Exhibit 4.10
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SALE AND SERVICING
AGREEMENT
among
HOME EQUITY
LOAN TRUST 199_-_
Issuer,
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
Seller and Servicer
Dated as of _______ __, 199_
Table of Contents
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Page
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ARTICLE I Definitions......................................................................... 1
SECTION 1.1. Definitions.......................................................................... 1
SECTION 1.2. Other Definitional Provisions........................................................ 23
SECTION 1.3. Interest Calculations................................................................ 24
ARTICLE II Conveyance of Home Equity Loans................................................... 24
SECTION 2.1. Conveyance of Home Equity Loans...................................................... 24
SECTION 2.2. Acceptance by Trustee................................................................ 27
SECTION 2.3. [Intentionally Omitted].............................................................. 28
SECTION 2.4. Representations and Warranties of the Seller Regarding the Home Equity Loans......... 28
SECTION 2.5. Substitution of Home Equity Loans.................................................... 35
ARTICLE III Administration and Servicing of Home Equity Loans................................. 36
SECTION 3.1. Duties of Servicer................................................................... 36
SECTION 3.2. Collection and Allocation of Home Equity Loan Payments............................... 37
SECTION 3.3. Withdrawals from each Collection Account............................................. 39
SECTION 3.4. Maintenance of Hazard Insurance; Property Protection Expenses........................ 40
SECTION 3.5. Maintenance of Mortgage Impairment Insurance Policy.................................. 41
SECTION 3.6. Fidelity Bond........................................................................ 41
SECTION 3.7. Management and Realization Upon Defaulted Home Equity Loans.......................... 42
SECTION 3.8. Trustee to Cooperate................................................................. 43
SECTION 3.9. Servicing Fee........................................................................ 44
SECTION 3.10. Servicer's Certificate.............................................................. 44
SECTION 3.11. Annual Statement as to Compliance; Notice of Default................................ 44
SECTION 3.12. Annual Independent Certified Public Accountants' Report............................. 45
SECTION 3.13. Access to Certain Documentation and Information Regarding Home Equity Loans......... 45
SECTION 3.14. Servicer Expenses................................................................... 46
SECTION 3.15. Advances by the Servicer............................................................ 46
SECTION 3.16. Optional Purchase of Defaulted Home Equity Loans.................................... 47
SECTION 3.17. Superior Liens...................................................................... 47
SECTION 3.18..Payment of Taxes, Insurance and Other Charges........................................ 48
SECTION 3.19. Appointment of Subservicer.......................................................... 48
(i)
ARTICLE IV Distributions; Reserve Account; Statements to Certificateholders and Noteholders... 49
SECTION 4.1. Establishment of Trust Accounts...................................................... 49
SECTION 4.2. [Intentionally Omitted].............................................................. 52
SECTION 4.3. Application of Collections........................................................... 52
SECTION 4.4. Additional Deposits.................................................................. 52
SECTION 4.5. Distributions........................................................................ 52
SECTION 4.6. Reserve Account...................................................................... 54
SECTION 4.7. [Intentionally Omitted].............................................................. 54
SECTION 4.8. Statements to Certificateholders and Noteholders..................................... 54
SECTION 4.9. Net Deposits......................................................................... 56
ARTICLE V The Seller......................................................................... 56
SECTION 5.1. Representations of Seller............................................................ 56
SECTION 5.2. Corporate Existence.................................................................. 58
SECTION 5.3. Liability of Seller; Indemnities..................................................... 59
SECTION 5.4. Merger or Consolidation of, or Assumption of the Obligations of, Seller.............. 60
SECTION 5.5. Limitation on Liability of Seller and Others......................................... 61
SECTION 5.6. Seller May Own Certificates or Notes................................................. 61
ARTICLE VI The Servicer...................................................................... 62
SECTION 6.1. Representations of Servicer.......................................................... 62
SECTION 6.2. Indemnities of Servicer.............................................................. 64
SECTION 6.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer............ 65
SECTION 6.4. Limitation on Liability of Servicer and Others....................................... 65
SECTION 6.5. Credit Suisse First Boston Mortgage Securities Corp. Not To Resign as Servicer........ 66
ARTICLE VII Default.......................................................................... 66
SECTION 7.1. Servicer Default..................................................................... 66
SECTION 7.2. Appointment of Successor............................................................. 68
SECTION 7.3. Payment of Servicing Fee............................................................. 69
SECTION 7.4. Notification to Noteholders and Certificateholders................................... 69
SECTION 7.5. Waiver of Past Defaults.............................................................. 69
ARTICLE VIII Termination..................................................................... 70
SECTION 8.1. Optional Purchase of All Home Equity Loans.70
ARTICLE IX Administrative Duties of the Servicer.............................................. 71
SECTION .. Administrative Duties.................................................................. 71
(ii)
SECTION 9.2. Records.............................................................................. 74
SECTION 9.3. Additional Information To Be Furnished to the Issuer................................. 74
ARTICLE X Miscellaneous Provisions............................................................ 74
SECTION 10.1. Amendment........................................................................... 74
SECTION 10.2. Protection of Title to Trust........................................................ 75
SECTION 10.3. Notices............................................................................. 78
SECTION 10.4. Assignment.......................................................................... 78
SECTION 10.5. Limitations on Rights of Others..................................................... 78
SECTION 10.6. Severability........................................................................ 79
SECTION 10.7. Separate Counterparts............................................................... 79
SECTION 10.8 Headings............................................................................. 79
SECTION 10.9. Governing Law....................................................................... 79
SECTION 10.10. Assignment to Trustee.............................................................. 79
SECTION 10.11. Nonpetition Covenant............................................................... 79
SECTION 10.12. Limitation of Liability of Owner Trustee and Trustee............................... 80
SECTION 10.13. Independence of the Servicer....................................................... 80
SECTION 10.14. No Joint Venture................................................................... 80
(iii)
EXHIBITS
Exhibit A Home Equity Loan Schedule
Exhibit B Form of Monthly Certificateholder Statement
Exhibit C Form of Monthly Noteholder Statement
Exhibit D Form of Servicer's Certificate
Exhibit E Form of Request for Release
(iv)
SALE AND SERVICING AGREEMENT dated as
of,___________ __, 199_-_, among HOME EQUITY LOAN
TRUST 199_-_, a Delaware business trust (the
"Issuer"), and CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP., as Seller (the "Seller") and as
servicer (the "Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of mortgage loans
from the Seller;
WHEREAS, the Seller has purchased such mortgage loans from
________________ and is willing to sell such mortgage loans to the Issuer; and
WHEREAS, the Servicer is willing to service such mortgage loans.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
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SECTION 1.1. Definitions. Whenever used in this Agreement, the
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following words and phrases shall have the following meanings:
"Accrual Period" means as to any Simple Interest Loan and Monthly
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Payment, the period commencing from and after the date through which interest
was last paid up to but excluding the date of receipt of such Monthly Payment.
As to any Actuarial Loan and Monthly Payment, the period from and including a
Due Date for such Actuarial Loan to but excluding the succeeding Due Date.
"Actuarial Loan" means a Home Equity Loan for which the relative
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application of each Monthly Payment to interest and principal is based on the
period between Due Dates and not on the timing of receipt of such Monthly
Payment.
"Aggregate Net Losses" means with respect to a Due Period, the
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aggregate principal balance of all Home Equity Loans newly designated during
such Due Period as Liquidated Home Equity Loans minus Liquidation Proceeds
collected during such Due Period with respect to all Liquidated Home Equity
Loans.
"Agreement" means this Sale and Servicing Agreement, as the same may
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be amended and supplemented from time to time.
"ARM" means a Home Equity Loan which is serviced as an Actuarial Loan
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and the Mortgage Rate of which is subject to adjustment on each Change Date by
reference to the Index, subject to rounding and the Periodic Cap, the applicable
Lifetime Cap and the applicable Lifetime Floor.
"Assignment of Mortgage" means, with respect to any Mortgage, an
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assignment, notice of transfer or equivalent instrument, in recordable form,
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect the sale of the Mortgage to the Issuer, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the Home Equity Loans secured by
Mortgaged Properties located in the same jurisdiction.
"Available Principal" means with respect to any Distribution Date, the
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sum of the following amounts without duplication: (a) that portion of all
collections on the Home Equity Loans allocable to principal in respect of the
preceding Due Period; (b) Liquidation Proceeds attributable to the principal
amount of Home Equity Loans which became Liquidated Home Equity Loans during the
preceding Due Period in accordance with the Servicer's customary servicing
procedures; and (c) to the extent attributable to principal, the Purchase Price
of each Home Equity Loan repurchased by the Seller or purchased by the Servicer
during the preceding Due Period; provided, however, that in calculating the
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Available Principal, all payments and proceeds (including Liquidation Proceeds)
of any Home Equity Loans repurchased by the Seller or purchased by the Servicer
the Purchase Price of which has been included in the Available Principal in a
prior Due Period shall be excluded.
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
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the Indenture, the Depository Agreements and other documents and certificates
delivered in connection therewith.
"Business Day" means any day other than (i) a Saturday or a Sunday or
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(ii) a day on which banking institutions in the States of New York or
____________ are required or authorized by law to be closed.
"Certificate" means a Trust Certificate (as defined in the Trust
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Agreement).
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"Certificate Balance" equals, initially, $ and, thereafter,
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equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such
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term in the Trust Agreement.
"Certificate Rate" means ____% per annum.
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"Certificateholder" has the meaning assigned to such term in the Trust
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Agreement.
"Certificateholders' Distributable Amount" means, with respect to any
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Distribution Date, the sum of the Certificateholders' Interest Distributable
Amount and the Certificateholders' Principal Distributable Amount.
"Certificateholders' Interest Carryover Shortfall" means, with respect
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to any Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Certificate- holders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest at the Certificate
Rate that is actually deposited in the Certificate Distribution Account on such
preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Certificate Rate from and including such preceding
Distribution Date to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means, with
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respect to any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means,
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with respect to any Distribution Date, 30 days of interest (or, in the case of
the first Distribution Date, interest accrued from and including the Closing
Date to but excluding such Distribution Date) at the Certificate Rate on the
Certificate Balance on the immediately preceding Distribution Date, after giving
effect to all payments of principal to the Certificateholders on or prior to
such Distribution Date (or, in the case of the first Distribution Date, the
Certificate Balance on the Closing Date).
"Certificateholders' Monthly Principal Distributable Amount" means,
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with respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution
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Amount or, with respect to any Distribution Date on or after the Distribution
Date on which the outstanding principal balance of the Class A-__ Notes is
reduced to zero, 100% of the Principal Distribution Amount (less any amount
required on the first such Distribution Date to reduce the outstanding principal
balance of the Class A-__ Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Percentage" means 100% minus the Noteholders'
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Percentage.
"Certificateholders' Principal Carryover Shortfall" means, as of the
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close of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with
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respect to any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Certificate-holders'
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Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Certificate Final Scheduled Distribution Date, the principal
required to be distributed to Certificateholders will include the lesser of (a)
any payments of principal due and remaining unpaid on each Home Equity Loan in
the Trust as of _______ __, ____ or (b) the portion of the amount that is
necessary (after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero, in either case after
giving effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all distributions to the
Servicer, the Noteholders and the Certificateholders on such Distribution Date,
(i) the outstanding principal balance of the Notes is zero and (ii) the amount
on deposit in the Reserve Account is equal to or greater than the Certificate
Balance, Certificateholders' Principal Distributable Amount shall include an
amount equal to such Certificate Balance.
"Change Date" means the date on which the Mortgage Rate of each ARM is
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subject to adjustment, which date is the Due Date set forth in the related
Mortgage Note and every twelfth Due Date thereafter.
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"Charge-off Rate" means, with respect to a Due Period, the Aggregate
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Net Losses with respect to the Home Equity Loans expressed, on an annualized
basis, as a percentage of the average of (x) the Pool Balance on the last day of
the immediately preceding Due Period and (y) the Pool Balance on the last day in
such Due Period.
"Civil Relief Act" means the Soldiers' and Sailors' Civil Relief Act
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of 1940, as amended.
"Closing Date" means ________ __, 199__.
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"Collection Account" means the account designated as such, established
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and maintained pursuant to Section 3.2(c).
"Credit Suisse First Boston Mortgage Securities Corp." means Credit
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Suisse First Boston Mortgage Securities Corp. in its individual capacity and not
as Servicer.
"Cutoff Date" means _________ __, 199__.
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"Cutoff Date Principal Balance" means with respect to any Home Equity
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Loan, the unpaid principal balance thereof as of the Cut-Off Date (or as of the
applicable date of substitution with respect to an Eligible Substitute Home
Equity Loan pursuant to Section 2.2 or 2.4).
"Debt Service Reduction" means with respect to any Home Equity Loan, a
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reduction by a court of competent jurisdiction of the Monthly Payment due on
such Home Equity Loan.
"Defective Home Equity Loan" means any Home Equity Loan subject to
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repurchase or substitution pursuant to Section 2.2 or 2.4.
"Delinquency Percentage" means, with respect to a Due Period, the
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ratio of (a) the outstanding principal balance of all outstanding Home Equity
Loans 60 days or more delinquent (which amount shall include Home Equity Loans
in respect of Mortgaged Properties that have been repossessed but not yet sold
or otherwise liquidated) as of the last day of such Due Period, determined in
accordance with the Servicer's normal practices, divided by (b) the outstanding
principal balance of all Home Equity Loans on the last day of such Due Period.
"Delivery" when used with respect to Trust Account Property means:
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(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9.105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Trustee or its
nominee or custodian by physical delivery to the Trustee or its nominee or
custodian endorsed to, or registered in the name of, the Trustee or its
nominee or custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer
thereof (i) by delivery of such certificated security endorsed to, or
registered in the name of, the Trustee or its nominee or custodian or
endorsed in blank to a financial intermediary (as defined in Section 8-313
of the UCC) and the making by such financial intermediary of entries on its
books and records identifying such certificated securities as belonging to
the Trustee or its nominee or custodian and the sending by such financial
intermediary of a confirmation of the purchase of such certificated
security by the Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of the
UCC) and the making by such clearing corporation of appropriate entries on
its books reducing the appropriate securities account of the transferor and
increasing the appropriate securities account of a financial intermediary
by the amount of such certificated security, the identification by the
clearing corporation of the certificated securities for the sole and
exclusive account of the financial intermediary, the maintenance of such
certificated securities by such clearing corporation or a "custodian bank"
(as defined in Section 8-102(4) of the UCC) or the nominee of either
subject to the clearing corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the purchase by the Trustee
or its nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Trustee or its nominee or
custodian (all of the foregoing, "Physical Property"), and, in any event,
any such Physical Property in registered form shall be in the name of the
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect the complete
transfer of ownership of any such Trust Account Property to the Trustee or
its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury, FHLMC
or by FNMA that is a book-entry security
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held through the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures, all in accordance with applicable
law, including applicable Federal regulations and Articles 8 and 9 of the
UCC: book-entry registration of such Trust Account Property to an
appropriate book-entry account maintained with a Federal Reserve Bank by a
financial intermediary which is also a "depository" pursuant to applicable
Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry
registration to the Trustee or its nominee or custodian of the purchase by
the Trustee or its nominee or custodian of such book-entry securities; the
making by such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations as belonging to the
Trustee or its nominee or custodian and indicating that such custodian
holds such Trust Account Property solely as agent for the Trustee or its
nominee or custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership of
any such Trust Account Property to the Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer
thereof in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the Trustee
or its nominee or custodian of such uncertificated security, the making by
such financial intermediary of entries on its books and records identifying
such uncertificated certificates as belonging to the Trustee or its nominee
or custodian.
"Depository Agreements" mean the Certificate Depository Agreement and
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the Note Depository Agreement.
"Determination Date" means, with respect to any Distribution Date, the
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fourth Business Day prior to each Distribution Date.
"Distribution Date" means, with respect to each Due Period, the __th
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day of the following month, or if such day is not a Business Day, the
immediately following Business Day, commencing on _________ __, 199__.
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"Due Period" means a calendar month, except with respect to the first
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Due Period, which shall be the period from the Cutoff Date to _________ __,
199__. Any amount stated "as of the close of business on the last day of a Due
Period" shall give effect to the following calculations as determined as of the
end of the day on such last day: (1) all applications of collections and (2)
all distributions to be made on the immediately following Distribution Date.
"Eligible Deposit Account" means either (a) a segregated account with
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an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution (other than the Seller or any
affiliate of the Seller) organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of the securities of
such depository institution have a credit rating from each Rating Agency in one
of its generic rating categories which signifies investment grade.
"Eligible Institution" means a depository institution (other than the
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Seller or any affiliate of the Seller) organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), which (i) has (A) either a long-term
senior unsecured debt rating of [AAA] or a short-term senior unsecured debt or
certificate of deposit rating of [A-l+] or better by [Standard & Poor's] and
(B)(1) a long-term senior unsecured debt rating of [Al] or better and (2) a
short-term senior unsecured debt rating of [Pl] or better by [Moody's], or any
other long-term, short-term or certificate of deposit rating acceptable to the
Rating Agencies and (ii) whose deposits are insured by the Federal Deposit
Insurance Corporation. If so qualified, the Owner Trustee or the Trustee may be
considered an Eligible Institution.
"Eligible Investments" mean book-entry securities, negotiable
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instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution (including the Seller or any Affiliate of the
Seller) or trust company incorporated under the laws of the United States
of America
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or any state thereof or the District of Columbia (or any domestic branch of
a foreign bank) and subject to supervision and examination by Federal or
state banking or depository institution authorities (including depository
receipts issued by any such institution or trust company as custodian with
respect to any obligation referred to in clause (a) above or portion of
such obligation for the benefit of the holders of such depository
receipts); provided, however, that at the time of the investment or
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contractual commitment to invest therein (which shall be deemed to be made
again each time funds are reinvested following each Distribution Date), the
commercial paper or other short-term senior unsecured debt obligations
(other than such obligations the rating of which is based on the credit of
a Person other than such depository institution or trust company) of such
depository institution or trust company shall have a credit rating from
[Standard & Poor's of A-1+ and from Moody's of P1];
(c) commercial paper (including commercial paper of the Seller or any
Affiliate of the Seller) having, at the time of the investment or
contractual commitment to invest therein, a rating from [Standard & Poor's
of A-1+ and from Moody's of P1];
(d) investments in money market funds (including funds for which the
Seller, the Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor) having a rating from [Standard
& Poor's of AAA-m or AAAm-G and from Moody's of Aaa];
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) referred to in clause (b) above; and
(g) any other investment which would not cause either Rating Agency
to downgrade or withdraw its then current rating of any class of Notes or
the Certificates.
"Eligible Substitute Home Equity Loan" means a Home Equity Loan
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substituted by the Seller for a Defective Home Equity
-9-
Loan which must, on the date of such substitution, (i) have an outstanding
Principal Balance not in excess of and not more than __% less than the Principal
Balance of the Defective Home Equity Loan; (ii) have a current Mortgage Rate not
less than the Mortgage Rate of the Defective Home Equity Loan and not more than
__% in excess of the Mortgage Rate of such Defective Home Equity Loan; (iii)
have a Mortgage of the same or higher level of lien priority as the Mortgage
relating to the Defective Home Equity Loan at the time such Mortgage was
transferred to the Trust; (iv) have a remaining term to maturity not more than
six months earlier and not later than the remaining term to maturity of the
Defective Home Equity Loan; (v) comply with each representation and warranty set
forth in Section 2.4 (deemed to be made as of the date of substitution); and
(vi) have an original Loan-to-Value Ratio not greater than that of the Defective
Home Equity Loan; (vii) be an ARM if the Defective Home Equity Loan was an ARM;
and (viii) if an ARM, use the same Index, have the same Periodic Cap, have a
Lifetime Cap and a Gross Margin no less than, those of the Defective Home Equity
Loan.
"FHLMC" means Federal Home Loan Mortgage Corporation or any successor
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thereto.
"Final Scheduled Distribution Date" means with respect to [List
---------------------------------
Classe(s) of Notes and their Respective Final Scheduled Distribution Dates].
"Final Scheduled Maturity Date" means _________ __, __.
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"First Lien" means, with respect to any Home Equity Loan which is a
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second priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
"Fitch" means Fitch Investors Service, L.P., or its successors.
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"FNMA" means Federal National Mortgage Association or any successor
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thereto.
"Foreclosure Profits" means, with respect to a Liquidated Home Equity
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Loan, the amount, if any, by which (i) the aggregate of the related Net
Liquidation Proceeds exceeds (ii) the related Principal Balance (plus accrued
and unpaid interest thereon at the applicable Mortgage Rate from the date
interest was last paid through the date of receipt of the final Liquidation
Proceeds) of such Liquidated Home Equity Loan immediately prior to the final
recovery of its Liquidation Proceeds.
-10-
"Gross Margin" means, with respect to each ARM, the number of basis
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points set forth in the related Mortgage Note which is added to the Index to
determine the Mortgage Rate on the related Change Date, subject to rounding and
the Periodic Cap and the applicable Lifetime Cap and the applicable Lifetime
Floor.
"GP Interest" means the __% interest in the Trust held by
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___________________, a ___________, pursuant to the Trust Agreement.
"Home Equity Loan" means a mortgage loan transferred and assigned to
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the Trustee pursuant to Section 2.1 or Section 2.4 and held as a part of the
Trust, as identified in the Home Equity Loan Schedule.
"Home Equity Loan Schedule" means with respect to any date, the
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schedule of Home Equity Loans included in the Trust on such date. The initial
schedule of Home Equity Loans as of the Cutoff Date is the schedule set forth
herein as Exhibit A, which schedule sets forth as to each Home Equity Loan (i)
the Cut-Off Date Principal Balance, (ii) the account number, (iii) the original
principal amount, (iv) the Loan-to-Value Ratio as of the date of the origination
of the related Home Equity Loan, (v) the Due Date, (vi) the current Mortgage
Rate, (vii) the first date on which a Monthly Payment is due under the Mortgage
Note, (viii) the original stated maturity date of the Mortgage Note, (ix) the
remaining number of months to maturity as of the Cutoff Date, (x) the State in
which the related Mortgaged Property is situated, (xi) the type of property,
(xii) the lien status, (xiii) a code indicating whether the Home Equity Loan is
an ARM, and (xiv) for each ARM, the Gross Margin and the Mortgage Rate at
origination.]
"Indenture" means the Indenture dated as of _______ __, 199_, between
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the Issuer and the Trustee, as the same may be amended and supplemented from
time to time.
"Index" means [the weekly average yield on United States Treasury
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securities adjusted to a constant maturity of one year, as made available by the
Federal Reserve Board and most recently available as of the date __ days before
each Change Date].
"Insolvency Event" means, with respect to a specified Person, (a) the
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filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as
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amended), liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to
------------------
any insurance policy covering a Home Equity Loan, or amounts required to be paid
by the Servicer pursuant to Section 3.5, net of any component thereof (i)
covering any expenses incurred by or on behalf of the Servicer in connection
with obtaining such proceeds, (ii) that is applied to the restoration or repair
of the related Mortgaged Property, (iii) released to the Mortgagor in accordance
with the Servicer's normal servicing procedures or (iv) required to be paid to
any holder of a mortgage senior to such Home Equity Loan.
"Interest Distribution Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the following amounts without duplication: (a) that portion of
all collections on the Home Equity Loans allocable to interest in respect of the
preceding Due Period; (b) Liquidation Proceeds attributable to interest on the
Home Equity Loans which became Liquidated Home Equity Loans during the preceding
Due Period in accordance with the Servicer's customary servicing procedures; (c)
the Purchase Price of each Home Equity Loan that became a Purchased Home Equity
Loan during the preceding Due Period to the extent attributable to accrued
interest on such Home Equity Loan; (d) Recoveries for such Due Period and (e)
Investment Earnings for such Distribution Date; provided, however, that in
-------- -------
calculating the Interest Distribution Amount, all payments and proceeds
(including Liquidation Proceeds) of any Purchased Home Equity Loans the Purchase
Price of which has been included in the Interest Distribution Amount in a prior
Due Period shall be excluded.
"Investment Earnings" means, with respect to any Distribution Date,
-------------------
the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts
-12-
and the Certificate Distribution Account to be deposited into the Collection
Account on such Distribution Date pursuant to Section 4.1(b).
"Issuer" means Home Equity Loan Trust 199_-_.
------
"Lien" means a security interest, lien, charge, pledge or encumbrance
----
of any kind, other than tax liens, mechanics' liens and any liens which attach
to the respective Home Equity Loan by operation of law as a result of any act or
omission by the related Mortgagor.
"Lifetime Cap" means the provision in the Mortgage Note for each ARM
------------
which limits the maximum Mortgage Rate over the life of such ARM to ___ basis
points greater than the Mortgage Rate on the date of origination of such ARM.
"Lifetime Floor" means the provision in the Mortgage Note for each ARM
--------------
which limits the minimum Mortgage Rate over the life of such ARM to the Mortgage
Rate on the date of origination of such ARM.
"Liquidated Home Equity Loan" means, as to any Distribution Date, any
---------------------------
Home Equity Loan with respect to which the Servicer has determined, in
accordance with the servicing procedures specified herein, as of the end of the
related Due Period that all Liquidation Proceeds which it expects to recover
with respect to the liquidation of the Home Equity Loan or disposition of the
related REO Property have been recovered.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds)
--------------------
received in connection with the liquidation of any Home Equity Loan or related
REO Property, whether through trustee's sale, foreclosure sale or otherwise.
"Loan-to-Value Ratio" means the fraction, expressed as a percentage,
-------------------
the numerator of which is the original principal balance of the related Home
Equity Loan and the denominator of which is the Original Value of the related
Mortgaged Property.
"Monthly Advance" means an advance made by the Servicer pursuant to
---------------
Section 3.15 hereof.
"Monthly Payment" means the scheduled monthly payment of principal
---------------
and/or interest required to be made by a Mortgagor on the related Home Equity
Loan.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor.
-------
-13-
"Mortgage" means the mortgage, deed of trust or other instrument
--------
creating a first or second lien on an estate in fee simple interest in real
property securing a Home Equity Loan.
"Mortgage File" means the mortgage documents listed in Section 2.1(b)
-------------
pertaining to a particular Home Equity Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Note" means the originally executed note or other evidence
-------------
of indebtedness evidencing the indebtedness of a Mortgagor under the related
Home Equity Loan.
"Mortgaged Property" means the land and improvements securing the
------------------
indebtedness of a Mortgagor under the related Home Equity Loan.
"Mortgagor" means the obligor or obligors on a Mortgage Note.
---------
"Net Liquidation Proceeds" means, with respect to any Liquidated Home
------------------------
Equity Loan, Liquidation Proceeds net of unreimbursed Servicing Fees,
unreimbursed Servicing Advances and Monthly Advances with respect thereto.
"Net Rate" means, with respect to any Home Equity Loan as to any day,
--------
the Mortgage Rate less the related Servicing Fee Rate.
"Nonrecoverable Advances" means, with respect to any Home Equity Loan,
-----------------------
(i) any Monthly Advance previously made and not reimbursed pursuant to Section
3.2(c) or 3.3(ii), or (ii) a Servicing Advance or Monthly Advance proposed to be
made in respect of a Home Equity Loan or REO Property which, in the good faith
business judgment of the Servicer, will not or, in the case of a proposed
advance, would not be ultimately recoverable pursuant to Sections 3.2(c) or
3.3(ii).
"Note Distribution Account" means the account designated as such,
-------------------------
established and maintained pursuant to Section 4.1.
"Noteholders' Distributable Amount" means, with respect to any
---------------------------------
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
-----------------------------------------
Distribution Date, the excess of the Noteholders' Monthly Interest Distributable
Amount for the preceding Distribution Date and any outstanding Noteholders'
Interest Carryover Shortfall on such preceding
-14-
Distribution Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to Noteholders on the
preceding Distribution Date, to the extent permitted by law, at the respective
Interest Rate borne by each class of Notes from such preceding Distribution Date
through the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, with respect to
------------------------------------------
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with
--------------------------------------------------
respect to any Distribution Date, the product of (i)(A) in the case of the Class
A-__ Notes, the product of the Interest Rate for such class and a fraction, the
numerator of which is the number of days elapsed from and including the prior
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date and the
denominator of which is ___ and (B) in the case of each other class of Notes,
___________ of the Interest Rate for such class (or, in the case of the first
Distribution Date, the Interest Rate for such class multiplied by a fraction,
the numerator of which is the number of days elapsed from and including the
Closing Date to but excluding such Distribution Date and the denominator of
which is ___) and (ii) the outstanding principal balance of the Notes of such
class on the immediately preceding Distribution Date, after giving effect to all
distributions of principal to Noteholders of such class on such Distribution
Date (or, in the case of the first Distribution Date, on the Closing Date).
"Noteholders' Monthly Principal Distributable Amount" means, with
---------------------------------------------------
respect to any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"Noteholders' Percentage" means 100% until the point in time at which
-----------------------
[List Class(es) of Notes] have been paid in full and zero thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
------------------------------------------
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
-15-
principal that is actually deposited in the Note Distribution Account.
"Noteholders' Principal Distributable Amount" means, with respect to
-------------------------------------------
any Distribution Date, the sum of the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date;
provided, however, that the Noteholders' Principal Distributable Amount shall
-------- -------
not exceed the outstanding principal balance of the Notes. In addition, on the
Final Scheduled Distribution Date of each class of Notes, the principal required
to be deposited in the Note Distribution Account will include the amount
necessary (after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to
reduce the Outstanding Amount of such class of Notes to zero.
"Officers' Certificate" means a certificate signed by (a) the chairman
---------------------
of the board, the president, the vice chairman of the board, any executive vice
president, any senior vice president or any vice president and (b) a cashier,
assistant cashier, secretary or assistant secretary of the Seller or the
Servicer, as appropriate, provided that no one person may sign in a capacity
fulfilling both clause (a) and clause (b).
"Opinion of Counsel" means one or more written opinions of counsel who
------------------
may be an employee of or counsel to the Seller or the Servicer, which counsel
shall be acceptable to the Trustee, the Owner Trustee or the Rating Agencies, as
applicable.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date
---------------------
which is $____________.
"Original Value" means the value of the Mortgaged Property at the time
--------------
of origination of the related Home Equity Loan, such value being the lower of
the value of such property set forth in an appraisal acceptable to the
originator of the Home Equity Loan or the sales price of such property at the
time of origination or, in the case of a refinancing, the value of such property
set forth in an appraisal acceptable to the originator.
"Owner Trust Estate" has the meaning assigned to such term in the
------------------
Trust Agreement.
"Owner Trustee" means _________________________, not in its individual
-------------
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
-16-
"Payahead" on a Actuarial Home Equity Loan means the amount, as of the
--------
close of business on the last day of a Due Period, computed in accordance with
Section 4.3 with respect to such Home Equity Loan.
"Payahead Account" means the account designated as such, established
----------------
and maintained pursuant to Section 4.1(d)(ii).
"Payahead Balance" on a Actuarial Home Equity Loan means the sum, as
----------------
of the close of business on the last day of a Due Period, of all Payaheads made
by or on behalf of the Mortgagor with respect to such Actuarial Home Equity
Loan, as reduced by applications of previous Payaheads with respect to such
Actuarial Home Equity Loan, pursuant to Sections 4.3 and 4.4.
"Periodic Cap" means the provision in the Mortgage Note for each ARM
------------
which limits increases or decreases in the Mortgage Rate on each Change Date to
_____ basis points.
"Person" means any individual, corporation, limited liability company,
------
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in the
-----------------
definition of "Delivery" above.
"Pool Balance" as of the close of business on the last day of a Due
------------
Period means the aggregate Principal Balance of the Home Equity Loans (excluding
Purchased Home Equity Loans and Liquidated Home Equity Loans).
"Primary Mortgage Insurance Policy" means the certificate of primary
---------------------------------
mortgage insurance relating to a particular Home Equity Loan, or any replacement
policy therefor.
"Principal Balance" means as to any Home Equity Loan other than a
-----------------
Liquidated Home Equity Loan and any day, the related Cut-Off Date Principal
Balance (or unpaid principal balance as of the date of substitution), minus all
collections credited against the Principal Balance of any such Home Equity Loan.
For purposes of this definition, a Liquidated Home Equity Loan shall be deemed
to have a Principal Balance equal to the Principal Balance of the related Home
Equity Loan immediately prior to the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter.
-17-
"Principal Distribution Amount" means, with respect to any
-----------------------------
Distribution Date, the sum of the following amounts, without duplication, in
respect of the preceding Due Period: (a) that portion of all collections on
Home Equity Loans (including, with respect to Actuarial Loans, amounts withdrawn
from the Payahead Account but excluding amounts deposited into the Payahead
Account) allocable to principal, (b) Liquidation Proceeds attributable to the
principal amount of Home Equity Loans which became Liquidated Home Equity Loans
during such Due Period in accordance with the Servicer's customary servicing
procedures, plus the amount of Realized Losses with respect to such Liquidated
Home Equity Loans, (c) to the extent attributable to principal, the Purchase
Price of each Home Equity Loan that became a Purchased Home Equity Loan during
such Due Period and (d) on the Final Scheduled Distribution Date for the
Certificates, any amounts advanced by the Servicer on such Final Scheduled
Distribution Date with respect to principal on the Home Equity Loans; provided,
--------
however, that in calculating the Principal Distribution Amount the following
-------
will be excluded: (i) amounts received on Actuarial Home Equity Loans to the
extent that the Servicer has previously made an unreimbursed Precomputed Advance
of principal, (ii) Liquidation Proceeds with respect to a particular Actuarial
Home Equity Loan to the extent of any unreimbursed Precomputed Advances of
principal, (iii) all payments and proceeds (including Liquidation Proceeds) of
any Purchased Home Equity Loans the Purchase Price of which has been included in
the Principal Distribution Amount in a prior Due Period and (iv) Recoveries.
"Purchase Price" means as to any Defective Home Equity Loan
--------------
repurchased on any date pursuant to Sections 2.2 or 2.4, an amount equal to the
sum of (i) the unpaid Principal Balance thereof, (ii) the greater of (a) all
unpaid accrued interest thereon and (b) ___ days' interest thereon, computed at
the applicable Mortgage Rate and (iii) any unreimbursed Servicing Advances with
respect to such Home Equity Loan; provided, however, that if at the time of
-------- -------
repurchase the Seller or an Affiliate is the Servicer, the amount described in
clause (ii) shall be computed at the Net Rate.
"Purchased Home Equity Loan" means a Home Equity Loan purchased as of
--------------------------
the close of business on the last day of a Due Period by the Servicer pursuant
to Section 3.16 or repurchased by the Seller pursuant to Section 2.2.
"Rating Agency" means Moody's, Standard & Poor's, Fitch and/or any
-------------
other rating agency requested by the Seller or an affiliate thereof to rate the
Notes and/or the Certificates. If no such organization or successor is any
longer in existence, "Rating Agency" shall be a nationally recognized
statistical
-18-
rating organization or other comparable Person designated by the Seller, notice
of which designation shall be given to the Trustee, the Owner Trustee and the
Servicer.
"Rating Agency Condition" means, with respect to any action, that each
-----------------------
Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
of the Rating Agencies shall have notified the Seller, the Servicer, the Owner
Trustee or the Trustee in writing that such action will, in and of itself,
result in a reduction or withdrawal of the then current rating of any class of
Notes, or the Certificates.
"Realized Losses" means the excess of the Principal Balance of any
---------------
Liquidated Home Equity Loan over Liquidation Proceeds to the extent allocable to
principal.
"Recoveries" means, with respect to any Liquidated Home Equity Loan,
----------
monies collected in respect thereof, from whatever source, during any Due Period
following the Due Period in which such Home Equity Loan became a Liquidated Home
Equity Loan, net of the sum of any amounts expended by the Servicer for the
account of the Mortgagor and any amounts required by law to be remitted to the
Mortgagor.
"REO Property" means a Mortgaged Property that is acquired by the
------------
Servicer on behalf of the Trustee in foreclosure or by deed-in-lieu of
foreclosure.
"Released Mortgaged Property Proceeds" means, as to any Home Equity
------------------------------------
Loan, proceeds received by the Servicer in connection with (a) a taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise,
which are not released to the Mortgagor in accordance with applicable law,
mortgage servicing standards the Servicer would use in servicing mortgage loans
for its own account and this Agreement.
"Reserve Account" means the account designated as such, established
---------------
and maintained pursuant to Section 4.1.
"Reserve Account Initial Deposit" means, with respect to the Closing
-------------------------------
Date, $__________.
"Reserve Account Transfer Amount" means an amount equal to the lesser
-------------------------------
of (i) the amount of cash or other immediately available funds on deposit in the
Reserve Account on such Distribution Date (before giving effect to any
withdrawals
-19-
therefrom relating to such Distribution Date) or (ii) the amount, if any, by
which (x) the sum of the Total Servicing Fee, the Noteholders' Interest
Distributable Amount, the Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the Certificateholders'
Principal Distributable Amount for such Distribution Date exceeds (y) the sum of
the Interest Distribution Amount and the Available Principal for such
Distribution Date.
"Seller" means Credit Suisse First Boston Mortgage Securities Corp.,
------
as the seller of the Home Equity Loans, and each successor to Credit Suisse
First Boston Mortgage Securities Corp.(in the same capacity) to the extent
permitted hereunder.
"Servicer" means Credit Suisse First Boston Mortgage Securities Corp.,
--------
the servicer of the Home Equity Loans, and each successor to Credit Suisse First
Boston Mortgage Securities Corp., (in the same capacity) pursuant to Section 6.3
or 7.2.
"Servicer Default" means an event specified in Section 7.1.
----------------
"Servicer's Certificate" means an Officers' Certificate of the
----------------------
Servicer delivered pursuant to Section 3.10, substantially in the form of
Exhibit D.
"Servicing Advances" means all reasonable and customary "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 the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property, including reasonable fees paid
to any independent contractor in connection therewith, (iv) compliance with the
obligations under Sections 3.4, 3.7 or 3.19 and (v) in connection with the
liquidation of a Home Equity Loan, expenditures relating to the purchase or
maintenance of the First Lien pursuant to Section 3.17.
"Servicing Compensation" means the Servicing Fee, the Supplemental
----------------------
Servicing Fee and any other amounts to which the Servicer is entitled pursuant
to Section 3.9.
"Servicing Fee" has the meaning specified in Section 3.9.
-------------
"Servicing Fee Rate" means _____% per annum.
------------------
-20-
"Simple Interest Loan" means any Home Equity Loan as to which,
--------------------
pursuant to the Mortgage Note related thereto, interest is calculated on the
basis of the outstanding principal balance of the Home Equity Loan multiplied by
the applicable Mortgage Rate and further multiplied by a fraction, of which the
numerator is the number of days in the period elapsed since the date to which
interest was paid and the denominator is the number of days in the annual period
for which interest accrues on such Home Equity Loan, and the Monthly Payment
received is applied first to interest accrued to the date of payment and the
balance is applied to reduce the unpaid principal balance.
"Specified Reserve Account Balance" means, with respect to (i) any
---------------------------------
Distribution Date prior to the Distribution Date on which the Outstanding Amount
of the Class A-1 Notes has been paid in full, $___________ and (ii) any
Distribution Date on or after the Distribution Date on which the Outstanding
Amount of the Class A-__ Notes has been paid in full the greater of (a) ____% of
the sum of the aggregate outstanding principal amount of each class of Notes
plus the outstanding Certificate Balance on such Distribution Date (after giving
effect to all payments on the Notes and distributions with respect to the
Certificates to be made on such Distribution Date); or (b) ____% of the sum of
the aggregate initial principal of the Notes plus the initial Certificate
Balance except that, if on any Distribution Date (x) the average of the Charge-
off Rates for the three preceding Due Periods exceeds ____% or (y) the average
of the Delinquency Percentages for the three preceding Due Periods exceeds
____%, then the Specified Reserve Account Balance shall be an amount equal to
___% of the sum of the aggregate outstanding principal amount of each class of
Notes and the aggregate outstanding Certificate Balance on such Distribution
Date (after giving effect to all payments on the Notes and distributions with
respect to the Certificates to be made on such Distribution Date).
"Standard & Poor's" means Standard & Poor's Ratings Group, or its
-----------------
successor.
"Supplemental Servicing Fee" means the fee payable to the Servicer for
--------------------------
certain services rendered during the respective Due Period, determined pursuant
to and defined in Section 3.9.
"Total Servicing Fee" means with respect to each Distribution Date the
-------------------
Servicing Fee for the related Due Period and all accrued and unpaid Servicing
Fees for prior Due Periods.
"Total Distribution Amount" means, for each Distribution Date, the sum
-------------------------
of (i) the Interest Distribution Amount (ii) the Available Principal and (iii)
the Reserve Account
-21-
Transfer Amount, in each case in respect of such Distribution Date; provided,
--------
however, that if on the Class A-1 Final Scheduled Distribution Date, the Total
-------
Distribution Amount (as defined above) would be insufficient to pay the Total
Servicing Fee, Noteholders' Interest Distributable Amount, Certificateholders'
Interest Distributable Amount and the Noteholders' Principal Distributable
Amount for such Distribution Date, then the Total Distribution Amount for such
Distribution Date will include, in addition to the Total Distribution Amount (as
defined above), an amount, up to the amount necessary to pay any such items, of
the Interest Distribution Amount and the Available Principal on deposit (or, if
the conditions specified in Section 3.2(c) have been satisfied, that would have
been required to have been deposited but for the satisfaction of such
conditions) in the Collection Account on the Determination Date relating to such
Class A-1 Final Scheduled Distribution Date which would have constituted the
Interest Distribution Amount or Available Principal, as the case may be, for the
Due Period relating to the succeeding Distribution Date and the Interest
Distribution Amount and Available Principal, as the case may be, for such
succeeding Distribution Date will be reduced accordingly.
"Transfer Date" means, with respect to any Distribution Date, the
-------------
Business Day preceding such Distribution Date.
"Trust" means the Issuer.
-----
"Trust Account Property" means the Trust Accounts, all amounts and
----------------------
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 4.1.
--------------
"Trust Agreement" means the Trust Agreement dated as of _________
--------------- -
________ __, ____, between the Seller and the Owner Trustee, as the same may be
amended and supplemented from time to time.
"Trust Officer" means, (i) in the case of the Trustee, any Officer
-------------
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject and (ii)
in the case of
-22-
the Owner Trustee, any officer in the corporate trust office of the Owner
Trustee with direct responsibility for the administration of this Agreement or
any of the Basic Documents on behalf of the Owner Trustee.
"Trustee" means the Person acting as Trustee under the Indenture, its
-------
successors in interest and any successor trustee under the Indenture.
SECTION 1.2. Other Definitional Provisions.
-----------------------------
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Indenture, or, if not defined therein,
in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed hereby and
in any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of
-23-
such terms and to the masculine as well as to the feminine and neuter genders of
such terms.
SECTION 1.3. Interest Calculations. All calculations of interest
---------------------
hereunder that are made in respect of the Principal Balance of a Simple Interest
Loan shall be made on the basis of the actual number of days in an Accrual
Period and a year assumed to consist of 365 days. All calculations of interest
in respect of the Principal Balance of an Actuarial Loan or in respect of the
Notes or the Certificates shall be made on the basis of a 360-day year
consisting of twelve 30-day months. The calculation of the Servicing Fee shall
be made on the basis of the actual number of days in an Accrual Period and a
year assumed to consist of 365 days.
ARTICLE II
Conveyance of Home Equity Loans
-------------------------------
SECTION 2.1. Conveyance of Home Equity Loans. (a) In consideration
-------------------------------
of the Issuer's delivery to or upon the order of the Seller on the Closing Date
of the net proceeds from the sale of the Notes and the Certificates and the
other amounts to be distributed from time to time to the Seller in accordance
with the terms of this Agreement, the Seller does hereby sell, transfer, assign,
set over and otherwise convey to the Issuer, without recourse (subject to the
obligations herein):
(A) all right, title and interest of the Seller in and to the
Home Equity Loans, and all moneys received thereon, on or after the
Cutoff Date;
(B) all right, title and interest of the Seller in the security
interests in the Mortgaged Properties granted by Mortgagors pursuant to
the Home Equity Loans and any other interest of the Seller in the
Mortgaged Properties;
(C) the interest of the Seller in any proceeds with respect to
the Home Equity Loans from claims on any physical damage, theft, credit
life or disability insurance policies covering Mortgaged Properties or
Mortgagors;
(D) all right, title and interest in all funds on deposit from
time to time in the Certificate Distribution Account, in the Trust
Accounts, including the Reserve Account Initial Deposit, and in all
investments and proceeds thereof (including all income thereon); and
-24-
(E) the proceeds of any and all of the foregoing.
In connection with such transfer, assignment and conveyance by the
Seller, the Seller shall deliver to, and deposit with the Trustee, on or before
the Closing Date, the following documents or instruments with respect to each
Home Equity Loan (the "Related Documents"):
(i) The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the originator
of the Home Equity Loan to the Person so endorsing the Home Equity Loan to
the Trustee, endorsed by such Person "Pay to the order of
____________________, as Trustee for Home Equity and Home Improvement Loan
Trusts 199_-_ without recourse" and signed, by facsimile or manual
signature, in the name of the Seller by a Responsible Officer;
(ii) Any of: (1) the original Mortgage, and related power of
attorney, if any, with evidence of recording thereon, (2) a copy of the
Mortgage and related power of attorney, if any, certified as a true copy of
the original Mortgage or power of attorney by a Responsible Officer of the
Seller or by the closing attorney by facsimile or manual signature, or by
an officer of the title insurer or agent of the title insurer that issued
the related title insurance policy if the original has been transmitted for
recording until such time as the original is returned by the public
recording office or (3) a copy of the Mortgage and related power of
attorney, if any, certified by the public recording office;
(iii) The original Assignment of Mortgage in recordable form, to
"__________________, as Trustee for Home Equity and Home Improvement Loan
Trusts 199_-_". Any such Assignments of Mortgage may be made by blanket
assignments for Home Equity Loans secured by the Mortgaged Properties in
the same county, if permitted by applicable law;
(iv) The original lender's policy of title insurance or a true copy
thereof, or if such original lender's title insurance policy has been lost,
a copy thereof certified by the appropriate title insurer to be true and
complete, or if such lender's title insurance policy has not been issued as
of the Closing Date, a marked up commitment (binder) to issue such policy;
(v) All intervening assignments, if any, showing a complete chain of
assignments from the originator to the
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Seller, including any recorded warehousing assignments, with evidence of
recording thereon, certified by a Responsible Officer of the Seller by
facsimile or manual signature as a true copy of the original of such
intervening assignments; and
(vi) Originals of all assumption, written assurance, substitution and
modification agreements, if any.
In instances where the original recorded Mortgage cannot be delivered
by the Seller to the Trustee prior to or concurrently with the execution and
delivery of this Agreement due to a delay in connection with recording, the
Seller may in lieu of delivering such original recorded Mortgage, deliver to the
Trustee a copy thereof, provided that the Seller certifies that the original
Mortgage has been delivered to a title insurance company for recordation after
receipt of its policy of title insurance or binder therefor. In all such
instances, the Seller will deliver or cause to be delivered the original
recorded Mortgage to the Trustee promptly upon receipt of the original recorded
Mortgage but in no event later than one year after the Closing Date.
(b) The Trustee agrees, for the benefit of the Noteholders and the
Certificateholders, within 90 days after execution and delivery of this
Agreement, to review the Mortgage Files to ascertain that all required documents
set forth in paragraphs (i) - (v) of Section 2.1(a) have been executed and
received, and that the Mortgage Notes have been endorsed as set forth in Section
2.1(a), and that such documents relate to the Home Equity Loans identified on
the Home Equity Loan Schedule and in so doing the Trustee may rely on the
purported due execution and genuineness of any signature thereon. If within
such 90-day period the Trustee finds any document constituting a part of a
Mortgage File not to have been executed or received or to be unrelated to the
Home Equity Loans identified in said Home Equity Loan Schedule or, if in the
course of its review, the Trustee determines that such Mortgage File is
otherwise defective in any material respect, the Trustee shall promptly upon the
conclusion of its review notify the Seller, and the Seller shall have a period
of 90 days after such notice within which to correct or cure any such defect.
(c) The Trustee shall have no responsibility for reviewing any
Mortgage File except as expressly provided in Section 2.1(b). Without limiting
the effect of the preceding sentence, in reviewing any Mortgage File pursuant to
such subsection, 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
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recordable form (except, if applicable, to determine if the Trustee is the
assignee or endorsee), 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, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded, but
shall not be required to determine whether any Person executing any document is
authorized to do so or whether any signature thereon is genuine.
SECTION 2.2. Acceptance by Trustee. The Trustee hereby acknowledges,
---------------------
subject to the review and period for delivery provided for in Section 2.1, its
receipt of the Mortgage Files, and declares that the Trustee holds and will hold
such documents and all amounts received by it thereunder and hereunder in trust,
upon the terms herein set forth, for the use and benefit of all present and
future Noteholders and Certificate holders. If the Seller is given notice under
Section 2.1(c) above and if the Seller does not correct or cure such omission or
defect within the 90-day period specified in Section 2.1(c) above, the Seller
shall substitute one or more Eligible Substitute Home Equity Loans therefor as
provided in Section 2.5 hereof or purchase such Home Equity Loan from the
Trustee on the Determination Date in the month following the month in which such
90-day period expired at the Purchase Price of such Home Equity Loan. The
Purchase Price for the purchased Home Equity Loan shall be deposited in the
Collection Account no later than the applicable Determination Date or the
Business Day preceding the expiration of such 90-day period, as the case may be,
and, upon receipt by the Trustee of written notification of such deposit signed
by an officer of the Seller, the Trustee shall release to the Seller the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be necessary to
vest in the Seller or its designee any Home Equity Loan released pursuant
hereto. It is understood and agreed that the obligation of the Seller to cure,
substitute for or purchase any Home Equity Loan as to which a material defect in
or omission of a constituent document exists shall constitute the sole remedy
against the Seller respecting such defect or omission available to the Issuer,
the Owner Trustee, the Trustee, the Noteholders or the Certificateholders.
The Servicer, promptly following the transfer of (i) a Defective Home
Equity Loan from or (ii) an Eligible Substitute Home Equity Loan to the Trust
pursuant to this Section and Section 2.5, as the case may be, shall amend the
Home Equity Loan Schedule and make appropriate entries in its general account
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records to reflect such transfer and the addition of any Eligible Substitute
Home Equity Loan, if applicable.
SECTION 2.3. [Intentionally Omitted].
SECTION 2.4. Representations and Warranties of the Seller Regarding
------------------------------------------------------
the Home Equity Loans. (a) The Seller represents and warrants to the Issuer as
---------------------
follows as of the Closing Date:
(i) the information set forth in the Home Equity Loan Schedule
in Exhibit A hereto with respect to the Home Equity Loans was and will be
true and correct in all material respects at the date or dates respecting
which such information is furnished;
(ii) the terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by
written instruments, if required by law in the jurisdiction where the
Mortgaged Property is located, the substance of which waiver, alteration or
modification is reflected on the Home Equity Loan Schedule and the Mortgage
File for such Home Equity Loan contains a true, accurate and complete copy
of each such waiver, alteration and modification;
(iii) except as otherwise set forth in the Home Equity Loan
Schedule, the Mortgage File for each Home Equity Loan contains a true,
accurate and complete copy of each of the documents contained in such
Mortgage File, including all amendments, modifications and, if applicable,
waivers and assumptions that have been executed in connection with such
Home Equity Loan, and except as reflected in the Mortgage File, the Home
Equity Loan Schedule for such Home Equity Loan, such Home Equity Loan has
not been further modified or amended;
(iv) immediately prior to the transfer to the Issuer, the Seller
is the sole owner of beneficial title and holder of each Mortgage and
Mortgage Note relating to the Home Equity Loans free and clear of any and
all liens, claims, encumbrances, participation interests, equities,
pledges, charges or security interests of any nature and the Seller has
full right and authority, subject to no interest or participation of, or
agreement with, any other party, to sell or assign the same pursuant to
this Agreement;
(v) each Mortgage is a valid and enforceable first lien or
junior lien (as to which all prior liens are being assigned) on the
property securing the related
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Mortgage Note and each Mortgaged Property is owned by the Mortgagor in fee
simple (except with respect to common areas in the case of condominiums,
PUDs and de minimis PUDs) or by leasehold for a term longer than the term
-- -------
of the related Mortgage, subject only to (i) the lien of current real
property taxes and assessments, not yet due and payable, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of
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 obtained in connection
with the origination of the related Home Equity Loan and (iii) such 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;
(vi) as of the Cutoff Date, no payment of principal of or
interest on or in respect of any Home Equity Loan is more than ___ days
past due;
(vii) there is no mechanics' lien or claim for work, labor or
materials affecting the premises subject to any Mortgage which is 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
clause (x) below;
(viii) as of the Cutoff Date, no Home Equity Loan has been
delinquent for ___ days or more during the preceding 12 months, and there
is no delinquent tax or assessment lien against the property subject to any
Mortgage;
(ix) there is no valid offset, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to pay
the unpaid principal and interest on such Mortgage Note;
(x) the physical property subject to any Mortgage is free of
material damage and is in good repair and there is no proceeding pending
or, to the best of the Seller's knowledge, threatened for the total or
partial condemnation of any Mortgaged Property;
(xi) a lender's title insurance policy (on an ALTA or CLTA form)
or binder, or other assurance of title customary in the relevant
jurisdiction therefor in a form acceptable to FNMA or FHLMC, was issued on
the date of the origination of each related Home Equity Loan by a title
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insurance company acceptable to FNMA or FHLMC and qualified to do business
in the jurisdiction where the related Mortgaged Property is located,
insuring the Seller and its successors and assigns that the Mortgage is a
first priority lien on the related Mortgaged Property in the original
principal amount of the Home Equity Loan. The Seller is the sole insured
under such lender's title insurance policy, and such policy, binder or
assurance is valid and remains in full force and effect, and each such
policy, binder or assurance shall contain all applicable endorsements
including a negative amortization endorsement, if applicable;
(xii) in the event the Mortgage constitutes a deed of trust,
either a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in the
Mortgage or if no duly qualified trustee has been properly designated and
so serves, the Mortgage contains satisfactory provisions for the
appointment of such trustee by the holder of the Mortgage at no cost or
expense to such holder, and no fees or expenses are or will become payable
by Issuer to the trustee under the deed of trust, except in connection with
a trustee's sale after default by the mortgagor;
(xiii) as of the Cutoff Date, the Home Equity Loans had the
characteristics described in the Home Equity Loan Schedule for such Home
Equity Loans;
(xiv) the original principal amount of each Home Equity Loan is
not more than ___% of the Original Value; except as otherwise set forth in
the Home Equity Loan Schedule, each Home Equity Loan for which the original
principal balance of the related Mortgage Note exceeded __% of the Original
Value is covered by a Primary Mortgage Insurance Policy issued by a private
mortgage insurer insuring against default under the Mortgage Note in an
amount at least equal to the excess of such outstanding principal amount
over __% of such Original Value until the principal balance of such Home
Equity Loan is reduced below __% of the Original Value or, based upon a new
appraisal, the principal balance of such Home Equity Loan represents less
than __% of the new appraised value. Each FHA insurance policy or VA
guaranty relating to each FHA/VA insured/guaranteed Home Equity Loan is
current, in full force and effect and may be assigned by the Seller to the
Issuer at no cost to the Issuer;
(xv) there has been no fraud, misrepresentation or dishonesty
with respect to the
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origination or servicing of any Home Equity Loan or which has resulted or
may result in the exclusion from, denial of or defense to coverage under
any Primary Mortgage Insurance Policy;
(xvi) upon origination of each Home Equity Loan, the originator
received an appraisal with respect to each Mortgaged Property which
conformed to all FNMA requirements, and a true, accurate and complete copy
of such appraisal is contained in the Mortgage File;
(xvii) on the basis of a representation by the Mortgagor at the
time of origination of the Home Equity Loans, at least ___% of the Home
Equity Loans (by aggregate principal balance) are secured by Mortgages on
properties which were owner-occupied primary residences at the time of the
origination of such Home Equity Loan;
(xviii) neither the Seller nor any servicer of the related Home
Equity Loans has advanced funds 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 Mortgage, except for (i) interest
accruing from the date of the origination of the related Mortgage Note or
date of disbursement of the Home Equity Loan proceeds, whichever is later,
to the first Due Date under the related Mortgage Note and (ii) customary
advances for insurance and taxes;
(xix) each Mortgage Note, the related Mortgage and other
agreements executed in connection therewith are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law); and all parties to each Mortgage Note and the Mortgage
had legal capacity to execute the Mortgage Note and the Mortgage and each
Mortgage Note and Mortgage has been duly and properly executed by the
Mortgagor;
(xx) if the Home Equity Loan provides that the interest rate on
the principal balance of the related Home Equity Loan may be adjusted, all
of the terms of the related Mortgage pertaining to interest rate
adjustments, payment adjustments and adjustments of the outstanding
principal balance are enforceable and such adjustments will not affect the
priority of the Mortgage lien;
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(xxi) to the extent required under applicable law, each
originator and subsequent mortgagee or servicer of the Home Equity Loans
was authorized to transact and do business in the jurisdiction in which the
related Mortgaged Property is located at all times when it held or serviced
the Home Equity Loan; any requirements of any laws or regulations,
including usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, fair credit reporting, unfair collection
practice, equal credit opportunity and disclosure laws and regulations,
applicable to the origination and servicing of such Home Equity Loan have
been complied with in all material respects; and any obligations of the
holder of the related Mortgage Note, Mortgage and other loan documents have
been complied with in all material respects; servicing of each Home Equity
Loan has been in accordance with prudent mortgage servicing standards, any
applicable laws, rules and regulations and in accordance with the terms of
the Mortgage Notes, the Mortgage and other loan documents, whether such
origination and servicing was done by the Seller, its affiliates, or any
third party which originated the Home Equity Loan on behalf of, or sold the
Home Equity Loan to, any of them, or any servicing agent of any of the
foregoing;
(xxii) the related Mortgage Note and Mortgage contain customary
and enforceable provisions such as to render the rights and remedies of the
holder adequate for the realization against the Mortgaged Property of the
benefits of the security, including realization by judicial, or, if
applicable, non-judicial foreclosure, and there is no homestead or other
exemption available to the Mortgagor which would interfere with such right
to foreclosure;
(xxiii) the proceeds of the related Home Equity Loans 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; and all costs, fees and expenses incurred in making, closing
or recording the related Home Equity Loan have been paid, except recording
fees with respect to Mortgages not recorded as of the Closing Date;
(xxiv) as of the Closing Date the Mortgaged Property securing
the Home Equity Loan is insured (by an insurer which is acceptable to the
Seller) against loss by fire and such hazards as are covered under a
standard extended coverage endorsement, in an amount which is not
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less than the lesser of the maximum insurable value of the improvements
securing such Home Equity Loan and the outstanding principal balance of the
Home Equity Loan, but in no event in an amount less than an amount that is
required to prevent the Mortgagor from being deemed to be a co-insurer
thereunder; if the Mortgaged Property is a condominium unit, it is included
under the coverage afforded by a blanket policy for the condominium
project; if upon origination of the related Home Equity Loan, the
improvements on the Mortgaged Property were in an area identified as a
federally designated flood area, a flood insurance policy is in effect in
an amount representing coverage not less than the lesser of (i) the
outstanding principal balance of the Home Equity Loan, (ii) the restorable
cost of improvements located on such Mortgaged Property and (iii) the
maximum coverage available; and each Mortgage obligates the Mortgagor
thereunder to maintain the insurance referred to in the Mortgage at the
Mortgagor's cost and expense;
(xxv) except for ___% of the Home Equity Loans (by aggregate
principal balance as of the Cutoff Date) which are no more than ___ days
delinquent as of the Cutoff Date, there is no material monetary default
existing under any Mortgage or the related Mortgage Note and 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
or event of acceleration; and neither the Seller nor any servicer of any
related Home Equity Loan has taken any action to waive any default, breach
or event of acceleration; except for ___% of the Home Equity Loans (by
aggregate principal balance as of the Cutoff Date) which are no more than
___ days delinquent as of the Cutoff Date, no foreclosure action is
threatened or has been commenced with respect to the Home Equity Loans;
(xxvi) no Mortgagor, at the time of origination of the
applicable Mortgage, was a debtor in any state or federal bankruptcy or
insolvency proceeding;
(xxvii) each Home Equity Loan was originated by an entity
described in Section 3(a)(41) of the Securities Exchange Act of 1934, as
amended;
(xxviii) all inspections, licenses and certificates required to
be made or issued with respect to the Mortgaged Property and, with respect
to the use and occupancy of the same, including, but not limited to,
certificates of occupancy and fire underwriting
-33-
certificates, have been made or obtained from the appropriate authorities;
(xxix) the Mortgaged Property and all improvements thereon
comply with all requirements of any applicable zoning and subdivision laws
and ordinances;
(xxx) there do not exist any circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can be reasonably expected to cause
private institutional investors to regard the Home Equity Loan as an
unacceptable investment, cause the Home Equity Loan to become delinquent or
adversely affect the value or marketability of the Home Equity Loan;
(xxxi) no instrument of release or waiver has been executed in
connection with the Home Equity Loans, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if any,
and which has been delivered to the Issuer or its designee; and
(xxxii) except as otherwise provided in the Home Equity Loan
Schedule, no Home Equity Loan provides for a balloon payment and each
Mortgage Note contains provisions providing for its full amortization by
the end of its original term and is payable on the first day of each month
in monthly installments of principal and interest, with interest payable in
arrears, over an original term of not more than ___ years.
(b) It is understood and agreed that the representations and
warranties set forth in Section 2.4(a) shall survive the sale, transfer and
assignment of the Home Equity Loans to the Issuer and the pledge thereof to the
Trustee pursuant to the Indenture. Upon discovery by the Seller, the Servicer
or the Owner Trustee of a breach of any of the foregoing representations and
warranties, without regard to any limitation set forth therein concerning the
knowledge of the Seller as to the facts stated therein, which materially and
adversely affects the interests of the Noteholders or the Certificateholders in
the related Home Equity Loan, the party discovering such breach shall give
prompt written notice to the other parties and the Trustee. Within 60 days of
its discovery or its receipt of notice of breach, the Seller shall use all
reasonable efforts to cure such breach in all material respects or shall
purchase from the Trust or substitute an Eligible Substitute Home Equity Loan as
provided in Section 2.5 for such Home Equity Loan. Any such purchase by
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the Seller shall be at the Purchase Price, and in each case shall be
accomplished in the manner set forth in Section 2.2. It is understood and agreed
that the obligation of the Seller to cure, substitute for or purchase any Home
Equity Loan as to which such a breach has occurred and is continuing shall
constitute the sole remedies against the Seller respecting such breach available
to the Issuer, the Owner Trustee, the Trustee, the Noteholders or
Certificateholders. Neither the Owner Trustee nor the Trustee shall have a duty
to conduct any affirmative investigation as to the occurrence of any conditions
requiring the repurchase of any Home Equity Loan pursuant to this Section.
SECTION 2.5. Substitution of Home Equity Loans. (a) On a
---------------------------------
Determination Date within two years following the Closing Date and which is on
or before the date on which the Seller would otherwise be required to repurchase
a Home Equity Loan under Section 2.2 or 2.4, the Seller may deliver to the
Trustee one or more Eligible Substitute Home Equity Loans in substitution for
any one or more of the Defective Home Equity Loans which the Seller would
otherwise be required to repurchase pursuant to Sections 2.2 or 2.4.
(b) The Seller shall notify the Issuer, the Owner Trustee, the
Servicer and the Trustee in writing not less than five Business Days before the
related Determination Date which is on or before the date on which the Seller
would otherwise be required to repurchase such Home Equity Loan pursuant to
Section 2.2 or 2.4 of its intention to effect a substitution under this Section.
On such Determination Date (the "Substitution Date"), the Seller shall deliver
to the Issuer (1) the Eligible Substitute Home Equity Loans to be substituted
for the Original Home Equity Loans, (2) a list of the Original Home Equity Loans
to be substituted for by such Eligible Substitute Home Equity Loans, (3) an
Officers' Certificate (A) stating that no failure by the Servicer described in
Section 7.1 shall have occurred and be continuing, (B) stating that all
conditions precedent to such substitution specified in subsection (a) have been
satisfied and attaching as an exhibit a supplemental Home Equity Loan schedule
(the "Supplemental Home Equity Loan Schedule") setting forth the same type of
information as appears on the Home Equity Loan Schedule and representing as to
the accuracy thereof and (C) confirming that the representations and warranties
contained in Section 2.4 are true and correct in all material respects with
respect to the Substitute Home Equity Loans on and as of such Determination
Date, provided that remedies for the inaccuracy of such representations are
limited as set forth in Sections 2.2, 2.4 and this Section 2.5 and (4) a
certificate stating that cash in the amount of the related Substitution
Adjustment, if any, has been deposited to the Collection Account. Upon receipt
of the
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foregoing, the Issuer shall release such Original Home Equity Loans to the
Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Section 2.5(a) and (b) above and the grant of such Eligible Substitute Home
Equity Loans to the Trustee pursuant to Section 2.5(a) above, Exhibit A to this
Agreement shall be deemed to be amended to exclude all Home Equity Loans being
replaced by such Eligible Substitute Home Equity Loans and to include the
information set forth on the Supplemental Home Equity Loan Schedule with respect
to such Eligible Substitute Home Equity Loans, and all references in this
Agreement to Home Equity Loans shall include such Eligible Substitute Home
Equity Loans and be deemed to be made on or after the related Substitution Date,
as the case may be, as to such Eligible Substitute Home Equity Loans.
ARTICLE III
Administration and Servicing of Home Equity Loans
-------------------------------------------------
SECTION 3.1. Duties of Servicer. (a) The Servicer, as agent for the
------------------
Issuer (to the extent provided herein) shall supervise, or take such actions as
are necessary to ensure, the servicing and administration of the Home Equity
Loans and any REO Property in accordance with this Agreement and the customary
and usual standards of an institution prudently servicing mortgage loans for its
own account and shall have full authority to do anything it reasonably deems
appropriate in connection with such servicing and administration. The Servicer
shall maintain servicing standards equivalent to those required for approval by
FNMA or FHLMC. The Servicer may perform its responsibilities relating to
servicing through other agents or independent contractors, but shall not thereby
be released from any of its responsibilities as hereinafter set forth. The
authority of the Servicer, in its capacity as servicer, shall include the power
to (i) supervise the filing and collection of insurance claims and take or cause
to be taken such actions on behalf of the insured person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (ii)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Home Equity Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Primary Insurance Policy and any other matter pertaining to a delinquent
Home Equity Loan. The authority of the Servicer shall include, in addition, the
power to (i) execute and deliver customary consents or waivers and other
instruments and documents, (ii) consent to transfers of any
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related Mortgaged Property and assumptions of the related Mortgage Notes and
Security Instruments (but only in the manner provided in this Agreement) and
(iii) collect any Insurance Proceeds and Liquidation Proceeds. Without limiting
the generality of the foregoing, the Servicer is authorized and empowered to
execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the
Trustee, the Certificateholders and the Noteholders or any of them, any and all
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such Home
Equity Loans or to the Mortgaged Properties securing such Home Equity Loans.
(b) Notwithstanding the provisions of Subsection 3.1(a), the Servicer
shall not take any action inconsistent with the interest of the Noteholders or
the Certificateholders in the Home Equity Loans or with the rights and interests
of the Owner Trustee, the Trustee, the Noteholders or the Certificateholders
under this Agreement.
(c) The Owner Trustee shall furnish the Servicer with any powers of
attorney and other documents in form as provided to it necessary or appropriate
(as certified to the Owner Trustee by the Servicer) to enable the Servicer to
service and administer the related Home Equity Loans and REO Property.
SECTION 3.2. Collection and Allocation of Home Equity Loan Payments.
------------------------------------------------------
(a) The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Home Equity Loans as and when the same
shall become due and shall follow such collection procedures as it follows with
respect to all mortgage loans in its servicing portfolio comparable to the Home
Equity Loans that it services for itself or others.
(b) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Home Equity Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Noteholders and the Certificateholders; provided, however, that
-------- -------
the Servicer may not permit any modification with respect to any Home Equity
Loan that would change the Mortgage Rate, defer or forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Home Equity Loan) or extend the Final Scheduled Maturity Date on the Home Equity
Loan. No costs incurred by the Servicer in respect of Servicing Advances shall
for the purposes
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of distributions to Noteholders or Certificateholders be added to the amount
owing under the related Home Equity Loan.
(c) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the Trustee an
Eligible Deposit Account (the "Collection Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Noteholders and the Certificateholders. The Collection Account shall
initially be established with the Trustee. The Servicer shall on the Closing
Date deposit into the Collection Account any amounts representing payments on
and any collections in respect of the Home Equity Loans in received on or after
the Cutoff Date and prior to the Closing Date, and thereafter shall use its best
efforts to deposit within one Business Day, and shall in any event deposit
within two Business Days following receipt thereof the following payments and
collections received or made by it (without duplication) with respect to the
Home Equity Loans:
(i) all payments received on and after the Cutoff Date on account of
principal on the Home Equity Loans and all full or partial prepayments
collected after the Cutoff Date;
(ii) all payments received on and after the Cutoff Date on account of
interest on the Home Equity Loans;
(iii) all Net Liquidation Proceeds net of Foreclosure Profits;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any
Home Equity Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.2, 2.4, 2.6 and 3.16; and
(vii) any amount required to be deposited in the Collection Account
pursuant to Sections 3.5, 3.7, 3.15, 3.16 or 8.1;
provided, however, that (x) with respect to each Due Period, the Servicer shall
-------- -------
be permitted to retain from payments in respect of interest on the Home Equity
Loans, the Servicing Fee for such Due Period and (y) the Servicer shall be
permitted to retain late collections, including Liquidation Proceeds, Released
Mortgaged Property Proceeds and Insurance Proceeds, to the extent of any unpaid
Servicing Fees, unreimbursed Monthly Advance and/or Servicing Advance with
respect to the related Home Equity Loan.
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The foregoing requirements respecting deposits to the Collection Account are
exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing Foreclosure Profits, fees (including annual fees), late charges or
penalties payable by Mortgagors, or amounts received by the Servicer for the
accounts of Mortgagors for application towards the payment of taxes, insurance
premiums, assessments and similar items.
SECTION 3.3. Withdrawals from each Collection Account. The Trustee
----------------------------------------
shall withdraw or cause to be withdrawn funds from the Collection Account for
the following purposes with respect to the Home Equity Loans:
(i) the deposits and distributions required by Section 4.5(d);
(ii) to the extent not retained by the Servicer as provided in
Section 3.2(c), to reimburse the Servicer for any accrued unpaid
Servicing Fees and for unreimbursed Monthly Advances and Servicing
Advances. The Servicer's right to reimbursement for unpaid Servicing
Fees and unreimbursed Servicing Advances shall be limited to late
collections on the related Home Equity Loan, including Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Servicer from the related
Mortgagor or otherwise relating to the Home Equity Loan in respect of
which such reimbursed amounts are owed. If a Monthly Advance was made
net of the Servicing Fee as permitted by Section 3.15 hereof, no
additional Servicing Fee for the related Mortgage loan and Due Period
shall be payable. The Servicer's right to reimbursement from such
Collection Account for unreimbursed Monthly Advances shall be limited to
late collections of interest on any Home Equity Loan and to Liquidation
Proceeds and Insurance Proceeds on related Home Equity Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction;
(iv) (a) to make investments in Eligible Investments and (b) to
pay to the Servicer, interest earned in respect of Eligible Investments
or on funds deposited in the Collection Account;
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(v) to withdraw any funds deposited in such Collection Account
that were not required to be deposited therein (such as Servicing
Compensation) or were deposited therein in error and to pay such funds to
the appropriate Person;
(vi) to pay the Servicer Servicing Compensation pursuant to
Section 3.9 hereof to the extent not retained or paid pursuant to Section
3.2(c);
(vii) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to Section 3.7; and
(viii) to clear and terminate such Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein in
accordance with Section 8.1(b).
SECTION 3.4. Maintenance of Hazard Insurance; Property Protection
----------------------------------------------------
Expenses. The Servicer shall cause to be maintained for each Home Equity Loan
--------
fire and hazard insurance naming the Servicer as loss payee thereunder providing
extended coverage in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements securing such Home Equity Loan from
time to time, (ii) the combined principal balance owing on such Home Equity Loan
and any related First Lien and (iii) the minimum amount required to compensate
for damage or loss on a replacement cost basis. The Servicer shall also
maintain on property acquired upon foreclosure, or by deed-in-lieu of
foreclosure, hazard insurance with extended coverage in an amount which is at
least equal to the lesser of (i) the maximum insurable value from time to time
of the improvements which are a part of such property, (ii) the combined
principal balance owing on such Home Equity Loan and any related First Lien and
(iii) the minimum amount required to compensate for damage or loss on a
replacement cost basis at the time of such foreclosure, fire and or deed in lieu
of foreclosure plus accrued interest and the good-faith estimate of the Servicer
of related Servicing Advances to be incurred in connection therewith. Amounts
collected by the Servicer under any such policies shall be deposited in the
Collection Account to the extent called for by Section 3.2. In cases in which
any Mortgaged Property is located in a federally designated flood area, the
hazard insurance to be maintained for the related Home Equity Loan shall include
flood insurance to the extent such flood insurance is available and the Servicer
has determined such insurance to be necessary in accordance with accepted
mortgage loan servicing standards for mortgage loans comparable to the Home
Equity Loans. All such
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flood insurance shall be in amounts equal to the least of the amount in clause
(i) above, clause (ii) above and the maximum amount of insurance available under
the National Flood Insurance Act of 1968, as amended. The Servicer shall be
under no obligation to require that any Mortgagor maintain earthquake or other
additional insurance and shall be under no obligation itself to maintain any
such additional insurance on property acquired in respect of a Home Equity Loan,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance.
SECTION 3.5. Maintenance of Mortgage Impairment Insurance Policy. In
---------------------------------------------------
the event that the Servicer shall obtain and maintain a blanket policy with an
insurer having a General Policy rating of A:VIII or better in Best's Key Rating
Guide insuring against fire and hazards of extended coverage on all of the Home
Equity Loans, then, to the extent such policy names the Servicer as loss payee
and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Home Equity Loans without co-insurance, and otherwise complies
with the requirements of Section 3.4, the Servicer shall be deemed conclusively
to have satisfied its obligations with respect to fire and hazard insurance
coverage under Section 3.4, it being understood and agreed that such blanket
policy may contain a deductible clause, in which case the Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 3.4, and there shall have been a loss
which would have been covered by such policy, deposit in the Collection Account
the difference, if any, between the amount that would have been payable under a
policy complying with Section 3.4 and the amount paid under such blanket policy.
Upon the request of the Owner Trustee or the Trustee, the Servicer shall cause
to be delivered to the Owner Trustee or the Trustee a certified true copy of
such policy. In connection with its activities as administrator and servicer of
the Home Equity Loans, the Servicer agrees to prepare and present, on behalf of
itself, the Owner Trustee, the Trustee, the Noteholders and the
Certificateholders, claims under any such policy in a timely fashion in
accordance with the terms of such policy.
SECTION 3.6. Fidelity Bond. The Servicer shall maintain with a
-------------
responsible company, and at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, in a minimum amount acceptable to FNMA or
FHLMC or otherwise in an amount as is commercially available at a cost that is
not generally regarded as excessive by industry standards, with broad coverage
on all officers, employees or other persons acting in any capacity requiring
such persons to handle funds, money, documents or papers relating to the Home
Equity Loans ("Servicer Employees"). Any such fidelity bond and
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errors and omissions insurance shall protect and insure the Servicer against
losses, including losses resulting from forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such Servicer Employees. Such
fidelity bond shall also protect and insure the Servicer against losses in
connection with the release or satisfaction of a Home Equity Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 3.6 requiring such fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. Upon the request of the Owner Trustee or the Trustee,
the Servicer shall cause to be delivered to the Owner Trustee or the Trustee a
certified true copy of such fidelity bond and insurance policy.
SECTION 3.7. Management and Realization Upon Defaulted Home Equity
-----------------------------------------------------
Loans. On behalf of the Issuer, the Servicer shall manage, conserve, protect
-----
and operate each REO Property for the Noteholders and the Certificateholders
solely for the purpose of its prudent and prompt disposition and sale. The
Servicer shall, either itself or through an agent selected by the Servicer,
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Servicer shall attempt to sell the same
(and may temporarily rent the same) on such terms and conditions as the Servicer
deems to be in the best interests of the Noteholders and the Certificateholders.
The Servicer shall cause to be deposited, no later than five Business
Days after the receipt thereof, in the Collection Account, all revenues received
with respect to the related REO Property and shall retain, or cause the Trustee
to withdraw therefrom funds necessary for the proper operation, management and
maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer
for cash at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interests of the Noteholders and the Certificateholders
and, as soon as practicable thereafter, the expenses of such sale shall be paid.
The cash proceeds of sale of the REO Property shall be promptly deposited in the
Collection Account, net of Foreclosure Profits and of any related unreimbursed
Servicing Advances, accrued and unpaid Servicing Fees and unreimbursed Monthly
Advances payable to the Servicer in accordance with Section 3.3, for
distribution to the Noteholders and the Certificateholders in accordance with
Section 4.5 hereof.
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The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Home Equity Loans as come
into and continue in default when no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.2 subject to the
provisions contained in the last paragraph of this Section 3.7.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Owner Trustee, or to its nominee on behalf of the
Noteholders and the Certifi cateholders.
SECTION 3.8. Trustee to Cooperate. Upon payment in full of any Home
--------------------
Equity Loan, the Servicer is authorized to execute, pursuant to the
authorization contained in Section 3.1, if the related Assignment of Mortgage
has been recorded as required hereunder, an instrument of satisfaction regarding
the related Mortgage, which instrument of satisfaction shall be recorded by the
Servicer if required by applicable law and be delivered to the Person entitled
thereto. It is understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or transfer shall be reimbursed from
amounts deposited in the Collection Account. If the Trustee is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Home Equity Loan, the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a Request for Release, in the form
annexed hereto as Exhibit E, signed by a Servicing Officer, release the related
Mortgage File to the Servicer, and the Trustee shall execute such documents, in
the forms provided by the Servicer, as shall be necessary to the prosecution of
any such proceedings or the taking of other servicing actions. Such Request for
Release shall obligate the Servicer to return the Mortgage File to the Trustee
when the need therefor by the Servicer no longer exists unless the Home Equity
Loan shall be liquidated, in which case, upon receipt of a certificate of a
Servicing Officer similar to that hereinabove specified, the Request for Release
shall be released by the Trustee to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Home Equity Loan that is in default following recordation of the related
Assignment of Mortgage in accordance with the provisions hereof, the Trustee
shall, if so requested in writing by the Servicer, execute an appropriate
assignment in the form provided to the Trustee by the Servicer to assign such
Home Equity Loan for the purpose of collection to the Servicer (any such
assignment shall unambiguously indicate that the assignment
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is for the purpose of collection only), and, upon such assign ment, such
assignee for collection will thereupon bring all required actions in its own
name and otherwise enforce the terms of the Home Equity Loan and deposit or
credit the Net Liquidation Proceeds, exclusive of Foreclosure Profits, received
with respect thereto in the Collection Account. In the event that all delinquent
payments due under any such Home Equity Loan are paid by the Mortgagor and any
other defaults are cured then the assignee for collection shall promptly
reassign such Home Equity Loan to the Trustee and return it to the place where
the related Mortgage File was being maintained.
SECTION 3.9. Servicing Fee. The servicing fee for a Distribution
-------------
Date shall equal the product of (a) one-twelfth, (b) the Servicing Fee Rate and
(c) the Pool Balance as of the first day of the preceding Due Period (the
"Servicing Fee"). The Servicer shall also be entitled to all late payment
charges and other administrative fees or similar charges, including without
limitation, Foreclosure Profits, allowed by applicable law with respect to Home
Equity Loans, collected (from whatever source) on the Home Equity Loans (the
"Supplemental Servicing Fee"). The Servicer also shall be entitled to and may
retain from Collections the Servicing Fee, as provided herein. The Servicer, in
its discretion at its election, may defer receipt of all or any portion of the
Servicing Fee or Supplemental Servicing Fee for any Due Period to and until a
later Due Period for any reason, including in order to avoid a shortfall in any
payments due on any Notes or Certificates. Any such deferred amount shall be
payable to (or may be retained from subsequent collections by) the Servicer on
demand.
SECTION 3.10. Servicer's Certificate. On each Determination Date,
----------------------
the Servicer shall deliver to the Owner Trustee, the Trustee and the Seller,
with a copy to the Rating Agencies, a Servicer's Certificate containing all
information necessary to make the distributions pursuant to Sections 4.5 and 4.6
for the Due Period preceding the date of such Servicer's Certificate. Home
Equity Loans to be purchased by the Servicer or to be repurchased by the Seller
shall be identified by the Servicer by account number with respect to such Home
Equity Loan (as specified in Exhibit A).
SECTION 3.11. Annual Statement as to Compliance; Notice of Default.
---------------------------------- -----------------
(a) The Servicer shall deliver to the Owner Trustee and the Trustee, on or
before ________ of each year beginning ________, 199__, an Officers'
Certificate, dated as of December 31 of the preceding year, stating that (i) a
review of the activities of the Servicer during the preceding twelve-month
period (or, in the case of the first such report, during the period from the
Closing Date to December 31, 199__) and of its
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performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
thereof. The Trustee shall send a copy of such certificate and the report
referred to in Section 3.10 to the Rating Agencies. A copy of such certificate
and the report referred to in Section 3.10 may be obtained by any
Certificateholder by a request in writing to the Owner Trustee addressed to the
Corporate Trust Office (as defined in the Trust Agreement) or by any Noteholder
by a request in writing to the Trustee addressed to the Corporate Trust Office.
Upon the telephone request of the Owner Trustee, the Trustee will promptly
furnish the Owner Trustee a list of Noteholders as of the date specified by the
Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Trustee and
the Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than five Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Default under Section 7.1(a) or (b).
SECTION 3.12. Annual Independent Certified Public Accountants'
------------------------------------------------
Report. The Servicer shall cause a firm of independent certified public
accountants, which may also render other services to the Servicer or the Seller,
to deliver to the Seller, the Owner Trustee and the Trustee on or before
________ of each year beginning ________, 199__, an letter addressed to the
Servicer, the Seller, the Owner Trustee and the Trustee and each Rating Agency,
to the effect that such firm has with respect to the Servicer's overall
servicing operations examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers during the
preceding calendar year (or, in the case of the first such report, during the
period from the Closing Date to December 31, 199__), and stating such firm's
conclusions relating thereto.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 3.13. Access to Certain Documentation and Information
-----------------------------------------------
Regarding Home Equity Loans. The Servicer shall provide to the
---------------------------
Certificateholders and Noteholders access to the Mortgage Files in such cases
where the Certificateholders or
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Noteholders shall be required by applicable statutes or regulations to review
such documentation as demonstrated by evidence satisfactory to the Servicer in
its reasonable judgment. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section 3.13 shall affect 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 to information as provided in this Section 3.13 as a result of
such obligation shall not constitute a breach of this Section 3.13.
SECTION 3.14. Servicer Expenses. The Servicer shall be required to
-----------------
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and reports
to Certificateholders and Noteholders.
SECTION 3.15. Advances by the Servicer. (a) Not later than the
------------------------
close of business on the second Business Day preceding each Distribution Date,
the Servicer shall remit to the Trustee for deposit in the Collection Account an
amount, to be distributed on the related Distribution Date pursuant to Section
4.5(d), equal to the sum of (a) the interest accrued on each Home Equity Loan at
the Mortgage Rate (or at such lower rate as may be in effect for such Home
Equity Loan pursuant to application of the Civil Relief Act and/or any Debt
Service Reduction) through the related Due Date, but not received as of the
close of busi ness on the Determination Date for such Distribution Date (net of
the Servicing Fee) and (b) with respect to each REO Property which was acquired
during or prior to the related Due Period and as to which a final disposition
did not occur during the related Due Period, an amount equal to the excess, if
any, of interest on the Principal Balance of such REO Property at the Net Rate
for the most recently ended Due Period prior to the related Determination Date
for the related Home Equity Loan over the net income from the REO Property
transferred to the Collection Account for such Distribution Date pursuant to
Section 3.4; such sum being defined herein as the "Monthly Advance." The
Servicer may fund all or a portion of the Monthly Advance with respect to the
Home Equity Loans by instructing the Trustee on such Determination Date to use
funds deposited in the Collection Account which are not part of the Total
Distribution Amount for the related Distribution Date; provided that if such
funds are so used the Servicer shall replace such funds on or before any
subsequent Determination Date on which such funds are required to be part of the
Total Distribution Amount.
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(b) Notwithstanding anything herein to the contrary, no Servicing
Advance or Monthly Advance shall be required to be made hereunder if the
Servicer determines that such Servicing Advance or Monthly Advance would, if
made, constitute a Nonrecoverable Advance.
SECTION 3.16. Optional Purchase of Defaulted Home Equity Loans. The
------------------------------------------------
Servicer, in its sole discretion, shall have the right to elect (by written
notice sent to the Seller, the Owner Trustee and the Trustee) to purchase for
its own account from the Issuer any Home Equity Loan which is 90 days or more
delinquent in the manner and at the price specified in Section 2.2. The
Purchase Price for any Home Equity Loan purchased hereunder shall be deposited
in the Collection Account and the Trustee, upon receipt of such deposit, shall
release or cause to be released to the Servicer or its designee the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment prepared by the purchaser of such Home Equity Loan, in each case
without recourse, as shall be necessary to vest in the purchaser of such Home
Equity Loan any Home Equity Loan released pursuant hereto and the purchaser of
such Home Equity Loan shall succeed to all the Issuer's right, title and
interest in and to such Home Equity Loan and all security and documents related
thereto. Such assignment shall be an assignment outright and not for security.
The purchaser of such Home Equity Loan shall thereupon own such Home Equity
Loan, and all security and documents, free of any further obligation to the
Owner Trustee, the Trustee, the Noteholders or the Certificateholders with
respect thereto.
SECTION 3.17. Superior Liens. The Servicer shall file (or cause to
--------------
be filed) of record a request for notice of any action by a superior lienholder
under a First Lien for the protection of the Issuer's interest, where permitted
by local law and whenever applicable state law does not require that a junior
lienholder be named as a party defendant in foreclosure proceed ings in order to
foreclose such junior lienholder's equity of redemption.
If the Servicer is notified that any superior lien holder has
accelerated or intends to accelerate the obligations secured by the First Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust, whatever actions are necessary to protect the interests of
the Noteholders and the Certificateholders, and/or to preserve the security of
the related Home Equity Loan. The Servicer shall advance the necessary funds to
cure the default or reinstate the superior lien, if the Servicer
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reasonably believes such advance is in the best interests of the Noteholders and
the Certificateholders. The Servicer shall not make such an advance except to
the extent that it determines in its reasonable good faith judgment that the
advance would be recoverable from Liquidation Proceeds on the related Home
Equity Loan.
SECTION 3.18. Payment of Taxes, Insurance and Other Charges. With
---------------------------------------------
respect to each Home Equity Loan, the Servicer shall maintain accurate records
reflecting fire and hazard insurance coverage.
With respect to each Home Equity Loan as to which the Servicer
maintains escrow accounts, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of primary mortgage guaranty insurance premiums, if any, and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in any escrow account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage. To the extent that a Mortgage does not
provide for escrow payments, the Servicer shall, if it has received notice of a
default or deficiency, monitor such payments to determine if they are made by
the Mortgagor.
SECTION 3.19. Appointment of Subservicer. The Servicer may at any
--------------------------
time appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, however, that the Rating Agency Condition shall
-------- -------
have been satisfied in connection therewith; provided further that the Servicer
-------- -------
shall remain obligated and be liable to the Issuer, the Owner Trustee, the
Trustee, the Certificateholders and the Noteholders for the servicing and
administering of the Home Equity Loans in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the appointment
of such subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the Home
Equity Loans. The fees and expenses of the subservicer shall be as agreed
between the Servicer and its subservicer from time to time and none of the
Issuer, the Owner Trustee, the Trustee, the Certificateholders or the
Noteholders shall have any responsibility therefor.
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ARTICLE IV
Distributions; Reserve Account;
-------------------------------
Statements to Certificateholders and Noteholders
------------------------------------------------
SECTION 4.1. Establishment of Trust Accounts. (a) (i) The Servicer,
-------------------------------
for the benefit of the Noteholders, shall establish and maintain in the name of
the Trustee an Eligible Deposit Account (the "Note Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Noteholders. The Note Distribution Account shall
initially be established with the Trustee.
(ii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the Trustee an
Eligible Deposit Account (the "Reserve Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Noteholders and the Certificateholders. The Reserve Account shall be maintained
with the Trustee as long as the Trustee is an Eligible Institution.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Reserve Account (collectively, the "Trust Accounts") and the
Certificate Distribution Account shall be invested by the Trustee with respect
to Trust Accounts and by the Owner Trustee with respect to the Certificate
Distribution Account (or any custodian with respect to funds on deposit in any
such account) in Eligible Investments selected in writing by the Servicer
(pursuant to standing instructions or otherwise); provided, however, it is
-------- -------
understood and agreed that neither the Trustee nor the Owner Trustee shall be
liable for any loss arising from such investment in Eligible Investments. All
such Eligible Investments shall be held by or on behalf of the Trustee or the
Owner Trustee, as applicable, for the benefit of the Noteholders and the
Certificateholders, the Noteholders or the Certificateholders, as applicable;
provided that on each Distribution Date all interest and other investment income
--------
(net of losses and investment expenses) on funds on deposit therein shall be
deposited into the Collection Account and shall be deemed to constitute a
portion of the Interest Distribution Amount. Other than as permitted by the
Rating Agencies, funds on deposit in the Collection Account, the Note
Distribution Account, the Certificate Distribution Account and the Reserve
Account shall be invested in Eligible Investments that will mature so that such
funds will be available at the close of business on the Transfer Date preceding
the following Distribution Date. Funds deposited in a Trust Account or the
Certificate Distribution Account on a Transfer Date which
-49-
immediately precedes a Distribution Date upon the maturity of any Eligible
Investments are not required to be invested overnight.
(c) (i) The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Trust Accounts and in all proceeds
thereof (including all income thereon) and all such funds, investments, proceeds
and income shall be part of the Owner Trust Estate. Except as otherwise
provided herein, the Trust Accounts shall be under the sole dominion and control
of the Trustee for the benefit of the Noteholders and the Certificateholders, or
the Noteholders, as the case may be. If, at any time, any of the Trust Accounts
or the Certificate Distribution Account ceases to be an Eligible Deposit
Account, the Trustee (or the Servicer on its behalf) or the Owner Trustee, as
applicable, shall within 10 Business Days (or such longer period as to which
each Rating Agency may consent) establish a new Trust Account or a new
Certificate Distribution Account, as applicable, as an Eligible Deposit Account
and shall transfer any cash and/or any investments to such new Trust Account or
a new Certificate Distribution Account, as applicable. In connection with the
foregoing, the Servicer agrees that, in the event that any of the Trust Accounts
are not accounts with the Trustee, the Servicer shall notify the Trustee in
writing promptly upon any of such Trust Accounts ceasing to be an Eligible
Deposit Account.
(ii) With respect to the Trust Account Property, the Trustee,
and with respect to the Certificate Distribution Account, the Owner
Trustee, agrees, by its respective acceptance hereof, that:
(A) any Trust Account Property or any property in the Certificate
Distribution Account that is held in deposit accounts shall be held
solely in the Eligible Deposit Accounts subject to the penultimate
sentence of Section 4.1(c)(i); and, except as otherwise provided
herein, each such Eligible Deposit Account shall be subject to the
exclusive custody and control of the Trustee with respect to the Trust
Accounts and the Owner Trustee with respect to the Certificate
Distribution Account, and the Trustee or the Owner Trustee, as
applicable, shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical Property
shall be delivered to the Trustee in accordance with paragraph (a) of
the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Trustee or a financial
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intermediary (as such term is defined in Section 8-313(4) of the UCC)
acting solely for the Trustee;
(C) any Trust Account Property that is a book- entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Trustee,
pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in such
paragraph; and
(D) any Trust Account Property that is an "uncertificated security"
under Article 8 of the UCC and that is not governed by clause (C)
above shall be delivered to the Trustee in accordance with paragraph
(c) of the definition of "Delivery" and shall be maintained by the
Trustee, pending maturity or disposition, through continued
registration of the Trustee's (or its nominee's) ownership of such
security.
(iii) The Servicer shall have the power, revocable by the Trustee or
by the Owner Trustee with the consent of the Trustee, to instruct the
Trustee to make withdrawals and payments from the Trust Accounts for the
purpose of permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Trustee to carry out its
duties under the Indenture.
(d) (i) The Servicer shall establish and maintain with the Trustee
an Eligible Deposit Account (the "Payahead Account"). The Payahead Account
shall not be property of the Issuer.
(ii) The Servicer shall on or prior to each Distribution Date (and
prior to deposits to the Note Distribution Account or the Certificate
Distribution Account) transfer from the Collection Account to the Payahead
Account all Payaheads as described in Section 4.3 received by the Servicer
during the Due Period. Notwithstanding the foregoing, for so long as the
Servicer is permitted to make monthly remittances to the Collection Account
pursuant to Section 3.2(c), Payaheads need not be remitted to and deposited in
the Payahead Account but instead may be remitted to and held by the Servicer.
So long as such condition is met, the Servicer shall not be required to
segregate or otherwise hold separate any Payaheads remitted to the Servicer as
aforesaid but shall be required to remit Payaheads to the Collection Account in
accordance with the first sentence of the third paragraph of Section 4.5(a).
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SECTION 4.2. [Intentionally Omitted].
SECTION 4.3. Application of Collections.
--------------------------
(a) All collections for the Due Period shall be applied by the
Servicer as follows:
With respect to each Home Equity Loan (other than a Purchased Home
Equity Loan), payments by or on behalf of the Mortgagor shall be applied, in the
case of Actuarial Home Equity Loans, to the Scheduled Payment and, in the case
of Simple Interest Home Equity Loans, to interest and principal in accordance
with the Simple Interest Method. With respect to Actuarial Home Equity Loans,
any remaining excess shall be added to the Payahead Balance, and shall be
applied to prepay the Actuarial Home Equity Loan, but only if the sum of such
excess and the previous Payahead Balance shall be sufficient to prepay the Home
Equity Loan in full. Otherwise, any such remaining excess payments shall
constitute a Payahead and shall increase the Payahead Balance.
(b) All Liquidation Proceeds shall be applied to the related Home
Equity Loan in accordance with the Servicer's customary servicing procedures.
SECTION 4.4. Additional Deposits. The Servicer and the Seller shall
-------------------
deposit or cause to be deposited in the Collection Account the aggregate
Purchase Price with respect to Purchased Home Equity Loans and the Seller shall
deposit therein all amounts to be paid under Section 8.1. The Servicer will
deposit the aggregate Purchase Price with respect to Purchased Home Equity Loans
within two Business Days after such obligations become due, unless the Servicer
shall not be required to make deposits within two Business Days of receipt
pursuant to Section 3.2(c) (in which case such deposit will be made by the
related Transfer Date). All such other deposits shall be made on the Transfer
Date following the end of the related Due Period.
SECTION 4.5. Distributions. (a) On each Distribution Date, the
-------------
Trustee shall cause to be transferred from the Payahead Account, or from the
Servicer in the event the provisions of Section 4.1(d)(ii) are applicable, to
the Collection Account, in immediately available funds, the aggregate previous
Payaheads to be applied to Scheduled Payments on Actuarial Home Equity Loans for
the related Due Period or prepayments for the related Due Period, pursuant to
Sections 4.3 and 4.4, in the amounts set forth in the Servicer's Certificate for
such Distribution Date. A single, net transfer may be made.
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(b) On each Determination Date, the Servicer shall calculate all
amounts required to determine the amounts to be deposited from the Reserve
Account into the Collection Account and from the Collection Account into the
Note Distribution Account and the Certificate Distribution Account.
(c) On or before each Distribution Date, the Servicer shall instruct
the Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.10) to
withdraw from the Reserve Account and deposit in the Collection Account and the
Trustee shall so withdraw and deposit the Reserve Account Transfer Amount for
such Distribution Date.
(d) Subject to the last paragraph of this Section 4.5(c), on each
Distribution Date, the Servicer shall instruct the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.10) to make, and the Trustee shall
make, the following deposits and distributions from the Collection Account for
deposit in the applicable Account by [TIME], to the extent of the Total
Distribution Amount, in the following order of priority:
(i) to the Servicer, from the Total Distribution Amount, the
Total Servicing Fee;
(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i), the
Noteholders' Interest Distributable Amount;
(iii) to the Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining after
the application of clause (i) and clause (ii), the Certificateholders'
Interest Distributable Amount;
(iv) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iii), the Noteholders' Principal Distributable Amount; and
(v) to the Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining after
the application of clauses (i) through (iv), the Certificateholders'
Principal Distributable Amount;
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provided, however, that following the occurrence of an Event of Default pursuant
-------- -------
to Section 5.1(i), 5.1(ii), 5.1(iv) or 5.1(v) of the Indenture, an acceleration
of the Notes pursuant to Section 5.2 of the Indenture or an Insolvency Event
with respect to the holder of the GP Interest, amounts on deposit in the
Collection Account will be deposited in the Note Distribution Account to the
extent necessary to pay accrued and unpaid interest on the Notes and then, to
the extent funds are available therefore, principal on the Notes until the
principal balance of each class of Notes has been reduced to zero, before any
amounts are deposited in the Certificate Distribution Account. Following the
payment in full of the Notes, amounts on deposit in the Collection Account will
be deposited in the Certificate Distribution Account to the extent necessary to
pay accrued and unpaid interest on the Certificates and then, to the extent
funds are available therefore, principal on the Certificates until the principal
balance thereof has been reduced to zero.
In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to this Section
4.5(c) on the related Transfer Date.
SECTION 4.6. Reserve Account. (a) On the Closing Date, the Seller
---------------
shall deposit the Reserve Account Initial Deposit into the Reserve Account.
(b) If the amount on deposit in the Reserve Account on any
Distribution Date (after giving effect to any withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account Balance for
such Distribution Date, the Servicer shall instruct the Trustee to distribute,
and the Trustee shall distribute, the amount of the excess to the Seller.
Amounts properly distributed to the Seller pursuant to Section 4.6(b)
shall be deemed released from the Trust and the security interest therein
granted to the Trustee and the Seller shall in no event thereafter be required
to refund any such distributed amounts.
SECTION 4.7. [Intentionally Omitted].
SECTION 4.8. Statements to Certificateholders and Noteholders. On
------------------------------------------------
each Determination Date, the Servicer shall provide to the Trustee (with a copy
to the Rating Agencies) for the Trustee to forward to each Noteholder of record,
to each Paying Agent, if any, and to the Owner Trustee for the Owner Trustee to
forward to each Certificateholder of record, a statement substantially in the
form of Exhibit B and Exhibit C,
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respectively, setting forth at least the following information as to the Notes
and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of each
class of Notes and to the Certificate Balance of the Certificates;
(ii) the amount of such distribution allocable to interest on or with
respect to each class of Notes and to the Certificates;
(iii) the aggregate outstanding principal balance of each class of the
Notes and the Certificate Balance after giving effect to payments allocated
to principal reported under (i) above;
(iv) the amount of the Total Servicing Fee paid to the Servicer with
respect to the related Due Period;
(v) The amount of the Monthly Advances payment to be made on the
Determination Date;
(vi) the amount of the aggregate Realized Losses, if any, for such
Due Period;
(vii) the Reserve Account Transfer Amount, if any, for such
Distribution Date, the average of the Charge-off Rates and the Delinquency
Percentages for the three preceding Due Periods, the Specified Reserve
Account Balance for such Distribution Date, the amount distributed to the
Seller from the Reserve Account on such Distribution Date, and the balance
of the Reserve Account (if any) on such Distribution Date, after giving
effect to changes therein on such Distribution Date;
(viii) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, and the Certificateholders' Principal
Carryover Shortfall;
(ix) the amounts which are reimbursable to the Servicer for
Reimbursable Amounts and Nonrecoverable Advances;
(x) the amount of Servicing Advances for the preceding Due Period;
and
(xi) the aggregate Purchase Price paid by the
Seller or the Servicer with respect to the related Due Period.
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Each amount set forth pursuant to paragraph (i), (ii), (vi) or (xi) above shall
be expressed as a dollar amount per $1,000 of the initial principal balance of
the Notes (or class thereof) or the initial Certificate Balance, as applicable.
SECTION 4.9. Net Deposits. As an administrative convenience, unless
------------
the Servicer is required to remit collections within two Business Days of
receipt thereof, the Servicer will be permitted to make the deposit of
collections on the Home Equity Loans and Purchase Prices for or with respect to
the Due Period net of distributions to be made to the Servicer with respect to
the Due Period. The Servicer, however, will account to the Owner Trustee, the
Trustee, the Noteholders and the Certificateholders as if all deposits,
distributions and transfers were made individually.
ARTICLE V
The Seller
----------
SECTION 5.1. Representations of Seller. The Seller makes the
-------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Home Equity Loans. The representations speak as of the execution
and delivery of this Agreement and shall survive the sale of the Home Equity
Loans to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Seller is duly organized and
------------------------------
validly existing as a corporation in good standing under the laws of the
State of New York with the corporate power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant
times, and has, the power, authority and legal right to acquire and own the
Home Equity Loans.
(b) Due Qualification. The Seller is duly qualified to do business
-----------------
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business shall require such
qualifications.
(c) Power and Authority of the Seller. The Seller has the corporate
---------------------------------
power and authority to execute and deliver this Agreement and to perform
its obligations under each of the Basic Documents to which the Seller is a
party; the
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Seller has full corporate power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer and the
Seller has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance of
each of the Basic Documents to which the Seller is a party has been duly
authorized by the Seller by all necessary corporate action.
(d) Binding Obligation. This Agreement and each of the Basic
------------------
Documents to which the Seller is a party constitute legal, valid and
binding obligations of the Seller, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect
relating to creditors' rights generally and subject to general principles
of equity (whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions contemplated
------------
by this Agreement and the fulfillment of the terms hereof do not result in
any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time or both) a default under, the articles of
association or by-laws of the Seller, or any material indenture, agreement
or other instrument to which the Seller is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any
law or, to the best of its knowledge, any order, rule or regulation
applicable to the Seller of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending against the Seller or, to its best knowledge, threatened against
the Seller, before any court, regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or
its properties: (i) asserting the invalidity of this Agreement or any of
the Basic Documents, the Notes or the Certificates, (ii) seeking to prevent
the issuance of the Notes or the Certificates or the consummation of any of
the transactions contemplated by this Agreement or any of the Basic
Documents, (iii) seeking any determination or ruling that could reasonably
be expected to have a material and adverse effect on the performance by the
Seller of its
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obligations under, or the validity or enforceability of the Basic
Documents, the Notes or the Certificates or (iv) seeking to affect
adversely the Federal or state income tax or ERISA attributes of the
Issuer, the Notes or the Certificates.
(g) All Consents. All authorizations, consents, orders or approvals
------------
of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Seller in connection with the execution
and delivery by the Seller of this Agreement or any of the Basic Documents
to which it is a party and the performance by the Seller of the
transactions contemplated by this Agreement or any of the Basic Documents
to which it is a party, have been duly obtained, effected or given and are
in full force and effect, except where failure to obtain the same would not
have a material adverse effect upon the rights of the Issuer, the
Noteholders or the Certificateholders.
SECTION 5.2. Corporate Existence. (a) During the term of this
-------------------
Agreement, the Seller will keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall observe the
applicable legal requirements for the recognition of the Seller as a legal
entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall maintain corporate records and books of account
separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the Seller shall
not commingle its assets and funds with those of its Affiliates;
(iii) the Seller shall hold such appropriate meetings of its Board of
Directors as are necessary to authorize all the Seller's corporate actions
required by law to be authorized by the Board of Directors, shall keep minutes
of such meetings and of meetings of its stockholder(s) and observe all other
customary corporate formalities (and any successor Seller not a corporation
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shall observe similar procedures in accordance with its governing documents and
applicable law);
(iv) the Seller shall at all times hold itself out to the public under
the Seller's own name as a legal entity separate and distinct from its
Affiliates; and
(v) all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
SECTION 5.3. Liability of Seller; Indemnities. The Seller shall be
--------------------------------
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee and the Trustee and their respective officers, directors,
employees and agents from and against any taxes that may at any time be
asserted against any such Person with respect to the transactions
contemplated in this Agreement and any of the Basic Documents (except any
income taxes arising out of fees paid to the Owner Trustee or the Trustee
and except any taxes to which the Owner Trustee or the Trustee may
otherwise be subject to), including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes (but,
in the case of the Issuer, not including any taxes asserted with respect
to, and as of the date of, the sale of the Home Equity Loans to the Owner
Trustee on behalf of the Issuer or the issuance and original sale of the
Certificates and the Notes, or asserted with respect to ownership of the
Home Equity Loans or Federal or other income taxes arising out of
distributions on the Certificates and the Notes) and costs and expenses in
defending against the same or in connection with any application relating
to the Notes or Certificates under any state securities laws.
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trustee, the Certificateholders and the Noteholders
and the officers, directors, employees and agents of the Issuer, the Owner
Trustee and the Trustee from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent arising out of, or
imposed upon such Person through (i) the Seller's willful misfeasance, bad
faith or negligence in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Seller's or the Issuer's violation of Federal or
state
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securities laws in connection with the offering and sale of the Notes
and the Certificates or in connection with any application relating to the
Notes or Certificates under any state securities laws.
(c) The Seller shall be liable as primary obligor for, and shall
indemnify, defend and hold harmless the Owner Trustee and its officers,
directors, employees and agents from and against any and all costs,
expenses, losses, claims, damages and liabilities arising out of, or
incurred in connection with, this Agreement or any of the Basic Documents,
the Owner Trust Estate, the acceptance or performance of the trusts and
duties set forth herein and in the Trust Agreement or the action or the
inaction of the Owner Trustee hereunder and under the Trust Agreement,
except to the extent that such cost, expense, loss, claim, damage or
liability: (i) shall be due to the willful misfeasance, bad faith or
negligence of the Owner Trustee, (ii) shall arise from any breach by the
Owner Trustee of its covenants under this Agreement or any of the Basic
Documents; or (iii) shall arise from the breach by the Owner Trustee of any
of its representations or warranties set forth in Section 7.3 of the Trust
Agreement. Such liability shall survive the termination of the Trust. In
the event of any claim, action or proceeding for which indemnity will be
sought pursuant to this paragraph, the Owner Trustee's choice of legal
counsel shall be subject to the approval of the Seller, which approval
shall not be unreasonably withheld.
(d) The Seller shall pay any and all taxes levied or assessed upon
all or any part of the Trust Estate (other than those taxes expressly
excluded from the Seller's responsibilities pursuant to the parentheticals
in paragraph (a) above).
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 5.4. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
----------------------
consolidated, (b) which may result from
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any merger or consolidation to which the Seller shall be a party or (c) which
may succeed to the properties and assets of the Seller substantially as a whole,
shall be the successor to the Seller without the execution or filing of any
document or any further act by any of the parties to this Agreement; provided,
--------
however, that the Seller hereby covenants that it will not consummate any of the
-------
foregoing transactions except upon satisfaction of the following: (i) the
surviving Seller if other than Credit Suisse First Boston Mortgage Securities
Corp., executes an agreement of assumption to perform every obligation of the
Seller under this Agreement, (ii) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 2.4 or 5.1
shall have been breached, (iii) the Seller shall have delivered to the Owner
Trustee and the Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, and that the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) the surviving Seller shall have a consolidated
net worth at least equal to that of the predecessor Seller, (v) such transaction
will not result in a material adverse federal or state tax consequence to the
Issuer, the Noteholders or the Certificateholders and (vi) unless Credit Suisse
First Boston Mortgage Securities Corp., is the surviving entity, the Seller
shall have delivered to the Owner Trustee and the Trustee an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Owner Trustee and Trustee, respectively, in the Home Equity Loans and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interests.
SECTION 5.5. Limitation on Liability of Seller and Others. The
--------------------------------------------
Seller and any director or officer or employee or agent of the Seller may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising under any Basic Document (provided that such reliance shall not limit in
any way the Seller's obligations under Section 2.4(b)). The Seller shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its obligations under this Agreement, and that in its
opinion may involve it in any expense or liability.
SECTION 5.6. Seller May Own Certificates or Notes. The Seller and
------------------------------------
any Affiliate thereof may in its individual or any
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other capacity become the owner or pledgee of Certificates or Notes with the
same rights as it would have if it were not the Seller or an Affiliate thereof,
except as expressly provided herein or in any Basic Document.
ARTICLE VI
The Servicer
------------
SECTION 6.1. Representations of Servicer. The Servicer makes the
---------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Home Equity Loans. The representations speak as of the execution
and delivery of the Agreement and shall survive the sale of the Home Equity
Loans to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Servicer is duly organized
------------------------------
and validly existing as a corporation in good standing under the laws of the
State of New York with the corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and has, the
power, authority and legal right to service the Home Equity Loans.
(b) Due Qualification. The Servicer is duly qualified to do business
-----------------
and has obtained all necessary licenses and approvals in all jurisdictions in
which the ownership or lease of property or the conduct of its business
(including the servicing of the Home Equity Loans as required by this Agreement)
shall require such qualifications.
(c) Power and Authority of the Servicer. The Servicer has the
-----------------------------------
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement have been duly authorized by the Servicer by all necessary
corporate action. All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by the Servicer in connection with the execution and delivery by the
Servicer of this Agreement or any of the Basic Documents to which it is a party
and the performance by the Servicer of the transactions contemplated by this
Agreement or any of the Basic Documents to which it is a party, have been duly
obtained, effected or given and are in full force and effect, except where
failure to obtain the same would not have a material adverse
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effect upon the rights of the Issuer, the Noteholders or the Certificateholders.
(d) Binding Obligation. This Agreement constitutes a legal, valid
------------------
and binding obligation of the Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally, and subject to general principles of equity
(whether applied in a proceeding of law or in equity).
(e) No Violation. The consummation of the transactions contemplated
------------
by this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time or both) a default under the articles of association or
by-laws of the Servicer, or any material indenture, agreement or other
instrument to which the Servicer is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of its knowledge, any order, rule or regulation applicable to the Servicer
of any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Servicer or
its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending against the Servicer, or, to its best knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance
of the Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Servicer of its obligations under, or
the validity or enforceability of this Agreement or any of the Basic Documents,
the Notes or the Certificates or (iv) seeking to affect adversely the Federal or
state income tax or ERISA attributes of the Issuer, the Notes or the
Certificates.
(g) No Amendment or Waiver. No provision of any Home Equity Loan has
----------------------
been waived, altered or modified in any respect, except pursuant to a document,
instrument or writing
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included in the relevant Mortgage File, and no such amendment, waiver,
alteration or modification causes such Home Equity Loan not to conform to the
other warranties contained in this Section or those of the Seller contained in
Section 2.4.
SECTION 6.2. Indemnities of Servicer. (a) The Servicer shall be
-----------------------
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
The Servicer shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trustee, the Seller, the Certificateholders and the
Noteholders and any of the officers, directors, employees and agents of the
Issuer, the Owner Trustee, the Trustee or the Seller from any and all costs,
expenses, losses, claims, damages and liabilities (including reasonable
attorneys' fees and expenses) to the extent arising out of, or imposed upon any
such Person through, the negligence, willful misfeasance or bad faith of the
Servicer in the performance of its obligations and duties under this Agreement
or in the performance of the obligations and duties of any subservicer under any
subservicing agreement or by reason of the reckless disregard of its obligations
and duties under this Agreement or by reason of the reckless disregard of the
obligations of any subservicer under any subservicing agreement, where the final
determination that any such cost, expense, loss, claim, damage or liability
arose out of, or was imposed upon any such Person through, any such negligence,
willful misfeasance, bad faith or recklessness on the part of the Servicer or
any subservicer, is established by a court of law, by an arbitrator or by way of
settlement agreed to by the Servicer. Notwithstanding the foregoing, if the
Servicer is rendered unable, in whole or in part, by virtue of an act of God,
act of war, fires, earthquake or other natural disasters, to satisfy its
obligations under this Agreement, the Servicer shall not be deemed to have
breached any such obligation upon the sending of written notice of such event to
the other parties hereto, for so long as the Servicer remains unable to perform
such obligation as a result of such event. This provision shall not be
construed to limit the Servicer's or any other party's rights, obligations,
liabilities, claims or defenses which arise as a matter of law or pursuant to
any other provision of this Agreement.
The Servicer shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trustee, the Seller, the Certificateholders and the
Noteholders or any of the officers, directors, employees and agents of the
Issuer, the Owner Trustee, the Trustee or the Seller from any and all costs,
expenses, losses, claims, damages and liabilities (including reasonable
attorneys' fees and expenses) to the extent arising out of or
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imposed upon any such Person as a result of any compensation payable to any
subservicer (including any fees payable in connection with the termination of
the servicing activities of such subservicer with respect to any Home Equity
Loan) whether pursuant to the terms of any subservicing agreement or otherwise.
SECTION 6.3. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Servicer. Any Person (a) into which the Servicer may be merged
------------------------
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party or (c) which may succeed to the properties and
assets of the Servicer, substantially as a whole, shall be the successor to the
Servicer without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that the Servicer
-------- -------
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Servicer if other
than Credit Suisse First Boston Mortgage Securities Corp., executes an agreement
of assumption to perform every obligation of the Servicer under this Agreement,
(ii) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 6.1 shall have been breached and no Servicer
Default, and no event that, after notice or lapse of time, or both, would become
a Servicer Default shall have occurred and be continuing, (iii) the Servicer
shall have delivered to the Owner Trustee and the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and that the Rating Agency
Condition shall have been satisfied with respect to such transaction, (iv) the
surviving Servicer shall have a consolidated net worth at least equal to that of
the predecessor Servicer, and (v) such transaction will not result in a material
adverse Federal or state tax consequence to the Issuer, the Noteholders or the
Certificateholders.
SECTION 6.4. Limitation on Liability of Servicer and Others. Neither
----------------------------------------------
the Servicer nor any of its directors, officers, employees or agents shall be
under any liability to the Issuer, the Noteholders or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action by the Servicer or any subservicer pursuant to
this Agreement or for errors in judgment; provided, however, that this provision
-------- -------
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer or
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any subservicer and any of their respective directors, officers, employees or
agents may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
Except as provided in this Agreement the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that shall be
incidental to its duties to service the Home Equity Loans in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer, may (but shall not be required
-------- -------
to) undertake any reasonable action that it may deem necessary or desirable in
respect of the Basic Documents to protect the interests of the
Certificateholders under this Agreement and the Noteholders under the Indenture.
SECTION 6.5. Credit Suisse First Boston Mortgage Securities Corp. Not
--------------------------------------------------------
To Resign as Servicer. Subject to the provisions of Section 6.3, Credit Suisse
---------------------
First Boston Mortgage Securities Corp., hereby agrees not to resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties hereunder shall no
longer be permissible under applicable law or if such resignation is required by
regulatory authorities. Notice of any such determination permitting the
resignation of Credit Suisse First Boston Mortgage Securities Corp., as Servicer
shall be communicated to the Owner Trustee and the Trustee at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Owner Trustee and the Trustee concurrently with or promptly
after such notice. No such resignation shall become effective until the earlier
of the Trustee or a Successor Servicer having assumed the responsibilities and
obligations of the resigning Servicer in accordance with Section 7.2 or the date
upon which any regulatory authority requires such resignation.
ARTICLE VII
Default
-------
SECTION 7.1. Servicer Default. If any one of the following events (a
----------------
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Trustee for deposit
in any of the Trust Accounts or the Certificate Distribution Account any
required payment or to
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direct the Trustee to make any required distributions therefrom (other than
a Monthly Advance required to be made from its own funds) that shall
continue unremedied for a period of five Business Days after written notice
of such failure is received by the Servicer from the Owner Trustee or the
Trustee or after discovery of such failure by an Authorized Officer of the
Servicer; or
(b) failure by the Servicer to make any required Servicing Advance
which failure continues unremedied for a period of 30 days, or failure on
the part of the Servicer duly to observe or to perform in any material
respect any other covenants or agreements of the Servicer set forth in this
Agreement or any other Basic Document, which failure shall (i) materially
and adversely affect the rights of either the Certificateholders or
Noteholders and (ii) continue unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer by the Owner Trustee or
the Trustee or (B) to the Servicer and to the Owner Trustee and the Trustee
by the Holders of Notes evidencing not less than 25% of the Outstanding
Amount of the Notes or Holders of Certificates evidencing not less than 25%
of the outstanding Certificate Balance, as applicable (or for such longer
period, not in excess of 120 days, as may be reasonably necessary to remedy
such default; provided that such default is capable of remedy within 120
days and the Servicer delivers an Officers' Certificate to the Owner
Trustee and the Trustee to such effect and to the effect that the Servicer
has commenced or will promptly commence, and will diligently pursue, all
reasonable efforts to remedy such default); or
(c) any failure of the Servicer to pay any Monthly Advance required
to be made from its own funds pursuant to Section 3.15 that continues
unremedied for a period of one Business Day; or
(d) an Insolvency Event occurs with respect to the Servicer or any
successor;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Trustee, or the Holders of Notes evidencing not less
than 25% of the Outstanding Amount of the Notes, by notice then given in writing
to the Servicer and the Owner Trustee (and to the Trustee if given by the
Noteholders) may terminate all the rights and obligations (other than the
obligations set forth in Section 6.2) of the Servicer under this Agreement. On
or after the receipt by the Servicer of such written notice, all authority and
power of the Servicer
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under this Agreement, whether with respect to the Notes, the Certificates or the
Home Equity Loans or otherwise, shall, without further action, pass to and be
vested in the Trustee or such successor Servicer as may be appointed under
Section 7.2; and, without limitation, the Trustee and the Owner Trustee are
hereby authorized and empowered to execute and deliver, on behalf of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Home Equity Loans and
related documents, or otherwise. The predecessor Servicer shall cooperate with
the successor Servicer, the Trustee and the Owner Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received by it with
respect to a Home Equity Loan. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Servicer and amending this Agreement to reflect such succession as
Servicer pursuant to this Section shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Owner Trustee
shall give notice thereof to the Rating Agencies.
SECTION 7.2. Appointment of Successor. (a) Upon the Servicer's
------------------------
receipt of notice of termination, pursuant to Section 7.1 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the earlier
of (x) the date 45 days from the delivery to the Owner Trustee and the Trustee
of written notice of such resignation (or written confirmation of such notice)
in accordance with the terms of this Agreement and (y) the date upon which the
predecessor Servicer shall become unable to act as Servicer, as specified in the
notice of resignation and accompanying Opinion of Counsel. In the event of the
Servicer's termination hereunder, the Trustee shall appoint a successor
Servicer, and the successor Servicer shall accept its appointment by a written
assumption in form acceptable to the Owner Trustee and the Trustee. In the
event that a successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section, the Trustee without further action shall automatically be appointed
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the successor Servicer and the Trustee shall be entitled to the Servicing Fee.
Notwithstanding the above, the Trustee shall, if it shall be unwilling or unable
so to act, appoint or petition a court of competent jurisdiction to appoint, any
established institution, having a net worth of not less than $50,000,000 and
whose regular business shall include the servicing of Home Equity Loans and REO
Property, as the successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the Trustee
acting as successor servicer) shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the responsibilities, duties
and liabilities arising thereafter relating thereto placed on the predecessor
Servicer and shall be entitled to the Servicing Fee and all the rights granted
to the predecessor Servicer by the terms and provisions of this Agreement. No
successor Servicer shall be liable for any acts or omissions of any predecessor
Servicer.
(c) The Servicer may not resign unless it is prohibited from serving
as such by law or by requirement of any regulatory authority.
SECTION 7.3. Payment of Servicing Fee. If the Servicer shall change,
------------------------
the predecessor Servicer shall be entitled to receive any accrued and unpaid
Servicing Fees through the date of the successor Servicer's acceptance hereunder
in accordance with Section 3.9.
SECTION 7.4. Notification to Noteholders and Certificateholders.
--------------------------------------------------
Upon any termination of, or appointment of a successor to, the Servicer pursuant
to this Article VII, the Owner Trustee shall give prompt written notice thereof
to Certificateholders and the Trustee shall give prompt written notice thereof
to Noteholders subject to the Rating Agency Condition.
SECTION 7.5. Waiver of Past Defaults. The Holders of Notes
-----------------------
evidencing not less than a majority of the Outstanding Amount of the Notes (or
the Holders (as defined in the Trust Agreement) of Certificates evidencing not
less than a majority of the outstanding Certificate Balance, as applicable, in
the case of any default which does not adversely affect the Trustee or the
Noteholders) may, on behalf of all Noteholders and Certificateholders, waive in
writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required deposits
to or payments from any of the Trust Accounts in accordance with this Agreement.
Upon any such waiver of a past default, such default shall cease to exist, and
any Servicer Default arising
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therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto.
ARTICLE VIII
Termination
-----------
SECTION 8.1. Optional Purchase of All Home Equity Loans. (a) On the
------------------------------------------
last day of any Due Period immediately preceding a Determination Date as of
which the then outstanding Pool Balance is __% or less of the Original Pool
Balance, the Seller shall have the option to purchase the Owner Trust Estate,
other than the Trust Accounts and the Certificate Distribution Account. To
exercise such option, the Seller shall deposit pursuant to Section 4.4 in the
Collection Account an amount which, when added to the amounts on deposit in the
Collection Account for such Distribution Date, equals the sum of (a) the unpaid
principal amount of the then outstanding Class A-__ Notes, plus accrued and
unpaid interest thereon, plus (b) the Certificate Balance plus accrued and
unpaid interest thereon. The Class A-__ Notes and the Certificates will be
redeemed concurrently therewith.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.2
of the Trust Agreement, the Servicer shall instruct the Trustee to deposit the
proceeds from such sale after all payments and reserves therefrom (including the
expenses of such sale) have been made (the "Insolvency Proceeds") in the
Collection Account. On the Distribution Date on which the Insolvency Proceeds
are deposited in the Collection Account (or, if such proceeds are not so
deposited on a Distribution Date, on the Distribution Date immediately following
such deposit), the Servicer shall instruct the Trustee to make, and the Trustee
shall make, the following deposits and distributions (after the application on
such Distribution Date of the Total Distribution Amount pursuant to Section 4.5)
from the Insolvency Proceeds and any funds remaining on deposit in the Reserve
Account (including the proceeds of any sale of investments therein):
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited into the
Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding principal
balance of the Notes (after giving effect to the reduction in the
outstanding principal balance
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of the Notes to result from the deposits made in the Note Distribution
Account on such Distribution Date);
(iii) to the Owner Trustee for deposit in the Certificate
Distribution Account, any portion of the Certificateholders' Interest
Distributable Amount not otherwise deposited into the Certificate
Distribution Account on such Distribution Date; and
(iv) to the Owner Trustee for deposit in the Certificate
Distribution Account, the Certificate Balance and any Certificateholders'
Principal Carryover Shortfall Amount (after giving effect to the reduction
in the Certificate Balance to result from the deposits made in the
Certificate Distribution Account on such Distribution Date).
Any Insolvency Proceeds remaining after the deposits described above shall be
paid to the GP Holder.
(c) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Trustee and the Rating Agencies as soon as
practicable after the Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee pursuant to this Agreement.
ARTICLE IX
Administrative Duties of the Servicer
-------------------------------------
SECTION 9.1. Administrative Duties.
---------------------
(a) Duties with Respect to the Indenture and Depository Agreements.
--------------------------------------------------------------
The Servicer shall perform all its duties and the duties of the Issuer under the
Depository Agreements. In addition, the Servicer shall consult with the Owner
Trustee as the Servicer deems appropriate regarding the duties of the Issuer
under the Indenture and the Depository Agreements. The Servicer shall monitor
the performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's duties under the Indenture and the
Depository Agreements. The Servicer shall prepare for execution by the Issuer
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments,
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certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture and the Depository Agreements. In
furtherance of the foregoing, the Servicer shall take all appropriate action
that is the duty of the Issuer to take pursuant to the Indenture.
(b) Duties with Respect to the Issuer. (i) In addition to the
---------------------------------
duties of the Servicer set forth in this Agreement or any of the Basic
Documents, the Servicer shall perform such calculations and shall prepare for
execution by the Issuer or the Owner Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to this Agreement or any of the
Basic Documents, and at the request of the Owner Trustee shall take all
appropriate action that it is the duty of the Issuer to take pursuant to this
Agreement or any of the Basic Documents. Subject to Section 9.4, and in
accordance with the directions of the Owner Trustee, the Servicer shall
administer, perform or supervise the performance of such other activities in
connection with the Collateral (including the Basic Documents) as are not
covered by any of the foregoing provisions and as are expressly requested by the
Owner Trustee and are reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the Basic
Documents to the contrary, the Servicer shall be responsible for promptly
notifying the Owner Trustee in the event that any withholding tax is imposed on
the Issuer's payments (or allocations of income) to an Owner (as defined in the
Trust Agreement) as contemplated in Section 5.2(c) of the Trust Agreement. Any
such notice shall specify the amount of any withholding tax required to be
withheld by the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for performance of
the duties of the Owner Trustee and the holder of the GP Interest set forth in
Section 5.6(a), (b), (c) and (d) of the Trust Agreement with respect to, among
other things, accounting and reports to Owners (as defined in the Trust
Agreement); provided, however, that the Owner Trustee shall retain
-------- -------
responsibility for the distribution of the Schedule K-1s necessary to enable
each Certificateholder to prepare its federal and state income tax returns.
(iv) The Servicer shall perform the duties of the Servicer specified
in Section 10.2 of the Trust Agreement required to be performed in connection
with the resignation or
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removal of the Owner Trustee, and any other duties expressly required to be
performed by the Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into transactions with
or otherwise deal with any of its Affiliates; provided, however, that the terms
-------- -------
of any such transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Servicer's opinion, no less
favorable to the Issuer in any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on behalf of
-----------
the holder of the GP Interest, all tax returns, tax elections, financial
statements and such annual or other reports of the Issuer as are necessary for
preparation of tax reports as provided in Article V of the Trust Agreement,
including without limitation forms 1099 and 1066. All tax returns will be
signed by the holder of the GP Interest.
(d) Non-Ministerial Matters. With respect to matters that in the
-----------------------
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article X unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (A), (B), (C) and (D) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Home Equity Loans);
(C) the amendment, change or modification of this Agreement or
any of the Basic Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by the
Note Registrar, Paying Agent or Trustee of its obligations under the
Indenture; and
(E) the removal of the Trustee.
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(e) Exceptions. Notwithstanding anything to the contrary in this
----------
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or Certificateholders under the
Basic Documents, (2) sell the Indenture Trust Estate pursuant to Section 5.4 of
the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
SECTION 9.2. Records. The Servicer shall maintain appropriate books
-------
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer at any time during normal business hours.
SECTION 9.3. Additional Information To Be Furnished to the Issuer.
----------------------------------------------------
The Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE X
Miscellaneous Provisions
------------------------
SECTION 10.1. Amendment. This Agreement may be amended by the
---------
Seller, the Servicer and the Owner Trustee, with the consent of the Trustee
(which consent may not be unreasonably withheld), but without the consent of any
of the Noteholders or the Certificateholders, to cure any ambiguity or defect,
to correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that such action shall
-------- -------
not, as evidenced by an Opinion of Counsel delivered to the Owner Trustee and
the Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller,
the Servicer and the Owner Trustee, with the consent of the Trustee, the consent
of the Holders of Notes evidencing not less than a majority of the Outstanding
Amount of the Notes and the consent of the Holders (as defined in the Trust
Agreement) of Certificates evidencing not less than a majority of the
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions
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of this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that no such amendment shall (a)
-------- -------
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Home Equity Loans or distributions that
shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance, the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes and the Holders (as defined in the Trust Agreement) of
all the outstanding Certificates of each class affected thereby.
Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to the Rating Agencies. Promptly after the execution of any such
amendment or consent, the Owner Trustee shall furnish written notification of
the substance of such amendment or consent to each Certificateholder and the
Trustee.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and that all conditions precedent to the execution and
delivery of such amendment have been satisfied and the Opinion of Counsel
referred to in Section 10.2(i)(1) has been delivered. The Owner Trustee and the
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's or the Trustee's, as applicable, own rights, duties
or immunities under this Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust. (a) The Seller shall
----------------------------
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and the interests of the Trustee in the Home Equity Loans and in the
proceeds thereof. The Seller shall deliver (or cause to be delivered) to the
Owner Trustee and the Trustee file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
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(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Owner Trustee and the Trustee at
least five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) Each of the Seller and the Servicer shall have an obligation to
give the Owner Trustee and the Trustee at least 60 days' prior written notice of
any relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement and shall promptly file any such amendment. The
Servicer shall at all times maintain each office from which it shall service
Home Equity Loans, and its principal executive office, within the United States
of America.
(d) The Servicer shall maintain accounts and records as to each Home
Equity Loan accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Home Equity Loan, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each Home
Equity Loan and the amounts from time to time deposited in the Collection
Account in respect of such Home Equity Loan.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Home Equity Loans, the
Servicer's master computer records (including any backup archives) that refer to
a Home Equity Loan shall indicate clearly the interest of the Issuer and the
Trustee in such Home Equity Loan and that such Home Equity Loan is owned by the
Issuer and has been pledged to the Trustee. Indication of the Issuer's and the
Trustee's interest in a Home Equity Loan shall be deleted from or modified on
the Servicer's computer systems when, and only when, the related Home Equity
Loan shall have been paid in full or repurchased by the Seller or purchased by
the Servicer.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in mortgage
loans to any prospective purchaser, lender or other transferee, the Servicer
shall give to such prospective purchaser, lender or other transferee computer
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tapes, records or printouts (including any restored from backup archives) that,
if they shall refer in any manner whatsoever to any Home Equity Loan, shall
indicate clearly that such Home Equity Loan has been sold and is owned by the
Issuer and has been pledged to the Trustee.
(g) The Servicer shall permit the Trustee and its agents at any time
during normal business hours to inspect, audit and make copies of and abstracts
from the Servicer's records regarding any Home Equity Loan.
(h) Upon request at any time the Owner Trustee or the Trustee shall
have reasonable grounds to believe that such request is necessary in connection
with the performance of its duties under this Agreement or any of the Basic
Documents, the Servicer shall furnish to the Owner Trustee or to the Trustee,
within five Business Days, a list of all Home Equity Loans (by contract number
and name of Mortgagor) then held as part of the Trust, together with a
reconciliation of such list to the Home Equity Loan Schedule and to each of the
Servicer's Certificates furnished before such request indicating removal of Home
Equity Loans from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the
Trustee:
(1) promptly after the execution and delivery of this Agreement
and of each amendment thereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner Trustee and the
Trustee in the Home Equity Loans, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are given,
or (B) stating that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 120-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Trustee in the Home Equity Loans, and
reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B)
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stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (l) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law, cause
the Certificates and the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
SECTION 10.3. Notices. All demands, notices and communications upon
-------
or to the Seller, the Servicer, the Owner Trustee, the Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, sent by
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Seller or the Servicer to Credit Suisse First Boston Mortgage Securities Corp.,
00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ________________, (b)
in the case of the Issuer or the Owner Trustee, at the Corporate Trust Office
(as defined in the Trust Agreement), (c) in the case of the Trustee, at the
Corporate Trust Office, [(d) in the case of Moody's, to Xxxxx'x Investors
Service, Inc., to 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset
Backed Securities Group, (e) in the case of Standard & Poor's, to Standard &
Poor's Ratings Group, 00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000,
Attention of Asset Backed Surveillance Department and (f) in the case of Fitch,
to Fitch Investors Service, L.P., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 Attention of ____________________.]
SECTION 10.4. Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Sections 5.4 and 6.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer.
SECTION 10.5. Limitations on Rights of Others. The provisions of
-------------------------------
this Agreement are solely for the benefit of the Seller, the Servicer, the
Issuer, the Owner Trustee and for the benefit of the Certificateholders
(including the holder of the GP Interest), the Trustee and the Noteholders, as
third-party beneficiaries, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or
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under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 10.6. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.7. Separate Counterparts. This Agreement may be executed
---------------------
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.8 Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF [NEW YORK], WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.10. Assignment to Trustee. The Seller hereby acknowledges
---------------------
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the benefit
of the Noteholders of all right, title and interest of the Issuer in, to and
under the Home Equity Loans and/or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Trustee.
SECTION 10.11. Nonpetition Covenant. Notwithstanding any prior
--------------------
termination of this Agreement, the Servicer and the Seller shall not, prior to
the date which is one year and one day after the termination of this Agreement
with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any Federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
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SECTION 10.12. Limitation of Liability of Owner Trustee and Trustee.
----------------------------------------------------
(a) Notwithstanding anything contained herein to the contrary, this Agreement
has been countersigned by [Name of Owner Trustee] not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
[Name of Owner Trustee] in its individual capacity or, except as expressly
provided in the Trust Agreement, as Owner Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement, in the performance of its
duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles VI, VII and
VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by ___________________ not in its individual
capacity but solely as Trustee and in no event shall _____________________ have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
SECTION 10.13. Independence of the Servicer. For all purposes of
----------------------------
this Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Servicer shall have
no authority to act for or represent the Issuer or the Owner Trustee in any way
and shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.
SECTION 10.14. No Joint Venture. Nothing contained in this Agreement
----------------
(i) shall constitute the Servicer and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.
HOME EQUITY LOAN
TRUST 199__-__
By:_________________________________,
not in its individual capacity but solely as Owner
Trustee on behalf of the Trust,
By:______________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
MORTGAGE SECURITIES CORP.,
Seller and Servicer
By:____________________________________
Name:
Title:
Acknowledged and Accepted:
_____________________, not
in its individual capacity
but solely as Trustee,
By________________________________
Name:
Title:
Acknowledged and Accepted:
__________________________________,
not in its individual capacity
but solely as Owner Trustee,
By_________________________________
Name:
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Title:
Acknowledged and Accepted:
______________________________
By____________________________
Name:
Title:
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