified to transact any and all
business contemplated by the Pooling and Servicing Agreement to be
conducted by Seller in any state in which a Mortgaged Property is located
or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to
enforce each Loan and to perform any of its other obligations under the
Pooling and Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Pooling and Servicing Agreement and
has duly authorized by all necessary corporate action on the part of Seller
the execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale of the Loans by Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions contemplated
by the Pooling and Servicing Agreement, and the fulfillment of or
compliance with the terms thereof are in the ordinary course of business of
Seller and will not (a) result in a material
S-IID-1
breach of any term or provision of the charter or by-laws of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which Seller is a party or by
which it may be bound or (c) constitute a material violation of any
statute, order or regulation applicable to Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair Seller's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell the Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
(7) Seller is not insolvent nor is Seller aware of any pending
insolvency, and Seller will not become insolvent as a result of its sale of
the Loans under the Pooling and Servicing Agreement, and Seller's sale of
the Loans to the Depositor under the Pooling and Servicing Agreement will
not be made with any intent to hinder, delay or defraud any of its
creditors.
S-IID-2
SCHEDULE IIE
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of Equity One-New York
Equity One-New York ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIE to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans related to Seller as set forth in Schedule I.
Capitalized terms used but not otherwise defined in this Schedule IIE shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and The Chase Manhattan Bank, as trustee.
(1) Seller is duly organized as a New York corporation and is validly
existing and in good standing under the laws of the State of New York and
is duly authorized and qualified to transact any and all business
contemplated by the Pooling and Servicing Agreement to be conducted by
Seller in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such state, to the extent necessary to ensure its ability to enforce each
Loan and to perform any of its other obligations under the Pooling and
Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Pooling and Servicing Agreement and
has duly authorized by all necessary corporate action on the part of Seller
the execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale of the Loans by Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions contemplated
by the Pooling and Servicing Agreement, and the fulfillment of or
compliance with the terms thereof are in the ordinary course of business of
Seller and will not (a) result in a material
S-IIE-1
breach of any term or provision of the charter or by-laws of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which Seller is a party or by
which it may be bound or (c) constitute a material violation of any
statute, order or regulation applicable to Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair Seller's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell the Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
(7) Seller is not insolvent nor is Seller aware of any pending
insolvency, and Seller will not become insolvent as a result of its sale of
the Loans under the Pooling and Servicing Agreement, and Seller's sale of
the Loans to the Depositor under the Pooling and Servicing Agreement will
not be made with any intent to hinder, delay or defraud any of its
creditors.
S-IIE-2
SCHEDULE IIF
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of Equity One-North Carolina
Equity One-North Carolina ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIF to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans related to Seller as set forth in Schedule I.
Capitalized terms used but not otherwise defined in this Schedule IIF shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and The Chase Manhattan Bank, as trustee.
(1) Seller is duly organized as a North Carolina corporation and is
validly existing and in good standing under the laws of the State of North
Carolina and is duly authorized and qualified to transact any and all
business contemplated by the Pooling and Servicing Agreement to be
conducted by Seller in any state in which a Mortgaged Property is located
or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to
enforce each Loan and to perform any of its other obligations under the
Pooling and Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Pooling and Servicing Agreement and
has duly authorized by all necessary corporate action on the part of Seller
the execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale of the Loans by Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions contemplated
by the Pooling and Servicing Agreement, and the fulfillment of or
compliance with the terms thereof are in the ordinary course of business of
Seller and will not (a) result in a material
S-IIF-1
breach of any term or provision of the charter or by-laws of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which Seller is a party or by
which it may be bound or (c) constitute a material violation of any
statute, order or regulation applicable to Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair Seller's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell the Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
(7) Seller is not insolvent nor is Seller aware of any pending
insolvency, and Seller will not become insolvent as a result of its sale of
the Loans under the Pooling and Servicing Agreement, and Seller's sale of
the Loans to the Depositor under the Pooling and Servicing Agreement will
not be made with any intent to hinder, delay or defraud any of its
creditors.
S-IIF-2
SCHEDULE IIG
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of Equity One-Pennsylvania
Equity One-Pennsylvania ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIG to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans related to Seller as set forth in Schedule I.
Capitalized terms used but not otherwise defined in this Schedule IIG shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and The Chase Manhattan Bank, as trustee.
(1) Seller is duly organized as a Pennsylvania corporation and is
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and is duly authorized and qualified to transact any and all
business contemplated by the Pooling and Servicing Agreement to be
conducted by Seller in any state in which a Mortgaged Property is located
or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to
enforce each Loan and to perform any of its other obligations under the
Pooling and Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Pooling and Servicing Agreement and
has duly authorized by all necessary corporate action on the part of Seller
the execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale of the Loans by Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions contemplated
by the Pooling and Servicing Agreement, and the fulfillment of or
compliance with the terms thereof are in the ordinary course of business of
Seller and will not (a) result in a material
S-IIG-1
breach of any term or provision of the charter or by-laws of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which Seller is a party or by
which it may be bound or (c) constitute a material violation of any
statute, order or regulation applicable to Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair Seller's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell the Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
(7) Seller is not insolvent nor is Seller aware of any pending
insolvency, and Seller will not become insolvent as a result of its sale of
the Loans under the Pooling and Servicing Agreement, and Seller's sale of
the Loans to the Depositor under the Pooling and Servicing Agreement will
not be made with any intent to hinder, delay or defraud any of its
creditors.
S-IIG-2
SCHEDULE IIH
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of Equity One-West Virginia
Equity One-West Virginia ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIH to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans related to Seller as set forth in Schedule I.
Capitalized terms used but not otherwise defined in this Schedule IIH shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and The Chase Manhattan Bank, as trustee.
(1) Seller is duly organized as a West Virginia corporation and is
validly existing and in good standing under the laws of the State of West
Virginia and is duly authorized and qualified to transact any and all
business contemplated by the Pooling and Servicing Agreement to be
conducted by Seller in any state in which a Mortgaged Property is located
or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to
enforce each Loan and to perform any of its other obligations under the
Pooling and Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Pooling and Servicing Agreement and
has duly authorized by all necessary corporate action on the part of Seller
the execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale of the Loans by Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions contemplated
by the Pooling and Servicing Agreement, and the fulfillment of or
compliance with the terms thereof are in the ordinary course of business of
Seller and will not (a) result in a material
S-IIH-1
breach of any term or provision of the charter or by-laws of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which Seller is a party or by
which it may be bound or (c) constitute a material violation of any
statute, order or regulation applicable to Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair Seller's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell the Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
(7) Seller is not insolvent nor is Seller aware of any pending
insolvency, and Seller will not become insolvent as a result of its sale of
the Loans under the Pooling and Servicing Agreement, and Seller's sale of
the Loans to the Depositor under the Pooling and Servicing Agreement will
not be made with any intent to hinder, delay or defraud any of its
creditors.
S-IIH-2
SCHEDULE IIX
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Representations and Warranties of the Servicer
Equity-One Delaware, in its capacity as Servicer, hereby makes the
representations and warranties set forth in this Schedule IIX to the Depositor,
and the Trustee, as of the Closing Date, or if so specified herein, as of the
Cut-off Date with respect to the Loans set forth in Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIX shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among
Servicer, the Sellers identified therein, Equity One ABS, Inc., as depositor,
and The Chase Manhattan Bank, as trustee.
(1) Servicer is duly organized as a Delaware corporation and is
validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by the Pooling and Servicing Agreement to be
conducted by Servicer in any state in which a Mortgaged Property is located
or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to
service the Loans in accordance with the terms of the Pooling and Servicing
Agreement and to perform any of its other obligations under the Pooling and
Servicing Agreement in accordance with the terms thereof.
(2) Servicer has the full corporate power and authority to service
each Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by the Pooling and Servicing
Agreement and has duly authorized by all necessary corporate action on the
part of Servicer the execution, delivery and performance of the Pooling and
Servicing Agreement; and the Pooling and Servicing Agreement, assuming the
due authorization, execution and delivery thereof by the other parties
thereto, constitutes a legal, valid and binding obligation of Servicer,
enforceable against Servicer in accordance with its terms, except that (a)
the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Servicer, the servicing of the Loans by Servicer under the Pooling and
Servicing Agreement, the consummation of any other of the transactions
contemplated by
S-IIX-1
the Pooling and Servicing Agreement, and the fulfillment of or compliance
with the terms thereof are in the ordinary course of business of Servicer
and will not (a) result in a material breach of any term or provision of
the charter or by-laws of Servicer or (b) materially conflict with, result
in a material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument to
which Servicer is a party or by which it may be bound or (c) constitute a
material violation of any statute, order or regulation applicable to
Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Servicer; and Servicer is not in
breach or violation of any material indenture or other material agreement
or instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair
Servicer's ability to perform or meet any of its obligations under the
Pooling and Servicing Agreement.
(4) No litigation is pending or, to the best of Servicer's knowledge,
threatened, against Servicer that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Servicer to service the Loans or to perform any
of its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Servicer of, or compliance by Servicer with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Servicer has obtained the same.
S-IIX-2
SCHEDULE IIIA
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Loan Representations and Warranties of Equity One-Delaware
Equity One-Delaware ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIA to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans, Mortgages, Mortgage Notes and Mortgaged
Properties related to Seller set forth or referenced on Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIIA shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and The Chase Manhattan Bank, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans is true and correct in all
material respects as of the Closing Date.
(2) As of the Cut-off Date, (i) no Loan was contractually delinquent
for [60] or more days and (ii) not more than [5%] (by principal balance) of
all of the mortgage loans set forth on Schedule I were between 30 and 59
days contractually delinquent.
(3) No Loan had a Loan-to-Value Ratio at origination in excess of
[90%]. For purposes of determining the date of origination on which each
Loan's Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
(4) Each Mortgage is a valid and enforceable first or subordinate lien
on the referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan and (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
(5) Immediately prior to the assignment of the Loans to the Depositor,
the Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Loan secured by
a subordinate lien, which shall be
S-IIIA-1
subject to prior liens approved by Seller), encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid right of rescission, offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and in good repair.
(10) Each Loan at origination complied in all material respects with
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which has
been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) For each Loan, a lender's policy of title insurance together with
a condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has
S-IIIA-2
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(13) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(14) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property, and such Mortgaged Property is lawfully occupied under applicable
law.
(15) Each Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to such Mortgage Note and such
Mortgage had legal capacity to execute such Mortgage Note and such Mortgage
and each such Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(16) The proceeds of each Loan have been fully disbursed, there is no
requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording such
Loans were paid.
(17) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including, (a) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (b) otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
S-IIIA-3
(19) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(20) The origination, underwriting and collection practices used by
the Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(21) There is no pledged account or other security other than any
Escrow Account and real estate securing the Mortgagor's obligations.
(22) No Loan has a shared appreciation feature, or other contingent
interest feature.
(23) Each Loan contains a customary "due on sale" clause.
(24) At the Cut-off Date, the improvements on each Mortgaged Property
were covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where such
Mortgaged Property is located in an amount at least equal to the lesser of
(a) the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage creating a
first lien on such Mortgaged Property, the original principal balance of
such Loan, or (ii) in the case of a Loan which is subject to a prior loan
or prior loans, the combined principal balances of such Loan and the prior
loan(s). If such Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium unit.
For all Mortgages creating a first lien on the related Mortgaged Property,
all such individual insurance policies and all flood policies referred to
in item (25) below contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance including flood insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(25) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration was required at
closing with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (a)
the original outstanding principal balance of the related Loan, (b) the
minimum amount required to compensate for damage or loss on a maximum
insurable value basis or (c) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973, as amended, and
if Seller has received
S-IIIA-4
any notice of non-payment of any premium or cancellation of any such
policy, Seller has required or is in the process of requiring the
reinstatement of such insurance.
(26) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property.
(27) There is no material monetary default existing under any Mortgage
or the related Mortgage Note and, to the best of the Seller's knowledge,
there is no material event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or related
Mortgage Note; and the Seller has not waived any default, breach, violation
or event of acceleration.
(28) Each Mortgaged Property is improved by a mixed use building or a
one- to four-family residential dwelling including condominium units,
which, to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under state
law.
(29) Each Loan is being serviced by the Servicer.
(30) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the related Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of such Loan. No Mortgage Note permits or obligates the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor.
(31) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, except for items which have
been assessed, but are not yet due and payable. Except for (a) payments in
the nature of escrow payments, and (b) interest accruing from the date of
any Mortgage Note or date of disbursement of the related Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due Date of
the first installment of principal and interest, including without
limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(32) Each Loan was underwritten in all material respects in accordance
with the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
S-IIIA-5
(33) An appraisal of each Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(34) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar arrangement.
(35) The Loans were selected from among the outstanding fixed-rate
residential mortgage or mixed use loans in Seller's portfolio at the
Closing Date as to which the representations and warranties made as to such
Loans set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders or the Insurer.
(36) Each Loan has a payment date on or before its Due Date in the
month of the first Distribution Date.
(37) Approximately [ ____ ]% of the mortgage loans set forth on
Schedule I were balloon loans as described in the Prospectus Supplement.
(38) No Loan is subject to negative amortization or deferred interest
payments.
(39) No Mortgagor has requested relief under the Relief Act.
(40) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which would
be either "consumer credit contracts" or "purchase money loans" as such
terms are defined in 16 C.F.R. ss.433.1.
(41) No Mortgagor has or will have a claim or defense against Seller
or any assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(42) Each Loan is a "qualified mortgage" for purposes of Section
860G(a)(3) of the Code.
(43) The Loans, individually and in the aggregate, conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
(44) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or related Mortgage Note.
S-IIIA-6
SCHEDULE IIIB
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Loan Representations and Warranties of Equity One-Florida
Equity One-Florida ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIB to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans, Mortgages, Mortgage Notes and Mortgaged
Properties related to Seller set forth or referenced on Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIIB shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and The Chase Manhattan Bank, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans is true and correct in all
material respects as of the Closing Date.
(2) As of the Cut-off Date, (i) no Loan was contractually delinquent
for [60] or more days and (ii) not more than [5%] (by principal balance) of
all of the mortgage loans set forth on Schedule I were between 30 and 59
days contractually delinquent.
(3) No Loan had a Loan-to-Value Ratio at origination in excess of
[90%.] For purposes of determining the date of origination on which each
Loan's Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
(4) Each Mortgage is a valid and enforceable first or subordinate lien
on the referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan and (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
(5) Immediately prior to the assignment of the Loans to the Depositor,
the Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Loan secured by
a subordinate lien, which shall be
S-IIIB-1
subject to prior liens approved by Seller), encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid right of rescission, offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and in good repair.
(10) Each Loan at origination complied in all material respects with
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which has
been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) For each Loan, a lender's policy of title insurance together with
a condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title
S-IIIB-2
insurance policy and no prior holder of the related Mortgage, including the
Seller, has done, by act or omission, anything which would impair the
coverage of such mortgage title insurance policy.
(13) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(14) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property, and such Mortgaged Property is lawfully occupied under applicable
law.
(15) Each Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to such Mortgage Note and such
Mortgage had legal capacity to execute such Mortgage Note and such Mortgage
and each such Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(16) The proceeds of each Loan have been fully disbursed, there is no
requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording such
Loans were paid.
(17) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including, (a) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (b) otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
S-IIIB-3
(19) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(20) The origination, underwriting and collection practices used by
the Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(21) There is no pledged account or other security other than any
Escrow Account and real estate securing the Mortgagor's obligations.
(22) No Loan has a shared appreciation feature, or other contingent
interest feature.
(23) Each Loan contains a customary "due on sale" clause.
(24) At the Cut-off Date, the improvements on each Mortgaged Property
were covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where such
Mortgaged Property is located in an amount at least equal to the lesser of
(a) the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage creating a
first lien on such Mortgaged Property, the original principal balance of
such Loan, or (ii) in the case of a Loan which is subject to a prior loan
or prior loans, the combined principal balances of such Loan and the prior
loan(s). If such Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium unit.
For all Mortgages creating a first lien on the related Mortgaged Property,
all such individual insurance policies and all flood policies referred to
in item (25) below contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance including flood insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(25) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration was required at
closing with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (a)
the original outstanding principal balance of the related Loan, (b) the
minimum amount required to compensate for damage or loss on a maximum
insurable value basis or (c) the maximum amount of insurance that is
available
S-IIIB-4
under the Flood Disaster Protection Act of 1973, as amended, and if Seller
has received any notice of non-payment of any premium or cancellation of
any such policy, Seller has required or is in the process of requiring the
reinstatement of such insurance.
(26) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property.
(27) There is no material monetary default existing under any Mortgage
or the related Mortgage Note and, to the best of the Seller's knowledge,
there is no material event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or related
Mortgage Note; and the Seller has not waived any default, breach, violation
or event of acceleration.
(28) Each Mortgaged Property is improved by a mixed use building or a
one- to four-family residential dwelling including condominium units,
which, to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under state
law.
(29) Each Loan is being serviced by the Servicer.
(30) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the related Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of such Loan. No Mortgage Note permits or obligates the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor.
(31) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, except for items which have
been assessed, but are not yet due and payable. Except for (a) payments in
the nature of escrow payments, and (b) interest accruing from the date of
any Mortgage Note or date of disbursement of the related Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due Date of
the first installment of principal and interest, including without
limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(32) Each Loan was underwritten in all material respects in accordance
with the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
S-IIIB-5
(33) An appraisal of each Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(34) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar arrangement.
(35) The Loans were selected from among the outstanding fixed-rate
residential mortgage or mixed use loans in Seller's portfolio at the
Closing Date as to which the representations and warranties made as to such
Loans set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders or the Insurer.
(36) Each Loan has a payment date on or before its Due Date in the
month of the first Distribution Date.
(37) Approximately [ ____ ]% of the mortgage loans set forth on
Schedule I were balloon loans as described in the Prospectus Supplement.
(38) No Loan is subject to negative amortization or deferred interest
payments.
(39) No Mortgagor has requested relief under the Relief Act.
(40) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which would
be either "consumer credit contracts" or "purchase money loans" as such
terms are defined in 16 C.F.R. ss.433.1.
(41) No Mortgagor has or will have a claim or defense against Seller
or any assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(42) Each Loan is a "qualified mortgage" for purposes of Section
860G(a)(3) of the Code.
(43) The Loans, individually and in the aggregate, conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
(44) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or related Mortgage Note.
S-IIIB-6
SCHEDULE IIIC
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Loan Representations and Warranties of Equity One-Minnesota
Equity One-Minnesota ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIC to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans, Mortgages, Mortgage Notes and Mortgaged
Properties related to Seller set forth or referenced on Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIIC shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and The Chase Manhattan Bank, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans is true and correct in all
material respects as of the Closing Date.
(2) As of the Cut-off Date, (i) no Loan was contractually delinquent
for [60] or more days and (ii) not more than [5%] (by principal balance) of
all of the mortgage loans set forth on Schedule I were between 30 and 59
days contractually delinquent.
(3) No Loan had a Loan-to-Value Ratio at origination in excess of
[90%]. For purposes of determining the date of origination on which each
Loan's Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
(4) Each Mortgage is a valid and enforceable first or subordinate lien
on the referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan and (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
(5) Immediately prior to the assignment of the Loans to the Depositor,
the Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Loan secured by
a subordinate lien, which shall be
S-IIIC-1
subject to prior liens approved by Seller), encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid right of rescission, offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and in good repair.
(10) Each Loan at origination complied in all material respects with
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which has
been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) For each Loan, a lender's policy of title insurance together with
a condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has
S-IIIC-2
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(13) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(14) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property, and such Mortgaged Property is lawfully occupied under applicable
law.
(15) Each Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to such Mortgage Note and such
Mortgage had legal capacity to execute such Mortgage Note and such Mortgage
and each such Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(16) The proceeds of each Loan have been fully disbursed, there is no
requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording such
Loans were paid.
(17) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including, (a) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (b) otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
S-IIIC-3
(19) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(20) The origination, underwriting and collection practices used by
the Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(21) There is no pledged account or other security other than any
Escrow Account and real estate securing the Mortgagor's obligations.
(22) No Loan has a shared appreciation feature, or other contingent
interest feature.
(23) Each Loan contains a customary "due on sale" clause.
(24) At the Cut-off Date, the improvements on each Mortgaged Property
were covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where such
Mortgaged Property is located in an amount at least equal to the lesser of
(a) the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage creating a
first lien on such Mortgaged Property, the original principal balance of
such Loan, or (ii) in the case of a Loan which is subject to a prior loan
or prior loans, the combined principal balances of such Loan and the prior
loan(s). If such Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium unit.
For all Mortgages creating a first lien on the related Mortgaged Property,
all such individual insurance policies and all flood policies referred to
in item (25) below contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance including flood insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(25) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration was required at
closing with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (a)
the original outstanding principal balance of the related Loan, (b) the
minimum amount required to compensate for damage or loss on a maximum
insurable value basis or (c) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973, as amended, and
if Seller has received
S-IIIC-4
any notice of non-payment of any premium or cancellation of any such
policy, Seller has required or is in the process of requiring the
reinstatement of such insurance.
(26) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property.
(27) There is no material monetary default existing under any Mortgage
or the related Mortgage Note and, to the best of the Seller's knowledge,
there is no material event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or related
Mortgage Note; and the Seller has not waived any default, breach, violation
or event of acceleration.
(28) Each Mortgaged Property is improved by a mixed use building or a
one- to four-family residential dwelling including condominium units,
which, to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under state
law.
(29) Each Loan is being serviced by the Servicer.
(30) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the related Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of such Loan. No Mortgage Note permits or obligates the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor.
(31) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, except for items which have
been assessed, but are not yet due and payable. Except for (a) payments in
the nature of escrow payments, and (b) interest accruing from the date of
any Mortgage Note or date of disbursement of the related Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due Date of
the first installment of principal and interest, including without
limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(32) Each Loan was underwritten in all material respects in accordance
with the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
S-IIIC-5
(33) An appraisal of each Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(34) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar arrangement.
(35) The Loans were selected from among the outstanding fixed-rate
residential mortgage or mixed use loans in Seller's portfolio at the
Closing Date as to which the representations and warranties made as to such
Loans set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders or the Insurer.
(36) Each Loan has a payment date on or before its Due Date in the
month of the first Distribution Date.
(37) Approximately [ ____ ]% of the mortgage loans set forth on
Schedule I were balloon loans as described in the Prospectus Supplement.
(38) No Loan is subject to negative amortization or deferred interest
payments.
(39) No Mortgagor has requested relief under the Relief Act.
(40) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which would
be either "consumer credit contracts" or "purchase money loans" as such
terms are defined in 16 C.F.R. ss.433.1.
(41) No Mortgagor has or will have a claim or defense against Seller
or any assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(42) Each Loan is a "qualified mortgage" for purposes of Section
860G(a)(3) of the Code.
(43) The Loans, individually and in the aggregate, conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
(44) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or related Mortgage Note.
S-IIIC-6
SCHEDULE IIID
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Loan Representations and Warranties of Equity One-New Hampshire
Equity One-New Hampshire ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIID to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans, Mortgages, Mortgage Notes and Mortgaged
Properties related to Seller set forth or referenced on Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIID shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and The Chase Manhattan Bank, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans is true and correct in all
material respects as of the Closing Date.
(2) As of the Cut-off Date, (i) no Loan was contractually delinquent
for [60] or more days and (ii) not more than [5%] (by principal balance) of
all of the mortgage loans set forth on Schedule I were between 30 and 59
days contractually delinquent.
(3) No Loan had a Loan-to-Value Ratio at origination in excess of
[90%]. For purposes of determining the date of origination on which each
Loan's Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
(4) Each Mortgage is a valid and enforceable first or subordinate lien
on the referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan and (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
(5) Immediately prior to the assignment of the Loans to the Depositor,
the Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Loan secured by
a subordinate lien, which shall be
S-IIID-1
subject to prior liens approved by Seller), encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid right of rescission, offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and in good repair.
(10) Each Loan at origination complied in all material respects with
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which has
been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) For each Loan, a lender's policy of title insurance together with
a condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has
S-IIID-2
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(13) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(14) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property, and such Mortgaged Property is lawfully occupied under applicable
law.
(15) Each Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to such Mortgage Note and such
Mortgage had legal capacity to execute such Mortgage Note and such Mortgage
and each such Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(16) The proceeds of each Loan have been fully disbursed, there is no
requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording such
Loans were paid.
(17) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including, (a) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (b) otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
S-IIID-3
(19) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(20) The origination, underwriting and collection practices used by
the Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(21) There is no pledged account or other security other than any
Escrow Account and real estate securing the Mortgagor's obligations.
(22) No Loan has a shared appreciation feature, or other contingent
interest feature.
(23) Each Loan contains a customary "due on sale" clause.
(24) At the Cut-off Date, the improvements on each Mortgaged Property
were covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where such
Mortgaged Property is located in an amount at least equal to the lesser of
(a) the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage creating a
first lien on such Mortgaged Property, the original principal balance of
such Loan, or (ii) in the case of a Loan which is subject to a prior loan
or prior loans, the combined principal balances of such Loan and the prior
loan(s). If such Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium unit.
For all Mortgages creating a first lien on the related Mortgaged Property,
all such individual insurance policies and all flood policies referred to
in item (25) below contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance including flood insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(25) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration was required at
closing with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (a)
the original outstanding principal balance of the related Loan, (b) the
minimum amount required to compensate for damage or loss on a maximum
insurable value basis or (c) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973, as amended, and
if Seller has received
S-IIID-4
any notice of non-payment of any premium or cancellation of any such
policy, Seller has required or is in the process of requiring the
reinstatement of such insurance.
(26) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property.
(27) There is no material monetary default existing under any Mortgage
or the related Mortgage Note and, to the best of the Seller's knowledge,
there is no material event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or related
Mortgage Note; and the Seller has not waived any default, breach, violation
or event of acceleration.
(28) Each Mortgaged Property is improved by a mixed use building or a
one- to four-family residential dwelling including condominium units,
which, to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under state
law.
(29) Each Loan is being serviced by the Servicer.
(30) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the related Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of such Loan. No Mortgage Note permits or obligates the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor.
(31) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, except for items which have
been assessed, but are not yet due and payable. Except for (a) payments in
the nature of escrow payments, and (b) interest accruing from the date of
any Mortgage Note or date of disbursement of the related Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due Date of
the first installment of principal and interest, including without
limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(32) Each Loan was underwritten in all material respects in accordance
with the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
S-IIID-5
(33) An appraisal of each Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(34) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar arrangement.
(35) The Loans were selected from among the outstanding fixed-rate
residential mortgage or mixed use loans in Seller's portfolio at the
Closing Date as to which the representations and warranties made as to such
Loans set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders or the Insurer.
(36) Each Loan has a payment date on or before its Due Date in the
month of the first Distribution Date.
(37) Approximately [ ____ ]% of the mortgage loans set forth on
Schedule I were balloon loans as described in the Prospectus Supplement.
(38) No Loan is subject to negative amortization or deferred interest
payments.
(39) No Mortgagor has requested relief under the Relief Act.
(40) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which would
be either "consumer credit contracts" or "purchase money loans" as such
terms are defined in 16 C.F.R. ss.433.1.
(41) No Mortgagor has or will have a claim or defense against Seller
or any assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(42) Each Loan is a "qualified mortgage" for purposes of Section
860G(a)(3) of the Code.
(43) The Loans, individually and in the aggregate, conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
(44) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or related Mortgage Note.
S-IIID-6
SCHEDULE IIIE
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Loan Representations and Warranties of Equity One-New York
Equity One-New York ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIE to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans, Mortgages, Mortgage Notes and Mortgaged
Properties related to Seller set forth or referenced on Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIIE shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and The Chase Manhattan Bank, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans is true and correct in all
material respects as of the Closing Date.
(2) As of the Cut-off Date, (i) no Loan was contractually delinquent
for [60] or more days and (ii) not more than [5%] (by principal balance) of
all of the mortgage loans set forth on Schedule I were between 30 and 59
days contractually delinquent.
(3) No Loan had a Loan-to-Value Ratio at origination in excess of
[90%]. For purposes of determining the date of origination on which each
Loan's Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
(4) Each Mortgage is a valid and enforceable first or subordinate lien
on the referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan and (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
(5) Immediately prior to the assignment of the Loans to the Depositor,
the Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Loan secured by
a subordinate lien, which shall be
S-IIIE-1
subject to prior liens approved by Seller), encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid right of rescission, offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and in good repair.
(10) Each Loan at origination complied in all material respects with
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which has
been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) For each Loan, a lender's policy of title insurance together with
a condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has
S-IIIE-2
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(13) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(14) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property, and such Mortgaged Property is lawfully occupied under applicable
law.
(15) Each Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to such Mortgage Note and such
Mortgage had legal capacity to execute such Mortgage Note and such Mortgage
and each such Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(16) The proceeds of each Loan have been fully disbursed, there is no
requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording such
Loans were paid.
(17) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including, (a) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (b) otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
S-IIIE-3
(19) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(20) The origination, underwriting and collection practices used by
the Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(21) There is no pledged account or other security other than any
Escrow Account and real estate securing the Mortgagor's obligations.
(22) No Loan has a shared appreciation feature, or other contingent
interest feature.
(23) Each Loan contains a customary "due on sale" clause.
(24) At the Cut-off Date, the improvements on each Mortgaged Property
were covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where such
Mortgaged Property is located in an amount at least equal to the lesser of
(a) the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage creating a
first lien on such Mortgaged Property, the original principal balance of
such Loan, or (ii) in the case of a Loan which is subject to a prior loan
or prior loans, the combined principal balances of such Loan and the prior
loan(s). If such Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium unit.
For all Mortgages creating a first lien on the related Mortgaged Property,
all such individual insurance policies and all flood policies referred to
in item (25) below contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance including flood insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(25) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration was required at
closing with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (a)
the original outstanding principal balance of the related Loan, (b) the
minimum amount required to compensate for damage or loss on a maximum
insurable value basis or (c) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973, as amended, and
if Seller has received
S-IIIE-4
any notice of non-payment of any premium or cancellation of any such
policy, Seller has required or is in the process of requiring the
reinstatement of such insurance.
(26) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property.
(27) There is no material monetary default existing under any Mortgage
or the related Mortgage Note and, to the best of the Seller's knowledge,
there is no material event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or related
Mortgage Note; and the Seller has not waived any default, breach, violation
or event of acceleration.
(28) Each Mortgaged Property is improved by a mixed use building or a
one- to four-family residential dwelling including condominium units,
which, to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under state
law.
(29) Each Loan is being serviced by the Servicer.
(30) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the related Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of such Loan. No Mortgage Note permits or obligates the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor.
(31) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, except for items which have
been assessed, but are not yet due and payable. Except for (a) payments in
the nature of escrow payments, and (b) interest accruing from the date of
any Mortgage Note or date of disbursement of the related Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due Date of
the first installment of principal and interest, including without
limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(32) Each Loan was underwritten in all material respects in accordance
with the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
S-IIIE-5
(33) An appraisal of each Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(34) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar arrangement.
(35) The Loans were selected from among the outstanding fixed-rate
residential mortgage or mixed use loans in Seller's portfolio at the
Closing Date as to which the representations and warranties made as to such
Loans set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders or the Insurer.
(36) Each Loan has a payment date on or before its Due Date in the
month of the first Distribution Date.
(37) Approximately [ ____ ]% of the mortgage loans set forth on
Schedule I were balloon loans as described in the Prospectus Supplement.
(38) No Loan is subject to negative amortization or deferred interest
payments.
(39) No Mortgagor has requested relief under the Relief Act.
(40) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which would
be either "consumer credit contracts" or "purchase money loans" as such
terms are defined in 16 C.F.R. ss.433.1.
(41) No Mortgagor has or will have a claim or defense against Seller
or any assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(42) Each Loan is a "qualified mortgage" for purposes of Section
860G(a)(3) of the Code.
(43) The Loans, individually and in the aggregate, conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
(44) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or related Mortgage Note.
S-IIIE-6
SCHEDULE IIIF
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Loan Representations and Warranties of Equity One-North Carolina
Equity One-North Carolina ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIF to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans, Mortgages, Mortgage Notes and Mortgaged
Properties related to Seller set forth or referenced on Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIIF shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and The Chase Manhattan Bank, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans is true and correct in all
material respects as of the Closing Date.
(2) As of the Cut-off Date, (i) no Loan was contractually delinquent
for [60] or more days and (ii) not more than [5%] (by principal balance) of
all of the mortgage loans set forth on Schedule I were between 30 and 59
days contractually delinquent.
(3) No Loan had a Loan-to-Value Ratio at origination in excess of
[90%]. For purposes of determining the date of origination on which each
Loan's Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
(4) Each Mortgage is a valid and enforceable first or subordinate lien
on the referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan and (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
(5) Immediately prior to the assignment of the Loans to the Depositor,
the Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Loan secured by
a subordinate lien, which shall be
S-IIIF-1
subject to prior liens approved by Seller), encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid right of rescission, offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and in good repair.
(10) Each Loan at origination complied in all material respects with
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which has
been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) For each Loan, a lender's policy of title insurance together with
a condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has
S-IIIF-2
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(13) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(14) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property, and such Mortgaged Property is lawfully occupied under applicable
law.
(15) Each Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to such Mortgage Note and such
Mortgage had legal capacity to execute such Mortgage Note and such Mortgage
and each such Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(16) The proceeds of each Loan have been fully disbursed, there is no
requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording such
Loans were paid.
(17) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including, (a) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (b) otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
S-IIIF-3
(19) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(20) The origination, underwriting and collection practices used by
the Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(21) There is no pledged account or other security other than any
Escrow Account and real estate securing the Mortgagor's obligations.
(22) No Loan has a shared appreciation feature, or other contingent
interest feature.
(23) Each Loan contains a customary "due on sale" clause.
(24) At the Cut-off Date, the improvements on each Mortgaged Property
were covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where such
Mortgaged Property is located in an amount at least equal to the lesser of
(a) the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage creating a
first lien on such Mortgaged Property, the original principal balance of
such Loan, or (ii) in the case of a Loan which is subject to a prior loan
or prior loans, the combined principal balances of such Loan and the prior
loan(s). If such Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium unit.
For all Mortgages creating a first lien on the related Mortgaged Property,
all such individual insurance policies and all flood policies referred to
in item (25) below contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance including flood insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(25) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration was required at
closing with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (a)
the original outstanding principal balance of the related Loan, (b) the
minimum amount required to compensate for damage or loss on a maximum
insurable value basis or (c) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973, as amended, and
if Seller has received
S-IIIF-4
any notice of non-payment of any premium or cancellation of any such
policy, Seller has required or is in the process of requiring the
reinstatement of such insurance.
(26) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property.
(27) There is no material monetary default existing under any Mortgage
or the related Mortgage Note and, to the best of the Seller's knowledge,
there is no material event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or related
Mortgage Note; and the Seller has not waived any default, breach, violation
or event of acceleration.
(28) Each Mortgaged Property is improved by a mixed use building or a
one- to four-family residential dwelling including condominium units,
which, to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under state
law.
(29) Each Loan is being serviced by the Servicer.
(30) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the related Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of such Loan. No Mortgage Note permits or obligates the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor.
(31) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, except for items which have
been assessed, but are not yet due and payable. Except for (a) payments in
the nature of escrow payments, and (b) interest accruing from the date of
any Mortgage Note or date of disbursement of the related Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due Date of
the first installment of principal and interest, including without
limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(32) Each Loan was underwritten in all material respects in accordance
with the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
S-IIIF-5
(33) An appraisal of each Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(34) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar arrangement.
(35) The Loans were selected from among the outstanding fixed-rate
residential mortgage or mixed use loans in Seller's portfolio at the
Closing Date as to which the representations and warranties made as to such
Loans set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders or the Insurer.
(36) Each Loan has a payment date on or before its Due Date in the
month of the first Distribution Date.
(37) Approximately [ ____ ]% of the mortgage loans set forth on
Schedule I were balloon loans as described in the Prospectus Supplement.
(38) No Loan is subject to negative amortization or deferred interest
payments.
(39) No Mortgagor has requested relief under the Relief Act.
(40) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which would
be either "consumer credit contracts" or "purchase money loans" as such
terms are defined in 16 C.F.R. ss.433.1.
(41) No Mortgagor has or will have a claim or defense against Seller
or any assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(42) Each Loan is a "qualified mortgage" for purposes of Section
860G(a)(3) of the Code.
(43) The Loans, individually and in the aggregate, conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
(44) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or related Mortgage Note.
S-IIIF-6
SCHEDULE IIIG
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Loan Representations and Warranties of Equity One-Pennsylvania
Equity One-Pennsylvania ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIG to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans, Mortgages, Mortgage Notes and Mortgaged
Properties related to Seller set forth or referenced on Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIIG shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and The Chase Manhattan Bank, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans is true and correct in all
material respects as of the Closing Date.
(2) As of the Cut-off Date, (i) no Loan was contractually delinquent
for [60] or more days and (ii) not more than [5%] (by principal balance) of
all of the mortgage loans set forth on Schedule I were between 30 and 59
days contractually delinquent.
(3) No Loan had a Loan-to-Value Ratio at origination in excess of
[90%]. For purposes of determining the date of origination on which each
Loan's Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
(4) Each Mortgage is a valid and enforceable first or subordinate lien
on the referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan and (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
(5) Immediately prior to the assignment of the Loans to the Depositor,
the Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Loan secured by
a subordinate lien, which shall be
S-IIIG-1
subject to prior liens approved by Seller), encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid right of rescission, offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and in good repair.
(10) Each Loan at origination complied in all material respects with
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which has
been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) For each Loan, a lender's policy of title insurance together with
a condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has
S-IIIG-3
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(13) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(14) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property, and such Mortgaged Property is lawfully occupied under applicable
law.
(15) Each Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to such Mortgage Note and such
Mortgage had legal capacity to execute such Mortgage Note and such Mortgage
and each such Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(16) The proceeds of each Loan have been fully disbursed, there is no
requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording such
Loans were paid.
(17) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including, (a) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (b) otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
S-IIIG-3
(19) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(20) The origination, underwriting and collection practices used by
the Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(21) There is no pledged account or other security other than any
Escrow Account and real estate securing the Mortgagor's obligations.
(22) No Loan has a shared appreciation feature, or other contingent
interest feature.
(23) Each Loan contains a customary "due on sale" clause.
(24) At the Cut-off Date, the improvements on each Mortgaged Property
were covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where such
Mortgaged Property is located in an amount at least equal to the lesser of
(a) the maximum insurable value of the improvements on such Mortgaged
Property or (b)(i) in the case of a Loan secured by a Mortgage creating a
first lien on such Mortgaged Property, the original principal balance of
such Loan, or (ii) in the case of a Loan which is subject to a prior loan
or prior loans, the combined principal balances of such Loan and the prior
loan(s). If such Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium unit.
For all Mortgages creating a first lien on the related Mortgaged Property,
all such individual insurance policies and all flood policies referred to
in item (25) below contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance including flood insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(25) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration was required at
closing with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (a)
the original outstanding principal balance of the related Loan, (b) the
minimum amount required to compensate for damage or loss on a maximum
insurable value basis or (c) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973, as amended, and
if Seller has received
S-IIIG-4
any notice of non-payment of any premium or cancellation of any such
policy, Seller has required or is in the process of requiring the
reinstatement of such insurance.
(26) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property.
(27) There is no material monetary default existing under any Mortgage
or the related Mortgage Note and, to the best of the Seller's knowledge,
there is no material event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or related
Mortgage Note; and the Seller has not waived any default, breach, violation
or event of acceleration.
(28) Each Mortgaged Property is improved by a mixed use building or a
one- to four-family residential dwelling including condominium units,
which, to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under state
law.
(29) Each Loan is being serviced by the Servicer.
(30) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the related Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of such Loan. No Mortgage Note permits or obligates the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor.
(31) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, except for items which have
been assessed, but are not yet due and payable. Except for (a) payments in
the nature of escrow payments, and (b) interest accruing from the date of
any Mortgage Note or date of disbursement of the related Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due Date of
the first installment of principal and interest, including without
limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(32) Each Loan was underwritten in all material respects in accordance
with the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
S-IIIG-5
(33) An appraisal of each Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(34) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar arrangement.
(35) The Loans were selected from among the outstanding fixed-rate
residential mortgage or mixed use loans in Seller's portfolio at the
Closing Date as to which the representations and warranties made as to such
Loans set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders or the Insurer.
(36) Each Loan has a payment date on or before its Due Date in the
month of the first Distribution Date.
(37) Approximately [ ____ ]% of the mortgage loans set forth on
Schedule I were balloon loans as described in the Prospectus Supplement.
(38) No Loan is subject to negative amortization or deferred interest
payments.
(39) No Mortgagor has requested relief under the Relief Act.
(40) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which would
be either "consumer credit contracts" or "purchase money loans" as such
terms are defined in 16 C.F.R. ss.433.1.
(41) No Mortgagor has or will have a claim or defense against Seller
or any assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(42) Each Loan is a "qualified mortgage" for purposes of Section
860G(a)(3) of the Code.
(43) The Loans, individually and in the aggregate, conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
(44) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or related Mortgage Note.
S-IIIG-6
SCHEDULE IIIH
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
Loan Representations and Warranties of Equity One-West Virginia
Equity One-West Virginia ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIH to the Depositor, the Insurer and the
Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off
Date with respect to the Loans, Mortgages, Mortgage Notes and Mortgaged
Properties related to Seller set forth or referenced on Schedule I. Capitalized
terms used but not otherwise defined in this Schedule IIIH shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and The Chase Manhattan Bank, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans is true and correct in all
material respects as of the Closing Date.
(2) As of the Cut-off Date, (i) no Loan was contractually delinquent
for [60] or more days and (ii) not more than [5%] (by principal balance) of
all of the mortgage loans set forth on Schedule I were between 30 and 59
days contractually delinquent.
(3) No Loan had a Loan-to-Value Ratio at origination in excess of
[90%]. For purposes of determining the date of origination on which each
Loan's Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
(4) Each Mortgage is a valid and enforceable first or subordinate lien
on the referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan and (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
(5) Immediately prior to the assignment of the Loans to the Depositor,
the Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Loan secured by
a subordinate lien, which shall be
S-IIIH-1
subject to prior liens approved by Seller), encumbrance or security
interest and had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(7) There is no valid right of rescission, offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in item (12)
below.
(9) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and in good repair.
(10) Each Loan at origination complied in all material respects with
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage has modified the Mortgage in any material respect (except
that a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which has
been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(12) For each Loan, a lender's policy of title insurance together with
a condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in paragraph (4) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has
S-IIIH-2
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(13) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(14) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property, and such Mortgaged Property is lawfully occupied under applicable
law.
(15) Each Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To the
best of the Seller's knowledge, all parties to such Mortgage Note and such
Mortgage had legal capacity to execute such Mortgage Note and such Mortgage
and each such Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(16) The proceeds of each Loan have been fully disbursed, there is no
requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, or closing or recording such
Loans were paid.
(17) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including, (a) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (b) otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
S-IIIH-3
(19) Each Mortgage Note and each Mortgage is in substantially one of
the forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(20) The origination, underwriting and collection practices used by
the Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(21) There is no pledged account or other security other than any
Escrow Account and real estate securing the Mortgagor's obligations.
(22) No Loan has a shared appreciation feature, or other contingent
interest feature.
(23) Each Loan contains a customary "due on sale" clause.
(24) At the Cut-off Date, the improvements on each Mortgaged Property
were covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where such
Mortgaged Property is located in an amount at least equal to the lesser of
(a) the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage creating a
first lien on such Mortgaged Property, the original principal balance of
such Loan, or (ii) in the case of a Loan which is subject to a prior loan
or prior loans, the combined principal balances of such Loan and the prior
loan(s). If such Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium unit.
For all Mortgages creating a first lien on the related Mortgaged Property,
all such individual insurance policies and all flood policies referred to
in item (25) below contain a standard mortgagee clause naming the Seller or
the original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance including flood insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(25) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration was required at
closing with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (a)
the original outstanding principal balance of the related Loan, (b) the
minimum amount required to compensate for damage or loss on a maximum
insurable value basis or (c) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973, as amended, and
if Seller has received
S-IIIH-4
any notice of non-payment of any premium or cancellation of any such
policy, Seller has required or is in the process of requiring the
reinstatement of such insurance.
(26) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property.
(27) There is no material monetary default existing under any Mortgage
or the related Mortgage Note and, to the best of the Seller's knowledge,
there is no material event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or related
Mortgage Note; and the Seller has not waived any default, breach, violation
or event of acceleration.
(28) Each Mortgaged Property is improved by a mixed use building or a
one- to four-family residential dwelling including condominium units,
which, to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under state
law.
(29) Each Loan is being serviced by the Servicer.
(30) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the related Loan
Schedule. The consolidated principal amount does not exceed the original
principal amount of such Loan. No Mortgage Note permits or obligates the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor.
(31) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, except for items which have
been assessed, but are not yet due and payable. Except for (a) payments in
the nature of escrow payments, and (b) interest accruing from the date of
any Mortgage Note or date of disbursement of the related Mortgage proceeds,
whichever is later, to the day which precedes by one month the Due Date of
the first installment of principal and interest, including without
limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(32) Each Loan was underwritten in all material respects in accordance
with the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
S-IIIH-5
(33) An appraisal of each Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(34) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar arrangement.
(35) The Loans were selected from among the outstanding fixed-rate
residential mortgage or mixed use loans in Seller's portfolio at the
Closing Date as to which the representations and warranties made as to such
Loans set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders or the Insurer.
(36) Each Loan has a payment date on or before its Due Date in the
month of the first Distribution Date.
(37) Approximately [ ____ ]% of the mortgage loans set forth on
Schedule I were balloon loans as described in the Prospectus Supplement.
(38) No Loan is subject to negative amortization or deferred interest
payments.
(39) No Mortgagor has requested relief under the Relief Act.
(40) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which would
be either "consumer credit contracts" or "purchase money loans" as such
terms are defined in 16 C.F.R. ss.433.1.
(41) No Mortgagor has or will have a claim or defense against Seller
or any assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(42) Each Loan is a "qualified mortgage" for purposes of Section
860G(a)(3) of the Code.
(43) The Loans, individually and in the aggregate, conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
(44) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or related Mortgage Note.
S-IIIH-6
SCHEDULE IV
LIST OF FINANCING STATEMENTS:
PERFECTION OF GRANT OF SECURITY INTEREST
BY SELLERS TO DEPOSITOR
==============================================================================================================
SELLER LOCATION
==============================================================================================================
Equity One, Inc. (DE) Secretary of State of Delaware
--------------------------------------------------------------------------------------------------------------
Secretary of State of New Jersey
--------------------------------------------------------------------------------------------------------------
Burlington County, New Jersey
--------------------------------------------------------------------------------------------------------------
Equity One, Incorporated (PA) Secretary of Commonwealth of Pennsylvania
--------------------------------------------------------------------------------------------------------------
Bucks County, Pennsylvania
--------------------------------------------------------------------------------------------------------------
Equity One Mortgage, Inc. (NY) Secretary of State of New York
--------------------------------------------------------------------------------------------------------------
Suffolk County, New York
--------------------------------------------------------------------------------------------------------------
Equity One Mortgage Company (NC) Secretary of State of North Carolina
--------------------------------------------------------------------------------------------------------------
Guilford County, North Carolina
--------------------------------------------------------------------------------------------------------------
Equity One, Inc. (MN) Secretary of State of Minnesota
--------------------------------------------------------------------------------------------------------------
Hennepin County, Minnesota
--------------------------------------------------------------------------------------------------------------
Equity One Consumer Loan Company, Inc. (NH) Secretary of State of New Hampshire
--------------------------------------------------------------------------------------------------------------
Hillsborough County, New Hampshire
--------------------------------------------------------------------------------------------------------------
Equity One of West Virginia, Inc. (WV) Secretary of State of West Virginia
--------------------------------------------------------------------------------------------------------------
Berkeley County, West Virginia
--------------------------------------------------------------------------------------------------------------
Equity One Mortgage, Inc. (DE) Secretary of State of Florida
--------------------------------------------------------------------------------------------------------------
Hillsborough County, Florida
--------------------------------------------------------------------------------------------------------------
Secretary of State of Delaware
==============================================================================================================
S-IV-1
SCHEDULE V
LIST OF FINANCING STATEMENTS:
PERFECTION OF GRANT OF SECURITY INTEREST
BY DEPOSITOR TO TRUSTEE
================================================================================
DEPOSITOR LOCATION
================================================================================
Equity One ABS, Inc. Secretary of State of Delaware
================================================================================
S-V-1
EXHIBIT A
Form Of Class A Certificate
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-off Date: : August 31, 1998
First Distribution Date: : October 25, 1998
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
CUSIP :
Equity One ABS, Inc.
Mortgage Pass-Through Certificates, Series 1998-1
Class A- [ ]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of the following types of loans
(collectively, the "Loans"): fixed rate mortgage loans secured by first
A-1
and subordinate liens on (A) one- to four-family residential properties
and (B) mixed commercial/residential use properties
Equity One ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate does not evidence
an obligation of, or an interest in, and is not guaranteed by the Depositor, the
Sellers, the Servicer or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that ___________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Equity One ABS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, Equity One, Inc.
(DE), Equity One, Incorporated, (PA) Equity One Mortgage Company (NC), Equity
One Mortgage, Inc. (DE), Equity One, Inc. (MN), Equity One Consumer Loan
Company, Inc. (NH) , Equity One of West Virginia, Inc. (WV) and Equity One
Mortgage, Inc. (NY) (in such capacity, collectively, the "Sellers"), Equity One,
Inc. (DE) as servicer (in such capacity, the "Servicer"), and The Chase
Manhattan Bank, as trustee (the "Trustee"). To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________, 19__
The Chase Manhattan Bank,
as Trustee
By
----------------------------------
Countersigned:
A-2
By
---------------------------------
Authorized Signatory of
The Chase Manhattan Bank,
as Trustee
A-3
EXHIBIT B
Form Of Class R Certificate
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF THE DUTIES OF THE
SERVICER UNDER SUCH AGREEMENT.]
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
B-1
Certificate No. :
Cut-off Date : August 31, 1998
Equity One ABS, Inc.
Mortgage Pass-Through Certificates, Series 1998-1
evidencing the distributions allocable to the Class R Certificates with
respect to a Trust Fund consisting primarily of a pool of the following
types of loans (collectively, the "Loans"): fixed rate mortgage loans
secured by first and subordinate liens on (A) one- to four-family
residential properties and (B) mixed commercial/residential use
properties
Equity One ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate does not evidence
an obligation of, or an interest in, and is not guaranteed by the Depositor, the
Sellers, the Servicer or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that __________________________ is the registered owner of
the Percentage Interest (obtained by dividing the Denomination of this
Certificate by the aggregate Initial Certificate Balances of all Certificates of
the Class to which this Certificate belongs) in certain monthly distributions
with respect to a Trust Fund consisting of the Loans deposited by Equity One
ABS, Inc. (the "Depositor"). The Trust Fund was created pursuant to a Pooling
and Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among the Depositor, Equity One, Inc. (DE), Equity One,
Incorporated (PA), Equity One Mortgage Company (NC), Equity One Mortgage, Inc.
(DE), Equity One, Inc. (MN), Equity One Consumer Loan Company, Inc. (NH), Equity
One of West Virginia, Inc. (WV) and Equity One Mortgage, Inc. (NY) (in such
capacity, collectively, the "Sellers") and Equity One, Inc. (DE) as servicer (in
such capacity, the "Servicer"), and The Chase Manhattan Bank, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust Fund
will be made only upon presentment and surrender of this Class R Certificate at
the Corporate Trust Office or the office or agency maintained by the Trustee in
New York, New York.
Any proposed transfer of a Class R Certificate shall be subject to the
restrictions on transfer described in Section 5.02 of the Agreement.
No transfer of a Class R Certificate shall be made unless the Trustee shall
have received either (i) a representation letter from the transferee of such
B-2
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer, or (ii) in the case of any such Class R
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactment), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the Servicer to the effect that the purchase or holding of such Class R
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee or the Servicer to any obligation in
addition to those undertaken in the Agreement, which Opinion of Counsel shall
not be an expense of the Trustee or the Servicer. Notwithstanding anything else
to the contrary herein, any purported transfer of a Class R Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
opinion of counsel satisfactory to the Trustee as described above shall be void
and of no effect.
Each Holder of this Class R Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Class R Certificate must be a Permitted Transferee, (ii) no Ownership
Interest in this Class R Certificate may be transferred without delivery to the
Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Class R Certificate must agree to require a transfer affidavit
and to deliver a transfer certificate to the Trustee as required pursuant to the
Agreement, (iv) each person holding or acquiring an Ownership Interest in this
Class R Certificate must agree not to transfer an Ownership Interest in this
Class R Certificate if it has actual knowledge that the proposed transferee is
not a Permitted Transferee and (v) any attempted or purported transfer of any
Ownership Interest in this Class R Certificate in violation of such restrictions
will be absolutely null and void and will vest no rights in the purported
transferee.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
B-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: , 19
------- ---
The Chase Manhattan Bank,
as Trustee
By
---------------------------------
Countersigned:
By
---------------------------------
Authorized Signatory of
The Chase Manhattan Bank,
as Trustee
B-4
EXHIBIT C
Form of Reverse of Certificates
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Equity One ABS, Inc. Mortgage Pass-Through Certificates, of the
Series specified on the face hereof (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the Business Day immediately preceding such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer and the Trustee with the consent of the Holders
C-1
of Certificates affected by such amendment evidencing the requisite Percentage
Interest, as provided in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office or the office or agency maintained by the
Trustee in New York, New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the Holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
Fund will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Sellers and the Trustee and any agent of
the Depositor or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee, nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the Pool Principal Balance is less than
5% of the aggregate Cut-off Date Principal Balances of the Loans, the Servicer
will have the option to repurchase, in whole, from the Trust Fund all remaining
Loans and all property acquired in respect of the Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the later of the maturity or other liquidation (or
any advance with respect thereto) of the last Loan remaining in the Trust Fund
or the disposition of all property in respect thereof and the distribution to
Certificateholders of all amounts required to be distributed pursuant to the
Agreement. In no event, however, will the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants living at the date of the Agreement of a certain person named
in the Agreement.
C-2
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
C-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
_______________________________________________________________________________.
Dated:
_______________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
_______________________________________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number __________________ or, if mailed by check, to __________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
C-4
EXHIBIT D
Form Of Initial Certification Of Trustee
[date]
[Depositor]
[Servicer]
[Sellers]
---------------------
---------------------
Re: Pooling and Servicing Agreement among Equity One ABS,
Inc., as Depositor, Equity One, Inc. (DE), Equity One,
Incorporated (PA), Equity One Mortgage Company (NC),
Equity One Mortgage, Inc. (DE), Equity One, Inc. (MN),
Equity One Consumer Loan Company, Inc. (NH), Equity One
of West Virginia, Inc. (WV) and Equity One Mortgage, Inc.
(NY) as Sellers, Equity One, Inc. (DE) as Servicer, and
The Chase Manhattan Bank, as Trustee, Mortgage
Pass-Through Certificates, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that, as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or listed on the attached schedule) it has
received the original Mortgage Note and confirms that the name on the Mortgage
Note matches that on the Loan Schedule, except as set forth on the Exception
Report attached hereto.
Based on its review and examination and only as to the foregoing documents,
such documents appear regular on their face and related to such Loan.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Loans identified on the
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Loan.
D-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Chase Manhattan Bank,
as Trustee
By:
-------------------------------------
Name:
Title:
D-2
EXHIBIT E
Form Of Final Certification Of Trustee
[date]
[Depositor]
[Servicer]
[Seller]
---------------------
---------------------
Re: Pooling and Servicing Agreement among Equity One
ABS, Inc., as Depositor, Equity One, Inc. (DE),
Equity One, Incorporated (PA), Equity One Mortgage
Company (NC), Equity One Mortgage, Inc. (DE), Equity
One, Inc. (MN), Equity One Consumer Loan Company,
Inc. (NH), Equity One of West Virginia, Inc. (WV)
and Equity One Mortgage, Inc. (NY) as Sellers and
Equity One, Inc. (DE) as Servicer, and The Chase
Manhattan Bank, as Trustee, Mortgage Pass-Through
Certificates, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or listed on the attached Document Exception
Report), except as set forth on the Exception Report attached hereto, it has
received:
(i) the original Mortgage Note and confirms that the name on the
Mortgage Note matches that on the Loan Schedule;
(ii) the original recorded Mortgage (unless such Mortgage has not yet
been returned by the relevant recording office, as certified by the
Depositor;
(iii) the original recorded assignment of the Mortgage in the form
provided in Section 2.01(c) of the Pooling and Servicing Agreement;
(iv) the original or duplicate original recorded assignment or
assignments of the Mortgage necessary to show a complete chain of
assignment from the originator to the Seller, unless the Depositor has
certified that the related assignment has not been returned from the
applicable recording office; and
E-1
(v) the original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company, unless the Depositor has certified that
such title policy has not yet been received from the applicable title
insurance company.
Based on its review and examination and only as to the foregoing documents,
(a) such documents appear regular on their face and related to such Loan, and
(b) the information set forth in items (i), (ii), (iii) and (vi) of the
definition of the "Loan Schedule" in Section 1.01 of the Pooling and Servicing
Agreement accurately reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Loans identified on the
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Chase Manhattan Bank,
as Trustee
By:
--------------------------------------
Name:
Title:
E-2
EXHIBIT F
Form Of Transfer Affidavit
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
STATE OF )
) ss:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _________________________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the "Certificate")
issued pursuant to the Pooling and Servicing Agreement, (the "Agreement"),
relating to the above-referenced Series, by and among Equity One ABS, Inc., as
depositor (the "Depositor"), Equity One, Inc. (DE), Equity One, Incorporated
(PA), Equity One Mortgage Company (NC), Equity One Mortgage, Inc. (DE), Equity
One, Inc. (MN), Equity One Consumer Loan Company, Inc. (NH), Equity One of West
Virginia, Inc. (WV) and Equity One Mortgage, Inc. (NY), as sellers, Equity One,
Inc. (DE) as servicer and The Chase Manhattan Bank, as Trustee. Capitalized
terms used, but not defined herein or in Exhibit 1 hereto, shall have the
meanings ascribed to such terms in the Agreement. The Transferee has authorized
the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee has
no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
F-1
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 5.02(c) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.02(c) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person to
whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit G to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is ______.
9. The Transferee is a U.S. Person as defined in Code Section 7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to ERISA
or a plan that is subject to Section 4975 of the Code, and the Transferee is not
acting on behalf of such a plan.
* * *
F-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of _____________, 19___.
___________________________________
PRINT NAME OF TRANSFEREE
By: _______________________________
Name: _____________________________
Title: ____________________________
[Corporate Seal]
ATTEST:
_____________________________
[Assistant] Secretary
Personally appeared before me the above-named ________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the _______________________ of the Transferee, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this _________ day of ___________, 19__.
_________________________________
NOTARY PUBLIC
My Commission expires the _______
day of
______________________, 19__.
F-3
EXHIBIT 1
to EXHIBIT F
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial.
"Permitted Transferee": Any person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in section 860E(c)(l) of the Code) with respect to
any Class R Certificate, (iv) rural electric and telephone cooperatives
described in section 1381(a)(2)(C) of the Code, (v) a Person that is not a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate whose income from sources without
the United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States fiduciaries have authority to control all
substantial decisions of the trust, unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
4224, and (vi) any other Person so designated by the Depositor based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class R
Certificate to such Person may cause the REMIC hereunder to fail to qualify as a
REMIC at any time that the Certificates are outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
"Person": Any individual, corporation, partnership, joint venture, bank,
joint stock company, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
F-4
EXHIBIT 2
to EXHIBIT F
Section 5.02(c) of the Agreement
(c) 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 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. No Ownership Interest in a Class R Certificate may be registered on
the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Class R Certificate unless, in addition to the
certificates required to be delivered to the Trustee under subparagraph (b)
above, the Trustee shall have been furnished with an affidavit (a "Transfer
Affidavit") of the initial owner or the proposed transferee in the form
attached hereto as Exhibit F.
c. Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall agree (A) to obtain a Transfer Affidavit from any other
Person to whom such Person attempts to Transfer its Ownership Interest in a
Class R Certificate, (B) to obtain a Transfer Affidavit from any Person for
whom such Person is acting as nominee, trustee or agent in connection with
any Transfer of a Class R Certificate and (C) not to Transfer its Ownership
Interest in a Class R Certificate or to cause the Transfer of an Ownership
Interest in a Class R Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.
d. Any attempted or purported Transfer of any Ownership Interest in a
Class R Certificate in violation of the provisions of this Section 5.02(b)
shall be absolutely null and void and shall vest no rights in the purported
Transferee. If any purported transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section 5.02(b), then
the last preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of Transfer of such
Class R Certificate. The Trustee shall 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 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the
Transfer was registered after receipt of the related Transfer Affidavit,
Transferor Certificate and either the Rule 144A Letter or the Investment
Letter. The Trustee shall be entitled but not obligated to recover from any
Holder of a Class R Certificate that was in fact not a Permitted Transferee
at the time it became a Holder or, at such subsequent time as it became
F-5
other than a Permitted Transferee, all payments made on such Class R
Certificate at and after either such time. Any such payments so recovered
by the Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
e. The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Class R Certificate to any Holder
who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(b) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
shall not be an expense of the Trust Fund, the Trustee, the Sellers or the
Servicer, to the effect that the elimination of such restrictions will not cause
the Trust Fund hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the Trust
Fund, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class R Certificate hereby consents to any amendment
of this Agreement which, based on an Opinion of Counsel furnished to the
Trustee, is reasonably necessary (a) to ensure that the record ownership of, or
any beneficial interest in, a Class R Certificate is not transferred, directly
or indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate which is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
F-6
EXHIBIT G
Form Of Transferor Certificate
--------------------------
Date
Equity One ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:
------------------
The Chase Manhattan Bank
----------------------------
----------------------------
Attention:
---------------------------------
------------------------
Re: Equity One ABS, Inc. Mortgage Pass-Through Certificates,
Series 1998-1, Class,
-----------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act and (c)
to the extent we are disposing of a Class R Certificate, we have no knowledge
the Transferee is not a Permitted Transferee.
Very truly yours,
----------------------------------
Print Name of Transferor
By:
-------------------------------
Authorized Officer
G-1
EXHIBIT H
Form Of Investment Letter (Non Rule 144A)
--------------------------------
Date
Equity One ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:
--------------------
The Chase Manhattan Bank
----------------------------
----------------------------
Attention:
------------------------------
------------------------
Re: Equity One ABS, Inc. Mortgage Pass-Through Certificates,
Series 1998-1, Class
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan or arrangement that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or
arrangement, nor are we using the assets of any such plan or arrangement to
effect such acquisition, (e) we are acquiring the Certificates for investment
for our own account and not with a view to any distribution of such Certificates
(but without prejudice to our right at all times to sell or otherwise dispose of
the Certificates in accordance with clause (g) below), (f) we have not offered
or sold any Certificates to, or solicited offers to buy any Certificates from,
any person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
H-1
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has executed
and delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement.
Very truly yours,
---------------------------------------
Print Name of Transferee
By:
------------------------------------
Authorized Officer
H-2
EXHIBIT I
Form Of Rule 144A Letter
----------------------------
Date
Equity One ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:
----------------
The Chase Manhattan Bank
-------------------------
-------------------------
Attention:
------------------------
Re: Equity One ABS, Inc. Mortgage Pass-Through Certificates, Series
1998-1, Class ,
------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan or arrangement that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or
arrangement, nor are we using the assets of any such plan or arrangement to
effect such acquisition, (e) we have not, nor has anyone acting on our behalf
offered, transferred, pledged, sold or otherwise disposed of the Certificates,
any interest in the Certificates or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Act or that would render the
disposition of the Certificates a violation of Section 5 of the Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
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(f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Act and have completed either of the forms of certification to
that effect attached hereto as Annex 1 or Annex 2. We are aware that the sale to
us is being made in reliance on Rule 144A. We are acquiring the Certificates for
our own account or for resale pursuant to Rule 144A and further, understand that
such Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the Act.
I-2
ANNEX 1 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis either at least $100,000 in securities or, if
Buyer is a dealer, Buyer must own and/or invest on a discretionary basis at
least $10,000,000 in securities (except for the excluded securities referred to
below) as of the end of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A and (ii) the Buyer satisfies the
criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business
of which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank
or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over
any such institutions or is a foreign savings and
loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange
Act of 1934.
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is
the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
I-3
subject to supervision by the insurance commissioner
or a similar official or agency of a State, territory
or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a) (22) of the Investment
Advisors Act of 1940.
3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of an
unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
I-4
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
------------------------------------
Print Name of Buyer
By:
---------------------------------
Name:
Title:
Date:
-------------------------------
I-5
ANNEX 2 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $ in securities (other than the
excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $ in securities (other
than the excluded securities referred to below) as of
the end of the Buyer's most recent fiscal year (such
amount being calculated in accordance with Rule
144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
I-6
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and under-stands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
-----------------------------------
Print Name of Buyer or Adviser
By:
--------------------------------
Name:
Title:
IF AN ADVISER:
-----------------------------------
Print Name of Buyer
Date:
------------------------------
I-7
EXHIBIT J
Form Of Request For Release of Documents
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 1998-1
To: Attn:
------------------------ ------------------
Re: The Pooling & Servicing Agreement dated as of August 31, 1998 among
Equity One, Inc. (DE), Equity One, Incorporated (PA), Equity One
Mortgage Company (NC), Equity One Mortgage, Inc. (DE), Equity One,
Inc. (MN), Equity One Consumer Loan Company, Inc. (NH), Equity One of
West Virginia, Inc. (WV) and Equity One Mortgage, Inc. (NY), as
Sellers, Equity One, Inc. (DE) as Servicer, and Equity One ABS, Inc.
as Depositor and The Chase Manhattan Bank as Trustee
Ladies and Gentlemen:
In connection with the administration of the Loans held by you as Trustee
for Equity One ABS, Inc., we request the release of the Loan File for the
Loan(s) described below, for the reason indicated.
FT Account #: Pool #:
Mortgagor's Name, Address and Zip Code:
Loan Number:
Reason for Requesting Documents (check one)
1. Loan paid in full (_______________________, Inc. hereby certifies
that all amounts have been received.)
2. Loan Liquidated (___________________________ hereby certifies
that all proceeds of foreclosure, insurance, or other
liquidation have been finally received.)
3. Loan in Foreclosure.
4. Other (explain):
The Documents and any proceeds thereof, including any proceeds of proceeds,
coming into the possession or control of the Servicer shall be deposited into
the Certificate Account, and the Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Servicer's
possession, custody or control.
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If item 1 or 2 above is checked, and if all or part of the Mortgage File
was previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above-specified Loan. If item 3 or 4 is checked, upon return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
------------------------------------
------------------------------------
------------------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Date:
-----------------------------
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGEMENT OF RECEIPT
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Date:
-----------------------------
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EXHIBIT K
Copy of Certificate Guarantee Insurance Policy
[TO BE PROVIDED AT CLOSING BY AMBAC]
K-1
