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EXHIBIT 99.1
[EXECUTION COPY]
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NATIONSBANC XXXXXXXXXX FUNDING CORP.,
as Depositor,
NATIONSBANC MORTGAGE CORPORATION,
as Master Servicer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1998
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Mortgage Pass-Through Certificates
Series 1998-4
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TABLE OF CONTENTS
Section Page
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PRELIMINARY STATEMENT............................................................................................................1
ARTICLE I Definitions...........................................................................................................3
SECTION 1.01. Defined Terms....................................................................................3
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SECTION 1.02. Interest Calculations...........................................................................24
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ARTICLE II Conveyance of Mortgage Loans; Original Issuance of Certificates.....................................................25
SECTION 2.01. Conveyance of Mortgage Loans....................................................................25
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SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.................................................27
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SECTION 2.03. Representations, Warranties and Covenants of the Seller and the Master Servicer.................28
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SECTION 2.04. Representations and Warranties of the Depositor as to the Mortgage Loans........................31
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SECTION 2.05. Designation of Interests in REMIC...............................................................32
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SECTION 2.06. Designation of Start-up Day.....................................................................32
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SECTION 2.07. REMIC Certificate Maturity Date.................................................................32
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SECTION 2.08. Repurchases for Tax Violations..................................................................32
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SECTION 2.09. Execution and Delivery of Certificates..........................................................32
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ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS......................................................................33
SECTION 3.01. Master Servicer to Service Mortgage Loans.......................................................33
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SECTION 3.02. Subservicing; Enforcement of the Obligations of Servicers.......................................34
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SECTION 3.03. Fidelity Bond; Errors and Omissions Insurance...................................................35
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SECTION 3.04. Access to Certain Documentation.................................................................35
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SECTION 3.05. Maintenance of Primary Mortgage Insurance Policy; Claims........................................35
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SECTION 3.06. Rights of the Depositor and the Trustee in Respect of the Master Servicer.......................36
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SECTION 3.07. Trustee to Act as Master Servicer...............................................................36
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SECTION 3.08. Collection of Mortgage Loan Payments; Collection Account; Distribution Account..................37
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SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Escrow Accounts.............................40
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SECTION 3.10. Access to Certain Documentation and Information Regarding the Mortgage Loans....................41
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SECTION 3.11. Permitted Withdrawals from the Collection Account and Distribution Account......................41
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SECTION 3.12. Maintenance of Hazard Insurance.................................................................43
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SECTION 3.13. Enforcement of Due-On-Sale Clauses; Assumption Agreements.......................................44
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SECTION 3.14. Realization Upon Defaulted Mortgage Loans; REO Property.........................................45
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SECTION 3.15. Trustee to Cooperate; Release of Mortgage Files.................................................47
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SECTION 3.16. Documents, Records and Funds in Possession of the Master Servicer to be Held for the Trustee....48
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SECTION 3.17. Servicing Compensation..........................................................................49
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SECTION 3.18. Annual Statement as to Compliance...............................................................49
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SECTION 3.19. Annual Independent Public Accountants' Servicing Statement; Financial Statements................49
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SECTION 3.20. Advances........................................................................................50
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SECTION 3.21. Modifications, Waivers, Amendments and Consents.................................................50
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SECTION 3.22. Reports to the Securities and Exchange Commission...............................................51
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ARTICLE IV MASTER SERVICER'S CERTIFICATE........................................................................................51
SECTION 4.01. Master Servicer's Certificate...................................................................52
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ARTICLE V PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS; REMIC ADMINISTRATION..................................................52
SECTION 5.01. Distributions...................................................................................52
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SECTION 5.02. Priorities of Distribution......................................................................53
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SECTION 5.03. Allocation of Losses............................................................................55
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SECTION 5.04. Statements to Certificateholders................................................................56
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SECTION 5.05. Tax Returns and Reports to Certificateholders...................................................59
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SECTION 5.06. Tax Matters Person..............................................................................59
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SECTION 5.07. Rights of the Tax Matters Person in Respect of the Trustee......................................59
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SECTION 5.08. REMIC Related Covenants.........................................................................60
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ARTICLE VI THE CERTIFICATES....................................................................................................61
SECTION 6.01. The Certificates................................................................................61
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SECTION 6.02. Registration of Transfer and Exchange of Certificates...........................................61
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SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates...............................................66
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SECTION 6.04. Persons Deemed Owners...........................................................................66
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ARTICLE VII THE DEPOSITOR AND THE MASTER SERVICER..............................................................................66
SECTION 7.01. Respective Liabilities of the Depositor and the Master Servicer.................................67
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SECTION 7.02. Merger or Consolidation of the Depositor or the Master Servicer.................................67
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SECTION 7.03. Limitation on Liability of the Depositor, the Master Servicer and Others........................67
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SECTION 7.04. Depositor and Master Servicer Not to Resign.....................................................68
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ARTICLE VIII DEFAULT...........................................................................................................68
SECTION 8.01. Events of Default...............................................................................68
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SECTION 8.02. Remedies of Trustee.............................................................................70
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SECTION 8.03. Directions by Certificateholders and Duties of Trustee During Event of Default..................70
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SECTION 8.04. Action upon Certain Failures of the Master Servicer and upon Event of Default...................70
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SECTION 8.05. Trustee to Act; Appointment of Successor........................................................70
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SECTION 8.06. Notification to Certificateholders..............................................................72
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ARTICLE IX THE TRUSTEE.........................................................................................................72
SECTION 9.01. Duties of Trustee...............................................................................72
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SECTION 9.02. Certain Matters Affecting the Trustee...........................................................73
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SECTION 9.03. Trustee Not Liable for Certificates or Mortgage Loans...........................................74
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SECTION 9.04. Trustee May Own Certificates....................................................................75
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SECTION 9.05. Eligibility Requirements for Trustee............................................................75
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SECTION 9.06. Resignation and Removal of Trustee..............................................................76
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SECTION 9.07. Successor Trustee...............................................................................76
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SECTION 9.08. Merger or Consolidation of Trustee..............................................................77
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SECTION 9.09. Appointment of Co-Trustee or Separate Trustee...................................................77
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SECTION 9.10. Authenticating Agents...........................................................................78
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SECTION 9.11. Trustee's Fees and Expenses.....................................................................79
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SECTION 9.12. [RESERVED]......................................................................................79
SECTION 9.13. Paying Agents...................................................................................79
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SECTION 9.14. Limitation of Liability.........................................................................80
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SECTION 9.15 Trustee May Enforce Claims Without Possession of Certificates...................................80
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SECTION 9.16 Suits for Enforcement...........................................................................81
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SECTION 9.17 Waiver of Bond Requirement......................................................................81
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SECTION 9.18 Waiver of Inventory, Accounting and Appraisal Requirement.......................................81
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SECTION 9.19 Year 2000 Compliance............................................................................81
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ARTICLE X TERMINATION..........................................................................................................81
SECTION 10.01. Termination upon Purchase by the Depositor or Liquidation of All Mortgage Loans.................81
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SECTION 10.02. Additional Termination Requirements.............................................................83
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ARTICLE XI MISCELLANEOUS PROVISIONS............................................................................................83
SECTION 11.01. Amendment.......................................................................................83
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SECTION 11.02. Recordation of Agreement........................................................................85
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SECTION 11.03. Limitation on Rights of Certificateholders......................................................85
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SECTION 11.04. Governing Law...................................................................................86
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SECTION 11.05. Notices.........................................................................................86
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SECTION 11.06. Severability of Provisions......................................................................86
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SECTION 11.07. Certificates Nonassessable and Fully Paid.......................................................86
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SECTION 11.08. Access to List of Certificateholders............................................................87
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EXHIBITS
Exhibit A Form of Face of Senior Certificates...........................A-1
Exhibit B Form of Face of Residual Certificates.........................B-1
Exhibit C Form of Face of Subordinate Certificate.......................C-1
Exhibit D Form of Reverse of all Certificates...........................D-1
Exhibit E Mortgage Loan Schedule........................................E-1
Exhibit F Request for Release of Documents..............................F-1
Exhibit G Form of Certification of Establishment of Account.............G-1
Exhibit H Targeted Principal Balances...................................H-1
Exhibit I-1 Form of Transferor's Certificate............................I-1-1
Exhibit I-2A Form 1 of Transferee's Certificate.........................I-2A-1
Exhibit I-2B Form 2 of Transferee's Certificate.........................I-2B-1
Exhibit J Form of Residual Certificate Affidavit........................J-1
Exhibit K Form of Investment Letter.....................................K-1
Exhibit L Contents of Servicing File....................................L-1
Exhibit M Form of Initial Certification.................................M-1
Exhibit N Form of Final Certification...................................N-1
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POOLING AND SERVICING AGREEMENT
THIS POOLING AND SERVICING AGREEMENT, dated as of November 1,
1998, is hereby executed by and among NATIONSBANC XXXXXXXXXX FUNDING CORP., as
depositor (together with its permitted successors and assigns, the "Depositor"),
NATIONSBANC MORTGAGE CORPORATION, as master servicer (together with its
permitted successors and assigns, the "Master Servicer") and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, as trustee (together with its permitted
successors and assigns, the "Trustee").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee agree as follows:
PRELIMINARY STATEMENT
In exchange for the Certificates, the Depositor hereby conveys
the Trust Fund to the Trustee to create the Trust. The Trust Fund for federal
income tax purposes will be treated as a REMIC. The REMIC will consist of all of
the assets constituting the Trust Fund and will be evidenced by the Regular
Certificates (which will represent the "regular interests" in the REMIC) and the
Class R Certificate as the single "residual interest" in the REMIC. The
Certificates will represent the entire beneficial ownership interest in the
Trust. The "latest possible maturity date" for federal income tax purposes of
all interests created hereby will be the REMIC Certificate Maturity Date.
The following table sets forth characteristics of the
Certificates, together with the minimum denominations and integral multiples in
excess thereof in which such Classes shall be issuable (except that one
Certificate of each Class of Certificates may be issued in any amount in excess
of the minimum denomination):
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Initial Integral Multiples
Class Certificate Minimum in Excess
Balance Pass-Through Rate Denomination of Minimum
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Class A-1 $ 248,700,000.00 6.25% $1,000 $1
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Class A-2 $ 12,808,500.00 6.25% $1,000 $1
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Class A-3 $ 30,400,000.00 6.25% $1,000 $1
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Class A-PO $ 47,826.00 (1) $25,000 $1
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Class R $100.00 6.25% $100 N/A
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Class B-1 $ 6,555,680.00 6.25% $25,000 $1
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Class B-2 $ 2,591,781.00 6.25% $25,000 $1
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Class B-3 $ 1,372,120.00 6.25% $25,000 $1
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Class B-4 $ 1,067,204.00 6.25% $25,000 $1
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Class B-5 $609,831.00 6.25% $25,000 $1
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Class B-6 $ 762,290.74 6.25% $25,000 $1
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(1) The Class A-PO Certificates will be Principal-Only Certificates
and will not bear interest.
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ARTICLE I
Definitions
SECTION 1.01. Defined Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
1933 Act: As defined in Section 6.02.
Accrued Certificate Interest: For any Distribution Date and each
interest-bearing Class, one month's interest accrued during the related Interest
Accrual Period at the applicable Pass-Through Rate on the applicable Class
Certificate Balance.
Advance: A Monthly Advance or a Servicing Advance.
Agreement: This Pooling and Servicing Agreement together with all
amendments hereof and supplements hereto.
Amount Held for Future Distribution: As to any Distribution Date,
the total of the amounts held in the Collection Account at the close of business
on the preceding Determination Date on account of (i) Principal Prepayments and
Liquidation Proceeds received or made in the month of such Distribution Date and
(ii) payments which represent receipt of Monthly Payments in respect of a Due
Date or Due Dates subsequent to the related Due Date.
Appraised Value: With respect to any Mortgaged Property, the
lesser of (i) the value thereof as determined by an appraisal made for the
originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who met the minimum requirements of FNMA or FHLMC, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan; provided, however, that in the case of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the value determined by an appraisal made for the originator of such
Refinanced Mortgage Loan at the time of origination of such Refinanced Mortgaged
Loan by an appraiser who met the minimum requirements of FNMA or FHLMC.
Assignment: Each of the two Assignments of Mortgage Loan Sale and
Servicing Agreement, both dated November 24, 1998, among the Seller, NationsBanc
Mortgage Capital Corporation and the Depositor relating to the assignment of all
right, title and interest of NationsBanc Mortgage Capital Corporation under the
applicable Sale Agreement to the Depositor.
Assignment of Mortgage: An individual assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to give record notice of the sale of the Mortgage.
Authenticating Agents: As defined in Section 9.10.
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Available Funds: As to any Distribution Date, the excess of (a)
the sum of (i) the aggregate of (A) the interest portion of any Monthly Payment
(net of the Master Servicing Fee) and the principal portion of any Monthly
Payment due on the Due Date in the month in which such Distribution Date occurs
and which is received prior to the related Determination Date and (B) all
Monthly Advances and payments of Compensating Interest made by the Master
Servicer in respect of such Distribution Date deposited to the Collection
Account pursuant to Section 3.08(b)(vii); (ii) all Liquidation Proceeds received
during the preceding calendar month and deposited to the Collection Account
pursuant to Section 3.08(b)(iii); (iii) all Principal Prepayments received
during the month preceding the month of such Distribution Date and deposited to
the Collection Account pursuant to Section 3.08(b)(i) during such period; (iv)
in connection with Defective Mortgage Loans, as applicable, the aggregate of the
Purchase Prices and Substitution Adjustment Amounts deposited on the related
Distribution Account Deposit Date pursuant to Section 3.08(b)(vi); and (v) any
other amounts in the Collection Account deposited therein pursuant to Sections
3.08(b)(iv), (v) and (viii) in respect of such Distribution Date; over (b) any
(i) amounts permitted to be withdrawn from the Collection Account pursuant to
clauses (i) through (vii), inclusive, of Section 3.11(a) and (ii) amounts
permitted to be withdrawn from the Distribution Account pursuant to clauses (i)
and (ii) of Section 3.11(b).
Bankruptcy Loss: Any Deficient Valuation or Debt Service
Reduction.
Benefit Plan: As defined in Section 6.02(e).
Benefit Plan-Restricted Certificate: Any Class B Certificate.
Book-Entry Certificate: All Classes of Certificates other than
the Physical Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of North Carolina, the
State of Maryland, the State of Minnesota, the state in which the principal
servicing office of the Master Servicer is located or the state in which the
Corporate Trust Office is located are required or authorized by law or executive
order to be closed.
Certificate: Any of the NationsBanc Xxxxxxxxxx Funding Corp.
Mortgage Pass-Through Certificates, Series 1998-4 that are issued pursuant to
this Agreement.
Certificate Balance: With respect to any Certificate at any date,
the maximum dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the amount set forth on the face
thereof minus the sum of (i) all distributions of principal previously made with
respect thereto and (ii) all Realized Losses allocated thereto and, in the case
of any Subordinate Certificates, all other reductions in Certificate Balance
previously allocated thereto pursuant to Section 5.03.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of a Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
6.02.
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Certificate Registrar: The registrar appointed pursuant to
Section 6.02.
Certificateholder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor, the Master Servicer or any affiliate thereof shall be
deemed not to be outstanding and the Percentage Interest and Voting Rights
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Percentage Interests or Voting Rights, as the case may be,
necessary to effect any such consent has been obtained, unless such entity is
the registered owner of the entire Class of Certificates, provided that the
Trustee shall not be responsible for knowing that any Certificate is registered
in the name of such an affiliate unless one of its Responsible Officers has
actual knowledge.
Class: As to the Certificates, the Class A-1, Class A-2, Class
A-3, Class A-PO, Class R, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5
and Class B-6 Certificates, as the case may be.
Class A Certificates: The Class A-1, Class A-2, Class A-3, and
Class A-PO Certificates.
Class A-3 Percentage: As to any Distribution Date, the percentage
equivalent (carried to six places rounded up) of a fraction the numerator of
which is the Class Certificate Balance of the Class A-3 Certificates immediately
prior to such date and the denominator of which is the aggregate of the Class
Certificate Balances of all Classes of Senior Certificates (other than the Class
A-PO Certificates) immediately prior to such date.
Class A-3 Principal Distribution Amount: As to any Distribution
Date, the lesser of (i) the Class Certificate Balance of the Class A-3
Certificates and (ii) the product of (a) the Class A-3 Shift Percentage, (b) the
Class A-3 Percentage and (c) the Senior Principal Distribution Amount.
Class A-3 Shift Percentage: For any Distribution Date, the
percentage set forth below:
Class A-3
Distribution Date Occurring In Shift Percentage
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December 1998 through November 2003............................. 0%
December 2003 through November 2004............................. 30%
December 2004 through November 2005............................. 40%
December 2005 through November 2006............................. 60%
December 2006 through November 2007............................. 80%
December 2007 and thereafter.................................... 100%
Class A-PO Deferred Amount: As to any Distribution Date prior to
the Senior Credit Support Depletion Date, the aggregate of the applicable PO
Percentage of each Realized Loss, other than an Excess Loss, to be allocated to
the Class A-PO Certificates on such Distribution Date or previously allocated to
the Class A-PO Certificates and not yet paid to the Holders of the Class A-PO
Certificates pursuant to Section 5.02(a)(iii).
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Class B Certificates: The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates.
Class Certificate Balance: With respect to any Class and as to
any date of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class Interest Shortfall: For any Distribution Date and each
interest-bearing Class, the amount by which Accrued Certificate Interest for
such Class (as reduced pursuant to Section 5.02(c)) exceeds the amount of
interest actually distributed on such Class on such Distribution Date.
Class Unpaid Interest Shortfall: As to any Distribution Date and
each interest-bearing Class, the amount by which the aggregate Class Interest
Shortfalls for such Class on prior Distribution Dates exceeds the amount of
interest actually distributed on such Class on such prior Distribution Dates
pursuant to clause (ii) of the definition of "Interest Distribution Amount".
Closing Date: November 24, 1998.
Code: The Internal Revenue Code of 1986, as amended.
Collection Account: The separate Eligible Account or Accounts
created and maintained by the Master Servicer pursuant to Section 3.08(b) in the
name of the Master Servicer for the benefit of the Certificateholders and
designated "Norwest Bank Minnesota, National Association, as trustee for the
registered holders of NationsBanc Xxxxxxxxxx Funding Corp.
Mortgage Pass-Through Certificates, Series 1998-4."
Compensating Interest: As defined in Section 3.17.
Corporate Trust Office: The principal office of the Trustee at
which at any particular time its certificate transfer services are conducted,
which office at the date of the execution of this instrument is located at
Norwest Center, Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000.
Credit Support Percentage: As defined in Section 5.02(d).
Current Bankruptcy Coverage Amount: As of any Distribution Date,
the Initial Bankruptcy Coverage Amount less the aggregate amount of Bankruptcy
Losses previously incurred during the period from the Cut-Off Date through the
last day of the month preceding the month of such Distribution Date; provided,
however, that such amount may be reduced from time to time with the written
consent of the Rating Agencies without resulting in a downgrading to the current
rating of the Certificates.
Custodian: Any Custodian appointed by the Trustee in accordance
with the terms of this Agreement.
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Customary Servicing Procedures: Procedures (including collection
procedures) that the Master Servicer customarily employs and exercises in
servicing and administering mortgage loans for its own account and which are in
accordance with accepted mortgage servicing practices of prudent lending
institutions servicing mortgage loans of the same type as the Mortgage Loans in
the jurisdictions in which the related Mortgaged Properties are located.
Cut-Off Date: November 1, 1998.
Cut-Off Date Pool Principal Balance: The aggregate of the Cut-Off
Date Principal Balances of the Mortgage Loans which is $304,915,333.23.
Cut-Off Date Principal Balance: As to any Mortgage Loan, the
unpaid principal balance thereof as of the close of business on the Cut-Off
Date, reduced by all installments of principal due on or prior thereto whether
or not paid.
Debt Service Reduction: As to any Mortgage Loan and any
Determination Date, the excess of (i) the Monthly Payment due on the related Due
Date under the terms of such Mortgage Loan over (ii) the amount of the monthly
payment of principal and/or interest required to be paid with respect to such
Due Date by the Mortgagor as established by a court of competent jurisdiction
(pursuant to an order which has become final and nonappealable) as a result of a
proceeding initiated by or against the related Mortgagor under the Bankruptcy
Code, as amended from time to time (11 U.S.C.); provided that no such excess
shall be considered a Debt Service Reduction so long as (a) the Master Servicer
is pursuing an appeal of the court order giving rise to any such modification
and (b)(1) such Mortgage Loan is not in default with respect to payment due
thereunder in accordance with the terms of such Mortgage Loan as in effect on
the Cut-Off Date or (2) Monthly Payments are being advanced by the Master
Servicer in accordance with the terms of such Mortgage Loan as in effect on the
Cut-Off Date.
Debt Service Reduction Mortgage Loan: Any Mortgage Loan that
became the subject of a Debt Service Reduction.
Defective Mortgage Loan: Any Mortgage Loan which is required to
be cured, repurchased or substituted for pursuant to Sections 2.02 , 2.03 or
2.08.
Deficient Valuation: As to any Mortgage Loan and any
Determination Date, the excess of (i) the then outstanding indebtedness under
such Mortgage Loan over (ii) the secured valuation thereof established by a
court of competent jurisdiction (pursuant to an order which has become final and
nonappealable) as a result of a proceeding initiated by or against the related
Mortgagor under the Bankruptcy Code, as amended from time to time (11 U.S.C.),
pursuant to which such Mortgagor retained such Mortgaged Property; provided that
no such excess shall be considered a Deficient Valuation so long as (a) the
Master Servicer is pursuing an appeal of the court order giving rise to any such
modification and (b)(1) such Mortgage Loan is not in default with respect to
payments due thereunder in accordance with the terms of such Mortgage Loan as in
effect on the Cut-Off Date or (2) Monthly Payments are being advanced by the
Master Servicer in accordance with the terms of such Mortgage Loan as in effect
on the Cut-Off Date.
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Deficient Valuation Mortgage Loan: Any Mortgage Loan that became
the subject of a Deficient Valuation.
Definitive Certificates: As defined in Section 6.02.
Depositor: NationsBanc Xxxxxxxxxx Funding Corp., a Delaware
corporation, or its successor in interest, as depositor of the Trust Fund.
Depository: The Depository Trust Company, the nominee of which is
Cede & Co., as the registered Holder of the Book-Entry Certificates or any
successor thereto appointed in accordance with this Agreement. The Depository
shall at all times be a "clearing corporation" as defined in Section 8-102(3) of
the Uniform Commercial Code of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the fifth
Business Day preceding such Distribution Date.
Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage
Rate that is less than 6.25% per annum.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.08(c) in the name of the Trustee
for the benefit of the Certificateholders and designated "Norwest Bank
Minnesota, National Association, in trust for registered holders of NationsBanc
Xxxxxxxxxx Funding Corp. Mortgage Pass-Through Certificates, Series 1998-4."
Funds in the Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:30 p.m. Eastern time on the Business Day immediately preceding such
Distribution Date.
Distribution Date: The 25th day of each month beginning in
December 1998 (or, if such day is not a Business Day, the next Business Day).
Due Date: As to any Distribution Date and each Mortgage Loan, the
first day in the calendar month of such Distribution Date.
Eligible Account: Any of (i) an account or accounts maintained
with (a) NationsBank, N.A. or any successor thereto, or (b) a federal or state
chartered depository institution or trust company the short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein, or (ii) an
account or accounts in a depository institution or trust company in which such
accounts are insured by the FDIC (to the limits established by the FDIC) and the
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uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating
Agency, the Certificateholders have a claim with respect to the funds in such
account or a perfected first priority security interest against any collateral
(which shall be limited to Permitted Investments) securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution or trust company in which such account is maintained, or (iii) a
trust account or accounts maintained with the trust department of a federal or
state chartered depository institution or trust company, acting in its fiduciary
capacity or (iv) any other account acceptable to each Rating Agency. Eligible
Accounts may bear interest and may include, if otherwise qualified under this
definition, accounts maintained with the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Escrow Account: As defined in Section 3.09.
Escrow Payments: The amounts constituting taxes, assessments,
Primary Insurance Policy premiums, fire and hazard insurance premiums and other
payments as may be required to be escrowed by the Mortgagor with the mortgagee
pursuant to the terms of any Mortgage Note or Mortgage.
Event of Default: As defined in Section 8.01.
Excess Losses: For any Distribution Date, the amount of any (i)
Fraud Losses in excess of the Fraud Loss Coverage Amount, (ii) Special Hazard
Losses in excess of the Special Hazard Coverage Amount or (iii) Bankruptcy
Losses in excess of the Current Bankruptcy Coverage Amount.
Excess Proceeds: With respect to any Liquidated Mortgage Loan,
the amount, if any, by which the sum of any Liquidation Proceeds of such
Mortgage Loan received in the calendar month in which such Mortgage Loan became
a Liquidated Mortgage Loan, net of any amounts previously reimbursed to the
Master Servicer as Nonrecoverable Advance(s) with respect to such Mortgage Loan
pursuant to Section 3.11(a)(iii), exceeds (i) the unpaid principal balance of
such Liquidated Mortgage Loan as of the Due Date in the month in which such
Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued interest at
the Mortgage Rate from the Due Date as to which interest was last paid or for
which a Monthly Advance was made (and not reimbursed) up to the Due Date
applicable to the Distribution Date immediately following the calendar month
during which such liquidation occurred.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
Final Certification: As defined in Section 2.02.
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
10.01.
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Financial Market Service: Bloomberg Financial Service and any
other financial information provider designated by the Depositor by written
notice to the Trustee.
FIRREA: The Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.
Fitch: Fitch IBCA, Inc., or any successor thereto.
FNMA: Xxxxxx Xxx, or any successor thereto.
Fraud Loss: Realized Losses on Mortgage Loans as to which a loss
is sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a loss
by reason of the denial of coverage under any related Primary Insurance Policy
because of such fraud, dishonesty or misrepresentation.
Fraud Loss Coverage Amount: For each Distribution Date occurring
during the period from the Closing Date through the first anniversary of the
Cut-Off Date, the Initial Fraud Loss Coverage Amount reduced by the amount of
Fraud Losses allocated to the Certificates. Thereafter, the Fraud Loss Coverage
Amount shall be equal to the lesser of (i) the Initial Fraud Loss Coverage
Amount reduced by the amount of Fraud Losses allocated to the Certificates and
(ii) for each Distribution Date occurring (a) during the period from the day
after the first anniversary through the third anniversary of the Cut-Off Date,
1% of the Pool Stated Principal Balance, (b) during the period from the day
after the third anniversary through the fifth anniversary of the Cut-Off Date,
0.5% of the Pool Stated Principal Balance, and (c) after the fifth anniversary
of the Cut-Off Date, zero.
Holder: A Certificateholder.
Independent: When used with respect to any specified Person means
such a Person who (i) is in fact independent of the Depositor or the Master
Servicer, (ii) does not have any direct financial interest or any material
indirect financial interest in the Depositor or the Master Servicer or in an
affiliate of either, and (iii) is not connected with the Depositor or the Master
Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Initial Bankruptcy Coverage Amount: $100,000.00.
Initial Certification: As defined in Section 2.02.
Initial Class Certificate Balance: As to each Class of
Certificates, the aggregate of the initial Certificate Balances of all
Certificates of such Class, which is set forth in the Preliminary Statement. As
to each Certificate of a Class of Certificates, the portion of the Initial Class
Certificate Balance set forth on the face thereof.
Initial Fraud Loss Coverage Amount: $3,049,153.33.
Initial Special Hazard Coverage Amount: $3,049,153.33.
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Insurance Policy: With respect to any Mortgage Loan included in
the Trust Fund, any related insurance policy, including all riders and
endorsements thereto in effect, including any replacement policy or policies for
any Insurance Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to any
Insurance Policy, in each case other than any amount included in such Insurance
Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any
other insurance policy with respect to the Mortgage Loans.
Interest Accrual Period: As to any Distribution Date and each
Class of Certificates (other than the Class A-PO Certificates), the period from
and including the first day of the calendar month preceding the calendar month
of such Distribution Date to but not including the first day of the calendar
month of such Distribution Date.
Interest Distribution Amount: For any Distribution Date and each
interest-bearing Class, the sum of (i) Accrued Certificate Interest, subject to
reduction pursuant to Section 5.02(c), and (ii) any Class Unpaid Interest
Shortfall for such Class.
Liquidated Mortgage Loan: With respect to any Distribution Date,
a defaulted Mortgage Loan (including any REO Property) that was liquidated in
the calendar month preceding the month of such Distribution Date and as to which
the Master Servicer has certified (in accordance with this Agreement) that it
has received all proceeds it expects to receive in connection with the
liquidation of such Mortgage Loan including the final disposition of an REO
Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of defaulted
Mortgage Loans, whether through trustee's sale, foreclosure sale or otherwise or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Master Servicing Fees and
Advances.
Loan-to-Value Ratio: With respect to any Mortgage Loan and any
date of determination, the fraction, expressed as a percentage, the numerator of
which is the outstanding principal balance of the related Mortgage Loan at the
date of determination and the denominator of which is the Appraised Value of the
related Mortgaged Property.
Master Servicer: NationsBanc Mortgage Corporation, a Texas
corporation, or its successor in interest, as Master Servicer, or any successor
master servicer appointed as herein provided.
Master Servicer Advance Date: As to any Distribution Date, 11:30
a.m., Eastern time, on the Business Day immediately preceding such Distribution
Date.
Master Servicer's Certificate: The monthly report required by
Section 4.01.
Master Servicing Fee: With respect to each Mortgage Loan and
Distribution Date, the amount of the fee payable to the Master Servicer, which
shall, for such Distribution Date, be equal
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to one-twelfth of the product of the Master Servicing Fee Rate with respect to
such Mortgage Loan and the Stated Principal Balance of such Mortgage Loan,
subject to reduction as provided in Section 3.17. Such fee shall be payable
monthly, computed on the basis of the same Stated Principal Balance and period
respecting which any related interest payment on a Mortgage Loan is computed.
The Master Servicer's right to receive the Master Servicing Fee is limited to,
and payable solely from, the interest portion (including recoveries with respect
to interest from Liquidation Proceeds and other proceeds, to the extent
permitted by Section 3.11) of related Monthly Payments collected by the Master
Servicer, or as otherwise provided under Section 3.11.
Master Servicing Fee Rate: With respect to each Mortgage Loan,
the per annum rate equal to (i) the related Mortgage Rate less (ii) the sum of
6.25% and the Trustee Fee Rate; provided, however, that the Master Servicing Fee
Rate will not be less than 0.25% per annum with respect to any Mortgage Loan.
Monthly Advance: The payment required to be made by the Master
Servicer with respect to any Distribution Date pursuant to Section 3.20, the
amount of any such payment being equal to the aggregate of Monthly Payments (net
of the Master Servicing Fee) on the Mortgage Loans (including any REO Property)
that were due on the related Due Date and not received as of the close of
business on the related Determination Date, less the aggregate amount of any
such delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced.
Monthly Payment: The scheduled monthly payment on a Mortgage Loan
due on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified herein, shall give effect to any related Debt
Service Reduction and any Deficient Valuation that affects the amount of the
monthly payment due on such Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument
creating a first lien on a Mortgaged Property securing a Mortgage Note or
creating a first lien on a leasehold interest.
Mortgage File: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and
assigned to the Trustee pursuant to Section 2.01 as from time to time are held
as a part of the Trust Fund (including any Substitute Mortgage Loans and REO
Property), the Mortgage Loans originally so held being identified in the
Mortgage Loan Schedule.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time
to time amended by the Master Servicer to reflect the addition of Substitute
Mortgage Loans and the deletion of Defective Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, attached hereto as Exhibit
E, setting forth the following information with respect to each Mortgage Loan:
(i) the Mortgage Loan identifying number; (ii) a code indicating whether the
Mortgaged Property is owner-occupied; (iii) the property type for each Mortgaged
Property; (iv) the original months to
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maturity or the remaining months to maturity from the Cut-Off Date; (v) the
Loan-to-Value Ratio at origination; (vi) the Mortgage Interest Rate; (vii) the
date on which the first Monthly Payment was due on the Mortgage Loan, and, if
such date is not the Due Date currently in effect, such Due Date; (viii) the
stated maturity date; (ix) the amount of the Monthly Payment as of the Cut-Off
Date; (x) the paid-through date; (xi) the original principal amount of the
Mortgage Loan; (xii) the principal balance of the Mortgage Loan as of the close
of business on the Cut-Off Date, after application of payments of principal due
on or before the Cut-Off Date, whether or not collected, and after deduction of
any payments collected of scheduled principal due after the Cut-Off Date; (xiii)
a code indicating the purpose of the Mortgage Loan; (xiv) a code indicating the
documentation style; and (xv) the Appraised Value. With respect to the Mortgage
Loans in the aggregate, the Mortgage Loan Schedule shall set forth the following
information, as of the Cut-Off Date: (i) the number of Mortgage Loans; (ii) the
current aggregate outstanding principal balance of the Mortgage Loans; (iii) the
weighted average Mortgage Rate of the Mortgage Loans; and (iv) the weighted
average months to maturity of the Mortgage Loans.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with all riders thereto and amendments thereof.
Mortgage Rate: As to any Mortgage Loan, the per annum rate of
interest at which interest accrues on the principal balance of such Mortgage
Loan in accordance with the terms of the related Mortgage Note.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to any Mortgage Loan and Distribution Date,
such Mortgage Loan's Mortgage Rate thereon on the first day of the month
preceding the month of the related Distribution Date reduced by the related
Master Servicing Fee Rate and Trustee Fee Rate.
Net Prepayment Interest Shortfalls: As to any Distribution Date,
the amount, if any, by which the aggregate of Prepayment Interest Shortfalls
exceeds Compensating Interest for such Distribution Date.
Non-PO Percentage: As to any Discount Mortgage Loan, a fraction
(expressed as a percentage) the numerator of which is the Net Mortgage Rate of
such Discount Mortgage Loan and the denominator of which is 6.25%. As to any
Mortgage Loan that is not a Discount Mortgage Loan, 100%.
Non-PO Principal Amount: As to any Distribution Date, the sum of
the applicable Non-PO Percentage of (a) the principal portion of each Monthly
Payment (without giving effect, prior to the reduction of the Current Bankruptcy
Coverage Amount to zero, to any reductions thereof caused by any Debt Service
Reductions) due on each Mortgage Loan on the related Due Date, (b) the Stated
Principal Balance of each Mortgage Loan that was repurchased by the Seller or
the Depositor pursuant to this Agreement as of such Distribution Date, (c) any
Substitution Adjustment Amount in
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connection with a Defective Mortgage Loan received with respect to such
Distribution Date, (d) any Liquidation Proceeds allocable to recoveries of
principal of Mortgage Loans that are not yet Liquidated Mortgage Loans received
during the calendar month preceding the month of such Distribution Date, (e)
with respect to each Mortgage Loan that became a Liquidated Mortgage Loan during
the calendar month preceding the month of such Distribution Date, the amount of
Liquidation Proceeds allocable to principal received during the calendar month
preceding the month of such Distribution Date with respect to such Mortgage Loan
and (f) all Principal Prepayments received during the calendar month preceding
such Distribution Date.
Non-U.S. Person: An individual, corporation, partnership or other
Person other than a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate that is subject to
U.S. federal income tax regardless of the source of its income, or a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. Persons have the authority to
control all substantial decisions of the trust.
Nonrecoverable Advance: Any portion of an Advance previously made
or proposed to be made in respect of a Mortgage Loan which has not been
previously reimbursed and which, in the good faith judgment of the Master
Servicer, will not or, in the case of a proposed Advance, would not be
ultimately recoverable from the related Mortgagor, related Liquidation Proceeds,
or other recoveries in respect of the related Mortgage Loan. The determination
by the Master Servicer that it has made a Nonrecoverable Advance or that any
proposed Advance, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by a certificate of a Servicing Officer of the Master Servicer
delivered to the Trustee and the Depositor and detailing the reasons for such
determination.
Offered Certificates: The Class A, Class B-1, Class B-2, Class
B-3 and Class R Certificates.
Officer's Certificate: A certificate signed by the Chairman of
the Board, Vice Chairman of the Board, President or a Vice President and by the
Treasurer, the Secretary or one of the Assistant Treasurers or Assistant
Secretaries, or any other duly authorized officer of the Depositor or the Master
Servicer, as the case may be, and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to
the Trustee, who may be counsel for the Depositor or the Master Servicer, except
that any opinion of counsel relating to the qualification of the Trust Fund as a
REMIC or compliance with the REMIC Provisions must be an opinion of Independent
counsel.
Original Credit Support Percentage: With respect to each of the
following Classes of Subordinate Certificates, the corresponding percentage
described below, as of the Closing Date:
Class B-1 2.10%
Class B-2 1.25%
Class B-3 0.80%
Class B-4 0.45%
Class B-5 0.25%
Class B-6 0.00%
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Original Subordinate Certificate Balance: $ 12,958,906.74
OTS: The Office of Thrift Supervision.
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan
which was not the subject of a Principal Prepayment in Full prior to such Due
Date, which did not become a Liquidated Mortgage Loan prior to such Due Date and
which was not purchased from the Trust prior to such Due Date pursuant to
Sections 2.02, 2.03 or 2.08.
Ownership Interest: As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
Pass-Through Rate: As to each Class of interest-bearing
Certificates, the per annum rate set forth or described in the Preliminary
Statement.
Paying Agent: As defined in Section 9.13.
Percentage Interest: As to any Certificate, the percentage
obtained by dividing the initial Certificate Balance of such Certificate by the
initial Class Certificate Balance of all Certificates of the same Class.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal
and interest by the United States, FHLMC, FNMA or any agency or
instrumentality of the United States when such obligations are
backed by the full faith and credit of the United States;
provided that such obligations of FHLMC or FNMA shall be limited
to senior debt obligations and mortgage participation
certificates other than investments in mortgage-backed or
mortgage participation securities with yields evidencing extreme
sensitivity to the rate of principal payments on the underlying
mortgages, which shall not constitute Permitted Investments
hereunder;
(ii) repurchase agreements on obligations specified
in clause (i) maturing not more than one month from the date of
acquisition thereof with a corporation incorporated under the
laws of the United States or any state thereof rated not lower
than "A-1" by S&P and "F-1" by Fitch;
(iii) federal funds, certificates of deposit,
demand deposits, time deposits and bankers' acceptances (which
shall each have an original maturity of not more than 90 days
and, in the case of bankers' acceptances, shall in no event have
an original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States
dollars of any U.S. depository institution or trust company
incorporated under the laws of
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the United States or any state thereof, rated not lower than
"A-1" by S&P and "F-1" by Fitch;
(iv) commercial paper (having original maturities
of not more than 365 days) of any corporation incorporated under
the laws of the United States or any state thereof which is rated
not lower than "A-1" by S&P and "F-1" by Fitch;
(v) investments in money market funds (including
funds of the Trustee or its affiliates, or funds for which an
affiliate of the Trustee acts as advisor, as well as funds for
which the Trustee and its affiliates may receive compensation)
rated either "AAAm" or "AAAm G" by S&P, and "AAA" by Fitch or
otherwise approved in writing by the Rating Agency; and
(vi) other obligations or securities that are
acceptable to each Rating Agency and, as evidenced by an Opinion
of Counsel obtained by the Master Servicer, will not affect the
qualification of the REMIC as a REMIC;
provided, however, that no instrument shall be a Permitted Investment if it
represents either (a) the right to receive only interest payments with respect
to the underlying debt instrument or (b) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest with respect to such instrument provide a yield to
maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
Permitted Transferee: Any Person other than (i) the United
States, or any State or any political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
international organization or any agency or instrumentality of either of the
foregoing, (iii) an organization which is exempt from tax imposed by Chapter 1
of the Code (including the tax imposed by Section 511 of the Code on unrelated
business taxable income) (except certain farmers' cooperatives described in Code
Section 521), (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(C), (v) any Non-U.S. Person and (vi) any other Person so
designated by the Master Servicer based on an Opinion of Counsel to the effect
that any transfer to such Person may cause the Trust or any other Holder of a
Residual Certificate to incur tax liability that would not be imposed other than
on account of such transfer. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Code Section
7701 or successor provisions.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Physical Certificates: The Class B-4, Class B-5, Class B-6 and
Class R Certificates.
PO Percentage: As to any Discount Mortgage Loan, 100% minus the
Non-PO Percentage for such Mortgage Loan. As to any Mortgage Loan that is not a
Discount Mortgage Loan, 0%.
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PO Principal Amount: As to any Distribution Date, the sum of the
applicable PO Percentage of (a) the principal portion of each Monthly Payment
(without giving effect, prior to the reduction of the Current Bankruptcy
Coverage Amount to zero, to any reductions thereof caused by any Debt Service
Reductions) due on each Mortgage Loan on the related Due Date, (b) the Stated
Principal Balance of each Mortgage Loan that was repurchased by the Seller or
the Depositor pursuant to this Agreement as of such Distribution Date, (c) any
Substitution Adjustment Amount in connection with any Defective Mortgage Loan
received with respect to such Distribution Date, (d) any Liquidation Proceeds
allocable to recoveries of principal of Mortgage Loans that are not yet
Liquidated Mortgage Loans received during the calendar month preceding the month
of such Distribution Date, (e) with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the calendar month preceding the month of such
Distribution Date, the amount of Liquidation Proceeds allocable to principal
received with respect to such Mortgage Loan during the calendar month preceding
the month of such Distribution Date with respect to such Mortgage Loan and (f)
all Principal Prepayments received during the calendar month preceding such
Distribution Date.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate Stated Principal Balances of all Mortgage Loans that were Outstanding
Mortgage Loans immediately following the Due Date in the month of such
Distribution Date.
Prepayment Interest Shortfall: As to any Distribution Date and
each Mortgage Loan subject to a Principal Prepayment received during the
calendar month preceding such Distribution Date, the amount, if any, by which
one month's interest at the related Mortgage Rate (net of the Master Servicing
Fee) on such Principal Prepayment exceeds the amount of interest paid in
connection with such Principal Prepayment.
Primary Insurance Policy: Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with respect to any
Mortgage Loan, in each case issued by an insurer acceptable to FNMA or FHLMC.
Principal-Only Certificates: Any Class of Certificates entitled
to distributions of principal, but to no distributions of interest. The Class
A-PO Certificates are the sole Class of Principal-Only Certificates.
Principal Prepayment: Any payment or other recovery of principal
on a Mortgage Loan (other than Liquidation Proceeds) which is received in
advance of its scheduled Due Date and is not accompanied by an amount of
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment of the
entire principal balance of a Mortgage Loan.
Private Certificates: The Class B-4, Class B-5 and Class B-6
Certificates.
Pro Rata Share: As to any Distribution Date and any Class of
Subordinate Certificates, the portion of the Subordinate Principal Distribution
Amount allocable to such Class, equal to the
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product of the Subordinate Principal Distribution Amount for such Distribution
Date and a fraction, the numerator of which is the related Class Certificate
Balance thereof and the denominator of which is the aggregate Class Certificate
Balance of the Subordinate Certificates.
Purchase Price: As to any Defective Mortgage Loan repurchased on
any date pursuant to Sections 2.02, 2.03 or 2.08, an amount equal to the sum of
(i) the unpaid principal balance thereof and (ii) the unpaid accrued interest
thereon at the applicable Mortgage Rate from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in
which such Mortgage Loan became eligible to be repurchased; provided, however,
that if at the time of repurchase the Seller is the Master Servicer, the amount
described in clause (ii) shall be computed at the Mortgage Rate net of the
Master Servicing Fee Rate.
Rating Agency: Each of Fitch and S&P. If either such organization
or a successor is no longer in existence, "Rating Agency" shall be such
nationally recognized statistical rating organization, or other comparable
Person, as is designated by the Depositor, notice of which designation shall be
given to the Trustee. References herein to a given rating or rating category of
a Rating Agency shall mean such rating category without giving effect to any
modifiers.
Realized Loss: With respect to each Liquidated Mortgage Loan, an
amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the unpaid
principal balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the Net Mortgage Rate from the Due Date as to
which interest was last paid or advanced (and not reimbursed) to
Certificateholders up to the Due Date in the month in which Liquidation Proceeds
are required to be distributed on the Stated Principal Balance of such
Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation
Proceeds, if any, received during the month in which such liquidation occurred,
to the extent applied as recoveries of interest at the Net Mortgage Rate and to
principal of the Liquidated Mortgage Loan. With respect to each Mortgage Loan
that has become the subject of a Deficient Valuation, if the principal amount
due under the related Mortgage Note has been reduced, the difference between the
principal balance of the Mortgage Loan outstanding immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced by
the Deficient Valuation. With respect to each Mortgage Loan that has become the
subject of a Debt Service Reduction and any Distribution Date, the amount, if
any, by which the principal portion of the related Monthly Payment has been
reduced.
Record Date: The last day of the month (or, if such day is not a
Business Day, the preceding Business Day) preceding the month of the related
Distribution Date.
Refinanced Mortgage Loan: Any Mortgage Loan the proceeds of which
were not used to purchase the related Mortgaged Property.
Regular Certificates: The Class A and Class B Certificates.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
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Relief Act Reduction: With respect to any Distribution Date, for
any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended calendar month as a
result of the application of the Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan for the most recently ended calendar
month is less than (ii) interest accrued pursuant to the terms of the Mortgage
Note on the same principal amount and for the same period as the interest
collectible on such Mortgage Loan for the most recently ended calendar month.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Certificate Maturity Date: The "latest possible maturity
date" of the Regular Certificates as that term is defined in Section 2.07.
REMIC Provisions: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations promulgated thereunder, as the foregoing may be in
effect from time to time as well as provisions of applicable state laws.
REO Disposition Period: As defined in Section 3.14.
REO Proceeds: Proceeds, net of any related expenses of the Master
Servicer, received in respect of any REO Property (including, without
limitation, proceeds from the rental of the related Mortgaged Property) which
are received prior to the final liquidation of such Mortgaged Property.
REO Property: A Mortgaged Property acquired by the Master
Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
Request for Release: The Request for Release submitted by the
Master Servicer to the Trustee or the Custodian on behalf of the Trustee,
substantially in the form of Exhibit F.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan.
Residual Certificate: The Class R Certificate.
Responsible Officer: When used with respect to the Trustee, any
officer in its corporate trust department or successor group.
Restricted Classes: As defined in Section 5.02(d).
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., or any successor thereto.
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Sale Agreement: Each of (i) the Mortgage Loan Sale and Servicing
Agreement, dated October 23, 1998, between the Seller and NationsBanc Mortgage
Capital Corporation, as purchaser, and (ii) the Mortgage Loan Sale and Servicing
Agreement, dated November 23, 1998, between the Seller and NationsBanc Mortgage
Capital Corporation, as purchaser.
Seller: NationsBanc Mortgage Corporation, as seller of the
Mortgage Loans under the Sale Agreements.
Senior Certificates: The Class A and Class R Certificates.
Senior Credit Support Depletion Date: The date on which the
aggregate Class Certificate Balance of the Subordinate Certificates is reduced
to zero.
Senior Percentage: With respect to any Distribution Date, the
percentage, carried six places rounded up, obtained by dividing the aggregate
Class Certificate Balance of the Senior Certificates (other than the Class A-PO
Certificates) immediately prior to such Distribution Date by the aggregate Class
Certificate Balance of all Classes of Certificates (other than the Class A-PO
Certificates) immediately prior to such Distribution Date.
Senior Prepayment Percentage: For any Distribution Date during
the five years beginning on the first Distribution Date, 100%. The Senior
Prepayment Percentage for any Distribution Date occurring on or after the fifth
anniversary of the first Distribution Date will, except as provided herein, be
as follows: for any Distribution Date in the first year thereafter, the Senior
Percentage plus 70% of the Subordinate Percentage for such Distribution Date;
for any Distribution Date in the second year thereafter, the Senior Percentage
plus 60% of the Subordinate Percentage for such Distribution Date; for any
Distribution Date in the third year thereafter, the Senior Percentage plus 40%
of the Subordinate Percentage for such Distribution Date; for any Distribution
Date in the fourth year thereafter, the Senior Percentage plus 20% of the
Subordinate Percentage for such Distribution Date; and for any Distribution Date
in the fifth or later years thereafter, the Senior Percentage for such
Distribution Date (unless on any of the foregoing Distribution Dates the Senior
Percentage exceeds the initial Senior Percentage, in which case the Senior
Prepayment Percentage for such Distribution Date will once again equal 100%).
Notwithstanding the foregoing, no decrease in the Senior Prepayment Percentage
will occur unless both of the Senior Step Down Conditions are satisfied.
Senior Principal Distribution Amount: As to any Distribution
Date, the sum of (i) the Senior Percentage of the applicable Non-PO Percentage
of all amounts described in clauses (a) through (d) of the definition of "Non-PO
Principal Amount" for such Distribution Date and (ii) the Senior Prepayment
Percentage of the applicable Non-PO Percentage of the amounts described in
clauses (e) and (f) of the definition of "Non-PO Principal Amount" for such
Distribution Date; provided, however, that if a Debt Service Reduction that is
an Excess Loss is sustained with respect to a Mortgage Loan that is not a
Liquidated Mortgage Loan, the Senior Principal Distribution Amount will be
reduced on the related Distribution Date by the Senior Percentage of the Non-PO
Percentage of the principal portion of such Debt Service Reduction.
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Senior Step Down Conditions: As of any Distribution Date as to
which any decrease in the Senior Prepayment Percentage applies, (i) the
outstanding principal balance of all Mortgage Loans (including, for this
purpose, any Mortgage Loans in foreclosure or any REO Property) delinquent 60
days or more (averaged over the preceding six month period), as a percentage of
the aggregate Class Certificate Balance of the Subordinate Certificates
(averaged over the preceding six-month period), is not equal to or greater than
50% or (ii) cumulative Realized Losses with respect to the Mortgage Loans as of
the applicable Distribution Date do not exceed the percentages of the Original
Subordinate Certificate Balance set forth below:
Percentage of
Original Subordinate
Distribution Date Occurring Certificate Balance
--------------------------- -------------------
December 2003 through November 2004........................... 30%
December 2004 through November 2005........................... 35%
December 2005 through November 2006........................... 40%
December 2006 through November 2007........................... 45%
December 2007 and thereafter.................................. 50%
Servicer: Any Person with which the Master Servicer has entered
into a Servicing Agreement and which satisfies the requirements set forth
therein.
Servicing Advances: All customary, reasonable and necessary "out
of pocket" costs and expenses incurred in the performance by the Master Servicer
of its servicing obligations, including, but not limited to (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) expenses
reimbursable to the Master Servicer pursuant to Section 3.14 and any enforcement
or judicial proceedings, including foreclosures, (iii) the management and
liquidation of any REO Property and (iv) compliance with the obligations under
Section 3.12.
Servicing Agreement: Any servicing agreement between the Master
Servicer and any Servicer relating to servicing and/or administration of certain
Mortgage Loans as provided in Section 3.02.
Servicing File: The items pertaining to a particular Mortgage
Loan referred to in Exhibit L hereto, and any additional documents required to
be added to the Servicing File pursuant to the Agreement.
Servicing Officer: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name appears on a list of servicing officers furnished to the Trustee by
the Master Servicer, as such list may from time to time be amended.
Similar Law: As defined in Section 6.02(e).
Special Hazard Loss: As to a Mortgaged Property, any Realized
Loss on account of direct physical loss, exclusive of (i) any loss covered by a
hazard policy or a flood insurance policy
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maintained in respect of such Mortgaged Property pursuant to Section 3.12 and
(ii) any loss caused by or resulting from:
(a) (i) wear and tear, deterioration, rust or
corrosion, mold, wet or dry rot; inherent vice or latent defect;
animals, birds, vermin or insects; or
(ii) settling, subsidence, cracking,
shrinkage, building or expansion of pavements, foundations,
walls, floors, roofs or ceilings;
(b) errors in design, faulty workmanship or faulty
materials, unless the collapse of the property or a part thereof
ensues and then only for the ensuing loss;
(c) nuclear or chemical reaction or nuclear
radiation or radioactive or chemical contamination, all whether
controlled or uncontrolled, and whether such loss is direct or
indirect, proximate or remote; or
(d) (i) hostile or warlike action in time of peace
or war, including action in hindering, combating or defending
against an actual, impending or expected attack (A) by any
government or sovereign power (de jure or de facto), or by any
authority maintaining or using military, naval or air forces; or
(B) by military, naval or air forces; or (C) by an agent of any
such government, power, authority or forces;
(ii) any weapon of war or facility for
producing same employing atomic fission, radioactive force or
chemical or biological contaminants, whether in time of peace or
war; or
(iii) insurrection, rebellion, revolution,
civil war, usurped power or action taken by governmental
authority in hindering, combating or defending against such an
occurrence, seizure or destruction under quarantine or customs
regulations, confiscation by order of any government or public
authority, or risks of contraband or illegal transportation or
trade.
Special Hazard Loss Coverage Amount: As to any Distribution Date,
the lesser of (a) the greatest of (i) 1% of the Pool Stated Principal Balance of
the Mortgage Loans, (ii) twice the principal balance of the largest Mortgage
Loan, and (iii) the aggregate principal balance of all Mortgage Loans secured by
Mortgaged Properties located in the single California five-digit postal zip code
having the highest aggregate principal balance of any zip code area (all
principal balances to be calculated as of the first day of the month preceding
such Distribution Date after giving effect to Monthly Payments then due, whether
or not paid) and (b) the Initial Special Hazard Coverage Amount, reduced (but
not below zero) by the amount of Realized Losses in respect of Special Hazard
Mortgage Loans previously incurred during the period from the Cut-Off Date
through the last day of the month preceding the month of such Distribution Date.
The Special Hazard Loss Coverage Amount may be further reduced from time to time
below the amounts specified above with the written consent of the Rating
Agencies and without resulting in a downgrading to the then-current rating of
the Certificates.
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Special Hazard Mortgage Loan: Any Liquidated Mortgage Loan as to
which the ability to recover thereon was substantially impaired by reason of a
Special Hazard Event.
Stated Principal Balance: As to any Mortgage Loan and date, the
unpaid principal balance of such Mortgage Loan as of the Due Date immediately
preceding such date as specified in the amortization schedule at the time
relating thereto (before any adjustment to such amortization schedule by reason
of any moratorium or similar waiver or grace period) after giving effect to any
previous partial Principal Prepayments and Liquidation Proceeds allocable to
principal (other than with respect to any Liquidated Mortgage Loan) and to the
payment of principal due on such Due Date and irrespective of any delinquency in
payment by the related Mortgagor, and after giving effect to any Deficient
Valuation.
Subordinate Certificates: The Class B Certificates.
Subordinate Percentage: As of any Distribution Date, 100% minus
the Senior Percentage for such Distribution Date.
Subordinate Prepayment Percentage: As to any Distribution Date,
100% minus the Senior Prepayment Percentage for such Distribution Date.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to the sum of (i) the Subordinate Percentage
of the applicable Non-PO Percentage of all amounts described in clauses (a)
through (d) of the definition of "Non-PO Principal Amount" for such Distribution
Date and (ii) the Subordinate Prepayment Percentage of the applicable Non-PO
Percentage of the amounts described in clauses (e) and (f) of the definition of
"Non-PO Principal Amount" for such Distribution Date; provided, however, that if
a Debt Service Reduction that is an Excess Loss is sustained with respect to a
Mortgage Loan that is not a Liquidated Mortgage Loan, the Subordinate Principal
Distribution Amount will be reduced on the related Distribution Date by the
Subordinate Percentage of the applicable Non-PO Percentage of the principal
portion of such Debt Service Reduction.
Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution, be approved by the Depositor and (i) have a Stated Principal
Balance, after deduction of the principal portion of the Monthly Payment due in
the month of substitution, not in excess of, and not more than 10% less than,
the Stated Principal Balance of the Defective Mortgage Loan; (ii) have a Net
Mortgage Rate equal to that of the Defective Mortgage Loan; (iii) have a
Loan-to-Value Ratio not higher than that of the Defective Mortgage Loan; (iv)
have a remaining term to maturity not greater than (and not more than one year
less than) that of the Defective Mortgage Loan; and (v) comply with each
Mortgage Loan representation and warranty set forth in the Sale Agreement
relating to the Defective Mortgage Loan. More than one Substitute Mortgage Loan
may be substituted for a Defective Mortgage Loan if such Substitute Mortgage
Loans meet the foregoing attributes in the aggregate.
Substitution Adjustment Amount: As defined in Section 2.03(c).
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Tax Matters Person: The person designated as "tax matters person"
in accordance with Section 5.06 and the manner provided under Treasury
Regulation ss. 1.860F-4(d) and Treasury Regulation ss. 301.6231(a)(7)-1.
Treasury Regulations: The final and temporary regulations
promulgated under the Code by the U.S. Department of the Treasury.
Trust: The trust created by this Agreement.
Trust Fund: The corpus of the Trust created to the extent
described herein, consisting of the Mortgage Loans, such assets as shall from
time to time be identified as deposited in the Collection Account or the
Distribution Account, in accordance with this Agreement, REO Property, the
Primary Insurance Policies and any other Required Insurance Policy.
Trustee: Norwest Bank Minnesota, National Association, and its
successors-in-interest and, if a successor trustee is appointed hereunder, such
successor, as trustee.
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the aggregate Stated Principal
Balance of the Mortgage Loans immediately following the Due Date in the month
preceding the month in which such Distribution Date occurs.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.01% per
annum.
U.S. Person: A citizen or resident of the United States, a
corporation, partnership (except to the extent provided in applicable Treasury
Regulations) or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate that is subject to
United States federal income tax, regardless of the source of its income, or a
trust, if a court within the United States is able to exercise primary
supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust
(or, to the extent provided in applicable Treasury Regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons).
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Residual
Certificates (such Voting Rights to be allocated among the Holders of
Certificates of each such Class in accordance with their respective Percentage
Interests), and (b) the remaining Voting Rights shall be allocated among Holders
of the remaining Classes of Certificates in proportion to the Certificate
Balances of their respective Certificates on such date.
Section 1.02. Interest Calculations. All calculations of interest
will be made on a 360-day year consisting of twelve 30-day months. All dollar
amounts calculated hereunder shall be rounded to the nearest xxxxx with one-half
of one xxxxx being rounded down.
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the benefit of the Certificateholders, without recourse, all the
right, title and interest of the Depositor in and to the Mortgage Loans,
including all interest and principal received on or with respect to the Mortgage
Loans (other than payments of principal and interest due and payable on the
Mortgage Loans on or before the Cut-Off Date), together with the Depositor's
rights under the Sale Agreements and the Assignments, and the representations
and warranties of the Seller thereunder, together with all rights of the
Depositor to require the Seller to cure any breach of a representation or
warranty made in the applicable Sale Agreement by the Seller or to repurchase or
substitute for any affected Mortgage Loan in accordance herewith and the
applicable Sale Agreement. The foregoing sale, transfer, assignment and set over
does not and is not intended to result in a creation of an assumption by the
Trustee of any obligation of the Depositor, the Seller or any other Person in
connection with the Mortgage Loans or any agreement or instrument relating
thereto, except as specifically set forth herein.
(b) In connection with such transfer and assignment, the
Depositor has delivered or caused to be delivered to the Trustee, for the
benefit of the Certificateholders, the following documents or instruments with
respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note, endorsed by manual
or facsimile signature in the following form: "Pay to the order
of Norwest Bank Minnesota, National Association, as Trustee,"
without recourse, with all necessary intervening endorsements
showing a complete chain of endorsement from the originator to
the Trustee (each such endorsement being sufficient to transfer
all right, title and interest of the party so endorsing, as
noteholder or assignee thereof, in and to that Mortgage Note);
(ii) except as provided below, the original
recorded Mortgage with evidence of a recording thereon, or if any
such Mortgage has not been returned from the applicable recording
office or has been lost, or if such public recording office
retains the original recorded Mortgage, a copy of such Mortgage
certified by the Seller as being a true and correct copy of the
Mortgage;
(iii) subject to the proviso at the end of this
paragraph, a duly executed Assignment of Mortgage to "Norwest
Bank Minnesota, as trustee for the holders of the NationsBanc
Xxxxxxxxxx Funding Corp. Mortgage-Pass Through Certificates,
Series 1998-4" (which may be included in a blanket assignment or
assignments), together with, except as provided below, originals
of all interim recorded assignments of such mortgage or a copy of
such interim assignment certified by the Seller as being a true
and complete copy of the original recorded intervening
assignments of Mortgage (each such assignment, when duly
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and validly completed, to be in recordable form and sufficient to
effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which the assignment relates); provided
that, if the related Mortgage has not been returned from the
applicable public recording office, such Assignment of Mortgage
may exclude the information to be provided by the recording
office;
(iv) the originals of all assumption,
modification, consolidation or extension agreements, if any, with
evidence of recording thereon, if any;
(v) the original or duplicate original mortgagee
title insurance policy and all riders thereto;
(vi) the original of any guarantee executed in
connection with the Mortgage Note; and
(vii) the original of any security agreement,
chattel mortgage or equivalent document executed in connection
with the Mortgage;
provided, however, that on the Closing Date, with respect to item (iii), the
Depositor has delivered to the Trustee a copy of such Assignment of Mortgage in
blank and has caused the Master Servicer to retain the completed Assignment of
Mortgage for recording as described below. In addition, if the Depositor is
unable to deliver or cause the delivery of any original Mortgage Note due to the
loss of such original Mortgage Note, the Depositor may deliver a copy of such
Mortgage Note, together with a lost note affidavit, and shall thereby be deemed
to have satisfied the document delivery requirements of this 2.01(b).
If in connection with any Mortgage Loans, the Depositor cannot
deliver (A) the Mortgage, (B) all interim recorded assignments, (C) all
assumption, modification, consolidation or extension agreements, if any, or (D)
the lender's title policy (together with all riders thereto) satisfying the
requirements of clause (ii), (iii), (iv) or (v) above, respectively,
concurrently with the execution and delivery hereof because such document or
documents have not been returned from the applicable public recording office in
the case of clause (ii), (iii) or (iv) above, or because the title policy has
not been delivered to either the Master Servicer or the Depositor by the
applicable title insurer in the case of clause (v) above, the Depositor shall
promptly deliver or cause to be delivered to the Trustee or the Custodian on
behalf of the Trustee, in the case of clause (ii), (iii) or (iv) above, such
Mortgage, such interim assignment or such assumption, modification,
consolidation or extension agreement, as the case may be, with evidence of
recording indicated thereon upon receipt thereof from the public recording
office, but in no event shall any such delivery of any such documents or
instruments be made later than one year following the Closing Date, unless, in
the case of clause (ii), (iii) or (iv) above, there has been a continuing delay
at the applicable recording office or, in the case of clause (v), there has been
a continuing delay at the applicable insurer and the Depositor has delivered the
Officer's Certificate to such effect to the Trustee. The Depositor shall forward
or cause to be forwarded to the Trustee (1) from time to time additional
original documents evidencing an assumption or modification of a Mortgage Loan
and (2) any other documents required to be delivered by the Depositor or the
Master Servicer to the Trustee or the Custodian on the Trustee's behalf. In the
event that the original Mortgage is not delivered and in connection with the
payment
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in full of the related Mortgage Loan the public recording office requires the
presentation of a "lost instruments affidavit and indemnity" or any equivalent
document, because only a copy of the Mortgage can be delivered with the
instrument of satisfaction or reconveyance, the Master Servicer shall prepare,
execute and deliver or cause to be prepared, executed and delivered, on behalf
of the Trust, such a document to the public recording office.
As promptly as practicable subsequent to such transfer and
assignment, and in any event, within 30 days thereafter, the Master Servicer
shall (I) cause each Assignment of Mortgage to be in proper form for recording
in the appropriate public office for real property records within 30 days of the
Closing Date and (II) at the Depositor's expense, cause to be delivered for
recording in the appropriate public office for real property records the
Assignments of the Mortgages to the Trustee, except that, with respect to any
Assignment of a Mortgage as to which the Master Servicer has not received the
information required to prepare such assignment in recordable form, the Master
Servicer's obligation to do so and to deliver the same for such recording shall
be as soon as practicable after receipt of such information and in any event
within 30 days after the receipt thereof.
In the case of Mortgage Loans that have been prepaid in full as
of the Closing Date, the Depositor, in lieu of delivering the above documents to
the Trustee, or the Custodian on the Trustee's behalf, will cause the Master
Servicer to deposit in the Collection Account the portion of such payment that
is required to be deposited in the Collection Account pursuant to Section 3.08.
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.
Subject to the provisions of the following paragraph, the Trustee declares that
it, or the Custodian as its agent, will hold the documents referred to in
Section 2.01 and the other documents delivered to it constituting the Mortgage
Files, and that it will hold such other assets as are included in the Trust
Fund, in trust for the exclusive use and benefit of all present and future
Certificateholders.
Upon execution and delivery of this document, the Trustee shall
deliver to the Depositor and the Master Servicer a certification in the form of
Exhibit M hereto (the "Initial Certification") to the effect that, except as may
be specified in a list of exceptions attached thereto: (a) it, or the Custodian
as its agent, has received the original Mortgage Note relating to each of the
Mortgage Loans listed on the Mortgage Loan Schedule, and (b) each Mortgage Note
purports to be that of the Mortgagor.
Within 90 days after the execution and delivery of this
Agreement, the Trustee shall review, or cause the Custodian to review, the
Mortgage Files in its possession, and shall deliver to the Depositor and the
Master Servicer a certification in the form of Exhibit N hereto (the "Final
Certification") to the effect that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule, except as may be specified in a list of exceptions
attached to such Final Certification, such Mortgage File contains all of the
items required to be delivered pursuant to Section 2.01(b).
If, in the course of such review, the Trustee or the Custodian
finds any document constituting a part of a Mortgage File which does not meet
the requirements of Section 2.01 or is omitted from such Mortgage File, the
Trustee shall promptly so notify the Master Servicer, the
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Seller and the Depositor, or shall cause the Custodian to promptly so notify the
Master Servicer, the Seller and the Depositor. In performing any such review,
the Trustee or the Custodian may conclusively rely on the purported genuineness
of any such document and any signature thereon. It is understood that the scope
of the Trustee's or the Custodian's review of the Mortgage Files is limited
solely to confirming that the documents listed in Section 2.01 have been
received and further confirming that any and all documents delivered pursuant to
Section 2.01 have been executed and relate to the Mortgage Loans identified in
the Mortgage Loan Schedule. Neither the Trustee nor the Custodian shall have any
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form, whether any document has been recorded in accordance with the requirements
of any applicable jurisdiction, or whether a blanket assignment is permitted in
any applicable jurisdiction. The Master Servicer shall cause the Seller, in
accordance with the terms and provisions of Subsection 7.03 of each Sale
Agreement, to promptly correct or cure such defect within 90 days from the date
it was so notified of such defect and, if the Seller does not correct or cure
such defect within such period, the Master Servicer shall cause the Seller to
either (a) substitute for the related Mortgage Loan a Substitute Mortgage Loan,
which substitution shall be accomplished in the manner and subject to the
conditions set forth in Section 2.03(c), or (b) purchase such Mortgage Loan from
the Trustee at the Purchase Price for such Mortgage Loan, in either case within
90 days from the date the Seller was notified of such defect in writing;
provided, however, that in no event shall such a substitution occur more than
two years from the Closing Date, unless the Seller shall have provided to the
Trustee an Opinion of Counsel to the effect that such later substitution will
not affect the REMIC status of the Trust Fund.
The Trustee shall retain or shall cause the Custodian to retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions set forth herein. The Master Servicer shall promptly
deliver to the Trustee, upon the execution or, in the case of documents
requiring recording, receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File as come into the possession of the
Master Servicer from time to time.
It is understood and agreed that the obligation of the Seller,
pursuant to Subsection 7.03 of each Sale Agreement, to substitute for or to
purchase any Mortgage Loan which does not meet the requirements of Section 2.01
shall constitute the sole remedy respecting such defect available to the
Trustee, the Depositor and any Certificateholder against the Seller.
The Trustee or the Custodian, on behalf of the Trustee, shall be
under no duty or obligation (i) to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
are other than what they purport to be on their face or (ii) to determine
whether any Mortgage File should include any of the documents specified in
Section 2.01(b)(iv), (vi) and (vii).
SECTION 2.03. Representations, Warranties and Covenants of the
Seller and the Master Servicer.
(a) The Master Servicer hereby makes the following
representations and warranties to the Depositor and the Trustee, as of the
Closing Date:
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(i) The Master Servicer is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Texas and has all licenses necessary to carry on
its business as now being conducted and is licensed, qualified
and in good standing in each of the states where a Mortgaged
Property is located if the laws of such state require licensing
or qualification in order to conduct business of the type
conducted by the Master Servicer. The Master Servicer has
corporate power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this
Agreement) by the Master Servicer and the consummation of the
transactions contemplated hereby have been duly and validly
authorized. This Agreement, assuming due authorization, execution
and delivery by the other parties hereto, evidences the valid,
binding and enforceable obligation of the Master Servicer,
subject to applicable law except as enforceability may be limited
by (A) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors and (B) general principles
of equity, whether enforcement is sought in a proceeding in
equity or at law. All requisite corporate action has been taken
by the Master Servicer to make this Agreement valid and binding
upon the Master Servicer in accordance with its terms.
(ii) No consent, approval, authorization or order
is required for the transactions contemplated by this Agreement
from any court, governmental agency or body, or federal or state
regulatory authority having jurisdiction over the Master Servicer
is required or, if required, such consent, approval,
authorization or order has been or will, prior to the Closing
Date, be obtained.
(iii) The consummation of the transactions
contemplated by this Agreement are in the ordinary course of
business of the Master Servicer and will not result in the breach
of any term or provision of the charter or by-laws of the Master
Servicer or result in the breach of any term or provision of, or
conflict with or constitute a default under or result in the
acceleration of any obligation under, any agreement, indenture or
loan or credit agreement or other instrument to which the Master
Servicer or its property is subject, or result in the violation
of any law, rule, regulation, order, judgment or decree to which
the Master Servicer or its property is subject.
(iv) There is no action, suit, proceeding or
investigation pending or, to the best knowledge of the Master
Servicer, threatened against the Master Servicer which, either
individually or in the aggregate, would result in any material
adverse change in the business, operations, financial condition,
properties or assets of the Master Servicer, or in any material
impairment of the right or ability of the Master Servicer to
carry on its business substantially as now conducted or which
would draw into question the validity of this Agreement or the
Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Master Servicer
contemplated herein, or which would materially impair the ability
of the Master Servicer to perform under the terms of this
Agreement.
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(v) The Master Servicer is working to modify its
computer and other systems used in servicing the Mortgage Loans
to operate in a manner such that, on and after January 1, 2000,
the Master Servicer can service the Mortgage Loans in accordance
with the terms of this Agreement.
(b) The Seller has made certain representations and warranties
with respect to the Mortgage Loans in Subsection 7.01 of each Sale Agreement,
and such representations and warranties were assigned to the Depositor pursuant
to the applicable Assignment. The Depositor hereby assigns such representations
and warranties (together with any rights to cure breaches with respect thereto)
to the Trustee for the benefit of the Certificateholders.
(c) Upon discovery by any of the parties hereto of a breach of
any of the foregoing representations or warranties, or a breach of a
representation or warranty made pursuant to Subsection 7.01 of each Sale
Agreement that materially and adversely affects the value of any Mortgage Loan
or the interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt notice thereof to the other parties
hereto and to the Seller. In accordance with the terms and provisions of
Subsection 7.03 of each Sale Agreement, the Master Servicer shall cause the
Seller to, within 90 days of the earlier of its discovery or its receipt of
written notice from any party of a breach of any representation or warranty made
pursuant to Subsection 7.01 of such Sale Agreement which materially and
adversely affects the value of any Mortgage Loan or interests of the
Certificateholders in any Mortgage Loan, cure such breach in all material
respects, and if such breach is not so cured, shall, (i) if such action is taken
within the two-year period following the Closing Date, remove such Mortgage Loan
from the Trust Fund and substitute in its place a Substitute Mortgage Loan, in
the manner and subject to the conditions set forth in this Section 2.03(c); or
(ii) purchase the affected Mortgage Loan or Mortgage Loans from the Trustee at
the Purchase Price in the manner set forth below.
With respect to each Substitute Mortgage Loan, the Master
Servicer shall cause the Seller to deliver to the Trustee, for the benefit of
the Certificateholders, the Mortgage Note, the Mortgage, the related Assignment
of Mortgage, and such other documents and agreements as are otherwise required
by Section 2.01, with the Mortgage Note endorsed and the Mortgage assigned as
required by Section 2.01. No substitution is permitted to be made in any
calendar month after the Determination Date for such month. Monthly Payments due
with respect to any Substitute Mortgage Loan in the month of substitution shall
not be part of the Trust Fund and will be retained by the Seller. For the month
of substitution, distributions to Certificateholders will include the Monthly
Payment due on any Defective Mortgage Loan for such month and thereafter the
Seller shall be entitled to retain all amounts received in respect of such
Defective Mortgage Loan.
The Master Servicer shall amend the Mortgage Loan Schedule for
the benefit of the Certificateholders to reflect the removal of a Defective
Mortgage Loan and the substitution of the Substitute Mortgage Loan or Loans and
the Master Servicer shall deliver the amended Mortgage Loan Schedule to the
Trustee and the Custodian. Upon such substitution, each Substitute Mortgage Loan
shall be subject to the terms of this Agreement in all respects, and the Seller
shall be deemed to have made to the Trustee with respect to such Substitute
Mortgage Loan, as of the date of substitution, the representations and
warranties made pursuant to Subsection 7.01 of each Sale Agreement. Upon any
such substitution and the deposit to the Collection Account of any required
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Substitution Adjustment Amount (as described in the next paragraph) and receipt
of a Request for Release, the Trustee shall release, or shall direct the
Custodian to release, the Mortgage File relating to such Defective Mortgage Loan
to the Seller and shall execute and deliver at the Seller's direction such
instruments of transfer or assignment prepared by the Seller, in each case
without recourse, as shall be necessary to vest title in the Seller, or its
designee, to the Trustee's interest in any Defective Mortgage Loan substituted
for pursuant to this Section 2.03(c).
For any month in which the Seller substitutes one or more
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such Defective Mortgage
Loans (after application of the principal portion of the Monthly Payments due in
the month of substitution). The amount of such shortage (the "Substitution
Adjustment Amount") plus an amount equal to the aggregate of any unreimbursed
Advances with respect to such Defective Mortgage Loans shall be deposited into
the Collection Account by the Seller on or before the Distribution Account
Deposit Date for the Distribution Date in the month succeeding the calendar
month during which the related Mortgage Loan is required to be purchased or
replaced hereunder.
If the Seller repurchases a Defective Mortgage Loan, the Purchase
Price therefor shall be deposited in the Collection Account pursuant to Section
3.08(b)(vi) on or before the Distribution Account Deposit Date for the
Distribution Date in the month following the month during which the Seller
became obligated to repurchase or substitute for such Mortgage Loan and upon
such deposit of the Purchase Price, and receipt of a Request for Release, the
Trustee, or the Custodian on behalf of the Trustee, shall release the related
Mortgage File held for the benefit of the Certificateholders to the Seller, and
the Trustee shall execute and deliver at the Seller's direction such instruments
of transfer or assignment prepared by the Seller, in each case without recourse,
as shall be necessary to transfer title from the Trustee. It is understood and
agreed that the obligation of the Seller, pursuant to Subsection 7.03 of each
Sale Agreement, to cure, repurchase or substitute for any Mortgage Loan as to
which a breach has occurred and is continuing shall constitute the sole remedy
against the Seller respecting such breach available to Certificateholders, the
Depositor or the Trustee on their behalf.
The representations and warranties made or assigned pursuant to
this Section 2.03 shall survive delivery of the respective Mortgage Files to the
Trustee for the benefit of the Certificateholders.
SECTION 2.04. Representations and Warranties of the Depositor as
to the Mortgage Loans. The Depositor hereby represents and warrants to the
Trustee with respect to each Mortgage Loan as of the date hereof or such other
date set forth herein that as of the Closing Date, and following the transfer of
the Mortgage Loans to it by the Seller, the Depositor had good title to the
Mortgage Loans and the Mortgage Notes were subject to no offsets, defenses or
counterclaims.
The Depositor hereby assigns, transfers and conveys to the
Trustee all of its rights with respect to the Mortgage Loans including, without
limitation, the representations and warranties of the Seller made pursuant to
Subsection 7.01 of each Sale Agreement, together with all rights of the
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Depositor to require the Seller to cure any breach thereof or to repurchase or
substitute for any affected Mortgage Loan in accordance with such Sale
Agreement.
It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee. Upon discovery by the Master Servicer, the Depositor or
the Trustee of a breach of any of the foregoing representations and warranties
set forth in this Section 2.04, which breach materially and adversely affects
the interest of the Certificateholders, the party discovering such breach shall
give prompt written notice to the other parties hereto and to each Rating
Agency.
SECTION 2.05. Designation of Interests in REMIC. The Preliminary
Statement sets forth the designations for federal income tax purposes of all
interests created hereby.
SECTION 2.06. Designation of Start-up Day. The Closing Date is
hereby designated as the "start-up day" of the REMIC within the meaning of
Section 860G(a)(9) of the Code.
SECTION 2.07. REMIC Certificate Maturity Date. Solely for
purposes of satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations,
the "latest possible maturity date" of the Regular Certificates is the
Distribution Date in November 2031.
SECTION 2.08. Repurchases for Tax Violations. Upon discovery by
the Depositor, the Seller, the Master Servicer, or the Trustee that any Mortgage
Loan does not constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, the party discovering such fact shall promptly (and in
any event within five Business Days of discovery) give written notice thereof to
the other parties. In connection therewith, the Trustee shall require the Seller
pursuant to the terms of the applicable Sale Agreement, at the Seller's option,
to either (a) substitute, if the conditions in Section 2.03(c) with respect to
substitutions are satisfied, a Substitute Mortgage Loan for the affected
Mortgage Loan, or (b) purchase the affected Mortgage Loan within 90 days of such
discovery in the same manner as it would a Mortgage Loan for a breach of
representation or warranty made pursuant to Subsection 7.01 of the applicable
Sale Agreement and in accordance with Section 2.03. The Trustee shall reconvey
to the Seller the Mortgage Loan to be released pursuant hereto in the same
manner, and on the same terms and conditions, as it would a Mortgage Loan
purchased for breach of a representation or warranty pursuant to Subsection 7.01
of the applicable Sale Agreement and in accordance with Section 2.03.
SECTION 2.09. Execution and Delivery of Certificates. The Trustee
acknowledges the transfer and assignment to it of the Trust Fund and the
creation of the Trust, and, concurrently with such transfer and assignment, the
Trustee has executed and delivered to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing directly or indirectly the
entire ownership of the Trust. The Trustee agrees to hold the Trust Fund and
exercise the rights referred to above for the benefit of all present and future
Holders of the Certificates and to perform the duties set forth in this
Agreement to the end that the interests of the Holders of the Certificates may
be adequately and effectively protected.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans. For and
on behalf of the Certificateholders, the Master Servicer shall service and
administer the Mortgage Loans in accordance with the terms of this Agreement,
Customary Servicing Procedures, applicable law and the terms of the Mortgage
Notes and Mortgages. In connection with such servicing and administration, the
Master Servicer shall have full power and authority, acting alone and/or through
Servicers as provided in Section 3.02, to do or cause to be done any and all
things that it may deem necessary or desirable in connection with such servicing
and administration including, but not limited to, the power and authority,
subject to the terms hereof, (a) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (b) to consent to transfers of any Mortgaged Property
and assumptions of the Mortgage Notes and related Mortgages (but only in the
manner provided in this Agreement), (c) to collect any Insurance Proceeds and
other Liquidation Proceeds, and (d) to effectuate foreclosure or other
conversion of the ownership of the Mortgaged Property securing any Mortgage
Loan. The Master Servicer shall represent and protect the interests of the Trust
in the same manner as it protects its own interests in mortgage loans in its own
portfolio in any claim, proceeding or litigation regarding a Mortgage Loan and
shall not make or permit any modification, waiver or amendment of any term of
any Mortgage Loan, except as provided pursuant to Section 3.21. Without limiting
the generality of the foregoing, the Master Servicer, in its own name or in the
name of any Servicer or the Depositor and the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee, when the Master Servicer or the
Servicer, as the case may be, believes it appropriate in its reasonable
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans, and with respect to
the Mortgaged Properties held for the benefit of the Certificateholders. The
Master Servicer shall prepare and deliver to the Depositor and/or the Trustee
such documents requiring execution and delivery by either or both of them as are
necessary or appropriate to enable the Master Servicer to service and administer
the Mortgage Loans to the extent that the Master Servicer is not permitted to
execute and deliver such documents pursuant to the preceding sentence. Upon
receipt of such documents, the Depositor and/or the Trustee shall promptly
execute such documents and deliver them to the Master Servicer.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which Servicing Advances shall be reimbursable in the first instance
from related collections from the Mortgagors pursuant to Section 3.09, and
further as provided in Section 3.11. The costs incurred by the Master Servicer,
if any, in effecting the timely payments of taxes and assessments on the
Mortgaged Properties and related insurance premiums shall not, for the purpose
of calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balances of the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
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The relationship of the Master Servicer (and of any successor to
the Master Servicer as master servicer under this Agreement) to the Trustee
under this Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
Servicers.
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a Servicer pursuant to a Servicing Agreement; provided,
however, that such subservicing arrangement and the terms of the related
Servicing Agreement must provide for the servicing of such Mortgage Loan in a
manner consistent with the servicing arrangements contemplated hereunder.
Notwithstanding the provisions of any Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and a Servicer or reference to actions taken through a Servicer or
otherwise, the Master Servicer shall remain obligated and liable to the
Depositor, the Trustee and the Certificateholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Servicing Agreements or arrangements or by virtue of indemnification from the
Servicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Mortgage Loans.
All actions of each Servicer performed pursuant to the related Servicing
Agreement shall be performed as agent of the Master Servicer with the same force
and effect as if performed directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect to
the Mortgage Loans that are received by a Servicer regardless of whether such
payments are remitted by the Servicer to the Master Servicer.
(c) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
its best reasonable efforts to enforce the obligations of each Servicer under
the related Servicing Agreement, to the extent that the non-performance of any
such obligation would have a material and adverse effect on a Mortgage Loan.
Such enforcement, including, without limitation, the legal prosecution of
claims, termination of Servicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loan or (ii) from a specific recovery of costs, expenses or
attorneys fees against the party against whom such enforcement is directed.
(d) Any Servicing Agreement entered into by the Master Servicer
shall provide that it may be assumed or terminated by the Trustee, if the
Trustee has assumed the duties of the Master Servicer, or any successor Master
Servicer, at the Trustee's or successor Master Servicer's option, as applicable,
without cost or obligation to the assuming or terminating party or the Trust
Fund, upon the assumption by such party of the obligations of the Master
Servicer pursuant to Section 8.05.
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Any Servicing Agreement, and any other transactions or services
relating to the Mortgage Loans involving a Servicer, shall be deemed to be
between the Master Servicer and such Servicer alone, and the Trustee and the
Certificateholders shall not be deemed parties thereto and shall have no claims
or rights of action against, rights, obligations, duties or liabilities to or
with respect to the Servicer or its officers, directors or employees, except as
set forth in Section 3.01.
SECTION 3.03. Fidelity Bond; Errors and Omissions Insurance. The
Master Servicer shall maintain, at its own expense, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage on all officers,
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Mortgage Loans. These
policies must insure the Master Servicer against losses resulting from dishonest
or fraudulent acts committed by the Master Servicer's personnel, any employees
of outside firms that provide data processing services for the Master Servicer,
and temporary contract employees or student interns. Such fidelity bond shall
also protect and insure the Master Servicer against losses in connection with
the release or satisfaction of a Mortgage Loan without having obtained payment
in full of the indebtedness secured thereby. No provision of this Section 3.03
requiring such fidelity bond and errors and omissions insurance shall diminish
or relieve the Master Servicer from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such bond and insurance policy
shall be at least equal to the corresponding amounts required by FNMA in the
FNMA Servicing Guide or by FHLMC in the FHLMC Sellers' & Servicers' Guide, as
amended or restated from time to time, or in an amount as may be permitted to
the Master Servicer by express waiver of FNMA or FHLMC.
SECTION 3.04. Access to Certain Documentation. The Master
Servicer shall provide to the OTS and the FDIC and to comparable regulatory
authorities supervising Holders of Subordinate Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices designated by the Master Servicer. Nothing in this
Section 3.04 shall limit the obligation of the Master Servicer to observe any
applicable law and the failure of the Master Servicer to provide access as
provided in this Section 3.04 as a result of such obligation shall not
constitute a breach of this Section 3.04.
SECTION 3.05. Maintenance of Primary Mortgage Insurance Policy;
Claims. With respect to each Mortgage Loan with a Loan-to-Value Ratio in excess
of 80% or such other Loan-to-Value Ratio as may be required by law, the Master
Servicer shall, without any cost to the Trust Fund, maintain or cause the
Mortgagor to maintain in full force and effect a Primary Insurance Policy
insuring that portion of the Mortgage Loan in excess of a percentage in
conformity with FNMA requirements. The Master Servicer shall pay or shall cause
the Mortgagor to pay the premium thereon on a timely basis, at least until the
Loan-to-Value Ratio of such Mortgage Loan is reduced to 80% or such other
Loan-to-Value Ratio as may be required by law. If such Primary Insurance Policy
is terminated, the Master Servicer shall obtain from another insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated Primary Insurance Policy. If the insurer shall cease
to be an insurer acceptable to FNMA, the Master Servicer shall notify the
Trustee in writing, it being understood that the Master Servicer shall
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not have any responsibility or liability for any failure to recover under the
Primary Insurance Policy for such reason. If the Master Servicer determines that
recoveries under the Primary Insurance Policy are jeopardized by the financial
condition of the insurer, the Master Servicer shall obtain from another insurer
which meets the requirements of this Section 3.05 a replacement insurance
policy. The Master Servicer shall not take any action that would result in
noncoverage under any applicable Primary Insurance Policy of any loss that, but
for the actions of the Master Servicer, would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to be
entered into pursuant to Section 3.13, the Master Servicer shall promptly notify
the insurer under the related Primary Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
Primary Insurance Policy and shall take all actions which may be required by
such insurer as a condition to the continuation of coverage under such Primary
Insurance Policy. If such Primary Insurance Policy is terminated as a result of
such assumption or substitution of liability, the Master Servicer shall obtain a
replacement Primary Insurance Policy as provided above.
In connection with its activities as master servicer, the Master
Servicer agrees to prepare and present, on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Primary Insurance Policy in
a timely fashion in accordance with the terms of such Primary Insurance Policy
and, in this regard, to take such action as shall be necessary to permit
recovery under any Primary Insurance Policy respecting a defaulted Mortgage
Loan. Pursuant to Section 3.09(a), any amounts collected by the Master Servicer
under any Primary Insurance Policy shall be deposited in the Escrow Account,
subject to withdrawal pursuant to Section 3.09(b).
SECTION 3.06. Rights of the Depositor and the Trustee in Respect
of the Master Servicer. The Depositor may, but is not obligated to, enforce the
obligations of the Master Servicer hereunder and may, but is not obligated to,
perform, or cause a designee to perform, any defaulted obligation of the Master
Servicer hereunder and in connection with any such defaulted obligation to
exercise the related rights of the Master Servicer hereunder; provided that the
Master Servicer shall not be relieved of any of its obligations hereunder by
virtue of such performance by the Depositor or its designee. Neither the Trustee
nor the Depositor shall have any responsibility or liability for any action or
failure to act by the Master Servicer nor shall the Trustee or the Depositor be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
SECTION 3.07. Trustee to Act as Master Servicer. If the Master
Servicer shall for any reason no longer be the Master Servicer hereunder
(including by reason of an Event of Default), the Trustee shall thereupon
assume, if it so elects, or shall appoint a successor Master Servicer to assume,
all of the rights and obligations of the Master Servicer hereunder arising
thereafter (except that the Trustee shall not be (a) liable for losses of the
Master Servicer pursuant to Section 3.12 or any acts or omissions of the
predecessor Master Servicer hereunder, (b) obligated to make Advances if it is
prohibited from doing so by applicable law or (c) deemed to have made any
representations and warranties of the Master Servicer hereunder). Any such
assumption shall be subject to Section 7.02. If the Master Servicer shall for
any reason no longer be the Master Servicer (including by reason of any Event of
Default), the Trustee or the successor Master Servicer may elect to succeed to
any rights and obligations of the Master Servicer under each Servicing Agreement
or may terminate each Servicing Agreement. If it has elected to assume the
Servicing Agreement, the Trustee or the successor Master Servicer shall be
deemed to have assumed all of the
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Master Servicer's interest therein and to have replaced the Master Servicer as a
party to any Servicing Agreement entered into by the Master Servicer as
contemplated by Section 3.02 to the same extent as if the Servicing Agreement
had been assigned to the assuming party except that the Master Servicer shall
not be relieved of any liability or obligations under any such Servicing
Agreement.
The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each Servicing Agreement or substitute servicing
agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected or held by it and otherwise use its best efforts
to effect the orderly and efficient transfer of such substitute Servicing
Agreement to the assuming party.
SECTION 3.08. Collection of Mortgage Loan Payments; Collection
Account; Distribution Account.
(a) Continuously from the date hereof until the principal and
interest on all Mortgage Loans are paid in full, the Master Servicer will
proceed diligently, in accordance with this Agreement, to collect all payments
due under each of the Mortgage Loans when the same shall become due and payable.
Further, the Master Servicer will in accordance with all applicable law and
Customary Servicing Procedures ascertain and estimate taxes, assessments, fire
and hazard insurance premiums, mortgage insurance premiums and all other charges
that, as provided in any Mortgage, will become due and payable to the end that
the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable. Consistent with the foregoing,
the Master Servicer may in its discretion (i) waive any late payment charge or
any prepayment charge or penalty interest in connection with the prepayment of a
Mortgage Loan and (ii) extend the due dates for payments due on a Mortgage Note
for a period not greater than 120 days; provided, however, that the Master
Servicer cannot extend the maturity of any such Mortgage Loan past the date on
which the final payment is due on the latest maturing Mortgage Loan as of the
Cut-Off Date. In the event of any such arrangement, the Master Servicer shall
make Monthly Advances on the related Mortgage Loan in accordance with the
provisions of Section 3.20 during the scheduled period in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. The Master Servicer shall not be required to
institute or join in litigation with respect to collection of any payment
(whether under a Mortgage, Mortgage Note or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law.
(b) The Master Servicer shall establish and maintain the
Collection Account. The Master Servicer shall deposit or cause to be deposited
into the Collection Account on a daily basis within one Business Day of receipt,
except as otherwise specifically provided herein, the following payments and
collections remitted by Servicers or received by it in respect of Mortgage Loans
subsequent to the Cut-Off Date (other than in respect of principal and interest
due on the Mortgage Loans on or before the Cut-Off Date) and the following
amounts required to be deposited hereunder:
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(i) all payments on account of principal of the
Mortgage Loans, including Principal Prepayments;
(ii) all payments on account of interest on the
Mortgage Loans, net of the Master Servicing Fee;
(iii) (A) all Insurance Proceeds and Liquidation
Proceeds, other than Insurance Proceeds to be (1) applied to the
restoration or repair of the Mortgaged Property, (2) released to
the Mortgagor in accordance with Customary Servicing Procedures
or (3) required to be deposited to an Escrow Account pursuant to
Section 3.09(a) and (B) any Insurance Proceeds released from an
Escrow Account pursuant to Section 3.09(b)(iv);
(iv) any amount required to be deposited by the
Master Servicer pursuant to Section 3.08(d) in connection with
any losses on Permitted Investments with respect to the
Collection Account;
(v) any amounts required to be deposited by the
Master Servicer pursuant to Section 3.14;
(vi) all Purchase Prices and all Substitution
Adjustment Amounts received by the Master Servicer;
(vii) all Monthly Advances made by the Master
Servicer pursuant to Section 3.20 and any payments of
Compensating Interest; and
(viii) any other amounts required to be deposited
hereunder.
The foregoing requirements for deposits to the Collection Account
by the Master Servicer shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of
prepayment penalties, late payment charges or assumption fees, if collected,
need not be deposited by the Master Servicer. If the Master Servicer shall
deposit in the Collection Account any amount not required to be deposited, it
may at any time withdraw or direct the institution maintaining the Collection
Account to withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding. The Master Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section
3.08. All funds required to be deposited in the Collection Account shall be held
in trust for the Certificateholders until withdrawn in accordance with Section
3.11.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Master
Servicer to the Trustee pursuant to Section 3.11(a)(viii);
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(ii) any amount paid by the Master Servicer
pursuant to Section 3.08(d) in connection with any losses on
Permitted Investments with respect to the Distribution Account;
and
(iii) any other amounts deposited hereunder which
are required to be deposited in the Distribution Account.
If the Master Servicer shall remit any amount not required to be
remitted, it may at any time direct the Trustee to withdraw such amount from the
Distribution Account, any provision herein to the contrary notwithstanding. Such
direction may be accomplished by delivering an Officer's Certificate to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds required to be deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.11. In
no event shall the Trustee incur liability for withdrawals from the Distribution
Account at the direction of the Master Servicer.
(d) Each institution at which the Collection Account or the
Distribution Account is maintained shall invest the funds therein as directed in
writing by the Master Servicer (with respect to the Collection Account) or the
Trustee (with respect to the Distribution Account) in Permitted Investments,
which shall mature not later than (i) in the case of the Collection Account, the
Business Day next preceding the related Distribution Account Deposit Date
(except that if such Permitted Investment is an obligation of the institution
that maintains such account, then such Permitted Investment shall mature not
later than such Distribution Account Deposit Date) and (ii) in the case of the
Distribution Account, the Business Day next preceding the Distribution Date
(except that if such Permitted Investment is an obligation of the institution
that maintains such account, then such Permitted Investment shall mature not
later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be made
in the name of the Trustee, for the benefit of the Certificateholders. All
income and gain (net of any losses) realized from any such investment of funds
on deposit in the Collection Account shall be for the benefit of the Master
Servicer as servicing compensation and shall be retained by it monthly as
provided herein. All income or gain (net of any losses) realized from any such
investment of funds on deposit in the Distribution Account shall be for the
benefit of the Trustee as additional compensation and shall be retained by it
monthly as provided herein. The amount of any losses realized in the Collection
Account or the Distribution Account incurred in any such account in respect of
any such investments shall promptly be deposited by the Master Servicer in the
Collection Account or by the Trustee in the Distribution Account, as applicable.
(e) The Master Servicer shall give notice to the Trustee of any
proposed change of the location of the Collection Account not later than 30 days
and not more than 45 days prior to any change thereof. The Trustee shall give
notice to the Master Servicer, the Seller, each Rating Agency and the Depositor
of any proposed change of the location of the Distribution Account not later
than 30 days and not more than 45 days prior to any change thereof. The creation
of any Collection Account shall be evidenced by a certification substantially in
the form of Exhibit G hereto. A copy of such certification or letter agreement
shall be furnished to the Trustee.
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SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
(a) To the extent required by the related Mortgage Note and not
violative of current law, the Master Servicer shall segregate and hold all funds
collected and received pursuant to each Mortgage Loan which constitute Escrow
Payments in trust separate and apart from any of its own funds and general
assets and for such purpose shall establish and maintain one or more escrow
accounts (collectively, the "Escrow Account"), titled "NationsBanc Mortgage
Corporation, in trust for registered holders of NationsBanc Xxxxxxxxxx Funding
Corp. Mortgage Pass-Through Certificates, Series 1998-4 and various Mortgagors."
The Escrow Account shall be established with a commercial bank, a savings bank
or a savings and loan association that meets the guidelines set forth by FNMA or
FHLMC as an eligible institution for escrow accounts and which is a member of
the Automated Clearing House. In any case, the Escrow Account shall be insured
by the FDIC to the fullest extent permitted by law. The Master Servicer shall
deposit in the Escrow Account on a daily basis, and retain therein: (i) all
Escrow Payments collected on account of the Mortgage Loans, (ii) all amounts
representing proceeds of any hazard insurance policy which are to be applied to
the restoration or repair of any Mortgaged Property and (iii) all amounts
representing proceeds of any Primary Insurance Policy. Nothing herein shall
require the Master Servicer to compel a Mortgagor to establish an Escrow Account
in violation of applicable law.
(b) Withdrawals of amounts so collected from the Escrow Accounts
may be made by the Master Servicer only (i) to effect timely payment of taxes,
assessments, mortgage insurance premiums, fire and hazard insurance premiums,
condominium or PUD association dues, or comparable items constituting Escrow
Payments for the related Mortgage, (ii) to reimburse the Master Servicer out of
related Escrow Payments made with respect to a Mortgage Loan for any Servicing
Advance made by the Master Servicer pursuant to Section 3.09(c) with respect to
such Mortgage Loan, (iii) to refund to any Mortgagor any sums determined to be
overages, (iv) for transfer to the Collection Account upon default of a
Mortgagor or in accordance with the terms of the related Mortgage Loan and if
permitted by applicable law, (v) for application to restore or repair the
Mortgaged Property, (vi) to pay to the Mortgagor, to the extent required by law,
any interest paid on the funds deposited in the Escrow Account, (vii) to pay to
itself any interest earned on funds deposited in the Escrow Account (and not
required to be paid to the Mortgagor), (viii) to the extent permitted under the
terms of the related Mortgage Note and applicable law, to pay late fees with
respect to any Monthly Payment which is received after the applicable grace
period, (ix) to withdraw suspense payments that are deposited into the Escrow
Account, (x) to withdraw any amounts inadvertently deposited in the Escrow
Account or (xi) to clear and terminate the Escrow Account upon the termination
of this Agreement in accordance with Section 10.01. Any Escrow Account shall not
be a part of the Trust Fund.
(c) With respect to each Mortgage Loan, the Master Servicer shall
maintain accurate records reflecting the status of taxes, assessments and other
charges which are or may become a lien upon the Mortgaged Property and the
status of Primary Insurance Policy premiums and fire and hazard insurance
coverage. The Master Servicer 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 the Escrow Account, if any,
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which shall have been estimated and accumulated by the Master Servicer in
amounts sufficient for such purposes, as allowed under the terms of the
Mortgage. To the extent that a Mortgage does not provide for Escrow Payments,
the Master Servicer shall determine that any such payments are made by the
Mortgagor. The Master Servicer assumes full responsibility for the timely
payment of all such bills and shall effect timely payments of all such bills
irrespective of each Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments. The Master Servicer shall advance any such
payments that are not timely paid, but the Master Servicer shall be required so
to advance only to the extent that such Servicing Advances, in the good faith
judgment of the Master Servicer, will be recoverable by the Master Servicer out
of Insurance Proceeds, Liquidation Proceeds or otherwise.
SECTION 3.10. Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Master Servicer shall afford the Trustee
reasonable access to all records and documentation regarding the Mortgage Loans
and all accounts, insurance information and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the office designated by the Master
Servicer.
Upon reasonable advance notice in writing, the Master Servicer
will provide to each Certificateholder which is a savings and loan association,
bank or insurance company certain reports and reasonable access to information
and documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Master Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Master Servicer in
providing such reports and access.
SECTION 3.11. Permitted Withdrawals from the Collection Account
and Distribution Account.
(a) The Master Servicer may from time to time make withdrawals
from the Collection Account for the following purposes:
(i) to pay to the Master Servicer (to the extent
not previously retained), the servicing compensation to which it
is entitled pursuant to Section 3.17, and to pay to the Master
Servicer, as additional master servicing compensation, earnings
on or investment income with respect to funds in or credited to
the Collection Account;
(ii) to reimburse the Master Servicer for
unreimbursed Advances made by it, such right of reimbursement
pursuant to this clause (ii) being limited to amounts received on
the Mortgage Loan(s) in respect of which any such Advance was
made;
(iii) to reimburse the Master Servicer for any
Nonrecoverable Advance previously made, it being understood that,
in the case of any such reimbursement, the Master Servicer's
right thereto shall be prior to the rights of the Trust unless
the Master Servicer is also the Seller and the Seller is required
to purchase a Mortgage Loan pursuant to Section 2.02, 2.03 or
2.08, in which case the Master Servicer's right to such
reimbursement
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shall be subsequent to the payment to the Trust of the Purchase
Price and all other amounts required to be paid to the Trust with
respect to such Mortgage Loan;
(iv) to reimburse the Master Servicer for Insured
Expenses from the related Insurance Proceeds;
(v) to pay to the purchaser, with respect to each
Mortgage Loan or REO Property that has been purchased pursuant to
Section 2.02, 2.03 or 2.08, all amounts received thereon after
the date of such purchase;
(vi) to reimburse the Master Servicer or the
Depositor for expenses incurred by any of them and reimbursable
pursuant to Section 7.03;
(vii) to withdraw any amount deposited in the
Collection Account and not required to be deposited therein;
(viii) on or prior to the Distribution Account
Deposit Date, to withdraw an amount equal to the related
Available Funds, the related Trustee Fee and any other amounts
due to the Trustee under this Agreement for such Distribution
Date, to the extent on deposit, and remit such amount to the
Trustee for deposit in the Distribution Account; and
(ix) to clear and terminate the Collection Account
upon termination of this Agreement pursuant to Section 10.01.
The Master Servicer shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to clauses (i), (ii), (iv) and
(v). Prior to making any withdrawal from the Collection Account pursuant to
clause (iii), the Master Servicer shall deliver to the Trustee an Officer's
Certificate of a Servicing Officer indicating the amount of any previous Advance
determined by the Master Servicer to be a Nonrecoverable Advance and identifying
the related Mortgage Loan(s) and their respective portions of such
Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution
Account for distributions to Certificateholders in the manner specified in this
Agreement. In addition, the Trustee may from time to time make withdrawals from
the Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee and any other
amounts due to the Trustee under this Agreement for the related
Distribution Date;
(ii) to pay to itself as additional compensation
earnings on or investment income with respect to funds in the
Distribution Account;
(iii) to withdraw and return to the Master
Servicer any amount deposited in the Distribution Account and not
required to be deposited therein; and
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(iv) to clear and terminate the Distribution
Account upon termination of the Agreement pursuant to Section
10.01.
SECTION 3.12. Maintenance of Hazard Insurance. The Master
Servicer shall cause to be maintained for each Mortgage Loan fire and hazard
insurance with extended coverage customary in the area where the Mortgaged
Property is located in an amount which is at least equal to the lesser of (a)
the full insurable value of the Mortgaged Property or (b) the greater of (i) the
outstanding principal balance owing on the Mortgage Loan and (ii) an amount such
that the proceeds of such insurance shall be sufficient to avoid the application
to the Mortgagor or loss payee of any coinsurance clause under the policy. If
the Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) the Master Servicer will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration and the requirements of FNMA
or FHLMC. The Master Servicer shall also maintain on REO Property, fire and
hazard insurance with extended coverage in an amount which is at least equal to
the maximum insurable value of the improvements which are a part of such
property, liability insurance and, to the extent required, flood insurance in an
amount required above. Any amounts collected by the Master Servicer under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the property subject to the related
Mortgage or property acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor in accordance with Customary Servicing Procedures)
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.11(a). It is understood and agreed that no earthquake or other
additional insurance need be required by the Master Servicer of any Mortgagor or
maintained on REO Property, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with loss payable to the Master Servicer, and shall
provide for at least 30 days prior written notice of any cancellation, reduction
in amount or material change in coverage to the Master Servicer.
The hazard insurance policies for each Mortgage Loan secured by a
unit in a condominium development or planned unit development shall be
maintained with respect to such Mortgage Loan and the related development in a
manner which is consistent with FNMA requirements.
Notwithstanding the foregoing, the Master Servicer may maintain a
blanket policy insuring against hazard losses on all of the Mortgaged Properties
in lieu of maintaining the required hazard insurance policies for each Mortgage
Loan and may maintain a blanket policy insuring against special flood hazards in
lieu of maintaining any required flood insurance. Any such blanket policies
shall (A) be consistent with prudent industry standards, (B) name the Master
Servicer as loss payee, (C) provide coverage in an amount equal to the aggregate
unpaid principal balance on the Mortgage Loans without co-insurance, and (D)
otherwise comply with the requirements of this Section 3.12. Any such blanket
policy may contain a deductible clause; provided that if any Mortgaged Property
is not covered by a separate policy otherwise complying with this Section 3.12
and a loss occurs with respect to such Mortgaged Property which loss would have
been covered by such a policy, the Master Servicer shall deposit in the
Collection Account the difference, if any, between the amount that would have
been payable under a separate policy complying with Section 3.12 and the amount
paid under such blanket policy.
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SECTION 3.13. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.13, when any
Mortgaged Property subject to a Mortgage has been conveyed by the Mortgagor, the
Master Servicer shall use reasonable efforts, to the extent that it has actual
knowledge of such conveyance, to enforce any due-on-sale clause contained in any
Mortgage Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Master Servicer is not required to exercise
such rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise required under such Mortgage Note or Mortgage as a condition to such
transfer. If (i) the Master Servicer is prohibited by law from enforcing any
such due-on-sale clause, (ii) coverage under any Required Insurance Policy would
be adversely affected, (iii) the Mortgage Note does not include a due-on-sale
clause or (iv) nonenforcement is otherwise permitted hereunder, the Master
Servicer is authorized, subject to Section 3.13(b), to take or enter into an
assumption and modification agreement from or with the Person to whom such
Mortgaged Property has been or is about to be conveyed, pursuant to which such
Person becomes liable under the Mortgage Note and, unless prohibited by
applicable state law, the Mortgagor remains liable thereon; provided that the
Mortgage Loan shall continue to be covered (if so covered before the Master
Servicer enters such agreement) by the applicable Required Insurance Policies.
The Master Servicer, subject to Section 3.13(b), is also authorized with the
prior approval of the insurers under any Required Insurance Policies to enter
into a substitution of liability agreement with such Person, pursuant to which
the original Mortgagor is released from liability and such Person is substituted
as Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Master Servicer shall not be deemed to be in default under this
Section 3.13 by reason of any transfer or assumption which the Master Servicer
reasonably believes it is restricted by law from preventing, for any reason
whatsoever.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.13(a), in any case in
which a Mortgaged Property has been conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption agreement or modification agreement
or supplement to the Mortgage Note or Mortgage that requires the signature of
the Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Master Servicer
shall prepare and deliver or cause to be prepared and delivered to the Trustee
for signature and shall direct, in writing, the Trustee to execute the
assumption agreement with the Person to whom the Mortgaged Property is to be
conveyed and such modification agreement or supplement to the Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In no event shall the Trustee incur liability for executing any
document under this Section 3.13 at the direction of the Master Servicer. In
connection with any such assumption, no material term of the Mortgage Note may
be changed. In addition, the substitute Mortgagor and the Mortgaged Property
must be acceptable to the Master Servicer in
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accordance with its underwriting standards as then in effect. Together with each
such substitution, assumption or other agreement or instrument delivered to the
Trustee for execution by it, the Master Servicer shall deliver an Officer's
Certificate signed by a Servicing Officer stating that the requirements of this
subsection have been met. The Master Servicer shall notify the Trustee that any
such substitution or assumption agreement has been completed by forwarding to
the Trustee (or at the direction of the Trustee, the Custodian) the original of
such substitution or assumption agreement, which in the case of the original
shall be added to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. Any fee collected by the
Master Servicer for entering into an assumption or substitution of liability
agreement may be retained by the Master Servicer as additional master servicing
compensation. Notwithstanding the foregoing, to the extent permissible under
applicable law and at the request of the Master Servicer, the Trustee shall
execute and deliver to the Master Servicer any powers of attorney and other
documents prepared by the Master Servicer that are reasonably necessary or
appropriate to enable the Master Servicer to execute any assumption agreement or
modification agreement required to be executed by the Trustee under this Section
3.13.
SECTION 3.14. Realization Upon Defaulted Mortgage Loans; REO
Property. The Master Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of Mortgaged Properties securing such
of the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Master Servicer shall
follow Customary Servicing Procedures and shall meet the requirements of the
insurer under any Required Insurance Policy. Notwithstanding the foregoing, the
Master Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration of any Mortgaged Property unless it
shall determine (a) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan after reimbursement to itself of
such expenses and (b) that such expenses will be recoverable to it through
proceeds of the liquidation of the Mortgage Loan (respecting which it shall have
priority for purposes of withdrawals from the Collection Account). Any such
expenditures shall constitute Servicing Advances for purposes of this Agreement.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders, or its nominee, on behalf of the Certificateholders. The
Trustee's name shall be placed on the title to such REO Property solely as the
Trustee hereunder and not in its individual capacity. The Master Servicer shall
ensure that the title to such REO Property references the Agreement and the
Trustee's capacity hereunder. Pursuant to its efforts to sell such REO Property,
the Master Servicer shall either itself or through an agent selected by the
Master Servicer manage, conserve, protect and operate such 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. Incident to its conservation and
protection of the interests of the Certificateholders, the
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Master Servicer may rent the same, or any part thereof, as the Master Servicer
deems to be in the best interest of the Certificateholders for the period prior
to the sale of such REO Property. The Master Servicer shall prepare for and
deliver to the Trustee a statement with respect to each REO Property that has
been rented, if any, showing the aggregate rental income received and all
expenses incurred in connection with the management and maintenance of such REO
Property at such times as is necessary to enable the Trustee to comply with the
reporting requirements of the REMIC Provisions; provided, however, that the
Master Servicer shall have no duty to rent any REO Property on behalf of the
Trust. The net monthly rental income, if any, from such REO Property shall be
deposited in the Collection Account no later than the close of business on each
Determination Date. The Master Servicer shall perform the tax reporting and
withholding required by Sections 1445 and 6050J of the Code with respect to
foreclosures and abandonments, the tax reporting required by Section 6050H of
the Code with respect to the receipt of mortgage interest from individuals and,
if required by Section 6050P of the Code with respect to the cancellation of
indebtedness by certain financial entities, by preparing such tax and
information returns as may be required, in the form required. The Master
Servicer shall deliver copies of such reports to the Trustee.
If the Trust acquires any Mortgaged Property as described above
or otherwise in connection with a default or a default which is reasonably
foreseeable on a Mortgage Loan, the Master Servicer shall dispose of such
Mortgaged Property prior to the end of the third calendar year following the
year of its acquisition by the Trust (such period, the "REO Disposition Period")
unless (a) the Trustee shall have been supplied by the Master Servicer with an
Opinion of Counsel to the effect that the holding by the Trust of such Mortgaged
Property subsequent to the REO Disposition Period will not result in the
imposition of taxes on "prohibited transactions" on the REMIC (as defined in
Section 860F of the Code) or cause the REMIC to fail to qualify as a REMIC at
any time that any Certificates are outstanding, or (b) the Trustee (at the
Master Servicer's expense) or the Master Servicer shall have applied for, prior
to the expiration of the REO Disposition Period, an extension of the REO
Disposition Period in the manner contemplated by Section 856(e)(3) of the Code.
If such an Opinion of Counsel is provided or such an exemption is obtained, the
Trust may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel) for the applicable period. Notwithstanding
any other provision of this Agreement, no Mortgaged Property acquired by the
Trust shall be rented (or allowed to continue to be rented) or otherwise used
for the production of income by or on behalf of the Trust in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or (ii) subject the REMIC to the imposition of any federal, state or
local income taxes on the income earned from such Mortgaged Property under
Section 860G(c) of the Code or otherwise, unless the Master Servicer has agreed
to indemnify and hold harmless the Trust with respect to the imposition of any
such taxes. The Master Servicer shall identify to the Trustee any Mortgaged
Property held by the Trust for 30 months for which no plans to dispose of such
Mortgaged Property by the Master Servicer have been made. After delivery of such
identification, the Master Servicer shall proceed to dispose of any such
Mortgaged Property by holding a commercially reasonable auction for such
property.
The income earned from the management of any REO Properties, net
of reimbursement to the Master Servicer for expenses incurred (including any
property or other taxes) in connection with such management and net of
unreimbursed Master Servicing Fees, Monthly Advances and
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Servicing Advances, shall be applied to the payment of principal of and interest
on the related defaulted Mortgage Loans (solely for the purposes of allocating
principal and interest, interest shall be treated as accruing as though such
Mortgage Loans were still current) and all such income shall be deemed, for all
purposes in this Agreement, to be payments on account of principal and interest
on the related Mortgage Notes and shall be deposited into the Collection
Account. To the extent the net income received during any calendar month is in
excess of the amount attributable to amortizing principal and accrued interest
at the related Mortgage Rate on the related Mortgage Loan for such calendar
month, such excess shall be considered to be a partial prepayment of principal
of the related Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as
any income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Master Servicer for any related unreimbursed
Servicing Advances and Master Servicing Fees; second, to reimburse the Master
Servicer for any unreimbursed Monthly Advances and to reimburse the Collection
Account for any Nonrecoverable Advances (or portions thereof) that were
previously withdrawn by the Master Servicer pursuant to Section 3.11(a)(iii)
that related to such Mortgage Loan; third, to accrued and unpaid interest (to
the extent no Monthly Advance has been made for such amount or any such Monthly
Advance has been reimbursed) on the Mortgage Loan or related REO Property, at
the Mortgage Rate to the Due Date occurring in the month in which such amounts
are required to be distributed; and fourth, as a recovery of principal of the
Mortgage Loan. Excess Proceeds, if any, from the liquidation of a Liquidated
Mortgage Loan will be retained by the Master Servicer as additional servicing
compensation pursuant to Section 3.17.
SECTION 3.15. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the Master
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer will immediately notify the
Trustee (or, at the direction of the Trustee, the Custodian) by delivering, or
causing to be delivered, two copies (one of which will be returned to the Master
Servicer with the Mortgage File) of a Request for Release (which may be
delivered in an electronic format acceptable to the Trustee and the Master
Servicer). Upon receipt of such request, the Trustee or the Custodian, as
applicable, shall within seven Business Days release the related Mortgage File
to the Master Servicer. The Trustee shall at the Master Servicer's direction
execute and deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage, in each case provided by the Master Servicer, together
with the Mortgage Note with written evidence of cancellation thereon. Expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the related Mortgagor. From time to time and
as shall be appropriate for the servicing or foreclosure of any Mortgage Loan,
including for such purpose collection under any policy of flood insurance, any
fidelity bond or errors or omissions policy, or for the purposes of effecting a
partial release of any Mortgaged Property from the lien of the Mortgage or the
making of any corrections to the Mortgage Note or the Mortgage or any of the
other documents included in the Mortgage File, the Trustee or the Custodian, as
applicable, shall, upon delivery to the Trustee (or, at the direction of the
Trustee, the Custodian) of a Request for Release signed by a Servicing Officer,
release the Mortgage File within seven Business Days to the Master Servicer.
Subject to the further limitations set forth below, the Master Servicer shall
cause the Mortgage File so released to be returned to the Trustee or the
Custodian, as applicable, when the need therefor by the Master Servicer no
longer exists, unless
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the Mortgage Loan is liquidated and the proceeds thereof are deposited in the
Collection Account, in which case the Master Servicer shall deliver to the
Trustee or the Custodian, as applicable, a Request for Release, signed by a
Servicing Officer.
The Trustee shall execute and deliver to the Master Servicer any
powers of attorney and other documents prepared by the Master Servicer that are
reasonably necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties under this Agreement, upon the request
of the Master Servicer. In addition, upon prepayment in full of any Mortgage
Loan or the receipt of notice that funds for such purpose have been placed in
escrow, the Master Servicer is authorized to give, as attorney-in-fact for the
Trustee and the mortgagee under the Mortgage, an instrument of satisfaction (or
Assignment of Mortgage without recourse) regarding the Mortgaged Property
relating to such Mortgage Loan, which instrument of satisfaction or Assignment
of Mortgage, as the case may be, shall be delivered to the Person entitled
thereto against receipt of the prepayment in full. In lieu of executing such
satisfaction or Assignment of Mortgage, or if another document is required to be
executed by the Trustee, the Master Servicer may deliver or cause to be
delivered to the Trustee, for signature, as appropriate, any court pleadings,
requests for trustee's sale or other documents necessary to effectuate such
foreclosure or any legal action brought to obtain judgment against the Mortgagor
on the Mortgage Note or the Mortgage or to obtain a deficiency judgment or to
enforce any other remedies or rights provided by the Mortgage Note or the
Mortgage or otherwise available at law or in equity.
SECTION 3.16. Documents, Records and Funds in Possession of the
Master Servicer to be Held for the Trustee. The Master Servicer shall transmit
to the Trustee or, at the direction of the Trustee, the Custodian as required by
this Agreement all documents and instruments in respect of a Mortgage Loan
coming into the possession of the Master Servicer from time to time and shall
account fully to the Trustee for any funds received by the Master Servicer or
which otherwise are collected by the Master Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan. The documents constituting
the Servicing File shall be held by the Master Servicer as custodian and bailee
for the Trustee. All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds,
including but not limited to, any funds on deposit in the Collection Account,
shall be held by the Master Servicer for and on behalf of the Trustee and shall
be and remain the sole and exclusive property of the Trustee, subject to the
applicable provisions of this Agreement. The Master Servicer also agrees that it
shall not knowingly create, incur or subject any Mortgage File or any funds that
are deposited in the Collection Account, Distribution Account or any Escrow
Account, or any funds that otherwise are or may become due or payable to the
Trustee for the benefit of the Certificateholders, to any claim, lien, security
interest, judgment, levy, writ of attachment or other encumbrance created by the
Master Servicer, or assert by legal action or otherwise any claim or right of
setoff against any Mortgage File or any funds collected on, or in connection
with, a Mortgage Loan, except, however, that the Master Servicer shall be
entitled to set off against and deduct from any such funds any amounts that are
properly due and payable to the Master Servicer under this Agreement.
SECTION 3.17. Servicing Compensation. The Master Servicer shall
be entitled out of each payment of interest on a Mortgage Loan (or portion
thereof) included in the Trust Fund to
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retain or withdraw from the Collection Account an amount equal to the Master
Servicing Fee for such Distribution Date.
Additional master servicing compensation in the form of Excess
Proceeds, prepayment penalties, assumption fees, late payment charges and all
income and gain net of any losses realized from Permitted Investments and all
other customary and ancillary income and fees shall be retained by the Master
Servicer to the extent not required to be deposited in the Collection Account
pursuant to Section 3.08(b). The Master Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided in this Agreement.
Notwithstanding the foregoing, with respect to the payment of the
Master Servicing Fee on any Distribution Date, the aggregate Master Servicing
Fee for such Distribution Date shall be reduced (but not below zero) by an
amount equal to the lesser of (a) the Prepayment Interest Shortfall for such
Distribution Date and (b) one-twelfth of 0.25% of the Pool Stated Principal
Balance for such Distribution Date (any such reduction, "Compensating
Interest").
SECTION 3.18. Annual Statement as to Compliance. The Master
Servicer shall deliver to the Trustee and each Rating Agency on or before 75
days after the end of the Master Servicer's fiscal year, commencing with its
1998 fiscal year, an Officer's Certificate stating, as to the signer thereof,
that (a) a review of the activities of the Master Servicer during the preceding
calendar year and of the performance of the Master Servicer under this Agreement
has been made under such officer's supervision, and (b) to the best of such
officer's knowledge, based on such review, the Master Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof.
SECTION 3.19. Annual Independent Public Accountants' Servicing
Statement; Financial Statements. On or before 75 days after the end of the
Master Servicer's fiscal year, commencing with its 1998 fiscal year, the Master
Servicer, at its expense, shall cause a firm of independent public accountants
(who may also render other services to the Master Servicer, the Seller or any
affiliate thereof) which is a member of the American Institute of Certified
Public Accountants to furnish a statement to the Trustee to the effect that such
firm has with respect to the Master Servicer's overall servicing operations,
examined such operations in accordance with the requirements of the Uniform
Single Attestation Program for Mortgage Bankers, stating such firm's conclusions
relating thereto.
SECTION 3.20. Advances. The Master Servicer shall determine on or
before each Master Servicer Advance Date whether it is required to make a
Monthly Advance pursuant to the definition thereof. If the Master Servicer
determines it is required to make a Monthly Advance, it shall, on or before the
Master Servicer Advance Date, either (a) deposit into the Collection Account an
amount equal to the Advance and/or (b) make an appropriate entry in its records
relating to the Collection Account that any Amount Held for Future Distribution
has been used by the Master Servicer in discharge of its obligation to make any
such Monthly Advance. Any funds so applied shall be replaced by the Master
Servicer by deposit in the Collection Account no later than the close of
business on the Business Day preceding the next Master Servicer Advance Date.
The Master
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Servicer shall be entitled to be reimbursed from the Collection Account for all
Advances of its own funds made pursuant to this Section 3.20 as provided in
Section 3.11(a). The obligation to make Monthly Advances with respect to any
Mortgage Loan shall continue until the ultimate disposition of the REO Property
or Mortgaged Property relating to such Mortgage Loan. The Master Servicer shall
inform the Trustee of the amount of the Monthly Advance to be made on each
Master Servicer Advance Date no later than the related Distribution Account
Deposit Date.
The Master Servicer shall deliver to the Trustee on the related
Master Servicer Advance Date an Officer's Certificate of a Servicing Officer
indicating the amount of any proposed Monthly Advance determined by the Master
Servicer to be a Nonrecoverable Advance. Notwithstanding anything to the
contrary, the Master Servicer shall not be required to make any Monthly Advance
or Servicing Advance that would be a Nonrecoverable Advance.
SECTION 3.21. Modifications, Waivers, Amendments and Consents.
(a) Subject to this Section 3.21, the Master Servicer may agree
to any modification, waiver, forbearance, or amendment of any term of any
Mortgage Loan without the consent of the Trustee or any Certificateholder. All
modifications, waivers, forbearances or amendments of any Mortgage Loan shall be
in writing and shall be consistent with Customary Servicing Procedures.
(b) The Master Servicer shall not agree to enter into, and shall
not enter into, any modification, waiver (other than a waiver referred to in
Section 3.13, which waiver, if any, shall be governed by Section 3.13),
forbearance or amendment of any term of any Mortgage Loan if such modification,
waiver, forbearance, or amendment would:
(i) affect the amount or timing of any related
payment of principal, interest or other amount payable
thereunder; or
(ii) in the Master Servicer's judgment, materially
impair the security for such Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon;
unless, in either case, (A) such Mortgage Loan is 90 days or more past due or
(B) the Master Servicer delivers to the Trustee an Opinion of Counsel to the
effect that such modification, waiver, forbearance or amendment would not affect
the Trust Fund's REMIC status and, in either case, such modification, waiver,
forbearance or amendment is reasonably likely to produce a greater recovery with
respect to such Mortgage Loan than would liquidation. Subject to Customary
Servicing Procedures, the Master Servicer may permit a forbearance for a
Mortgage Loan which in the Master Servicer's judgment is subject to imminent
default.
(c) Any payment of interest, which is deferred pursuant to any
modification, waiver, forbearance or amendment permitted hereunder, shall not,
for purposes hereof, including, without limitation, calculating monthly
distributions to Certificateholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
or such modification, waiver or amendment so permit.
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(d) The Master Servicer may, as a condition to granting any
request by a Mortgagor for consent, modification, waiver, forbearance or
amendment, the granting of which is within the Master Servicer's discretion
pursuant to the Mortgage Loan and is permitted by the terms of this Agreement,
require that such Mortgagor pay to the Master Servicer, as additional servicing
compensation, a reasonable or customary fee for the additional services
performed in connection with such request, together with any related costs and
expenses incurred by the Master Servicer, which amount shall be retained by the
Master Servicer as additional servicing compensation.
(e) The Master Servicer shall notify the Trustee, in writing, of
any modification, waiver, forbearance or amendment of any term of any Mortgage
Loan and the date thereof, and shall deliver to the Trustee (or, at the
direction of the Trustee, the Custodian) for deposit in the related Mortgage
File, an original counterpart of the agreement relating to such modification,
waiver, forbearance or amendment, promptly (and in any event within ten Business
Days) following the execution thereof; provided, however, that if any such
modification, waiver, forbearance or amendment is required by applicable law to
be recorded, the Master Servicer (i) shall deliver to the Trustee a copy thereof
and (ii) shall deliver to the Trustee such document, with evidence of
notification upon receipt thereof from the public recording office.
SECTION 3.22. Reports to the Securities and Exchange Commission.
The Trustee shall, on behalf of the Trust, cause to be filed with the Securities
and Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder, for so long as
any Certificates registered under the 1933 Act are outstanding. Upon the request
of the Trustee, each of the Master Servicer and the Depositor shall cooperate
with the Trustee in the preparation of any such report and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section.
ARTICLE IV
MASTER SERVICER'S CERTIFICATE
SECTION 4.01. Master Servicer's Certificate. Each month, not
later than 12:00 noon Eastern time on the Business Day following each
Determination Date, the Master Servicer shall deliver to the Trustee, a Master
Servicer's Certificate (in substance and format mutually acceptable to the
Master Servicer and the Trustee) certified by a Servicing Officer. The Trustee
may conclusively rely upon the information contained in a Master Servicer's
Certificate for all purposes hereunder and shall have no duty to verify or
re-compute any of the information contained therein.
Such statement shall be provided by the Trustee to any Holder of
a Certificate upon request and shall also, to the extent available, include
information regarding delinquencies on Mortgage Loans, indicating the number and
aggregate principal amount of Mortgage Loans which are either one, two, three or
more than three months delinquent and the book value of any REO Property.
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ARTICLE V
PAYMENTS AND STATEMENTS TO
CERTIFICATEHOLDERS; REMIC ADMINISTRATION
SECTION 5.01. Distributions. On each Distribution Date, the
Trustee shall distribute out of the Distribution Account to each
Certificateholder of record on the related Record Date (other than as provided
in Section 10.01 respecting the final distribution) (a) by check mailed to such
Certificateholder entitled to receive a distribution on such Distribution Date
at the address appearing in the Certificate Register, or (b) upon written
request by the Holder of a Regular Certificate (in the event such
Certificateholder owns of record 100% of a Class of Certificates or holds
Certificates of any Class having denominations aggregating $1,000,000 or more),
by wire transfer or by such other means of payment as such Certificateholder and
the Trustee shall agree upon, such Certificateholder's Percentage Interest in
the amount to which the related Class of Certificates is entitled in accordance
with the priorities set forth below in Section 5.02.
None of the Holders of any Class of Certificates, the Depositor,
the Master Servicer or the Trustee shall in any way be responsible or liable to
Holders of any Class of Certificates in respect of amounts properly previously
distributed on any such Class.
Amounts distributed with respect to any Class of Certificates
shall be applied first to the distribution of interest thereon and then to
principal thereon.
SECTION 5.02. Priorities of Distribution.
(a) On each Distribution Date, the Trustee shall withdraw from
the Distribution Account (1) the amounts payable to the Trustee pursuant to
Sections 3.11(b)(i) and 3.11(b)(ii) and shall pay such funds to itself, and (2)
the Available Funds, in an amount as specified in written notice received by the
Trustee from the Master Servicer no later than the related Determination Date,
and shall apply such funds to distributions on the Certificates in the following
order of priority and to the extent of such funds:
(i) to each Class of Senior Certificates (other
than the Class A-PO Certificates), an amount allocable to
interest equal to the Interest Distribution Amount for such
Class, any shortfall being allocated among such Classes in
proportion to the amount of the Interest Distribution Amount that
would have been distributed in the absence of such shortfall;
(ii) to each Class of Senior Certificates,
concurrently as follows:
(A) to the Class A-PO Certificates,
up to the amount of the PO Principal Amount, until
the Class Certificate Balance thereof has been
reduced to zero; and
(B) on each Distribution Date prior
to the Senior Credit Support Depletion Date, the
Non-PO Principal Amount, up to the amount of the
Senior
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Principal Distribution Amount for such
Distribution Date, will be distributed in the
following order of priority:
(1) first, to the
Class R Certificates, until the
Class Certificate Balance thereof
has been reduced to zero;
(2) second, to the
Class A-3 Certificates, up to the
Class A-3 Principal Distribution
Amount for such Distribution Date,
until the Class Certificate Balance
thereof has been reduced to zero;
(3) third, to the
Class A-1 Certificates, until the
Class Certificate Balance thereof
has been reduced to zero;
(4) fourth, to the
Class A-2 Certificates, until the
Class Certificate Balance thereof
has been reduced to zero; and
(5) fifth, to the
Class A-3 Certificates, until the
Class Certificate Balance thereof
has been reduced to zero;
(iii) to the Class A-PO Certificates, any Class
A-PO Deferred Amount, up to the Subordinate Principal
Distribution Amount actually received or advanced for such
Distribution Date;
(iv) to each Class of Subordinate Certificates,
subject to paragraph (d) below, in the following order of
priority:
(A) to the Class B-1 Certificates,
an amount allocable to interest equal to the
Interest Distribution Amount for such Class for
such Distribution Date;
(B) to the Class B-1 Certificates,
an amount allocable to principal equal to its Pro
Rata Share for such Distribution Date until the
Class Certificate Balance thereof has been reduced
to zero;
(C) to the Class B-2 Certificates,
an amount allocable to interest equal to the
Interest Distribution Amount for such Class for
such Distribution Date;
(D) to the Class B-2 Certificates,
an amount allocable to principal equal to its Pro
Rata Share for such Distribution Date until the
Class Certificate Balance thereof has been reduced
to zero;
(E) to the Class B-3 Certificates,
an amount allocable to interest equal to the
Interest Distribution Amount for such Class for
such Distribution Date;
(F) to the Class B-3 Certificates,
an amount allocable to principal equal to its Pro
Rata Share for such Distribution Date until the
Class Certificate Balance thereof has been reduced
to zero;
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(G) to the Class B-4 Certificates,
an amount allocable to interest equal to the
Interest Distribution Amount for such Class for
such Distribution Date;
(H) to the Class B-4 Certificates,
an amount allocable to principal equal to its Pro
Rata Share for such Distribution Date until the
Class Certificate Balance thereof has been reduced
to zero;
(I) to the Class B-5 Certificates,
an amount allocable to interest equal to the
Interest Distribution Amount for such Class for
such Distribution Date;
(J) to the Class B-5 Certificates,
an amount allocable to principal equal to its Pro
Rata Share for such Distribution Date until the
Class Certificate Balance thereof has been reduced
to zero;
(K) to the Class B-6 Certificates,
an amount allocable to interest equal to the
Interest Distribution Amount for such Class for
such Distribution Date; and
(L) to the Class B-6 Certificates,
an amount allocable to principal equal to its Pro
Rata Share for such Distribution Date until the
Class Certificate Balance thereof has been reduced
to zero; and
(v) to the Class R Certificates, any remaining
funds.
On any Distribution Date, amounts distributed in respect of Class A-PO Deferred
Amounts will not reduce the Class Certificate Balance of the Class A-PO
Certificates.
(b) On each Distribution Date on or after the Senior Credit
Support Depletion Date, notwithstanding the allocation and priority set forth in
Section 5.02(a)(ii)(B), the portion of Available Funds available to be
distributed as principal of the Senior Certificates (other than the Class A-PO
Certificates) shall be distributed concurrently, as principal, on such Classes,
pro rata, on the basis of their respective Class Certificate Balances, until the
Class Certificate Balances thereof are reduced to zero.
(c) On each Distribution Date, Accrued Certificate Interest for
each Class of Certificates for such Distribution Date shall be reduced by such
Class's pro rata share, based on such Class's Interest Distribution Amount for
such Distribution Date without taking into account the allocation made by this
Section 5.02(c), of (A) Net Prepayment Interest Shortfalls, (B) any Excess
Losses allocable to interest, (C) on and after the Senior Credit Support
Depletion Date, any other Realized Loss allocable to interest and (D) each
Relief Act Reduction incurred during the calendar month preceding the month of
such Distribution Date.
(d) Notwithstanding the priority and allocation contained in
Section 5.02(a)(iv), if with respect to any Class of Subordinate Certificates on
any Distribution Date, (i) the aggregate of the Class Certificate Balances
immediately prior to such Distribution Date of all Classes of Subordinate
Certificates which have a higher numerical Class designation than such Class,
divided by (ii) the
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aggregate Class Certificate Balance of all the Certificates immediately prior to
such Distribution Date (the "Credit Support Percentage") is less than the
Original Credit Support Percentage for such Class, no distribution of principal
will be made to any Classes junior to such Class (the "Restricted Classes") and
the amount otherwise distributable to the Restricted Classes in respect to
principal shall be distributed to the Classes of Subordinate Certificates that
are not Restricted Classes, pro rata, based on their respective Class
Certificate Balances immediately prior to such Distribution Date, and shall be
distributed in the order provided in Section 5.02(a)(iv).
SECTION 5.03. Allocation of Losses.
(a) On or prior to each Determination Date, the Master Servicer
shall inform the Trustee in writing: (1) whether any Realized Loss is a
Deficient Valuation, a Debt Service Reduction, a Fraud Loss or a Special Hazard
Loss, (2) of the amount of such loss or Deficient Valuation, or of the terms of
such Debt Service Reduction and (3) of the total amount of Realized Losses.
Based on such information, the Trustee shall determine the total amount of
Realized Losses, including Excess Losses, with respect to the related
Distribution Date.
Realized Losses with respect to any Distribution Date shall be
allocated as follows:
(i) the applicable PO Percentage of any Realized
Loss with respect to a Discount Mortgage Loan, including any
Excess Loss, shall be allocated to the Class A-PO Certificates
until the Class Certificate Balance thereof is reduced to zero;
and
(ii) (1) the applicable Non-PO Percentage of any
Realized Loss (other than an Excess Loss) shall be allocated
first to the Subordinate Certificates in reverse order of their
respective numerical Class designations (beginning with the Class
of Subordinate Certificates then outstanding with the highest
numerical Class designation) until the respective Class
Certificate Balance of each such Class is reduced to zero, and
second to the Senior Certificates (other than the Class A-PO
Certificates), pro rata, on the basis of their respective Class
Certificate Balances immediately prior to the related
Distribution Date until the Class Certificate Balances thereof
have been reduced to zero; and
(2) the applicable Non-PO Percentage of any
Excess Losses shall be allocated to the Senior Certificates
(other than the Class A-PO Certificates) and the Subordinate
Certificates then outstanding, pro rata, on the basis of their
respective Class Certificate Balances.
(b) The Class Certificate Balance of the Class of Subordinate
Certificates then outstanding with the highest numerical Class designation shall
be reduced on each Distribution Date by the amount, if any, by which the
aggregate of the Class Certificate Balances of all outstanding Classes of
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses and Class A-PO Deferred Amounts on such
Distribution Date) exceeds the Pool Stated Principal Balance for the following
Distribution Date.
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(c) Any Realized Loss allocated to a Class of Certificates or any
reduction in the Class Certificate Balance of a Class of Certificates pursuant
to Section 5.03(b) above shall be allocated among the Certificates of such Class
in proportion to their respective Percentage Interests.
(d) Any allocation of Realized Losses to a Certificate or any
reduction in the Certificate Balance of a Certificate pursuant to Section
5.03(b) above shall be accomplished by reducing the Certificate Balance thereof
prior to the distributions made on the related Distribution Date in accordance
with the definition of "Certificate Balance."
SECTION 5.04. Statements to Certificateholders.
(a) Prior to the Distribution Date in each month, based upon the
information provided to the Trustee on the Master Servicer's Certificate
delivered to the Trustee pursuant to Section 4.01, the Trustee shall determine
the following information with respect to such Distribution Date:
(i) the amount allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments and
Liquidation Proceeds included therein;
(ii) the amount allocable to interest, any Class
Unpaid Interest Shortfall included in such distribution and any
remaining Class Unpaid Interest Shortfall after giving effect to
such distribution;
(iii) if the distribution to the Holders of such
Class of Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds
available therefor, the amount of the shortfall and the
allocation thereof as between principal and interest;
(iv) the Class Certificate Balance of each Class
of Certificates after giving effect to the distribution of
principal on such Distribution Date;
(v) the Pool Stated Principal Balance for the
following Distribution Date;
(vi) the Senior Percentage, Class A-3 Percentage
and Subordinate Percentage for the following Distribution Date;
(vii) the amount of the Master Servicing Fees paid
to or retained by the Master Servicer with respect to such
Distribution Date;
(viii) the Pass-Through Rate for each such Class
of Certificates with respect to such Distribution Date;
(ix) the amount of Monthly Advances included in
the distribution on such Distribution Date and the aggregate
amount of Monthly Advances outstanding as of the close of
business on such Distribution Date;
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(x) the number and aggregate principal amounts of
Mortgage Loans (A) delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days
and (4) 91 or more days and (B) in foreclosure, as of the close
of business on the last day of the calendar month preceding such
Distribution Date;
(xi) with respect to any Mortgage Loan that became
an REO Property during the preceding calendar month, the loan
number and Stated Principal Balance of such Mortgage Loan as of
the close of business on the Determination Date preceding such
Distribution Date and the date of acquisition thereof;
(xii) the total number and principal balance of
any REO Properties (and market value, if available) as of the
close of business on the Determination Date preceding such
Distribution Date;
(xiii) the Senior Prepayment Percentage and the
Subordinate Prepayment Percentage for the following Distribution
Date;
(xiv) the aggregate amount of Realized Losses
incurred during the preceding calendar month and any Class A-PO
Deferred Amounts for such Distribution Date; and
(xv) the Special Hazard Loss Coverage Amount, the
Fraud Loss Coverage Amount and the Current Bankruptcy Coverage
Amount, in each case as of the related Determination Date.
(b) No later than each Distribution Date, the Trustee, based upon
information supplied to it on the Master Servicer's Certificate, shall prepare
and deliver (by mail, fax or electronically) to each Holder of a Certificate,
each Rating Agency and the Master Servicer a statement setting forth the
information set forth in Section 5.04(a).
In the case of information furnished pursuant to clauses (i),
(ii) and (ix) of Section 5.04(a), the amounts shall be expressed as a dollar
amount per Certificate with a $1,000 denomination.
On each Distribution Date, the Trustee shall prepare and furnish
to each Financial Market Publisher, in electronic or such other format and media
mutually agreed upon by the Trustee, the Financial Market Publisher and the
Depositor, the information contained in the statement described in Section
5.04(a) for such Distribution Date.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was the Holder of a Certificate, if requested in writing by such
Person, a statement containing the information set forth in clauses (i), (ii)
and (vii) of Section 5.04(a), in each case aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code as from time to time in force.
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The Trustee shall deliver to the Holders of Certificates any
reports or information the Trustee is required by this Agreement or the Code,
Treasury Regulations or REMIC Provisions to deliver to the Holders of
Certificates, and the Trustee shall prepare and provide to the
Certificateholders (by mail, telephone, or publication as may be permitted by
applicable Treasury Regulations) such other reasonable information as the
Trustee deems necessary or appropriate or is required by the Code, Treasury
Regulations, and the REMIC Provisions including, but not limited to, (i)
information to be reported to the Holders of the Residual Certificates for
quarterly notices on Schedule Q (Form 1066) (which information shall be
forwarded to the Holders of the Residual Certificates by the Trustee), (ii)
information to be provided to the Holders of Certificates with respect to
amounts which should be included as interest and original issue discount in such
Holders' gross income and (iii) information to be provided to all Holders of
Certificates setting forth the percentage of the REMIC's assets, determined in
accordance with Treasury Regulations using a convention, not inconsistent with
Treasury Regulations, selected by the Trustee in its absolute discretion, that
constitute real estate assets under Section 856 of the Code, and assets
described in Section 7701(a)(19)(C) of the Code; provided, however, that in
setting forth the percentage of such assets of the REMIC, nothing contained in
this Agreement, including without limitation Section 7.03 hereof, shall be
interpreted to require the Trustee periodically to appraise the fair market
values of the assets of the Trust Fund or to indemnify the Trust Fund or any
Certificateholders from any adverse federal, state or local tax consequences
associated with a change subsequently required to be made in the Depositor's
initial good faith determinations of such fair market values (if subsequent
determinations are required pursuant to the REMIC Provisions) made from time to
time.
SECTION 5.05. Tax Returns and Reports to Certificateholders.
(a) For federal income tax purposes, the REMIC shall have a
calendar year taxable year and shall maintain its books on the accrual method of
accounting.
(b) The Trustee shall prepare or cause to be prepared and shall
file or cause to be filed with the Internal Revenue Service and applicable state
or local tax authorities income tax information returns for each taxable year
with respect to the REMIC containing such information at the times and in the
manner as may be required by the Code, the Treasury Regulations or state or
local tax laws, regulations, or rules, and shall furnish or cause to be
furnished to the REMIC and the Certificateholders the schedules, statements or
information at such times and in such manner as may be required thereby. Within
30 days of the Closing Date, the Trustee shall furnish or cause to be furnished
to the Internal Revenue Service, on Form 8811 or as otherwise required by the
Code or the Treasury Regulations, the name, title, address and telephone number
of the person that Holders of the Certificates may contact for tax information
relating thereto, together with such additional information at the time or times
and in the manner required by the Code or the Treasury Regulations. Such
federal, state, or local income tax or information returns shall be signed by
the Trustee, or such other Person as may be required to sign such returns by the
Code, the Treasury Regulations or state or local tax laws, regulations, or
rules.
(c) In the first federal income tax return of the REMIC for its
short taxable year ending December 31, 1998, REMIC status shall be elected for
such taxable year and all succeeding taxable years.
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(d) The Trustee will maintain or cause to be maintained such
records relating to the REMIC, including but not limited to records relating to
the income, expenses, assets and liabilities of the Trust Fund, and the initial
fair market value and adjusted basis of the Trust Fund property and assets
determined at such intervals as may be required by the Code or the Treasury
Regulations, as may be necessary to prepare the foregoing returns, schedules,
statements or information.
SECTION 5.06. Tax Matters Person. The Tax Matters Person shall
have the same duties with respect to the REMIC as those of a "tax matters
partner" under Subchapter C of Chapter 63 of Subtitle F of the Code. The Holder
of the Class R Certificate is hereby designated as the Tax Matters Person for
the REMIC. By its acceptance of the Class R Certificate, such Holder irrevocably
appoints the Trustee as its agent to perform all of the duties of the Tax
Matters Person for the REMIC.
SECTION 5.07. Rights of the Tax Matters Person in Respect of the
Trustee. The Trustee shall afford the Tax Matters Person, upon reasonable notice
during normal business hours, access to all records maintained by the Trustee in
respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties. Upon request, the Trustee shall furnish
the Tax Matters Person with its most recent statement of condition publicly
available. The Trustee shall make available to the Tax Matters Person such
books, documents or records relating to the Trustee's services hereunder as the
Tax Matters Person shall reasonably request. The Tax Matters Person shall not
have any responsibility or liability for any action or failure to act by the
Trustee and is not obligated to supervise the performance of the Trustee under
this Agreement or otherwise.
SECTION 5.08. REMIC Related Covenants. For as long as the Trust
shall exist, the Trustee, the Depositor and the Master Servicer shall act in
accordance herewith to assure continuing treatment of the Trust Fund as a REMIC
and avoid the imposition of tax on the REMIC. In particular:
(a) The Trustee shall not create, or permit the
creation of, any "interests" in the REMIC within the meaning of
Code Section 860D(a)(2) other than the interests represented by
the Trust Fund, the Regular Certificates and the Residual
Certificates, respectively.
(b) Except as otherwise provided in the Code, (i)
the Depositor and the Master Servicer shall not contribute to the
Trust Fund and the Trustee shall not accept property unless
substantially all of the property held in the REMIC constitutes
either "qualified mortgages" or "permitted investments" as
defined in Code Sections 860G(a)(3) and (5), respectively, and
(ii) no property shall be contributed to the REMIC after the
start-up day unless such contribution would not subject the Trust
Fund to the 100% tax on contributions to a REMIC after the
start-up day of the REMIC imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the
REMIC any fee or other compensation for services and neither the
Trustee nor the Master Servicer shall knowingly accept, on behalf
of the Trust Fund any income from assets other than those
permitted to be held by a REMIC.
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(d) The Trustee shall not sell or permit the sale
of all or any portion of the Mortgage Loans (other than in
accordance with Sections 2.02, 2.03 or 2.08), unless such sale is
pursuant to a "qualified liquidation" as defined in Code Section
860F(a)(4)(A) and in accordance with Article X.
(e) The Trustee shall maintain books with respect
to the Trust on a calendar year taxable year and on an accrual
basis.
Neither the Master Servicer nor the Trustee shall engage in a
"prohibited transaction" (as defined in Code Section 860F(a)(2)), except that,
with the prior written consent of the Master Servicer and the Depositor, the
Trustee may engage in the activities otherwise prohibited by the foregoing
paragraphs (b), (c) and (d); provided that the Master Servicer shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a tax on the REMIC and will not
disqualify the Trust Fund from treatment as a REMIC; and, provided further, that
the Master Servicer shall have demonstrated to the satisfaction of the Trustee
that such action will not adversely affect the rights of the Holders of the
Certificates and the Trustee and that such action will not adversely impact the
rating of the Certificates.
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates. The Classes of Senior
Certificates and the Subordinate Certificates shall be substantially in the
forms set forth in Exhibits A, B, C and D (reverse of all Certificates) and
shall, on original issue, be executed by the Trustee and shall be countersigned
and delivered by the Trustee to or upon the order of the Depositor upon receipt
by the Trustee of the documents specified in Section 2.01. The Senior
Certificates (other than the Class A-PO and Class R Certificates) shall be
available to investors in interests representing minimum dollar Certificate
Balances of $1,000 and integral multiples of $1 in excess thereof. The
Subordinate Certificates and the Class A-PO Certificates shall be available to
investors in interests representing minimum dollar Certificate Balances of
$25,000 and integral dollar multiples of $1 in excess thereof (except one
Certificate of such Class may be issued with a different Certificate Balance).
The Class R Certificates shall be in a minimum denomination of $100. The Senior
Certificates (other than the Class R Certificates) and the Class B-1, Class B-2
and Class B-3 Certificates shall initially be issued in book-entry form through
the Depository and all other Classes of Certificates shall initially be issued
in definitive, fully-registered form.
The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer or signatory.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trustee, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the execution and delivery of
such Certificates or did not hold such offices or positions at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless such Certificate shall have been
manually countersigned by the Trustee substantially in the form provided for
herein, and such
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countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their countersignature.
SECTION 6.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at an office or agency in
the city in which the Corporate Trust Office of the Trustee is located a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Trustee shall
initially serve as Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided.
(b) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class,
tenor and aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Depositor shall execute and the Trustee shall
authenticate, countersign and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee or the Certificate Registrar) be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or its attorney duly
authorized in writing.
(c) (i) Except as provided in paragraph (c)(iii) below, the
Book-Entry Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (A) registration of the Certificates
may not be transferred by the Trustee except to another Depository; (B) the
Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Book-Entry
Certificates; (C) ownership and transfers of registration of the Book-Entry
Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (D) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (E)
the Trustee shall deal with the Depository as the representative of the
Certificate Owners of the Book-Entry Certificates for purposes of exercising the
rights of Holders under this Agreement, and requests and directions for and
votes of the Depository shall not be deemed to be inconsistent if they are made
with respect to different Certificate Owners; and (F) the Trustee may rely and
shall be fully protected in relying upon information furnished by the Depository
with respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners.
(ii) All transfers by Certificate Owners of Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Certificate Owner.
Each Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
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(iii) If (A) (1) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository, and (2) the Trustee or the
Depositor is unable to locate a qualified successor, (B) the Depositor at its
option advises the Trustee in writing that it elects to terminate the book-entry
system through the Depository or (C) after the occurrence of an Event of
Default, Certificate Owners representing at least 51% of the aggregate Class
Certificate Balances of the Book-Entry Certificates together advise the Trustee
and the Depository through the Depository Participants in writing that the
continuation of a book-entry system through the Depository is no longer in the
best interests of the Certificate Owners, the Trustee shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of definitive, fully registered Certificates (the
"Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Trustee of the related Class of Certificates by the Depository,
accompanied by the instructions from the Depository for registration, the
Trustee shall issue the Definitive Certificates. Neither the Master Servicer,
the Depositor nor the Trustee shall be liable for any delay in delivery of such
instruction and may conclusively rely on, and shall be protected in relying on,
such instructions. The Master Servicer shall provide the Trustee with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon the issuance of Definitive Certificates, the
Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
(d) No transfer of a Private Certificate shall be made unless
such transfer is exempt from the registration requirements of the 1933 Act and
any applicable state securities laws or is made in accordance with the 1933 Act
and such laws. In the event of any such transfer, (i) unless such transfer is
made in reliance on Rule 144A under the 1933 Act, the Trustee or the Depositor
may require a written Opinion of Counsel (which may be in-house counsel)
acceptable to and in form and substance reasonably satisfactory to the Trustee
and the Depositor that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the 1933 Act
and such laws or is being made pursuant to the 1933 Act and such laws, which
Opinion of Counsel shall not be an expense of the Trustee or the Depositor and
(ii) the Trustee shall require a certificate from the Certificateholder desiring
to effect such transfer substantially in the form attached hereto as Exhibit I-1
and a certificate from such Certificateholder's prospective transferee
substantially in the form attached hereto either as Exhibit I-2A or as Exhibit
I-2B, which certificates shall not be an expense of the Trustee or the
Depositor; provided that the foregoing requirements under clauses (i) and (ii)
shall not apply to a transfer of a Private Certificate between or among the
Depositor, the Seller, their affiliates or both. The Depositor shall provide to
any Holder of a Private Certificate and any prospective transferees designated
by any such Holder, information regarding the related Certificates and the
Mortgage Loans and such other information as shall be necessary to satisfy the
condition to eligibility set forth in Rule 144A(d)(4) for transfer of any such
certificate without registration thereof under the 1933 Act pursuant to the
registration exemption provided by Rule 144A. The Holder of a Private
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
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(e) No transfer of a Benefit Plan-Restricted Certificate shall be
made unless the transferee delivers to the Trustee either (i) a representation
letter in the form of Exhibit J from the transferee of such Certificate, which
representation letter shall not be an expense of the Depositor, the Trustee or
the Master Servicer, or (ii) in the case of any Benefit Plan-Restricted
Certificate presented for registration in the name of an employee benefit plan
or arrangement, including an individual retirement account, subject to ERISA,
the Code, or any federal, state or local law ("Similar Law") which is similar to
ERISA or the Code (collectively, a "Benefit Plan"), or a trustee or custodian of
any of the foregoing, an Opinion of Counsel in form and substance satisfactory
to the Trustee and the Master Servicer to the effect that the purchase or
holding of such Benefit Plan-Restricted Certificate by or on behalf of such
Benefit Plan will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA, the
Code or Similar Law and will not subject the Trustee, the Depositor or the
Master Servicer to any obligation in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee or
the Master Servicer. Notwithstanding anything else to the contrary herein, any
purported transfer of a Benefit Plan-Restricted Certificate to or on behalf of a
Benefit Plan without the delivery to the Trustee and the Master Servicer of an
Opinion of Counsel satisfactory to the Trustee and the Master Servicer as
described above shall be void and of no effect.
Neither the Trustee nor the Certificate Registrar shall have any
liability for transfers of Book-Entry Certificates made through the book-entry
facilities of the Depository or between or among any Depository Participants or
Certificate Owners, made in violation of applicable restrictions. The Trustee
may rely and shall be fully protected in relying upon information furnished by
the Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and Persons
shown on the books of such indirect participating firms as direct or indirect
Certificate Owners.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any Benefit Plan-Restricted Certificate that is
in fact not permitted by this Section 6.02 or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the transfer
was registered by the Trustee in accordance with the foregoing requirements.
(f) Each Person who has or who acquires any Ownership Interest in
a Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Trustee or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (vii) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Residual Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be a Permitted
Transferee and shall promptly notify the Trustee of any change or
impending change in its status as a Permitted Transferee.
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(ii) No Person shall acquire an Ownership Interest
in a Residual Certificate unless such Ownership Interest is a pro
rata undivided interest.
(iii) In connection with any proposed transfer of
any Ownership Interest in a Residual Certificate, the Trustee
shall require delivery to it, in form and substance satisfactory
to it, of an affidavit in the form of Exhibit K hereto from the
proposed transferee.
(iv) Notwithstanding the delivery of an affidavit
by a proposed transferee under clause (iii) above, if a
Responsible Officer of the Trustee has actual knowledge that the
proposed transferee is not a Permitted Transferee, no Transfer of
any Ownership Interest in a Residual Certificate to such proposed
transferee shall be effected.
(v) No Ownership Interest in a Residual
Certificate may be purchased by or transferred to any Person that
is not a U.S. Person, unless (i) such Person holds such Residual
Certificate in connection with the conduct of a trade or business
within the United States and furnishes the transferor and the
Trustee with an effective Internal Revenue Service Form 4224 or
(ii) the transferee delivers to both the transferor and the
Trustee an Opinion of Counsel from a nationally-recognized tax
counsel to the effect that such transfer is in accordance with
the requirements of the Code and the regulations promulgated
thereunder and that such transfer of the Residual Certificate
will not be disregarded for federal income tax purposes.
(vi) Any attempted or purported transfer of any
Ownership Interest in a Residual Certificate in violation of the
provisions of this Section 6.02 shall be absolutely null and void
and shall vest no rights in the purported transferee. If any
purported transferee shall, in violation of the provisions of
this Section 6.02, become a Holder of a Residual Certificate,
then the prior Holder of such Residual Certificate that is a
Permitted Transferee shall, upon discovery that the registration
of transfer of such Residual Certificate was not in fact
permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of
transfer of such Residual Certificate. The Trustee shall be under
no liability to any Person for any registration of transfer of a
Residual Certificate that is in fact not permitted by this
Section 6.02 or for making any distributions due on such Residual
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of the Agreement so
long as the transfer was registered in accordance with this
Section 6.02. The Trustee shall be entitled to recover from any
Holder of a Residual Certificate that was in fact not a Permitted
Transferee at the time such distributions were made all
distributions made on such Residual Certificate. Any such
distributions so recovered by the Trustee shall be distributed
and delivered by the Trustee to the prior Holder of such Residual
Certificate that is a Permitted Transferee.
(vii) If any Person other than a Permitted
Transferee acquires any Ownership Interest in a Residual
Certificate in violation of the restrictions in this Section
6.02, then the Trustee shall have the right but not the
obligation, without notice to the Holder of such Residual
Certificate or any other Person having an Ownership Interest
therein, to arrange for the sale of such Residual Certificate.
The proceeds of such sale, net of commissions (which may include
commissions payable to the Trustee or its affiliates), expenses
and taxes due, if
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any, will be remitted by the Trustee to the previous Holder of
such Residual Certificate that is a Permitted Transferee, except
that in the event that the Trustee determines that the Holder of
such Residual Certificate may be liable for any amount due under
this Section 6.02 or any other provisions of this Agreement, the
Trustee may withhold a corresponding amount from such remittance
as security for such claim. The terms and conditions of any sale
under this clause (vii) shall be determined in the sole
discretion of the Trustee, and it shall not be liable to any
Person having an Ownership Interest in a Residual Certificate as
a result of its exercise of such discretion.
(viii) If any Person other than a Permitted
Transferee acquires any Ownership Interest in a Residual
Certificate in violation of the restrictions in this Section
6.02, then the Trustee, based on information provided to the
Trustee by the Master Servicer, will provide to the Internal
Revenue Service, and to the Persons specified in Section
860E(e)(3) and (6) of the Code, information needed to compute the
tax imposed under Section 860E(e) of the Code on transfers of
residual interests to disqualified organizations. The expenses of
the Trustee under this clause (viii) shall be reimbursable by the
Trust.
(g) The foregoing provisions of Section 6.02 (other than the
provisions of Sections 6.02(e) and 6.02(f)) shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
Transfer set forth in this Section 6.02 will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause the Trust Fund to fail to qualify as a
REMIC.
(h) No service charge shall be imposed for any transfer or
exchange of Certificates of any Class, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(i) All Certificates surrendered for transfer and exchange shall
be destroyed by the Certificate Registrar.
SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate Registrar or
the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (b) there is delivered to the
Trustee, the Depositor and the Certificate Registrar such security or indemnity
reasonably satisfactory to each, to save each of them harmless, then, in the
absence of actual notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
countersign and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor, Class
and Percentage Interest but bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the Trustee may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee and the Certificate Registrar) connected
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute complete and indefeasible
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evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 6.04. Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, the Depositor, the Master Servicer,
the Trustee, the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Trustee or the Certificate Registrar may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.01 and for all
other purposes whatsoever, and none of the Depositor, the Master Servicer, the
Trustee, the Certificate Registrar or any agent of the Master Servicer, the
Trustee or the Certificate Registrar shall be affected by notice to the
contrary.
ARTICLE VII
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 7.01. Respective Liabilities of the Depositor and the
Master Servicer. The Depositor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Depositor and the Master
Servicer herein. By way of illustration and not limitation, the Depositor is not
liable for the servicing and administration of the Mortgage Loans, nor is it
obligated by Section 8.01 to assume any obligations of the Master Servicer or to
appoint a designee to assume such obligations, nor is it liable for any other
obligation hereunder that it may, but is not obligated to, assume unless it
elects to assume such obligation in accordance herewith.
SECTION 7.02. Merger or Consolidation of the Depositor or the
Master Servicer. The Depositor and the Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation under the laws of
the state of its incorporation, and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Master Servicer may be
merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
FNMA or FHLMC.
SECTION 7.03. Limitation on Liability of the Depositor, the
Master Servicer and Others. None of the Depositor, the Master Servicer or any of
the directors, officers, employees or agents of the Depositor or of the Master
Servicer shall be under any liability to the Trust Fund or the
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Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Master Servicer or any such person against any breach of warranties or
representations made herein or any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Depositor, the Master
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer shall be indemnified by the Trust Fund and held harmless against
any loss, liability or expense incurred in connection with any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense related to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. Neither the Depositor nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its respective duties under this Agreement and which in its
opinion may involve it in any expense or liability; provided, however, that the
Depositor or the Master Servicer may in its discretion undertake any such action
which it may deem necessary or desirable in respect to this Agreement and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Master Servicer shall
be entitled to be reimbursed therefor out of amounts attributable to the
Mortgage Loans on deposit in the Collection Account as provided by Section 3.11.
SECTION 7.04. Depositor and Master Servicer Not to Resign.
Subject to the provisions of Section 7.02, neither the Depositor nor the Master
Servicer shall resign from its respective obligations and duties hereby imposed
on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Depositor or the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
by the Master Servicer shall become effective until the Trustee or a successor
servicer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with Section 8.05 hereof.
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ARTICLE VIII
DEFAULT
SECTION 8.01. Events of Default. If any one of the following
events ("Events of Default") shall occur and be continuing:
(a) any failure by the Master Servicer to deposit
amounts in the Collection Account in the amount and manner
provided herein so as to enable the Trustee to distribute to
Holders of Certificates any payment required to be made under the
terms of such Certificates and this Agreement (other than the
payments required to be made under Section 3.20) which continues
unremedied for a period of five days; or
(b) failure on the part of the Master Servicer duly
to observe or perform in any material respect any other covenants
or agreements of the Master Servicer set forth in the
Certificates or in this Agreement, which covenants and agreements
continue unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the
Trustee or the Depositor, or to the Master Servicer, the
Depositor and the Trustee by the Holders of Certificates
evidencing Voting Rights aggregating not less than 25% of all
Certificates affected thereby; or
(c) the entry of a decree or order by a court or
agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings against the
Master Servicer, or for the winding up or liquidation of the
Master Servicer's affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive
days; or
(d) the consent by the Master Servicer to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to substantially all of its property;
or the Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(e) the failure of the Master Servicer to remit
any Monthly Advance required to be remitted pursuant to Section
3.20 which failure continues unremedied at 3:00 p.m. on the
related Distribution Date;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied by the Master Servicer, either the Trustee or the Depositor
may, and at the direction of the Holders of Certificates evidencing Voting
Rights aggregating not less than 51% of all Certificates affected thereby shall,
by notice then given in writing to the Master Servicer (and to the Trustee, if
given by the Depositor, and to the Depositor, if given by the Trustee),
terminate all of the rights and
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obligations of the Master Servicer under this Agreement. If an Event of Default
described in clause (e) hereof shall occur, the Trustee shall, by notice to the
Master Servicer, terminate all of the rights and obligations of the Master
Servicer under this Agreement and in and to the Mortgage Loans and proceeds
thereof and the Trustee or a successor Master Servicer appointed pursuant to
Section 8.05 shall make the Advance which the Master Servicer failed to make. On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement, whether with
respect to the Certificates or the Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee pursuant to and under this Section 8.01, unless and
until such time as the Trustee shall appoint a successor Master Servicer
pursuant to Section 8.05, and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Mortgage Loans and related
documents, or otherwise, including, without limitation, the recordation of the
assignments of the Mortgage Loans to it. The Master Servicer agrees to cooperate
with the Trustee in effecting the termination of the responsibilities and rights
of the Master Servicer hereunder, including, without limitation, the transfer to
the Trustee for the administration by it of all cash amounts that have been
deposited by the Master Servicer in the Collection Account or thereafter
received by the Master Servicer with respect to the Mortgage Loans. Upon
obtaining notice or knowledge of the occurrence of any Event of Default, the
Person obtaining such notice or knowledge shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register and to each Rating Agency. All costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Mortgage Files to the successor Master Servicer and amending this Agreement to
reflect such succession as Master Servicer pursuant to this Section 8.01 shall
be paid by the predecessor Master Servicer. Notwithstanding the termination of
the Master Servicer pursuant hereto, the Master Servicer shall remain liable for
any causes of action arising out of any Event of Default occurring prior to such
termination.
SECTION 8.02. Remedies of Trustee. During the continuance of any
Event of Default, so long as such Event of Default shall not have been remedied,
the Trustee, in addition to the rights specified in Section 8.01, shall have the
right, in its own name as trustee of an express trust, to take all actions now
or hereafter existing at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce the rights and remedies, of
the Certificateholders (including the institution and prosecution of all
judicial, administrative and other proceedings and the filing of proofs of claim
and debt in connection therewith). Except as otherwise expressly provided in
this Agreement, no remedy provided for by this Agreement shall be exclusive of
any other remedy, and each and every remedy shall be cumulative and in addition
to any other remedy and no delay or omission to exercise any right or remedy
shall impair any such right or remedy or shall be deemed to be a waiver of any
Event of Default.
SECTION 8.03. Directions by Certificateholders and Duties of
Trustee During Event of Default. During the continuance of any Event of Default,
Holders of Certificates evidencing Voting Rights aggregating not less than 25%
of each Class of Certificates affected thereby may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this Agreement;
provided, however, that the Trustee shall be under no obligation to pursue any
such
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remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (a) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto, and (b) the
terminating of the Master Servicer or any successor Master Servicer from its
rights and duties as master servicer hereunder) at the request, order or
direction of any of the Certificateholders, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby and, provided
further, that, subject to the provisions of Section 9.01, the Trustee shall have
the right to decline to follow any such direction if the Trustee, based upon an
Opinion of Counsel, determines that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
SECTION 8.04. Action upon Certain Failures of the Master Servicer
and upon Event of Default. In the event that the Trustee shall have knowledge of
any failure of the Master Servicer specified in Section 8.01(a) or (b) which
would become an Event of Default upon the Master Servicer's failure to remedy
the same after notice, the Trustee may, but need not if the Trustee deems it not
in the Certificateholder's best interest, give notice thereof to the Master
Servicer. If the Trustee shall have knowledge of an Event of Default, the
Trustee shall give prompt written notice thereof to the Certificateholders.
SECTION 8.05. Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice
of termination pursuant to Section 8.01, the Trustee shall be the successor in
all respects to the Master Servicer in its capacity as master servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Master Servicer by the terms and provisions hereof.
Notwithstanding anything provided herein to the contrary, under no circumstances
shall any provision of this Agreement be construed to require the Trustee,
acting in its capacity as successor to the Master Servicer in its obligation to
make Advances, to advance, expend or risk its own funds or otherwise incur any
financial liability in the performance of its duties hereunder if it shall have
reasonable grounds for believing that such funds are non-recoverable. Subject to
Section 8.05(b), as compensation therefor, the Trustee shall be entitled to such
compensation as the Master Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, the
Trustee may, if it shall be unwilling so to act, or shall, if it is legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established housing and home finance institution having a net worth
of not less than $10,000,000 as the successor to the Master Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Master Servicer hereunder; provided, however, that any such
institution appointed as successor Master Servicer shall not, as evidenced in
writing by each Rating Agency, adversely affect the then current rating of any
Class of Certificates immediately prior to the termination of the Master
Servicer. The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer which may have arisen under this
Agreement prior to its termination as Master Servicer, nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by such Master Servicer of any of its representations
or warranties contained herein or in any related document or agreement. Pending
appointment of a successor to the Master
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Servicer hereunder, unless the Trustee is prohibited by law from so acting, the
Trustee shall act in such capacity as provided above. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
(b) In connection with the appointment of a successor Master
Servicer or the assumption of the duties of the Master Servicer, as specified in
Section 8.05(a), the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that any Person assuming the duties of Master Servicer
as successor to NationsBanc Mortgage Corporation shall pay to NationsBanc
Mortgage Corporation an amount equal to the market value of the portion of the
Master Servicing Fee that will accrue in the future due to the Master Servicing
Fee Rate exceeding 0.25% per annum with respect to any Mortgage Loan. The
"market value" of such portion of the Master Servicing Fee shall be determined
by NationsBanc Mortgage Corporation on the basis of at least two quotations from
third parties actively engaged in the servicing of single-family mortgage loans.
If the successor Master Servicer does not agree that such market value is a fair
price, such successor shall obtain two quotations of market value from third
parties actively engaged in the servicing of single-family mortgage loans. The
market value of the excess portion of the Master Servicing Fee will then be
equal to the average of (i) the lowest figure obtained by NationsBanc Mortgage
Corporation and (ii) the highest figure obtained by the successor Master
Servicer. Payment of the amount calculated above shall be made to NationsBanc
Mortgage Corporation by the successor Master Servicer no later than the last
Business Day of the month in which such successor Master Servicer becomes
entitled to receive the Master Servicing Fee under this Agreement. In no event
will any portion of the Trust Fund be used to pay amounts due to NationsBanc
Mortgage Corporation under this Section 8.05(b).
(c) Any successor, including the Trustee, to the Master Servicer
as master servicer shall during the term of its service as master servicer
maintain in force (i) a policy or policies of insurance covering errors and
omissions in the performance of its obligations as servicer hereunder and (ii) a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Master Servicer is so required pursuant to Section 3.03.
SECTION 8.06. Notification to Certificateholders. Upon any
termination or appointment of a successor to the Master Servicer pursuant to
this Article VIII, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each Rating Agency.
ARTICLE IX
THE TRUSTEE
SECTION 9.01. Duties of Trustee.
(a) The Trustee, except during the continuance of an Event of
Default, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. In case of an Event of Default (which
has not been cured), the Trustee shall exercise such of the rights and
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powers vested in it by this Agreement and use the same degree of care and skill
in their exercise as a prudent investor would exercise or use under the
circumstances in the conduct of such investor's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such certificate,
statement, opinion, report, or other order or instrument.
(b) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own gross negligent action, its own gross
negligent failure to act or its own willful misconduct; provided, however, that:
(i) this paragraph shall not be construed to limit
the effect of Section 9.01(a);
(ii) the Trustee shall not be personally liable
for an error of judgment made in good faith by a Responsible
Officer of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining or investigating the facts
related thereto;
(iii) the Trustee and any co-trustee shall not be
personally liable with respect to any action taken, suffered or
omitted to be taken by it in good faith in accordance with the
direction of Certificateholders as provided in Section 8.03;
(iv) for all purposes under this Agreement, the
Trustee shall not be deemed to have notice of any matter,
including without limitation those matters described in Section
8.01(b) through (e), unless a Responsible Officer assigned to and
working in the Trustee's corporate trust division has actual
knowledge thereof or unless written notice of any event is
received at the Corporate Trust Office, and such notice
references the Certificates and this Agreement;
(v) no provision of this Agreement shall require
the Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it and none of the provisions
contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Depositor or the
Master Servicer under this Agreement, except during such time, if
any, as the Trustee shall be the successor to the Master Servicer
in accordance with the terms of this Agreement or as otherwise
specifically set forth in this Agreement; and
(vi) prior to the occurrence of an Event of
Default as described in the first paragraph of this Section 9.01
and after the curing of all such events of default which may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the
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express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part
of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement.
SECTION 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditor or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document believed by it
to be genuine and to have been signed or presented by the proper
party or parties;
(b) the Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted
by it hereunder in good faith and in accordance with such Opinion
of Counsel;
(c) the Trustee and any co-trustee shall not be
personally liable for any action taken, suffered or omitted by it
in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by
this Agreement;
(d) unless an Event of Default shall have occurred
and be continuing and, in each case is known to a Responsible
Officer of the Trustee, the Trustee shall not be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by Holders of
Certificates evidencing not less than 50% of the Percentage
Interests of each Class of Certificates; provided, however, that
if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to
it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability or payment
of such estimated expenses as a condition to proceeding; and
(e) the Trustee and any co-trustee may execute any
of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys and the
Trustee and any co-trustee shall not be responsible for any
willful misconduct or gross negligence on the part of any agent
or attorney appointed with due care by it hereunder.
SECTION 9.03. Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein (other than those relating to the due
organization, power and authority of the Trustee) and in the Certificates (other
than the execution of, and the counter-signature on the
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Certificates) shall be taken as the statements of the Depositor or Master
Servicer, as applicable, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or any Mortgage Loans save
that the Trustee represents that, assuming due execution and delivery by the
other parties hereto, this Agreement has been duly authorized, executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject, as to enforcement
of remedies, to applicable insolvency, receivership, moratorium and other laws
affecting the rights of creditors generally, and to general principles of equity
and the discretion of the court (regardless of whether enforcement of such
remedies is considered in a proceeding in equity or at law). The Trustee shall
not be accountable for the use or application by the Depositor of funds paid to
the Depositor in consideration of the assignment of the Mortgage Loans hereunder
by the Depositor, or for the use or application of any funds paid to Servicers
or the Master Servicer in respect of the Mortgage Loans or deposited into the
Collection Account, or any other account hereunder (other than the Distribution
Account) by the Master Servicer.
The Trustee shall at no time have any responsibility or liability
for or with respect to the legality, validity and enforceability of any Mortgage
or any Mortgage Loan, or the perfection and priority of any Mortgage or the
maintenance of any such perfection and priority or for or with respect to the
sufficiency of the Trust or its ability to generate the payments to be
distributed to Certificateholders under this Agreement, including, without
limitation: the existence, condition and ownership of any Mortgaged Property;
the existence and enforceability of any hazard insurance thereon (other than if
the Trustee shall assume the duties of the Master Servicer pursuant to Section
8.05 and thereupon only for the acts or omissions of the successor Master
Servicer); the validity of the assignment of any Mortgage Loan to the Trustee or
of any intervening assignment; the completeness of any Mortgage Loan; the
performance or enforcement of any Mortgage Loan (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 8.05 and thereupon
only for the acts or omissions of the Trustee as successor Master Servicer); the
compliance by the Depositor or the Master Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation; any investment of monies by or
at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust
property that it may hold in its individual capacity; the acts or omissions of
any of the Depositor, the Master Servicer (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 8.05 and thereupon
only for the acts or omissions of the Trustee as successor Master Servicer), any
Servicer or any Mortgagor; any action of the Master Servicer (other than if the
Trustee shall assume the duties of the Master Servicer pursuant to Section 8.05
and thereupon only for the acts or omissions of the Trustee as successor Master
Servicer) or any Servicer taken in the name of the Trustee; the failure of the
Master Servicer or any Servicer to act or perform any duties required of it as
agent of the Trustee hereunder; or any action by the Trustee taken at the
instruction of the Master Servicer (other than if the Trustee shall assume the
duties of the Master Servicer pursuant to Section 8.05 and thereupon only for
the acts or omissions of the Trustee as successor Master Servicer); provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement, including, without limitation, the
Trustee's review of the Mortgage Files pursuant to Section 2.02. The Trustee
shall file any financing or continuation
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statement in any public office at any time required to maintain the perfection
of any security interest or lien granted to it hereunder.
SECTION 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee and may otherwise deal
with the Master Servicer, any Servicer or any of their respective affiliates
with the same right it would have if it were not the Trustee.
SECTION 9.05. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (a) an institution the deposits of which are
fully insured by the FDIC and (b) a corporation or national banking association
organized and doing business under the laws of the United States of America or
of any State, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of not less than $30,000,000 and subject
to supervision or examination by Federal or State authority and (c) with respect
to every successor trustee hereunder either an institution (i) the long-term
unsecured debt obligations of which are rated at least "A" by S&P and "A" by
Fitch or (ii) whose serving as Trustee hereunder would not result in the
lowering of the ratings originally assigned to any Class of Certificates. The
Trustee shall not be an affiliate of the Depositor or the Master Servicer. If
such corporation or national banking association publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 9.05,
the combined capital and surplus of such corporation or national banking
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provision of this
Section 9.05, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.06.
SECTION 9.06. Resignation and Removal of Trustee. The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Master Servicer and mailing a copy of such notice
to all Holders of record. The Trustee shall also mail a copy of such notice of
resignation to each Rating Agency. Upon receiving such notice of resignation,
the Master Servicer shall use its best efforts to promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and shall have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.05 and shall fail to resign after
written request therefor by the Master Servicer, or if at any time the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master Servicer may remove the Trustee and appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor.
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The Holders of Certificates evidencing not less than 50% of the
Voting Rights may at any time remove the Trustee by written instrument or
instruments delivered to the Master Servicer and the Trustee; the Master
Servicer shall thereupon use its best efforts to appoint a successor Trustee in
accordance with this Section 9.06.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.06 shall
become effective upon acceptance of appointment by the successor Trustee as
provided in Section 9.07.
SECTION 9.07. Successor Trustee. Any successor Trustee appointed
as provided in Section 9.06 shall execute, acknowledge and deliver to the Master
Servicer and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall duly assign, transfer,
deliver and pay over to the successor Trustee the whole of the Mortgage Files
and related documents and statements held by it hereunder, together with all
instruments of transfer and assignment or other documents properly executed as
may be reasonably required to effect such transfer and such of the records or
copies thereof maintained by the predecessor Trustee in the administration
hereof as may be reasonably requested by the successor Trustee and shall
thereupon be discharged from all duties and responsibilities under this
Agreement; provided, however, that if the predecessor Trustee has been
terminated pursuant to the third paragraph of Section 9.06, all reasonable
expenses of the predecessor Trustee incurred in complying with this Section 9.07
shall be reimbursed by the Trust.
No successor Trustee shall accept appointment as provided in this
Section 9.07 unless at the time of such appointment such successor Trustee shall
be eligible under the provisions of Section 9.05.
Upon acceptance of appointment by a successor Trustee as provided
in this Section 9.07, the Master Servicer shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency. If the Master
Servicer fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
SECTION 9.08. Merger or Consolidation of Trustee. Any corporation
or national banking association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or national
banking association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation or national banking
association succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder, if
such corporation or national banking association is eligible under the
provisions of Section 9.05, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
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SECTION 9.09. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any of the provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any Mortgaged
Property may at the time be located or for any other reason, the Master Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
as co-trustee or separate trustee of all or any part of the Trust Fund, and to
vest in such Person or Persons, in such capacity, such title to the Trust Fund,
or any part thereof, and, subject to the other provision of this Section 9.09,
such powers, duties, obligations, rights and trusts as the Master Servicer and
the Trustee may consider necessary or desirable. If the Master Servicer shall
not have joined in such appointment within ten days after the receipt by it of a
request to do so, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.05 and no
notice to Holders of Certificates of the appointment of co-trustee(s) or
separate trustee(s) shall be required under Section 9.07.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.09, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Master Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee. No trustee hereunder shall be held personally liable by reason of any
act or omission of any other trustee hereunder; provided, however, that no
appointment of a co-trustee or separate trustee hereunder shall relieve the
Trustee of its obligations hereunder.
Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute
the Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall become incapable of acting, resign or be removed, or shall be
adjudged a bankrupt or insolvent, or a receiver of its property shall be
appointed, or any public officer shall take charge or control of such trustee or
co-trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, all of its estates, properties, rights, remedies
and trusts shall vest in and
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be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 9.10. Authenticating Agents. The Trustee may appoint one
or more authenticating agents ("Authenticating Agents") which shall be
authorized to act on behalf of the Trustee in authenticating or countersigning
Certificates. Wherever reference is made in this Agreement to the authentication
or countersigning of Certificates by the Trustee or the Trustee's certificate of
authentication or countersigning, such reference shall be deemed to include
authentication or countersigning on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication or countersignature executed on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent must be
acceptable to the Master Servicer and must be a corporation or national banking
association organized and doing business under the laws of the United States of
America or of any State, having a principal office and place of business in New
York, New York, having a combined capital and surplus of at least $15,000,000,
authorized under such laws to do a trust business and subject to supervision or
examination by Federal or State authorities.
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, conversion or consolidation to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Master Servicer. The Trustee may
at any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Master Servicer.
Upon receiving a notice of resignation or upon such a termination, or in case,
at any time any Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 9.10, the Trustee may appoint a successor
Authenticating Agent, shall give written notice of such appointment to the
Master Servicer and shall mail notice of such appointment to all
Certificateholders. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent.
SECTION 9.11. Trustee's Fees and Expenses. The Trustee, as
compensation for its activities hereunder, shall be entitled to receive on each
Distribution Date an amount equal to the Trustee Fee for such Distribution Date
pursuant to Section 5.02(a). The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Trust and held harmless against
any loss, liability or expense (including reasonable attorney's fees) (a)
incurred in connection with any claim or legal action relating to (i) this
Agreement, (ii) the Certificates, or (iii) the performance of any of the
Trustee's duties hereunder, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance of
any of the Trustee's duties hereunder, (b) resulting from any tax or information
return which was prepared by, or should have been prepared by, the Master
Servicer and (c) arising out of the transfer of any
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Private Certificate not in compliance with ERISA. Such indemnity shall survive
the termination of this Agreement or the resignation or removal of the Trustee
hereunder. Without limiting the foregoing, except as otherwise agreed upon in
writing by the Depositor and the Trustee, and except for any such expense,
disbursement or advance as may arise from the Trustee's negligence, bad faith or
willful misconduct, the Trust shall reimburse the Trustee for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement; provided, however, that
the Depositor and the Trustee intend to enter into a separate agreement for
custody-related services. Except as otherwise provided herein, the Trustee shall
not be entitled to payment or reimbursement for any routine ongoing expenses
incurred by the Trustee in the ordinary course of its duties as Trustee,
Certificate Registrar or Paying Agent hereunder or for any other expenses.
SECTION 9.12. [RESERVED]
SECTION 9.13. Paying Agents. The Trustee may appoint one or more
Paying Agents (each, a "Paying Agent") which shall be authorized to act on
behalf of the Trustee in making withdrawals from the Distribution Account and
distributions to Certificateholders as provided in Section 3.08 and Section
5.02. Wherever reference is made in this Agreement to the withdrawal from the
Distribution Account by the Trustee, such reference shall be deemed to include
such a withdrawal on behalf of the Trustee by a Paying Agent. Whenever reference
is made in this Agreement to a distribution by the Trustee or the furnishing of
a statement to Certificateholders by the Trustee, such reference shall be deemed
to include such a distribution or furnishing on behalf of the Trustee by a
Paying Agent. Each Paying Agent shall provide to the Trustee such information
concerning the Distribution Account as the Trustee shall request from time to
time. Each Paying Agent must be reasonably acceptable to the Master Servicer and
must be a corporation or banking association organized and doing business under
the laws of the United States of America or of any state, having (except in the
case of the Trustee) a principal office and place of business in New York, New
York, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.
Any corporation into which any Paying Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Paying Agent shall be
a party, or any corporation succeeding to the corporate agency business of any
Paying Agent, shall continue to be the Paying Agent provided that such
corporation after the consummation of such merger, conversion, consolidation or
succession meets the eligibility requirements of this Section 9.13.
Any Paying Agent may at any time resign by giving written notice
of resignation to the Trustee and to the Master Servicer; provided that the
Paying Agent has returned to the Distribution Account or otherwise accounted, to
the reasonable satisfaction of the Trustee, for all amounts it has withdrawn
from the Distribution Account. The Trustee may, upon prior written approval of
the Master Servicer, at any time terminate the agency of any Paying Agent by
giving written notice of termination to such Paying Agent and to the Master
Servicer. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Paying Agent shall cease to be eligible in accordance
with the provisions of the first paragraph of this Section 9.13, the Trustee
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may appoint, upon prior written approval of the Master Servicer, a successor
Paying Agent, shall give written notice of such appointment to the Master
Servicer and shall mail notice of such appointment to all Certificateholders.
Any successor Paying Agent upon acceptance of its appointment hereunder shall
become vested with all rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as Paying Agent.
The Trustee shall remain liable for any duties and obligations assumed by its
appointed Paying Agent.
SECTION 9.14. Limitation of Liability. The Certificates are
executed by the Trustee, not in its individual capacity but solely as Trustee of
the Trust, in the exercise of the powers and authority conferred and vested in
it by this Agreement. Each of the undertakings and agreements made on the part
of the Trustee in the Certificates is made and intended not as a personal
undertaking or agreement by the Trustee but is made and intended for the purpose
of binding only the Trust.
SECTION 9.15 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such preceding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
SECTION 9.16 Suits for Enforcement. In case an Event of Default
or other default by the Master Servicer or the Depositor hereunder shall occur
and be continuing, the Trustee, in its discretion, may proceed to protect and
enforce its rights and the rights of the Holders of Certificates under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee and the Certificateholders.
SECTION 9.17 Waiver of Bond Requirement. The Trustee shall be
relieved of, and each Certificateholder hereby waives, any requirement of any
jurisdiction in which the Trust, or any part thereof, may be located that the
Trustee post a bond or other surety with any court, agency or body whatsoever.
SECTION 9.18 Waiver of Inventory, Accounting and Appraisal
Requirement. The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
SECTION 9.19 Year 2000 Compliance. The Trustee covenants that it
is working to modify its computer and other systems used in the performance of
its duties as trustee and/or bond administrator for the Certificates to operate
in a manner such that, on and after January 1,
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2000, the Trustee can perform its duties in accordance with the terms of this
Agreement.
ARTICLE X
TERMINATION
SECTION 10.01. Termination upon Purchase by the Depositor or
Liquidation of All Mortgage Loans. Subject to Section 10.02, the respective
obligations and responsibilities of the Depositor, the Master Servicer and the
Trustee created hereby (other than the obligation of Trustee to make certain
payments to Certificateholders after the Final Distribution Date, the
obligations of the Master Servicer to send certain notices as hereinafter set
forth and pursuant to Sections 9.11 and 9.12 hereof and the obligation of the
Master Servicer pursuant to Section 5.05(b)) shall terminate upon the last
action required to be taken by the Trustee on the Final Distribution Date
pursuant to this Article X following the earlier of (a) the purchase by the
Depositor of all Mortgage Loans and all REO Property remaining in the Trust Fund
at a price equal to the sum of (i) 100% of the Stated Principal Balance of each
Mortgage Loan (other than any Mortgage Loan as to which REO Property has been
acquired and whose fair market value is included pursuant to clause (ii) below)
and (ii) the fair market value of such REO Property (as determined by the
Depositor as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Article X), plus any
Class Unpaid Interest Shortfall for any Class of Certificates as well as one
month's interest at the related Mortgage Rate on the Stated Principal Balance of
each Mortgage Loan (including any Mortgage Loan as to which REO Property has
been acquired) or (b) the final payment or other liquidation (or any advance
with respect thereto) of the last Mortgage Loan remaining in the Trust Fund or
the disposition of all REO Property; provided, however, that in no event shall
the Trust created hereby continue beyond the expiration of 21 years from the
death of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. Xxxxx, living on the date
hereof.
The right of the Depositor to repurchase all Mortgage Loans
pursuant to (a) above is conditioned upon the Pool Stated Principal Balance as
of the Final Distribution Date being less than 5% of the Cut-Off Date Pool
Principal Balance. If such right is exercised, the Trustee shall, promptly
following payment of the purchase price, release to the Depositor or its
designee the Mortgage Files pertaining to the Mortgage Loans being purchased.
Notice of any termination, specifying the Final Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and for cancellation, shall be given promptly
by the Depositor (if exercising its right to purchase the assets of the Trust)
or by the Trustee (in any other case) by letter to Certificateholders mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (1) the Final
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of Certificates at the office or agency of the
Trustee therein designated, (2) the amount of any such final payment and (3)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation
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and surrender of the Certificates at the office or agency of the Trustee therein
specified. If the Depositor is obligated to give notice to Certificateholders as
aforesaid, it shall give such notice to the Trustee and the Certificate
Registrar at the time such notice is given to Certificateholders. In the event
such notice is given by the Depositor, the Depositor shall deposit in the
Collection Account on or before the Final Distribution Date in immediately
available funds an amount equal to the amount necessary to make the amount, if
any, on deposit in the Collection Account on the Final Distribution Date equal
to the purchase price for the assets of the Trust computed as above provided
together with a statement as to the amount to be distributed on each Class of
Certificates pursuant to the next succeeding paragraph.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to Certificateholders of each Class, in the order
set forth in Section 5.02 hereof, on the final Distribution Date and in
proportion to their respective Percentage Interests, with respect to
Certificateholders of the same Class, an amount equal to (I) as to each Class of
Certificates, the Class Certificate Balance thereof plus (a) accrued interest
thereon in the case of an interest bearing Certificate and (b) the Class A-PO
Deferred Amount with respect to the Class A-PO Certificates, and (II) as to the
Class R Certificates, the amount, if any, which remains on deposit in the
Distribution Account (other than the amounts retained to meet claims) after
application pursuant to clause (I) above.
If all of the Certificateholders do not surrender their
Certificates for final payment and cancellation on or before the Final
Distribution Date, the Trustee shall on such date cause all funds in the
Collection Account not distributed in final distribution to Certificateholders
to continue to be held by the Trustee in an Eligible Account for the benefit of
such Certificateholders and the Depositor (if it exercised its right to purchase
the assets of the Trust Fund) or the Trustee (in any other case) shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and the
cost thereof shall be paid out of the funds on deposit in such Eligible Account.
SECTION 10.02. Additional Termination Requirements.
(a) If the Depositor exercises its purchase option as provided in
Section 10.01, the Trust shall be terminated in accordance with the following
additional requirements, unless the Trustee has received an Opinion of Counsel
to the effect that the failure of the Trust to comply with the requirements of
this Section 10.02 will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust as defined in Section 860F of the Code, or (ii) cause
the Trust Fund to fail to qualify as a REMIC at any time that any Certificates
are outstanding:
(A) within 90 days prior to the Final Distribution
Date set forth in the notice given by the Depositor under Section
10.01, the Trustee shall sell all of the assets of the Trust Fund
to the Depositor for cash; and
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(B) the notice given by the Depositor or the
Trustee pursuant to Section 10.01 shall provide that such notice
constitutes the adopting of a plan of complete liquidation of the
REMIC as of the date of such notice (or, if earlier, the date on
which such notice was mailed to Certificateholders). The Trustee
shall also specify such date in the final tax return of the
REMIC.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby agree to take such other action in connection with such plan of
complete liquidation as may be reasonably requested by the Depositor.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment. This Agreement may be amended from time
to time by the Depositor, the Master Servicer and the Trustee, without the
consent of any of the Certificateholders, (a) to cure any ambiguity, (b) to
correct or supplement any provisions herein or therein which may be defective or
inconsistent with any other provisions herein or therein, as the case may be,
(c) to modify, eliminate or add to any of its provisions to such extent as shall
be necessary to maintain the qualification of the Trust Fund as a REMIC or (d)
to add any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that (i) as evidenced by an Opinion of Counsel in
each case such action shall not, adversely affect in any material respect the
interests of any Certificateholder, (ii) in each case, such action is necessary
or desirable to maintain the qualification of the Trust Fund as a REMIC or shall
not adversely affect such qualification and (iii) if the opinion called for in
clause (i) cannot be delivered with regard to an amendment pursuant to clause
(c) above, such amendment is necessary to maintain the qualification of the
Trust Fund as a REMIC; and, provided further, that the amendment shall not be
deemed to adversely affect in any material respect the interests of the
Certificateholders and no Opinion of Counsel to that effect shall be required if
the Person requesting the amendment obtains a letter from each Rating Agency
stating that the amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates of each Class of Certificates which is affected by such
amendment, evidencing, as to each such Class of Certificates, Percentage
Interests aggregating not less than 66-2/3%, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of such
Certificates; provided, however, that no such amendment shall (A) reduce in any
manner the amount of, or delay the timing of, collections of payments on
Mortgage Loans or distributions which are required to be made on any Certificate
without the consent of the Holder of such Certificate or (B) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all Certificates then Outstanding.
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Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of the Trust Fund as a REMIC and notice
of the conclusion expressed in such Opinion of Counsel shall be included with
any such solicitation. An amendment made with the consent of all
Certificateholders and executed in accordance with this Section 11.01 shall be
permitted or authorized by this Agreement notwithstanding that such Opinion of
Counsel may conclude that such amendment would adversely affect the
qualification of the Trust Fund as a REMIC.
Promptly after the execution of any such amendment or consent the
Trustee shall furnish written notification of the substance of or a copy of such
amendment to each Certificateholder and to each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
SECTION 11.02. Recordation of Agreement. This Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer and at its expense on direction by the Trustee,
who will act at the direction of Holders of Certificates evidencing not less
than 50% of all Voting Rights, but only upon direction of the Trustee
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement
as herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders. The
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust, or the obligations of the parties hereto, nor shall anything
herein set forth, or contained in the terms of the Certificates, be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
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No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as provided herein,
and unless also the Holders of Certificates evidencing Percentage Interests
aggregating not less than 25% of each Class of Certificates affected thereby
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 11.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT APPLICATION OF THE
CONFLICTS OF LAWS PROVISIONS THEREOF, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.05. Notices. All demands, notices and communications
required to be delivered hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered at or mailed by certified mail,
return receipt requested, (provided, however, that notices to the Trustee shall
be deemed effective upon receipt) to (a) in the case of the Depositor,
NationsBanc Xxxxxxxxxx Funding Corp., NationsBanc Corporate Center, 11th Floor,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Corporate
Secretary, (b) in the case of the Master Servicer, NationsBanc Mortgage
Corporation, 000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Servicing Manager, with a copy to: NationsBanc Mortgage Corporation,
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention:
General Counsel and Treasurer, (c) in the case of the Trustee, Norwest Bank
Minnesota, National Association, at the Corporate Trust Office, Attention:
NationsBanc Xxxxxxxxxx Funding Corp. 1998-4, with a copy to Norwest Bank
Minnesota, National Association, 00000 Xxxxxx Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx
00000, Attention: NationsBanc Xxxxxxxxxx Funding Corp. 1998-4; provided that any
correspondence concerning a Mortgage File or any Request for Release should be
sent to: Norwest Bank Minnesota, National Association, 0000 00xx Xxxxxx X.X.,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Inventory Control, (d) in the case
of S&P, Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc., 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Mortgage Surveillance Group, and (e)
in the case of Fitch, Fitch IBCA, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attn: Residential Mortgage Surveillance Group; or, as to each party,
at such other address as shall be designated by such party in a written notice
to each other party.
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Any notice required or permitted to be mailed to a Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice.
SECTION 11.06. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 11.07. Certificates Nonassessable and Fully Paid. It is
the intention of the Trustee that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the beneficial ownership
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust Fund or for any reason whatsoever, and that
Certificates upon execution, countersignature and delivery thereof by the
Trustee pursuant to Section 6.01 are and shall be deemed fully paid.
SECTION 11.08. Access to List of Certificateholders. The
Certificate Registrar will furnish or cause to be furnished to the Trustee,
within 15 days after the receipt of a request by the Trustee in writing, a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Certificateholders as of the most recent Record Date for payment of
distributions to Certificateholders.
If three or more Certificateholders apply in writing to the
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and is accompanied by a copy of the communication
which such applicants propose to transmit, then the Trustee shall, within five
Business Days after the receipt of such application, afford such applicants
access during normal business hours to the most recent list of
Certificateholders held by the Trustee. If such a list is as of a date more than
90 days prior to the date of receipt of such applicants' request, the Trustee
shall promptly request from the Certificate Registrar a current list as provided
above, and shall afford such applicants access to such list promptly upon
receipt.
Every Certificateholder, by receiving and holding such list,
agrees with the Certificate Registrar and the Trustee that neither the
Certificate Registrar nor the Trustee shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
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IN WITNESS WHEREOF, the Depositor, the Master Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized to be hereunto affixed, all as of the day and
year first above written.
NATIONSBANC XXXXXXXXXX FUNDING CORP.,
as Depositor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Senior Vice President
---------------------------------------
NATIONSBANC MORTGAGE CORPORATION,
as Master Servicer
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------------
Title: Senior Vice President
---------------------------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------------
Title: Officer
---------------------------------------
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STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
On the 24th day of November, 1998, before me, a notary public in
and for the State of North Carolina, personally appeared Xxxxxx X. Xxxxxx, known
to me who, being by me duly sworn, did depose and say that he is a Senior Vice
President of NationsBanc Xxxxxxxxxx Funding Corp., a Delaware corporation, one
of the parties that executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of such corporation.
/s/ Xxxxxxxxx X. Xxxxx
----------------------------------
Notary Public
[Notarial Seal]
My commission expires 6/18/2003.
00
XXXXX XX XXXXX XXXXXXXX )
) ss.:
COUNTY OF MECKLENBURG )
On the 24th day of November, 1998, before me, a notary public in
and for the State of North Carolina, personally appeared Xxxxxx X. Xxxxx, known
to me who, being by me duly sworn, did depose and say that they are an
Authorized Signatory of NationsBanc Mortgage Corporation, a Texas corporation,
one of the parties that executed the foregoing instrument; and that they signed
their name thereto by order of the Board of Directors of such corporation.
/s/ Xxxxxxxxx X. Xxxxx
----------------------------------
Notary Public
[Notarial Seal]
My commission expires 6/18/2003.
00
XXXXX XX XXXXX XXXXXXXX )
) ss.:
COUNTY OF MECKLENBURG )
On the 24th day of November, 1998, before me, a notary public in
and for the State of North Carolina, personally appeared Xxxxx X. Xxxxxx, known
to me who, being by me duly sworn, did depose and say that they are an
Authorized Signatory for Norwest Bank Minnesota, National Association, a
national banking association, one of the parties that executed the foregoing
instrument; and that they signed their name thereto by order of the Board of
Directors of said national banking association.
/s/ Xxxxxxxxx X. Xxxxx
----------------------------------
Notary Public
[Notarial Seal]
My commission expires 6/18/2003.
