Exhibit 4.1
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OPTION ONE MORTGAGE ACCEPTANCE CORPORATION,
Depositor
OPTION ONE MORTGAGE CORPORATION,
Master Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1999
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Option One Mortgage Loan Trust 1999-3
Asset-Backed Certificates, Series 1999-3
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms..........................................................................3
Section 1.02. Accounting............................................................................39
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans..........................................................40
Section 2.02. Acceptance by Trustee.................................................................43
Section 2.03. Repurchase or Substitution of Mortgage Loans by the Seller............................44
Section 2.04. Intentionally Omitted.................................................................47
Section 2.05. Representations, Warranties and Covenants of the Master Servicer......................47
Section 2.06. Representations and Warranties of the Depositor.......................................50
Section 2.07. Issuance of Certificates..............................................................52
Section 2.08. Conveyance of the Subsequent Mortgage Loans...........................................52
Section 2.09. Conveyance of Uncertificated REMIC I Regular Interests;
Acceptance of REMIC II by the Trustee.................................................54
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Master Servicer.............................................55
Section 3.02. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers....................57
Section 3.03. Successor Sub-Servicers...............................................................58
Section 3.04. Liability of the Master Servicer......................................................58
Section 3.05. No Contractual Relationship Between Sub-Servicers
and the Trustee or Certificateholders.................................................58
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by Trustee......................59
Section 3.07. Collection of Certain Mortgage Loan Payments..........................................59
Section 3.08. Sub-Servicing Accounts................................................................60
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts....................................................................60
Section 3.10. Collection Account, Initial Deposit Account and Distribution Account..................61
Section 3.11. Withdrawals from the Collection Account and Distribution Account......................64
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Section 3.12. Investment of Funds in the Interest Coverage Account, Collection Account,
Initial Deposit Account and the Distribution Account..................................66
Section 3.13. Use of Funds Held for Future Distribution.............................................67
Section 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.......................................................68
Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements.............................69
Section 3.16. Realization Upon Defaulted Mortgage Loans.............................................70
Section 3.17. Trustee to Cooperate; Release of Mortgage Files.......................................72
Section 3.18. Servicing Compensation................................................................73
Section 3.19. Reports to the Trustee; Collection Account Statements.................................74
Section 3.20. Statement as to Compliance............................................................74
Section 3.21. Independent Public Accountants' Servicing Report......................................74
Section 3.22. Access to Certain Documentation; Filing of Reports by Trustee.........................75
Section 3.23. Title, Management and Disposition of REO Property.....................................76
Section 3.24. Obligations of the Master Servicer in Respect
of Prepayment Interest Shortfalls.....................................................79
Section 3.25. [Reserved]............................................................................79
Section 3.26. Obligations of the Master Servicer in Respect of Mortgage Rates
and Monthly Payments..................................................................79
Section 3.27. Solicitations.........................................................................79
Section 3.28. Reserve Funds.........................................................................80
ARTICLE IV
FLOW OF FUNDS
Section 4.01. Distributions.........................................................................82
Section 4.02. Reserved..............................................................................84
Section 4.03. Statements............................................................................84
Section 4.04. Remittance Reports; Advances..........................................................87
Section 4.05. Pre-Funding Account...................................................................88
Section 4.06. Interest Coverage Account.............................................................90
Section 4.07. Distributions on the Uncertificated REMIC I Regular Interests.........................90
Section 4.08. Allocation of Principal Losses........................................................91
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates......................................................................92
Section 5.02. Registration of Transfer and Exchange of Certificates.................................92
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.....................................97
Section 5.04. Persons Deemed Owners.................................................................97
Section 5.05. Appointment of Paying Agent...........................................................97
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ARTICLE VI
THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Master Servicer and the Depositor....................................98
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations of,
the Master Servicer or the Depositor..................................................98
Section 6.03. Limitation on Liability of the Master Servicer and Others.............................98
Section 6.04. Master Servicer Not to Resign.........................................................99
Section 6.05. Delegation of Duties.................................................................100
Section 6.06. Reserved.............................................................................100
Section 6.07. Inspection...........................................................................100
ARTICLE VII
DEFAULT
Section 7.01. Master Servicer Events of Termination................................................100
Section 7.02. Trustee to Act; Appointment of Successor.............................................103
Section 7.03. Waiver of Defaults...................................................................104
Section 7.04. Notification to Certificateholders...................................................104
Section 7.05. Survivability of Master Servicer Liabilities.........................................105
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee....................................................................105
Section 8.02. Certain Matters Affecting the Trustee................................................106
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans................................108
Section 8.04. Trustee May Own Certificates.........................................................108
Section 8.05. Seller to Pay Trustee Expenses.......................................................109
Section 8.06. Eligibility Requirements for Trustee.................................................109
Section 8.07. Resignation or Removal of Trustee....................................................109
Section 8.08. Successor Trustee....................................................................110
Section 8.09. Merger or Consolidation of Trustee...................................................111
Section 8.10. Appointment of Co-Trustee or Separate Trustee........................................111
Section 8.11. Limitation of Liability..............................................................112
Section 8.12. Trustee May Enforce Claims Without Possession of Certificates........................112
Section 8.13. Suits for Enforcement................................................................113
Section 8.14. Waiver of Bond Requirement...........................................................113
Section 8.15. Waiver of Inventory, Accounting and Appraisal Requirement............................113
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ARTICLE IX
REMIC ADMINISTRATION
Section 9.01. REMIC Administration.................................................................114
Section 9.02. Prohibited Transactions and Activities...............................................116
Section 9.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.........................................................................116
Section 9.04. [Reserved]...........................................................................117
ARTICLE X
TERMINATION
Section 10.01. Termination..........................................................................117
Section 10.02. Additional Termination Requirements..................................................118
ARTICLE XI
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 11.01. Rights of the Certificate Insurer To Exercise Rights of
Class A and Class S Certificateholders...............................................119
Section 11.02. Trustee To Act Solely with Consent of the Certificate Insurer........................120
Section 11.03. Trust Fund and Accounts Held for Benefit of the Certificate Insurer..................120
Section 11.04. Claims Upon the Policy; Policy Payments Account......................................121
Section 11.05. Effect of Payments by the Certificate Insurer; Subrogation...........................122
Section 11.06. Notices to the Certificate Insurer...................................................123
Section 11.07. Third-Party Beneficiary..............................................................123
Section 11.08. Trustee to Hold the Policy...........................................................123
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Amendment............................................................................123
Section 12.02. Recordation of Agreement; Counterparts...............................................125
Section 12.03. Limitation on Rights of Certificateholders...........................................125
Section 12.04. Governing Law; Jurisdiction..........................................................126
Section 12.05. Notices..............................................................................126
Section 12.06. Severability of Provisions...........................................................126
Section 12.07. Article and Section References.......................................................127
Section 12.08. Notice to the Rating Agencies........................................................127
Section 12.09. Further Assurances...................................................................128
Section 12.10. Benefits of Agreement................................................................128
Section 12.11. Acts of Certificateholders...........................................................128
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EXHIBITS:
Exhibit A-1 Form of Class A Certificates
Exhibit A-2 Form of Class S Certificates
Exhibit A-3 Form of Class P Certificates
Exhibit A-4 Form of Class R Certificates
Exhibit B [Reserved]
Exhibit C Form of Mortgage Loan Purchase Agreement
Exhibit D Mortgage Loan Schedule
Exhibit E Request for Release
Exhibit F-1 Form of Trustee's Initial Certification
Exhibit F-2 Form of Trustee's Final Certification
Exhibit F-3 Form of Receipt of Mortgage Note
Exhibit G [Reserved]
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Form of Investment Letter
Exhibit K Form of Class R Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M Form of Liquidation Report
Exhibit N Form of Subsequent Transfer Instrument
Exhibit O Form of Addition Notice
Exhibit P Schedule of Projected Principal Balances
Schedule I Prepayment Charge Schedule
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This Pooling and Servicing Agreement is dated as of October 1, 1999
(the "Agreement"), among OPTION ONE MORTGAGE ACCEPTANCE CORPORATION, as
depositor (the "Depositor"), OPTION ONE MORTGAGE CORPORATION, as master servicer
(the "Master Servicer") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of four classes of
certificates, designated as (i) the Class A Certificates, (ii) the Class S
Certificates, (iii) the Class P Certificates and (iv) the Class R Certificates.
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (exclusive of the Pre-Funding Account,
the Interest Coverage Account, the Reserve Funds, the Yield Maintenance
Agreement and the Initial Deposit Account) as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC I." The Class R-I Interest will represent
the sole class of "residual interests" in REMIC I for purposes of the REMIC
Provisions (as defined herein) under federal income tax law. The following table
irrevocably sets forth the designation, the Uncertificated REMIC I Pass-Through
Rate, the initial Uncertificated Principal Balance, and solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the Uncertificated REMIC I Regular Interests. None of
the Uncertificated REMIC I Regular Interests will be certificated.
Designation Uncertificated REMIC I Initial Uncertificated Assumed Final
Pass-Through Rate Principal Balance Maturity Date (1)
------------------- -------------------------------- ----------------------------- -----------------
LTA Variable(2) $134,999,900.00 December 2029
LTB Variable(2) $15,000,000.00 December 0000
XXX Variable(2) $100.00 December 2029
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(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each
Uncertificated REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the Uncertificated REMIC I Regular
Interests as a REMIC for federal income tax purposes, and such segregated pool
of assets will be designated as REMIC II. The Class A Certificates, Component
SA, Component SB and the Class P Certificates represent all of the "regular
interests" in REMIC II, and the Class R-II Interest represents the sole class of
"residual interests" in REMIC II for purposes of the REMIC Provisions. The Class
R Certificates represent an undivided interest in the Class R-I Interest and the
Class R-II Interest.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates that represents one or more
of the "regular interests" in REMIC II created hereunder:
Original Class
Certificate Principal Pass-Through Assumed Final
Class Designation Balance Rate Maturity Date(1)
Class A...................... $144,750,000.00 Variable(2) December 2029
Class S...................... N/A(3) N/A(3) December 2029
Component SA................. N/A(4) Variable(5) December 2029
Component SB................. N/A(4) Variable(6) December 2029
Class P...................... $100.00 N/A(7) December 2029
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each Class of
Certificates that represents one or more of the "regular interests" in
REMIC II.
(2) Calculated in accordance with the definition of "Pass-Through Rate"
herein.
(3) The Class S Certificates will receive all amounts distributed to
Component SA and Component SB, each of which Components represents a
"regular interest" in REMIC II.
(4) Component SA and Component SB will not have Certificate Principal
Balances, but will accrue interest on their Component Notional Amounts
outstanding from time to time which in each case shall equal the
Uncertificated Principal Balance of Uncertificated REMIC I Regular
Interest LTB.
(5) 2.50% per annum for the first 30 Distribution Dates and 0.00% per annum
thereafter.
(6) 1.50% per annum for the first 12 Distribution Dates and 0.00% per annum
thereafter.
(7) The Class P Certificates will not accrue interest. The Class P
Certificates will receive all Prepayment Charges and payments of
principal distributed to Uncertificated REMIC I LTP.
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ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
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Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations in respect of interest on the Class A Certificates shall be made on
the basis of the actual number of days elapsed on the basis of a 360-day year
and all other calculations of interest described herein shall be made on the
basis of a 360-day year consisting of twelve 30-day months. The Class P
Certificates are not entitled to distributions in respect of interest and,
accordingly, will not accrue interest.
"1933 Act": The Securities Act of 1933, as amended.
"Account": Either of the Collection Account and Distribution Account.
"Accrual Period": With respect to (i) the Class S Certificates and each
interest-bearing Uncertificated REMIC I Regular Interest and each Distribution
Date, the calendar month prior to the month of such Distribution Date and (ii)
the Class A Certificates and each Distribution Date, the period commencing on
the preceding Distribution Date (or in the case of the first such Accrual
Period, commencing on the Closing Date) and ending on the day preceding the
current Distribution Date.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust Fund pursuant to Section 2.08, a notice of the Depositor's
designation of the Subsequent Mortgage Loans to be sold to the Trust Fund and
the aggregate principal balance of such Subsequent Mortgage Loans as of the
Subsequent Cut-off Date. The Addition Notice shall be given not later than three
Business Days prior to the related Subsequent Transfer Date and shall be
substantially in the form attached hereto as Exhibit O.
"Adjustable Rate Mortgage Loan": A Mortgage Loan which provides at any
period during the life of such loan for the adjustment of the Mortgage Rate
payable in respect thereto. The Adjustable Rate Mortgage Loans are identified as
such on the Mortgage Loan Schedule.
"Adjustment Date": With respect to each Adjustable Rate Mortgage Loan,
each adjustment date, on which the Mortgage Rate of such Mortgage Loan changes
pursuant to the related Mortgage Note. The first Adjustment Date following the
Cut-off Date as to each Adjustable Rate Mortgage Loan is set forth in the
Mortgage Loan Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance made by
the Master Servicer in respect of any Distribution Date pursuant to Section
4.04.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
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"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all federal, state
and local laws, statutes, rules and regulations applicable thereto.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of Certificates, the
date set forth as such in the Preliminary Statement.
"Available Funds": With respect to any Distribution Date, an amount
equal to the sum of (A) the excess of (i) the sum of (a) the aggregate of the
related Monthly Payments received on or prior to the Determination Date, (b)
Liquidation Proceeds, Insurance Proceeds, Principal Prepayments and other
unscheduled recoveries of principal and interest in respect of the Mortgage
Loans during the related Prepayment Period, (c) the aggregate of any amounts
received in respect of a related REO Property withdrawn from any REO Account and
deposited in the Collection Account for such Distribution Date, (d) the
aggregate of any amounts deposited in the Collection Account by the Master
Servicer in respect of related Prepayment Interest Shortfalls for such
Distribution Date, (e) the aggregate of any Advances made by the Master Servicer
for such Distribution Date, (f) the aggregate of any related advances made by
the Trustee for such Distribution Date pursuant to Section 7.02, (g) with
respect to the first Distribution Date, the Initial Deposit, (h) with respect to
the Distribution Date immediately following the end of the Funding Period, any
amounts in the Pre-Funding Account after giving effect to any purchase of
Subsequent Mortgage Loans and (i) with respect to each Distribution Date during
the Funding Period, any amounts withdrawn by the Trustee from the Interest
Coverage Account for distribution on the Certificates over (ii) the sum of (a)
amounts reimbursable or payable to the Master Servicer pursuant to Section
3.11(a), (b) amounts deposited in the Collection Account or the Distribution
Account pursuant to clauses (a) through (h) above, as the case may be, in error
and (c) the amount of any Prepayment Charges collected by the Master Servicer in
connection with the full or partial prepayment of any of the Mortgage Loans and
any Master Servicer Prepayment Charge Payment Amount; and (B) the sum of the
following: (i) from amounts available in Reserve Fund I, the excess of the
amount to be distributed pursuant to Section 4.01(a)(ii) over Available Funds
(calculated without reference to this clause (B)) that would be available to pay
such amount; (ii) from amounts available in Reserve Fund I, the excess of (a)
the lesser of the Extra Principal Distribution Amount and the amount of Realized
Losses incurred during the related Prepayment Period over (b) Available Funds
(calculated without reference to this clause (B)) that would be available to pay
such amount;
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(iii) any principal or interest for the Certificates to be paid under the Policy
after the inclusion of the amounts described in clauses (i) and (ii) of this
clause (B).
"Balloon Mortgage Loan": A Mortgage Loan that provides for the payment
of the unamortized principal balance of such Mortgage Loan in a single payment
at the maturity of such Mortgage Loan that is substantially greater than the
preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal balance of a
Mortgage Loan in a single payment at the maturity of such Mortgage Loan that is
substantially greater than the preceding Monthly Payment.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Basic Principal Distribution Amount": With respect to any Distribution
Date, the excess of (i) the Principal Remittance Amount for such Distribution
Date over (ii) the Overcollateralization Release Amount, if any, for such
Distribution Date.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which the Certificate Insurer or banking or savings institutions in the State of
Delaware, the State of New York, the State of Maryland, the State of California,
the State of Minnesota, the Commonwealth of Pennsylvania or in the city in which
the Corporate Trust Office of the Trustee is located are authorized or obligated
by law or executive order to be closed.
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificateholder" or "Holder": The Person in whose name a Certificate
is registered in the Certificate Register and the Certificate Insurer to the
extent of Cumulative Insurance Payments, except that a Disqualified Organization
or non-U.S. Person shall not be a Holder of a Class R
Certificate for any purpose hereof.
"Certificate Insurer": Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Certificate Margin": On each Distribution Date (A) on or prior to the
Optional Termination Date, 0.38% per annum and (B) after the Optional
Termination Date, 0.76% per annum.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
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"Certificate Principal Balance": With respect to any Class of Regular
Certificates (other than the Class S Certificates) immediately prior to any
Distribution Date, will be equal to the Initial Certificate Principal Balance
thereof reduced by the sum of all amounts actually distributed in respect of
principal of such Class on all prior Distribution Dates. The Class S
Certificates will not have a Certificate Principal Balance.
"Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.
"Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in the Percentage Interest evidenced thereby.
"Class A Certificate": Any one of the Class A Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-1, representing the right
to distributions as set forth herein and therein and evidencing a
regular interest in REMIC II.
"Class A Certificateholder": Any Holder of a Class A Certificate.
"Class P Certificate": Any one of the Class P Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-3, representing the right
to distributions as set forth herein and therein and evidencing a regular
interest in REMIC II.
"Class R Certificate": The Class R Certificate executed by the Trustee,
and authenticated and delivered by the Certificate Registrar, substantially in
the form annexed hereto as Exhibit A-4 and evidencing the ownership of the Class
R-I Interest and the Class R-II Interest.
"Class R-I Interest": The uncertificated Residual Interest in REMIC I.
"Class R-II Interest": The uncertificated Residual Interest in REMIC
II.
"Class S Certificate": Any one of the Class S Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-2, representing the right
to distributions as set forth herein and therein and evidencing the
ownership of Component SA and Component SB.
"Close of Business": As used herein, with respect to any Business Day,
5:00 p.m.
"Closing Date": October 28, 1999.
"Code": The Internal Revenue Code of 1986 as it may be amended from
time to time.
"Collection Account": The account or accounts created and maintained by
the Master Servicer pursuant to Section 3.10(a), which shall be entitled
"Norwest Bank Minnesota, National
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Association, as Trustee, in trust for registered Holders of Option One Mortgage
Loan Trust 1999-3, Asset-Backed Certificates, Series 1999-3," or such other
account title as consented to in writing by the Certificate Insurer and which
must be an Eligible Account.
"Compensating Interest": As defined in Section 3.24 hereof.
"Component": Either of Component SA or Component SB.
"Component Notional Amount": Immediately prior to any Distribution
Date, with respect to each of Component SA and Component SB, an amount equal to
the Uncertificated Principal Balance of Uncertificated REMIC I Regular Interest
LTB.
"Component SA": Component SA representing the right to distributions as
set forth herein and evidencing a regular interest in REMIC II, the ownership of
which Component shall be represented by the Class S Certificates.
"Component SB": Component SB representing the right to distributions as
set forth herein and evidencing a regular interest in REMIC II, the ownership of
which Component shall be represented by the Class S Certificates.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at Sixth and Marquette,
Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Option One Series 1999-3, or at such
other address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Certificate Insurer, the Master Servicer
and the Seller.
"Cumulative Loss Percentage": With respect to any Distribution Date,
the percentage equivalent of the fraction obtained by dividing (i) the aggregate
of Realized Losses on the Mortgage Loans from the Cut-off Date through the end
of the related Prepayment Period by (ii) the sum of the Initial Principal
Balances of the Mortgage Loans and the Original Pre-Funded Amount.
"Custodian": Norwest Bank Minnesota, National Association, as custodian
of the Mortgage Files, and any successor thereto.
"Cut-off Date": With respect to each Mortgage Loan, the later of (i)
the date of origination of such Mortgage Loan or (ii) October 1, 1999.
"Cut-off Date Aggregate Principal Balance": With respect to the
Mortgage Pool, the aggregate of the Cut-off Date Principal Balances of the
Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date (or as of the
applicable date of substitution with respect to a Qualified Substitute Mortgage
Loan).
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"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficiency Amount": With respect to any Distribution Date, the sum of
(A) the excess, if any, of (i) the aggregate of the Interest Distributable
Amounts for the Class A Certificates and the Class S Certificates over (ii)
funds on deposit in the Distribution Account and Reserve Fund I available to be
distributed therefor on such Distribution Date and (B) the Guaranteed Principal
Amount.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under
the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c) hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Qualified Substitute Mortgage Loans.
"Delinquent": Any Mortgage Loan, the Monthly Payment due on a Due Date
which is not made by the Close of Business on the next scheduled Due Date for
such Mortgage Loan. For example, a Mortgage Loan is 60 or more days Delinquent
if the Monthly Payment due on a Due Date is not made by the Close of Business on
the second scheduled Due Date after such Due Date.
"Depositor": Option One Mortgage Acceptance Corporation, a Delaware
corporation, or any successor in interest.
"Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"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": With respect to any Distribution Date, the 15th
day of the calendar month in which such Distribution Date occurs or, if such
15th day is not a Business Day, the Business Day immediately preceding such 15th
day.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work
8
thereon or any use of such REO Property in a trade or business conducted by the
REMIC other than through an Independent Contractor; provided, however, that the
Trustee (or the Master Servicer on behalf of the Trustee) shall not be
considered to Directly Operate an REO Property solely because the Trustee (or
the Master Servicer on behalf of the Trustee) establishes rental terms, chooses
tenants, enters into or renews leases, deals with taxes and insurance, or makes
decisions as to repairs or capital expenditures with respect to such REO
Property.
"Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the United
States, any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
unless such organization is subject to the tax imposed by Section 511 of the
Code, (iii) any organization described in Section 1381(a)(2)(C) of the Code,
(iv) an "electing large partnership" within the meaning of Section 775 of the
Code or (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel provided by nationally recognized counsel to the Trustee that the
holding of an ownership interest in a Class R Certificate by such Person may
cause the Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in the Class R Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof, if all of its activities are subject
to tax and, a majority of its board of directors is not selected by a
governmental unit. The term "United States", "state" and "international
organizations" shall have the meanings set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Norwest Bank Minnesota, National Association, as Trustee,
in trust for the registered Certificateholders of Option One Mortgage Loan Trust
1999-3, Asset-Backed Certificates, Series 1999-3" and which must be an Eligible
Account.
"Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in November 1999.
"Due Date": With respect to each Mortgage Loan and any Distribution
Date, the first day of the calendar month in which such Distribution Date occurs
on which the Monthly Payment for such Mortgage Loan was due, (or, in the case of
any Mortgage Loan under the terms of which the Monthly Payment for such Mortgage
Loan was due on a day other than the first day of the calendar month in which
such Distribution Date occurs, the day during the related Due Period on which
such Monthly Payment was due) exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
9
"Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated
P-1
by Xxxxx'x and A-1 by S&P (or comparable ratings if Xxxxx'x and S&P are not the
Rating Agencies) at the time any amounts are held on deposit therein, (ii) an
account or accounts the deposits in which are fully insured by the FDIC (to the
limits established by such corporation), the uninsured deposits in which account
are otherwise secured such that, as evidenced by an Opinion of Counsel delivered
to the Trustee and to each Rating Agency, the Certificateholders will have a
claim with respect to the funds in such account or a perfected first priority
security interest against such 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 with which such account is
maintained, (iii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution, national
banking association or trust company acting in its fiduciary capacity or (iv) an
account otherwise (A) acceptable to each Rating Agency without reduction or
withdrawal of their then current ratings of the Certificates as evidenced by a
letter from each Rating Agency to the Trustee and the Certificate Insurer and
(B) acceptable to the Certificate Insurer. Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, fire and hazard insurance premiums and other payments
required to be escrowed by the Mortgagor with the mortgagee pursuant to any
Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of real
property.
"Excess Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (i) the Overcollateralized Amount for such
Distribution Date, assuming that 100% of the Principal Remittance Amount is
applied as a principal payment on such Distribution Date over (ii)
the Overcollateralization Target Amount for such Distribution Date.
"Extra Principal Distribution Amount": With respect to any Distribution
Date, the lesser of (x) the sum of the General Excess Available Amount and any
amounts in Reserve Fund I that are permitted to be paid as Extra Principal
Distribution Amount in accordance with Section 4.01(a)(v) for such Distribution
Date and (y) the Overcollateralization Deficiency Amount for such Distribution
Date.
"Xxxxxx Xxx": Federal National Mortgage Association or any successor
thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor thereto.
"Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller or the Master Servicer pursuant to or as contemplated by Section
2.03 or 10.01), a determination made by the Master Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries
10
which the Master Servicer, in its reasonable good faith judgment, expects to be
finally recoverable in respect thereof have been so recovered. The Master
Servicer shall maintain records, prepared by a Servicing Officer, of each Final
Recovery Determination made thereby.
"Fiscal Agent": As defined in the Policy.
"Fixed Rate Mortgage Loan": A first or second lien Mortgage Loan which
provides for a fixed Mortgage Rate payable with respect thereto. The Fixed Rate
Mortgage Loans are identified as such on the Mortgage Loan Schedule.
"Foreclosure Price": The amount reasonably expected to be received from
the sale of the related Mortgaged Property net of any expenses associated with
foreclosure proceedings.
"Formula Rate": For any Distribution Date, the lesser of (i) LIBOR plus
the Certificate Margin and (ii) the Maximum Cap.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation, or any
successor thereto.
"Funding Period": The period beginning on the Closing Date and ending
on the earlier to occur of the date upon which (a) the amount on deposit in the
Pre-Funding Account has been reduced to zero or (b) November 30, 1999.
"General Excess Available Amount": With respect to each Distribution
Date, the amount, if any, of Available Funds remaining after the distributions
pursuant to clauses (i) through (iv) under Section 4.01(a).
"Gross Margin": With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Guaranteed Principal Amount": means (a) for any Distribution Date
(other than a Distribution Date specified in (b)), the amount, if any, by which
the Certificate Principal Balance of the Class A Certificates exceeds the sum of
the Pool Balance, the amounts remaining in the Pre- Funding Account and the
amount in Reserve Fund I as of the related Determination Date (in each case,
after giving effect to all distributions of principal on the Class A
Certificates on such Distribution Date) and (b) on the Distribution Date in
December 2029 or the earlier termination of the Trust Fund pursuant to the terms
hereof (after giving effect to all other distributions of principal on the Class
A Certificates), an amount equal to the Certificate Principal Balance of the
Class A Certificates.
"Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Master Servicer and
their respective Affiliates, (b) does not have any direct financial interest in
or any material indirect financial interest in the Depositor or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee,
11
partner, director or Person performing similar functions; provided, however,
that a Person shall not fail to be Independent of the Depositor or the Master
Servicer or any Affiliate thereof merely because such Person is the beneficial
owner of 1% or less of any class of securities issued by the Depositor or the
Master Servicer or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to REMIC I and
REMIC II within the meaning of Section 856(d)(3) of the Code if such REMIC were
a real estate investment trust (except that the ownership tests set forth in
that section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as each such
REMIC does not receive or derive any income from such Person and provided that
the relationship between such Person and such REMIC is at arm's length, all
within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Master Servicer) if the Trustee has received an
Opinion of Counsel to the effect that the taking of any action in respect of any
REO Property by such Person, subject to any conditions therein specified, that
is otherwise herein contemplated to be taken by an Independent Contractor will
not cause such REO Property to cease to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Index": With respect to each Adjustable Rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any Regular
Certificate (other than a Class S Certificate), the amount designated "Initial
Certificate Principal Balance" on the face thereof.
"Initial Deposit": $0.00 in cash to be deposited by the Depositor with
the Trustee for deposit into the Initial Deposit Account on or before the
Closing Date, which represents with respect to each Mortgage Loan having a first
Due Date in the Due Period relating to the Distribution Date in December 1999,
interest accrued at the Net Mortgage Rate for each such Mortgage Loan for
November 1999.
"Initial Deposit Account": The Initial Deposit Account established in
accordance with Section 3.04(b) hereof and maintained by the Trustee, which
shall be entitled "Norwest Bank Minnesota, National Association, as Trustee, in
trust for registered Holders of Option One Mortgage Loan Trust 1999-3,
Asset-Backed Certificates, Series 1999-3 Initial Deposit Account", which must be
an Eligible Account.
"Initial Mortgage Loan": Any of the Mortgage Loans included in the
Trust Fund as of the Closing Date.
"Insurance Agreement": The insurance and indemnity agreement, dated as
of October 28, 1999, among the Certificate Insurer, the Seller and the
Depositor.
12
"Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy (other than the Policy) covering a Mortgage Loan, to the
extent such proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Master Servicer would follow in servicing mortgage loans
held for its own account, subject to the terms and conditions of the related
Mortgage Note and Mortgage.
"Insured Payment": Shall mean with respect to the Class A Certificates
and the Class S Certificates as of any Distribution Date, the sum of (i) any
shortfall in amounts available in the Distribution Account and Reserve Fund I to
pay the sum of the Interest Distributable Amounts on such Certificates for the
related Accrual Period and (ii) the Guaranteed Principal Amount.
"Insurer Default": The existence and continuance of any of the
following:
(a) the Certificate Insurer fails to make a payment required under the
Policy in accordance with its terms;
(b) the Certificate Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the Bankruptcy
Code or any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, (B) makes a
general assignment for the benefit of its creditors, or (C) has an
order for relief entered against it under the Bankruptcy Code or any
other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final and
nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority enters a final and
nonappealable order, judgment or decree (A) appointing a custodian,
trustee, agent or receiver for the Certificate Insurer or for all or
any material portion of its property or (B) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the
Certificate Insurer (or the taking of possession of all or any material
portion of the property of the Certificate Insurer).
"Interest Coverage Account": The account established and maintained
pursuant to Section 4.06 , as defined therein.
"Interest Coverage Amount": The amount to be paid by the Depositor to
the Trustee for deposit in the Interest Coverage Account on the Closing Date
pursuant to Section 4.06, which amount is $0.00.
"Interest Determination Date": With respect to the Class A Certificates
and for each Accrual Period, the second LIBOR Business Day preceding the
commencement of such Accrual Period.
"Interest Distributable Amount": With respect to any Distribution Date
and the Class A Certificates, the Class S Certificates, Component SA and
Component SB, the sum of (i) the related Monthly Interest Distributable Amount
for such Class or Component for such Distribution Date and (ii) the related
Unpaid Interest Shortfall Amount for such Class or Component for such
Distribution Date.
13
"Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any related
Due Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent on a
contractual basis for such Due Period and not previously recovered.
"LIBOR": With respect to each Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of the
London interbank offered rate for one-month United States dollar deposits, as
such rate appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on
such Interest Determination Date. If such rate does not appear on Telerate Page
3750, the rate for such Interest Determination Date will be determined on the
basis of the offered rates of the Reference Banks for one-month United States
dollar deposits, as of 11:00 a.m. (London time) on such Interest Determination
Date. The Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. On such Interest
Determination Date, LIBOR for the related Accrual Period will be established by
the Trustee as follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 1/16 of
1%); and
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest
Rate.
"LIBOR Business Day": Any day on which banks in London, England and The
City of New York are open and conducting transactions in foreign currency and
exchange.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds which it expects to recover
with respect to the liquidation of the Mortgage Loan or disposition of the
related REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.23 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received by
the Master Servicer in connection with
14
(i) the taking of all or a part of a Mortgaged Property by exercise of the power
of eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan by means of a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.23 or Section 10.01.
"Loan-to-Value Ratio": As of any date and Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the Principal Balance of
the Mortgage Loan (and, with respect to any second lien Mortgage Loan, the
Principal Balance of the related first lien Mortgage Loan), and the denominator
of which is the Value of the related Mortgaged Property.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note and indemnifying the Trust against any loss, cost or
liability resulting from the failure to deliver the original Mortgage Note) in
the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates evidencing
at least 51% of the Voting Rights.
"Majority Class R Certificateholders": The Holders of Class R
Certificates evidencing at least a 51% Percentage Interest in the Class R
Certificates.
"Master Servicer": Option One Mortgage Corporation, a California
corporation, or any successor servicer appointed as herein provided, in its
capacity as Master Servicer hereunder.
"Master Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Master Servicer or which is 50% or more owned by
the Master Servicer and (ii) which is qualified to service residential mortgage
loans.
"Master Servicer Event of Termination": One or more of the events
described in Section 7.01.
"Master Servicer Extension Notice": As defined in Section 7.01(c).
"Master Servicer Portion": The portion of any income and gain realized
(or loss incurred) from the investment of funds deposited in the Distribution
Account payable to the Master Servicer, which portion of income and gain shall
be based on amounts in the Distribution Account from the Master Servicer
Remittance Date until the 22nd day of the related calendar month (or, if such
22nd day is not a Business Day, the next succeeding Business Day).
"Master Servicer Prepayment Charge Payment Amount": The amounts payable
by the Master Servicer in respect of any waived Prepayment Charges pursuant to
Section 2.05 or Section 3.01.
15
"Master Servicer Remittance Date": With respect to any Distribution
Date, the 20th day of the calendar month in which such Distribution Date occurs
(or, if such 20th day is not a Business Day, the next succeeding Business Day).
"Maximum Cap": For any Distribution Date a per annum rate equal to the
product of (x) weighted average of the Maximum Mortgage Rates of the Adjustable
Rate Mortgage Loans and the Mortgage Rate of the Fixed Rate Mortgage Loans as of
the first day of the month preceding the month of such Distribution Date less
the sum of (A) the Servicing Fee Rate, (B) the rate at which the premium and
Premium Supplement are payable to the Certificate Insurer multiplied by a
fraction, the numerator of which is the Certificate Principal Balance of the
Class A Certificates immediately prior to such Distribution Date and the
denominator of which is the current outstanding Principal Balance of the
Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date, (C) the Monthly Interest Distributable for the Class S
Certificates for such Distribution Date multiplied by a fraction, the numerator
of which is twelve and the denominator of which is the aggregate Principal
Balance of the Mortgage Loans as of the first day of the month preceding the
month of such Distribution Date and (D) beginning with the Distribution Date in
November 2000, 0.50% (provided that if on or after the Distribution Date in
November 2005 there is a claim paid on the Policy, 0.75% for each Distribution
Date following the Distribution Date on which such claim was made) and (y) a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.
"Maximum Mortgage Rate": With respect to each Adjustable Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the maximum
Mortgage Rate thereunder.
"Minimum Mortgage Rate": With respect to each Adjustable Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
"Monthly Interest Distributable Amount": With respect to any
Distribution Date and: (i) the Class A Certificates, the amount of interest
accrued during the related Accrual Period at the Pass- Through Rate on the
Certificate Principal Balance of such Class immediately prior to such
Distribution Date, (ii) Component SA and Component SB, the amount of interest
accrued during the related Accrual Period at the related Pass-Through Rate on
the Component Notional Amount of such Component immediately prior to such
Distribution Date, in each case, reduced by any Net Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls (allocated to such Certificate or
Component based on their respective entitlements to interest irrespective of any
Net Prepayment Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution Date). With respect to any Distribution Date and the Class S
Certificates, the aggregate of the Monthly Interest Distributable Amounts for
Component SA and Component SB for such Distribution Date.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to
16
Section 3.01; and (c) on the assumption that all other amounts, if any, due
under such Mortgage Loan are paid when due.
"Moody's": Xxxxx'x Investors Service, Inc. or its successor in
interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien or second lien on, or first priority or second priority security
interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to time held as
a part of the Trust Fund, the Mortgage Loans so held being identified in the
Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the Master
Servicer, in its capacity as Seller and the Depositor, regarding the transfer of
the Mortgage Loans by the Seller to or at the direction of the Depositor,
substantially in the form attached hereto as Exhibit C.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC I on such date, attached hereto as Exhibit D, as supplemented
by each schedule of Subsequent Mortgage Loans attached to a Subsequent Transfer
Instrument. The Mortgage Loan Schedule shall be prepared by the Seller and shall
set forth the following information with respect to each Mortgage Loan, as
applicable:
(1) the Mortgage Loan identifying number;
(2) the Mortgagor's name;
(3) the street address of the Mortgaged Property including the
state and zip code;
(4) a code indicating whether the Mortgaged Property was
represented by the borrower, at the time of origination, as being
owner-occupied;
(5) the type of Residential Dwelling constituting the
Mortgaged Property;
(6) the original months to maturity;
(7) the stated remaining months to maturity from the Cut-off
Date (or Subsequent Cut-off Date, with respect to a Subsequent Mortgage
Loan) based on the original amortization schedule;
(8) the Loan-to-Value Ratio at origination;
17
(9) the Mortgage Rate in effect immediately following the
Cut-off Date (or Subsequent Cut-off Date, with respect to a Subsequent
Mortgage Loan);
(10) the date on which the first Monthly Payment was due on
the Mortgage Loan;
(11) the stated maturity date;
(12) the amount of the Monthly Payment at origination;
(13) the amount of the Monthly Payment due on the first Due
Date after the Cutoff Date (or Subsequent Cut-off Date, with respect to
a Subsequent Mortgage Loan);
(14) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(15) the original principal amount of the Mortgage Loan;
(16) the Stated Principal Balance of the Mortgage Loan as of
the Close of Business on the Cut-off Date (or Subsequent Cut-off Date,
with respect to a Subsequent Mortgage
Loan);
(17) a code indicating the purpose of the Mortgage Loan (I.E.,
purchase financing, rate/term refinancing, cash-out refinancing);
(18) the Mortgage Rate at origination;
(19) a code indicating the documentation program (I.E., full
documentation, limited documentation, stated income documentation);
(20) the risk grade;
(21) the Value of the Mortgaged Property;
(22) the sale price of the Mortgaged Property, if applicable;
(23) the actual unpaid principal balance of the Mortgage Loan
as of the Cut-off Date (or Subsequent Cut-off Date, with respect to a
Subsequent Mortgage Loan);
(24) the type and term of the related Prepayment Charge;
(25) the rounding code;
(26) the program code;
(27) a code indicating the lien priority for Mortgage Loans;
18
(28) with respect to each Adjustable Rate Mortgage Loan, the
minimum Mortgage Rate;
(29) with respect to each Adjustable Rate Mortgage Loan, the
maximum Mortgage Rate;
(30) with respect to each Adjustable Rate Mortgage Loan, the
Gross Margin;
(31) with respect to each Adjustable Rate Mortgage Loan, the
next Adjustment Date; and
(32) with respect to each Adjustable Rate Mortgage Loan, the
Periodic Rate Cap.
The Mortgage Loan Schedule shall set forth the following information,
with respect to the Mortgage Loans in the aggregate as of the Cut-off Date (or
Subsequent Cut-off Date, with respect to a Subsequent Mortgage Loan): (1) the
number of Mortgage Loans; (2) the current Principal Balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule
shall be amended from time to time by the Seller in accordance with the
provisions of this Agreement. With respect to any Qualified Substitute Mortgage
Loan, Cut-off Date shall refer to the related Cut-off Date for such Mortgage
Loan, determined in accordance with the definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D
from time to time, and any REO Properties acquired in respect thereof and as
supplemented by any Subsequent Mortgage Loans identified on each schedule of
Subsequent Mortgage Loans attached to a Subsequent Transfer Instrument.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate (i) in the case of
each Fixed Rate Mortgage Loan shall remain constant at the rate set forth in the
Mortgage Loan Schedule as the Mortgage Rate in effect immediately following the
Cut-off Date (or Subsequent Cut-off Date, with respect to a Subsequent Mortgage
Loan) and (ii) in the case of each Adjustable Rate Mortgage Loan (A) as of any
date of determination until the first Adjustment Date following the Cut-off Date
(or Subsequent Cut-off Date, with respect to a Subsequent Mortgage Loan) shall
be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate in
effect immediately following the Cut-off Date (or Subsequent Cutoff Date, with
respect to a Subsequent Mortgage Loan) and (B) as of any date of determination
thereafter shall be the rate as adjusted on the most recent Adjustment Date, to
equal the sum, rounded to the next highest or nearest 0.125% (as provided in the
Mortgage Note), of the Index, determined as set forth in the related Mortgage
Note, plus the related Gross Margin subject to the limitations set forth in the
related Mortgage Note. With respect to each Mortgage Loan that becomes an REO
Property, as of any date of determination, the annual rate determined in
accordance with the immediately preceding sentence as of the date such Mortgage
Loan became an REO Property.
19
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of an Estate in Real Property improved by
a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"National": National Westminster Bank Plc, or its successor in
interest.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan or any other disposition of related Mortgaged Property (including REO
Property) the related Liquidation Proceeds net of Advances, Servicing Advances,
Servicing Fees and any other accrued and unpaid servicing fees received and
retained in connection with the liquidation of such Mortgage Loan or Mortgaged
Property.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the related
REO Property), as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Rate for such Mortgage Loan minus the
Servicing Fee Rate.
"Net Prepayment Interest Shortfall": With respect to any Distribution
Date, the excess, if any, of any Prepayment Interest Shortfalls for such date
over the related Compensating Interest.
"Net WAC Rate": With respect to each Distribution Date, a per annum
rate equal to the product of (x)(A) for the first 12 Distribution Dates, a per
annum rate equal to the weighted average of (1) the Uncertificated REMIC I
Pass-Through Rate for Uncertificated REMIC I Regular Interest LTA, weighted on
the basis of the Uncertificated Principal Balance of REMIC I Regular Interest
LTA and (2) the Uncertificated REMIC I Pass-Through Rate for Uncertificated
REMIC I Regular Interest LTB less 4.0%, weighted on the basis of the
Uncertificated Principal Balance of REMIC I Regular Interest LTB; (B) for the
next 18 Distribution Dates, a per annum rate equal to the weighted average of
(1) the Uncertificated REMIC I Pass-Through Rate for Uncertificated REMIC I
Regular Interest LTA, weighted on the basis of the Uncertificated Principal
Balance of REMIC I Regular Interest LTA and (2) the Uncertificated REMIC I
Pass-Through Rate for Uncertificated REMIC I Regular Interest LTB less 2.5%,
weighted on the basis of the Uncertificated Principal Balance of REMIC I Regular
Interest LTB; and (C) for each Distribution Date thereafter, a per annum rate
equal to the Net Mortgage Rate of the Mortgage Loans, in each case, less the sum
of (i) the rate at which the premium and Premium Supplement payable to the
Certificate Insurer multiplied by a fraction, the numerator of which is the
Certificate Principal Balance of the Class A Certificates immediately prior to
such Distribution Date and the denominator of which is the aggregate Principal
Balance of the Mortgage Loans as of the first day of the month preceding the
month of such Distribution Date and (ii) beginning with the Distribution Date in
November 2000, 0.50% (provided that if on or after the Distribution Date in
November 2005 there is a claim paid on the Policy, 0.75% for each Distribution
Date following the Distribution Date on which such claim was made) and (y) a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.
"Net WAC Rate Carryover Amount": With respect to any Distribution Date,
the sum of (A) the positive excess of (i) the amount of interest payable to such
Certificates on such Distribution Date calculated at the Formula Rate, over (ii)
the amount of interest payable on such Certificates at
20
the Net WAC Rate for such Distribution Date and (B) the Net WAC Rate Carryover
Amount for all previous Distribution Dates not previously paid, together with
interest thereon at a rate equal to the Formula Rate for such Certificates for
such Distribution Date (it being understood that such amount is not covered by
the Policy).
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously
made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Master Servicer, will not be ultimately recoverable
from Late Collections, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
"Notional Amount": Immediately prior to any Distribution Date, with
respect to the Class S Certificates, an amount equal to the Uncertificated
Principal Balance of Uncertificated REMIC I Regular Interest LTB.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Seller
or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Master Servicer,
acceptable to the Trustee, except that any opinion of counsel relating to (a)
the qualification of any REMIC as a REMIC or (b) compliance with the REMIC
Provisions which must be an opinion of Independent counsel.
"Optional Termination Date": The first Distribution Date on which the
Seller or the Certificate Insurer may opt to terminate the Trust Fund pursuant
to Section 10.01.
"Original Class Certificate Principal Balance": With respect to the
Class A and Class P Certificates, the corresponding amounts set forth opposite
such Class above in the Preliminary Statement.
"Original Notional Amount": With respect to the Class S Certificates,
$15,000,000.00.
"Original Pre-Funded Amount": The amount deposited by the Depositor in
the Pre-Funding Account on the Closing Date, which amount is $34,114,821.14.
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization Target
Amount exceeds the Overcollateralized Amount on such Distribution Date (after
giving effect to distributions in respect of the Basic Principal Distribution
Amount on such Distribution Date).
21
"Overcollateralization Deficit": With respect to any Distribution Date
is equal to the excess, if any, of (a) the Certificate Principal Balance of the
Class A Certificates then outstanding over (b) the sum of (i) the aggregate
principal balances of the Mortgage Loans then outstanding plus (ii) the
Pre-Funded Amount, if any.
"Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the Excess Overcollateralized Amount.
"Overcollateralization Target Amount": With respect to any Distribution
Date prior to the Stepdown Date, an amount equal to the greater of (i) 3.5% of
the initial Stated Principal Balance of the Mortgage Loans and the Original
Pre-Funded Amount, plus the Spread Squeeze Overcollateralization Increase Amount
or (ii) the Step Up Required Overcollateralization Amount, plus, the Spread
Squeeze Overcollateralization Increase Amount. Notwithstanding the foregoing,
with respect to the first twenty Distribution Dates, the amount determined
pursuant to clause (ii) above shall not exceed 7.0% of the then outstanding
Stated Principal Balance of the Mortgage Loans and any amounts remaining in the
Pre-Funding Account. With respect to any Distribution Date on or after the
Stepdown Date, an amount equal to the greatest of (i) 7.0% of the aggregate
Stated Principal Balance of the Mortgage Loans, (ii) the Step Up Required
Overcollateralization Amount and (iii) 0.50% of the initial Stated Principal
Balance of the Mortgage Loans and the Original Pre- Funded Amount, plus, with
respect to clause (i) and clause (ii) of this sentence, the Spread Squeeze
Overcollateralization Increase Amount. Notwithstanding the foregoing, if the
Master Servicer so requests, the Overcollateralization Target Amount may, with
the consent of the Certificate Insurer, be reduced below the amounts set forth
above.
"Overcollateralized Amount": For any Distribution Date, the amount, if
any, by which (i) the Pool Balance and the amounts remaining in the Pre-Funding
Account as of the related Determination Date exceeds (ii) the aggregate
Certificate Principal Balance of the Class A Certificates as of such
Distribution Date after giving effect to distributions to be made on such
Distribution Date.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Pass-Through Rate": As to any Distribution Date and with respect to:
(i) the Class A Certificates, the lesser of (x) the Formula Rate for such
Distribution Date and (b) the Net WAC Rate for such Distribution Date, (ii) the
Class S Certificates, a per annum rate equal to 4.00% for the Distribution Date
in November 1999 through the Distribution Date in October 2000, 2.50% for the
Distribution Date in November 2000 through the Distribution Date in April 2002
and 0.00% thereafter, (iii) Component SA, a per annum rate equal to 2.50% for
the Distribution Date in November 1999 through the Distribution Date in April
2002 and 0.00% thereafter and (iv) Component SB, a per annum rate equal to 1.50%
per annum for the Distribution Date in November 1999 through the Distribution
Date in October 2000 and 0.00% thereafter. Notwithstanding the foregoing, for
federal income tax purposes and under the REMIC Provisions, (A) the Class S
Certificates will not have a Pass-Through Rate, (B) the Monthly Interest
Distributable Amount for
22
the Class S Certificates and any Distribution Date will be deemed to be the
aggregate of the Monthly Interest Distributable Amounts for Component SA and
Component SB for such Distribution Date and (C) the Interest Distributable
Amount for the Class S Certificates and any Distribution Date will be deemed to
be 100% of the aggregate of the Interest Distributable Amounts for Component SA
and Component SB for such Distribution Date.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05.
"Percentage Interest": With respect to any Certificate (other than a
Class R Certificate), a fraction, expressed as a percentage, the numerator of
which is the Initial Certificate Principal Balance or Notional Amount
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance or initial Notional Amount of the related
Class. With respect to a Class R Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as stated on the face of such Certificate;
provided, however, that the sum of all such percentages for each such Class
totals 100%.
"Periodic Rate Cap": With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage Rate for such
Mortgage Loan may increase or decrease (without regard to the Maximum Mortgage
Rate or the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage
Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued or managed by the Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates or for which an Affiliate of the Trustee
serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit
of, bankers' acceptances issued by or federal funds sold by any
depository institution or trust company (including the Trustee or its
agent acting in their respective commercial capacities) incorporated
under the laws of the United States of America or any state thereof and
subject to supervision and examination by federal and/or state
authorities, so long as, at the time of such investment or contractual
commitment providing for such investment, such depository institution
or trust company or its ultimate parent has a short-term uninsured debt
rating in one of the two highest available ratings of S&P and the
highest available rating category of Moody's and provided that each
such investment has an original maturity of no more than 365 days and
(B) any other demand or time deposit or deposit which is fully insured
by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered
into with a depository institution or trust company (acting as
principal) rated A-1 or higher by S&P and rated A2 or higher by
23
Moody's, provided, however, that collateral transferred pursuant to
such repurchase obligation must be of the type described in clause (i)
above and must (A) be valued daily at current market prices plus
accrued interest, (B) pursuant to such valuation, be equal, at all
times, to 105% of the cash transferred by the Trustee in exchange for
such collateral and (C) be delivered to the Trustee or, if the Trustee
is supplying the collateral, an agent for the Trustee, in such a manner
as to accomplish perfection of a security interest in the collateral by
possession of certificated securities;
(iv) securities bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of the United
States of America or any State thereof and that are rated by a Rating
Agency in its highest long-term unsecured rating category at the time
of such investment or contractual commitment providing for such
investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand
or on a specified date not more than 30 days after the date of
acquisition thereof) that is rated by a Rating Agency in its highest
short-term unsecured debt rating available at the time of such
investment;
(vi) units of money market funds registered under the
Investment Company Act of 1940 including funds managed or advised by
the Trustee or an affiliate thereof having a rating by S&P of AAAm-G or
AAAm and if rated by Moody's, rated Aaa, Aa1 or Aa2; and
(vii) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to the Rating Agencies and
the Certificate Insurer in writing as a permitted investment of funds
backing securities having ratings equivalent to its highest initial
rating of the Class A Certificates;
provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any transferee of a Residual Certificate other
than a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Policy": The Certificate Guaranty Insurance Policy (No. 50877-N) with
respect to the Class A Certificates and the Class S Certificates and all
endorsements thereto dated the Closing Date, issued by the Certificate Insurer
for the benefit of the Holders of the Class A Certificates and the Class S
Certificates.
24
"Policy Payments Account": The account established pursuant to Section
11.04 hereof.
"Pool Balance": As of any date of determination, the aggregate
principal balance of the Mortgage Loans as of such date.
"Preference Amount": As defined in the Policy.
"Preference Claim": As defined in Section 11.04(d).
"Pre-Funding Account": The account established and maintained pursuant
to Section 4.05, as defined herein.
"Premium Amount": As to any Distribution Date, the product of the
Premium Percentage and the Certificate Principal Balance of the Class A
Certificates before giving effect to distributions to be made on such
Distribution Date.
"Premium Percentage": As defined in the letter agreement among the
Seller, the Depositor and the Certificate Insurer.
"Premium Supplement": As defined in the Insurance Agreement.
"Prepayment Assumption": As defined in the Prospectus Supplement.
"Prepayment Charge": With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof (other than any Master
Servicer Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of any date, the list of Prepayment
Charges on the Mortgage Loans included in the Trust Fund on such date, attached
hereto as Schedule I (including the Prepayment Charge Summary attached thereto).
The Prepayment Charge Schedule shall set forth the following information with
respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on the
related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan as of
the Cut-off Date (or Subsequent Cut-off Date, with respect
to a Subsequent Mortgage Loan).
25
The Prepayment Charge Schedule shall be amended from time to time by
the Master Servicer in accordance with the provisions of this Agreement.
"Prepayment Interest Excess": With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day and the Determination Date of the calendar month in which such Distribution
Date occurs, an amount equal to interest at the applicable Net Mortgage Rate on
the amount of such Principal Prepayment for the number of days commencing on the
first day of the calendar month in which such Distribution Date occurs and
ending on the date on which such prepayment is so applied.
"Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the day
after the Determination Date in the preceding month and the last day of the
calendar month preceding the month in which such Distribution Date occurs, an
amount equal to interest at the applicable Net Mortgage Rate on the amount of
such Principal Prepayment for the number of days commencing on the date on which
the prepayment is applied and ending on the last day of the calendar month
preceding the month in which such Distribution Date occurs. The obligations of
the Master Servicer in respect of any Prepayment Interest Shortfall are set
forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the period
commencing on the day after the Determination Date in the calendar month
preceding the calendar month in which such Distribution Date occurs (or, in the
case of the first Distribution Date, commencing on the Cut-Off Date) and ending
on the Determination Date of the calendar month in which such Distribution Date
occurs.
"Principal Balance": As to any Mortgage Loan other than a Liquidated
Mortgage Loan, and any day, the related Cut-off Date Principal Balance, MINUS
all collections credited against the Principal Balance of any such Mortgage
Loan. For purposes of this definition, a Liquidated Mortgage Loan shall be
deemed to have a Principal Balance equal to the Principal Balance of the related
Mortgage Loan as of the final recovery of related Liquidation Proceeds and a
Principal Balance of zero thereafter. As to any REO Property and any day, the
Principal Balance of the related Mortgage Loan immediately prior to such
Mortgage Loan becoming REO Property minus any REO Principal Amortization
received with respect thereto on or prior to such day.
"Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing the full amount
of scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.
"Principal Remittance Amount": With respect to any Distribution Date,
the sum of (i) each scheduled payment of principal collected or advanced on the
Mortgage Loans by the Master Servicer that were due during the related Due
Period, (ii) the principal portion of all partial and full principal prepayments
of the Mortgage Loans applied by the Master Servicer during the related
Prepayment Period, (iii) the principal portion of all related Net Liquidation
Proceeds and Insurance Proceeds
26
received during such Prepayment Period, (iv) that portion of the Purchase Price,
representing principal of any repurchased Mortgage Loan, deposited to the
Collection Account during such Prepayment Period, (v) the principal portion of
any related Substitution Adjustments deposited in the Collection Account during
such Prepayment Period, and (vi) on the Distribution Date on which the Trust
Fund is to be terminated pursuant to Section 10.01, that portion of the
Termination Price, in respect of principal.
"Projected Principal Balance": The amount set forth on Exhibit P
hereto.
"Prospectus Supplement": That certain Prospectus Supplement dated
October 26, 1999 relating to the public offering of the Class A Certificates and
the Class S Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
confirmed by an Officers' Certificate from the Master Servicer to the Trustee,
an amount equal to the sum of (i) 100% of the Principal Balance thereof as of
the date of purchase (or such other price as provided in Section 10.01), (ii) in
the case of (x) a Mortgage Loan, accrued interest on such Principal Balance at
the applicable Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the Master Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, the sum of (1)
accrued interest on such Principal Balance at the applicable Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or an advance by the Master Servicer through the
end of the calendar month immediately preceding the calendar month in which such
REO Property was acquired, plus (2) REO Imputed Interest for such REO Property
for each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and Advances that as of the date of purchase had
been distributed as or to cover REO Imputed Interest pursuant to Section 4.04,
(iii) any unreimbursed Servicing Advances and Advances and any unpaid Servicing
Fees allocable to such Mortgage Loan or REO Property, (iv) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan or REO Property pursuant to Section 3.23, and (v) in the case of a Mortgage
Loan required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the Master Servicer or the Trustee in respect of
the breach or defect giving rise to the purchase obligation.
"Qualified Insurer": Any insurance company acceptable to Xxxxxx Xxx.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement or the Mortgage
Loan Purchase Agreement which must, on the date of such substitution, (i) have
an outstanding principal balance (or in the case of a substitution of more than
one mortgage loan for a Deleted Mortgage Loan, an aggregate principal balance),
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of, and not more than 5%
less than, the outstanding principal balance of the Deleted Mortgage Loan as of
the Due Date in the calendar month during which the substitution occurs, (ii) if
the Deleted Mortgage Loan was a Fixed Rate Mortgage Loan, be a Fixed
27
Rate Mortgage Loan and have a Mortgage Rate not less than (and not more than one
percentage point in excess of) the Mortgage Rate of the Deleted Mortgage Loan,
(iii) if the Deleted Mortgage Loan was an Adjustable Rate Mortgage Loan, be an
Adjustable Rate Mortgage Loan and have a Maximum Mortgage Rate not less than the
Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) if an Adjustable Rate
Mortgage Loan, have a Minimum Mortgage Rate not less than the Minimum Mortgage
Rate of the Deleted Mortgage Loan, (v) if an Adjustable Rate Mortgage Loan, have
a Gross Margin equal to or greater than the Gross Margin of the Deleted Mortgage
Loan, (vi) if an Adjustable Rate Mortgage Loan, have a next Adjustment Date not
more than two months later than the next Adjustment Date on the Deleted Mortgage
Loan, (vii) have a remaining term to maturity not greater than (and not more
than one year less than) that of the Deleted Mortgage Loan, (viii) be current as
of the date of substitution, (ix) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (x) have a risk grading determined by the Seller
at least equal to the risk grading assigned on the Deleted Mortgage Loan, (xi)
have been underwritten or reunderwritten by the Seller in accordance with the
same underwriting criteria and guidelines as the Deleted Mortgage Loan and (xii)
conform to each representation and warranty set forth in Section 3.01 of the
Mortgage Loan Purchase Agreement applicable to the Deleted Mortgage Loan. In the
event that one or more mortgage loans are substituted for one or more Deleted
Mortgage Loans, the amounts described in clause (i) hereof shall be determined
on the basis of aggregate principal balances, the Mortgage Rates described in
clauses (ii) through (vi) hereof shall be satisfied for each such mortgage loan,
the risk gradings described in clause (x) hereof shall be satisfied as to each
such mortgage loan, the terms described in clause (vii) hereof shall be
determined on the basis of weighted average remaining term to maturity (provided
that no such mortgage loan may have a remaining term to maturity longer than the
Deleted Mortgage Loan), the Loan-to-Value Ratios described in clause (ix) hereof
shall be satisfied as to each such mortgage loan and, except to the extent
otherwise provided in this sentence, the representations and warranties
described in clause (xii) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
"Rating Agency or Rating Agencies": S&P and Xxxxx'x or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor and
acceptable to the Certificate Insurer, notice of which designation shall be
given to the Trustee and Master Servicer.
"Realized Loss": With respect to any Liquidated Mortgage Loan, the
amount of loss realized equal to the portion of the Principal Balance remaining
unpaid after application of all Net Liquidation Proceeds in respect of such
Mortgage Loan.
"Receipt": As defined in the Policy.
"Record Date": With respect to a (i) the Class P Certificates, the
Class S Certificates and the Class R Certificates, the last day of the calendar
month preceding the month in which the related Distribution Date occurs and (ii)
with respect to the Class A Certificates, the Close of Business on the Business
Day immediately preceding the related Distribution Date; provided, however, that
following the date on which Definitive Certificates for a Class A Certificate
are available pursuant
28
to Section 5.02, the Record Date shall be the last day of the calendar month
preceding the month in which the related Distribution Date occurs.
"Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not controlling, under the control of or under
common control with the Depositor, the Seller or the Master Servicer or any
affiliate thereof and (iii) which have been designated as such by the Depositor;
provided, however, that if fewer than two of such banks provide a LIBOR rate,
then any leading banks selected by the Depositor which are engaged in
transactions in United States dollar deposits in the international Eurocurrency
market.
"Regular Certificate": Any of the Class A Certificates, Class S
Certificates or Class P Certificates.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution Date,
for any Mortgage Loan with respect to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Due Period as
a result of the application of the Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Loan Rate
for such Mortgage Loan before giving effect to the application of the Relief
Act.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to which a REMIC election is to be made consisting of: (i) such Mortgage Loans
as from time to time are subject to this Agreement, together with the Mortgage
Files relating thereto, and together with all collections thereon and proceeds
thereof, (ii) any REO Property, together with all collections thereon and
proceeds thereof, (iii) the Trustee's rights with respect to the Mortgage Loans
under all insurance policies required to be maintained pursuant to this
Agreement and any proceeds thereof, (iv) the Depositor's rights under the
Mortgage Loan Purchase Agreement (including any security interest created
thereby) and (v) the Collection Account, the Distribution Account (subject to
the last sentence of this definition) and any REO Account and such assets that
are deposited therein from time to time and any investments thereof, together
with any and all income, proceeds and payments with respect thereto.
Notwithstanding the foregoing, however, a REMIC election will not be made with
respect to the Interest Coverage Account, the Pre-Funding Account and the
Reserve Funds.
"REMIC II": The segregated pool of assets consisting of the
Uncertificated REMIC I Regular Interests conveyed in trust to the Trustee for
the benefit of the holders of the Certificates, with respect to which a separate
REMIC election is to be made.
"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
29
Chapter 1 of the Code, and related provisions, and regulations and rulings
promulgated thereunder, as the foregoing may be in effect from time to time.
"Remittance Report": A report prepared by the Master Servicer and
delivered to the Trustee pursuant to Section 4.04.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Account": The account or accounts maintained by the Master
Servicer in respect of an REO Property pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Mortgage Rate on the Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the Close of Business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 10.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i) payable pursuant
to Section 3.23 in respect of the proper operation, management and maintenance
of such REO Property or (ii) payable or reimbursable to the Master Servicer
pursuant to Section 3.23 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and Advances in respect of
such REO Property or the related Mortgage Loan, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Master Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit E attached hereto.
"Reserve Fund I": One of the reserve funds established and maintained
pursuant to Section 3.28.
"Reserve Fund II": One of the reserve funds established and maintained
pursuant to Section 3.28.
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"Reserve Fund I Addition": With respect to the Yield Maintenance
Agreement and each Distribution Date, the amount equal to the product of (a) the
rate equal to the excess of (x) LIBOR over (y) the Strike Price, (b) the Yield
Maintenance Notional Balance and (c) a fraction equal to the actual number of
days in the related accrual period divided by 360. The Reserve Fund I Addition
will be taken from payments made by National under the Yield Maintenance
Agreement pursuant to Section 3.28.
"Reserve Funds": Reserve Fund I and Reserve Fund II.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
1/16 of 1%) of the one-month United States dollar lending rates which banks in
The City of New York selected by the Depositor are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks in
the London interbank market or (ii) in the event that the Trustee can determine
no such arithmetic mean, in the case of any Interest Determination Date after
the initial Interest Determination Date, the lowest one-month United States
dollar lending rate which such New York banks selected by the Depositor are
quoting on such Interest Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a Xxxxxx Xxx eligible condominium project, (iv) a
manufactured home, or (v) a detached one-family dwelling in a planned
unit development, none of which is a co-operative or mobile home.
"Residual Certificate": The Class R Certificates.
"Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, any vice president, any assistant vice president,
the Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
the Cashier, any assistant cashier, any trust officer or assistant trust
officer, the Controller and any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and, with respect to a particular matter, to whom
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
"S&P": Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., and its successors, and, if such division shall for any reason no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other "nationally recognized rating organization," as set forth on
the most current list of such organizations released by the Securities and
Exchange Commission and approved by the Certificate Insurer.
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"Seller": Option One Mortgage Corporation, a California corporation, or
its successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the Master Servicer in the performance of its servicing obligations,
including, but not limited to, the cost of (i) the preservation, restoration,
inspection and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property and (iv) compliance with the obligations under
Sections 3.01, 3.09, 3.16, and 3.23.
"Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. A
portion of such Servicing Fee may be retained by any Sub-Servicer as its
servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers furnished by the
Master Servicer to the Trustee and the Depositor on the
Closing Date, as such list may from time to time be amended.
"Servicing Standard": Shall mean the standards set forth in Section
3.01.
"Servicing Transfer Costs": Shall mean all reasonable costs and
expenses incurred by the Trustee in connection with the transfer of servicing
from a predecessor servicer, including, without limitation, any reasonable costs
or expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Mortgage Loans properly and
effectively.
"Spread Squeeze Condition": The Spread Squeeze Condition will be met
with respect to a Distribution Date if the Spread Squeeze Percentage for such
Distribution Date is less than (a) 2.0% for any Distribution Date between
November 2000 and October 2001 and (b) 3.0% for any Distribution Date beginning
in or after November 2001.
"Spread Squeeze Overcollateralization Increase Amount": For any
Distribution Date on which the Step Up Spread Squeeze Test is met, an amount
determined as follows:
(a) if the Spread Squeeze Condition is met for such Distribution
Date, the Spread Squeeze Overcollateralization Increase Amount for such
Distribution Date shall be equal to
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the product obtained by multiplying (i) three, (ii) the excess, if any,
of the percentage applicable to such Distribution Date set forth in the
definition of "Spread Squeeze Condition" over the Spread Squeeze
Percentage for such Distribution Date and (iii) the aggregate Stated
Principal Balance of the Adjustable Rate Mortgage Loans as of the
related Determination Date; or
(b) if the Spread Squeeze Condition is not met for such
Distribution Date, the Spread Squeeze Overcollateralization Increase
Amount for such Distribution Date shall be equal to (A) the Spread
Squeeze Overcollateralization Increase Amount for the most recent
Distribution Date for which the Spread Squeeze Condition was met minus
(B) the product obtained by multiplying (i) one sixth of the amount
determined under clause (A) above and (ii) the number of consecutive
Distribution Dates through and including the current Distribution Date
for which the Spread Squeeze Condition was not met.
"Spread Squeeze Percentage": With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the product of
(a) 12 and (b) the sum of the General Excess Available Amount for such
Distribution Date and the Interest Distributable Amount with respect to the
Class S Certificates, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties as of such
Distribution Date.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as
of any date of determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, the outstanding principal balance of such Mortgage
Loan as of the Cut-off Date (or Subsequent Cut-off Date, as applicable), as
shown in the Mortgage Loan Schedule, minus the sum of (i) the principal portion
of each Monthly Payment due on a Due Date subsequent to the Cut-off Date (or
Subsequent Cut-off Date, as applicable), to the extent received from the
Mortgagor or advanced by the Master Servicer and distributed pursuant to Section
4.01 on or before such date of determination, (ii) all Principal Prepayments
received after the Cut-off Date (or Subsequent Cut-off Date, as applicable), to
the extent distributed pursuant to Section 4.01 on or before such date of
determination, (iii) all Liquidation Proceeds and Insurance Proceeds to the
extent distributed pursuant to Section 4.01 on or before such date of
determination, and (iv) any Realized Loss incurred with respect thereto as a
result of a Deficient Valuation made during or prior to the Due Period for the
most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of the Trust Fund, minus the aggregate amount of REO Principal Amortization in
respect of such REO Property for all previously ended calendar months, to the
extent distributed pursuant to Section 4.01 on or before such date of
determination; and (b) as of any date of determination coinciding with or
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subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stepdown Date": The later of (x) the Distribution Date in May 2002 or
(y) the Distribution Date on which the aggregate outstanding principal balance
of the Mortgage Loans is less than or equal to one half of the sum of (i) the
Cut-off Date Aggregate Principal Balance plus (ii) the Original
Pre-Funded Amount.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss Test will
be met with respect to a Distribution Date as follows: (i) for the 1st through
the 12th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is more than 1.0%; (ii) for the 13th through the 24th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is more than 1.8%; (iii) for the 25th through the 36th Distribution Dates, if
the Cumulative Loss Percentage for such Distribution Date is more than 2.5%;
(iv) for the 37th through the 48th Distribution Dates, if the Cumulative Loss
Percentage for such Distribution Date is more than 3.0%; and (v) for the 49th
Distribution Date and any Distribution Date thereafter, if the Cumulative Loss
Percentage for such Distribution Date is more than 3.75%.
"Step Up Spread Squeeze Test": The Step Up Spread Squeeze Test will be
met with respect to a Distribution Date if the Spread Squeeze Condition is met
for such Distribution Date or was met for any of the five preceding Distribution
Dates.
"Step Up Required Overcollateralization Amount": With respect to any
Distribution Date on which the Step Up Cumulative Loss Test is not met, (i) 75%
of the Stated Principal Balance of the Mortgage Loans that are 90 days or more
Delinquent as of the last day of the preceding calendar month, in foreclosure or
converted to REO Property, minus (ii) 2.5 times the General Excess Available
Amount. With respect to any Distribution Date on which the Step Up Cumulative
Loss Test is met, the lesser of (i) two times the amount set forth in the
preceding sentence and (ii) the Stated Principal Balance of the Mortgage Loans
that are 90 days or more Delinquent as of the last day of the preceding calendar
month, in foreclosure or converted to REO Property.
"Strike Price": Will equal: (i) 6.00% per annum for the thirteenth
through twenty-fourth Distribution Dates; (ii) 6.25% per annum for the
twenty-fifth through the thirty-sixth Distribution Dates; (iii) 7.00% per annum
for the thirty-seventh through the forty-eighth Distribution Dates; (iv) 7.50%
per annum for the forty-ninth through the seventy-second Distribution Dates and
(v) 0.00% per annum thereafter.
"Subsequent Cut-off Date": With respect to those Subsequent Mortgage
Loans sold to the Trust Fund pursuant to a Subsequent Transfer Instrument, the
later of (i) first day of the month in which the related Subsequent Transfer
Date occurs or (ii) the date of origination of such Mortgage Loan.
"Subsequent Mortgage Loan": A Mortgage Loan sold by the Depositor to
the Trust Fund pursuant to Section 2.08, such Mortgage Loan being identified on
the Mortgage Loan Schedule attached to a Subsequent Transfer Instrument.
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"Subsequent Mortgage Loan Purchase Agreement": The agreement between
the Depositor and the Master Servicer, in its capacity as Seller, regarding the
transfer of the Subsequent Mortgage Loans by the Seller to the Depositor.
"Subsequent Transfer Date": With respect to each Subsequent Transfer
Instrument, the date on which the related Subsequent Mortgage Loans are sold to
the Trust Fund.
"Subsequent Transfer Instrument": Each Subsequent Transfer Instrument,
dated as of a Subsequent Transfer Date, executed by the Trustee and the
Depositor substantially in the form attached hereto as Exhibit N, by which
Subsequent Mortgage Loans are transferred to the Trust Fund.
"Sub-Servicer": Any Person with which either Master Servicer has
entered into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer which
meets the requirements set forth in Section 3.08 and is otherwise acceptable to
the applicable Master Servicer.
"Sub-Servicing Agreement": The written contract between either Master
Servicer and a Sub- Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.
"Substitution Adjustment": As defined in Section 2.03(d) hereof.
"Tax Matters Person": The tax matters person appointed pursuant to
Section 9.01(e) hereof.
"Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed by the Trustee on behalf of each of REMIC I and REMIC II,
together with any and all other information reports or returns that may be
required to be furnished to the Certificateholders or filed with the Internal
Revenue Service or any other governmental taxing authority under any applicable
provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01(a) hereof.
"Trust": Option One Mortgage Loan Trust 1999-3, the trust created
hereunder.
"Trust Fund": REMIC I, REMIC II, the Interest Coverage Account, the
Pre-Funding Account, the Reserve Funds, the Yield Maintenance Agreement and the
Initial Deposit Account.
"Trustee": Norwest Bank Minnesota, National Association, a national
banking association, or any successor trustee appointed as herein provided.
"Uncertificated Accrued Interest": With respect to each Uncertificated
REMIC I Regular Interest on each Distribution Date, an amount equal to one
month's interest at the related
35
Uncertificated REMIC I Pass-Through Rate on the Uncertificated Principal Balance
of such Uncertificated REMIC I Regular Interest. Uncertificated Accrued Interest
for each Uncertificated REMIC I Regular Interest will be calculated on the basis
of a 360-day year consisting of twelve 30- day months. In each case,
Uncertificated Accrued Interest will be reduced by any Net Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls (allocated to such Uncertificated
REMIC I Regular Interests based on their respective entitlements to interest
irrespective of any Net Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls for such Distribution Date).
"Uncertificated Principal Balance": With respect to each Uncertificated
REMIC I Regular Interest, the amount of such Uncertificated REMIC I Regular
Interest outstanding on any date of determination. As of the Closing Date, the
Uncertificated Principal Balance of each Uncertificated REMIC I Regular Interest
shall equal the amount set forth in the Preliminary Statement hereto as its
initial Uncertificated Principal Balance. On each Distribution Date, the
Uncertificated Principal Balance of each Uncertificated REMIC I Regular Interest
shall be reduced by all amounts deemed distributed with respect to such interest
and applied to reduce the Uncertificated Principal Balance thereof pursuant to
Section 4.07(ii) and Section 4.08.
"Uncertificated REMIC I Pass-Through Rate": With respect each
Uncertificated REMIC I Regular Interest, the Net Mortgage Rate of the Mortgage
Loans.
"Uncertificated REMIC I Regular Interest LTA": An uncertificated
partial undivided beneficial ownership interest in REMIC I having an initial
Uncertificated Principal Balance equal to the amount set forth in the
Preliminary Statement hereto and which bears interest at a rate equal to the
related Uncertificated REMIC I Pass-Through Rate.
"Uncertificated REMIC I Regular Interest LTB": An uncertificated
partial undivided beneficial ownership interest in REMIC I having an initial
Uncertificated Principal Balance equal to the amount set forth in the
Preliminary Statement hereto and which bears interest at a rate equal to the
related Uncertificated REMIC I Pass-Through Rate.
"Uncertificated REMIC I Regular Interest LTP": An uncertificated
partial undivided beneficial ownership interest in REMIC I having an initial
Uncertificated Principal Balance equal to the amount set forth in the
Preliminary Statement hereto and which bears interest at a rate equal to the
related Uncertificated REMIC I Pass-Through Rate. Uncertificated REMIC I Regular
Interest LTP shall be entitled to any Prepayment Charges collected by the Master
Servicer.
"Uncertificated REMIC I Regular Interests": Uncertificated REMIC I
Regular Interest LTA, Uncertificated REMIC I Regular Interest LTB and
Uncertificated REMIC I Regular Interest LTP.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.
"United States Person" or "U.S. Person": A citizen or resident of the
United States, a corporation, partnership or other entity treated as a
corporation or partnership for federal income tax purposes (other than a
partnership that is not treated as a U.S. Person pursuant to any applicable
36
Treasury regulations) created or organized in, or under the laws of, the United
States, any state thereof or the District of Columbia, or an estate the income
of which from sources without the United States is includible in gross income
for United States federal income tax purposes regardless of its connection with
the conduct of a trade or business within the United States, or a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority
to control all substantial decisions of the trust. The term "United States"
shall have the meaning set forth in Section 7701 of the Code or successor
provisions.
"Unpaid Interest Shortfall Amount": With respect to the Class A
Certificates, the Class S Certificates and the Components and (i) the first
Distribution Date, zero, and (ii) any Distribution Date after the first
Distribution Date, the amount, if any, by which (a) the sum of (1) the Monthly
Interest Distributable Amount for such Class or such Component for the
immediately preceding Distribution Date and (2) the outstanding Unpaid Interest
Shortfall Amount, if any, for such Class or such Component for such preceding
Distribution Date exceeds (b) the aggregate amount distributed on such Class or
such Component in respect of interest pursuant to clause (a) of this definition
on such preceding Distribution Date, plus interest on the amount of interest due
but not paid on the Certificates of such Class or such Component on such
preceding Distribution Date, to the extent permitted by law, at the Pass-Through
Rate for such Class or such Component for the related Accrual Period.
"Value": With respect to any Mortgage Loan, and the related Mortgaged
Property, the lesser of:
(i) the lesser of (a) the value thereof as determined by an
appraisal made for the originator of the Mortgage Loan at the time or
origination of the Mortgage Loan by an appraiser who met the minimum
requirements of Xxxxxx Xxx and Xxxxxxx Mac, and (b) the value thereof
as determined by a review appraisal conducted by the Seller in the
event any such review appraisal determines an appraised value more than
10% lower than the value thereof, in the case of a Mortgaged Loan with
a Loan-to-Value Ratio less than or equal to 80%, or more than 5% lower
than the value thereof, in the case of a Mortgage Loan with a
Loan-to-Value Ratio greater than 80%, as determined by the appraisal
referred to in clause (i)(a) above; and
(ii) the purchase price paid for the related Mortgaged Property by
the Mortgagor with the proceeds of the Mortgage Loan; provided,
however, that :
(A) in the case of a refinanced Mortgage Loan (which is a
Mortgage Loan the proceeds of which were not used to
purchase the related Mortgaged Property), such value of
the Mortgaged Property is based solely upon the lesser of
(i) the value determined by an appraisal made for the
originator of such refinanced Mortgaged Loan at the time
of origination of such refinanced Mortgage Loan by an
appraiser who met the minimum requirements of Xxxxxx Mae
and Xxxxxxx Mac and (ii) the value thereof as determined
by a review appraisal conducted by the Seller in the event
any such review appraisal determines an appraised value
more than 10% lower than the value thereof, in the case of
a Mortgage Loan with a
37
Loan-to-Value Ratio less than or equal to 80%, or more
than 5% lower than the value thereof, in the case of a
Mortgage Loan with a Loan-to-Value Ratio greater than 80%,
as determined by the appraisal referred to in clause
(ii)(A)(i) above, and
(B) in the case of a Mortgage Loan originated in connection
with a "lease option purchase," such value of the
Mortgaged Property is based on the lower of the value
determined by an appraisal made for the originator of such
Mortgage Loan at the time of origination or the sale price
of such Mortgaged Property if the "lease option purchase
price" was set less than 12 months prior to origination,
and is based on the value determined by an appraisal made
for the originator of such Mortgage Loan at the time of
the origination if the "lease option purchase price" was
set 12 months or more prior to origination.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times the Class A and
Class R Certificates shall have 98% of the Voting Rights, the Class S
Certificates shall have 1% of the Voting Rights and the Class P Certificates
shall have 1% of the Voting Rights. Except as otherwise expressly provided for
herein, on any date on which no Insurer Default exists and is continuing and the
Class A Certificates or Class S Certificates are outstanding or any amounts are
owed the Certificate Insurer under the Insurance Agreement, all of the Voting
Rights allocated to the Class A Certificateholders and Class S
Certificateholders shall be vested in the Certificate Insurer. However, if an
Insurer Default exists and is continuing and no amounts are owed to the
Certificate Insurer under the Insurance Agreement, the Voting Rights allocated
among Holders of the Class A Certificates outstanding shall be the fraction,
expressed as a percentage, the numerator of which is the aggregate Certificate
Balance of all of the Class A Certificates then outstanding and the denominator
of which is the aggregate unpaid principal balance of the Mortgage Loans. The
Voting Rights allocated to the Residual Certificates shall be 98% minus that
portion of the Voting Rights allocated to the Class A Certificates calculated in
accordance with the formula set forth in the preceding sentence. The Voting
Rights allocated to any Class of Certificates (other than the Class P
Certificates and the Class R Certificates) shall be allocated among all Holders
of each such Class in proportion to the outstanding Certificate Principal
Balance or Notional Amount of such Certificates and the Voting Rights allocated
to the Class P Certificates and the Class R Certificates shall be allocated
among all Holders of each such Class in proportion to such Holders' respective
Percentage Interest; provided, however that when none of the Regular
Certificates are outstanding, 100% of the Voting Rights shall be allocated among
Holders of the Class R Certificates in accordance with such Holders' respective
Percentage Interests in the Certificates of such Class.
"Yield Maintenance Agreement": The yield maintenance agreement, dated
as of the Closing Date, between National Westminster Bank Plc. and the Depositor
and assigned to the Trust Fund for the benefit of the Certificateholders, the
Certificate Insurer and the Seller pursuant to Section 2.01.
"Yield Maintenance Notional Balance": The lesser of (i) the aggregate
Stated Principal Balance of the Fixed Rate Mortgage Loans at the beginning of
the related Due Period and (ii) the Projected Principal Balance for such
Interest Accrual Period.
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"Yield Maintenance Purchase Price": $1,094,000 to be used by the
Depositor to purchase the Yield Maintenance Agreement.
Section 1.02. Accounting.
----------
Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without
duplication of such functions.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
----------------------------
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the Certificateholders and the Certificate
Insurer all the right, title and interest of the Depositor, including any
security interest therein for the benefit of the Depositor, in and to (i) each
Mortgage Loan identified on the Mortgage Loan Schedule, including the related
Cut-off Date Principal Balance, all interest accruing thereon on and after the
Cut-off Date and all collections in respect of interest and principal due after
the Cut-off Date; (ii) property which secured each such Mortgage Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its
interest in any insurance policies in respect of the Mortgage Loans; (iv) all
proceeds of any of the foregoing; (v) the Initial Deposit, (vi) the Yield
Maintenance Agreement, (vii) the rights of the Depositor under the Mortgage Loan
Purchase Agreement, and (viii) all other assets included or to be included in
the Trust Fund. Such assignment includes all interest and principal due to the
Depositor or the Master Servicer after the Cut-off Date with respect to the
Mortgage Loans.
In connection with such transfer and assignment, the Seller, on behalf
of the Depositor, does hereby deliver to, and deposit with the Trustee, or its
designated agent (the "Custodian"), the following documents or instruments with
respect to each Initial Mortgage Loan so transferred and assigned and the
Seller, on behalf of the Depositor, shall, in accordance with Section 2.08,
deliver or caused to be delivered to the Trustee with respect to each Subsequent
Mortgage Loan, the following documents or instruments (with respect to each
Mortgage Loan, a "Mortgage File") :
(i) the original Mortgage Note, endorsed either (A) in blank, in
which case the Trustee shall cause the endorsement to be
completed or (B) in the following form: "Pay to the order of
Norwest Bank Minnesota, National Association, as Trustee,
without recourse", or with respect to any lost Mortgage Note,
an original Lost Note Affidavit stating that the original
mortgage note was lost, misplaced or destroyed, together with
a copy of the related mortgage note; provided, however, that
such substitutions of Lost Note Affidavits for original
Mortgage Notes may occur only with respect to Mortgage Loans,
the aggregate Cut-off Date Principal Balance of which is less
than or equal to 1.00% of the Pool Balance as of the Cut-off
Date;
(ii) the original Mortgage with evidence of recording thereon,
and the original recorded power of attorney, if the
Mortgage was executed pursuant to a power of attorney,
with evidence of recording thereon or, if such Mortgage or
power of attorney has been submitted for recording but has
not been returned from the applicable public recording
office, has been lost or is not otherwise available, a
40
copy of such Mortgage or power of attorney, as the case
may be, certified to be a true and complete copy of the
original submitted for recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned
either (A) in blank or (B) to "Norwest Bank Minnesota,
National Association, as Trustee, without recourse";
(iv) an original copy of any intervening assignment of Mortgage
showing a complete chain of assignments;
(v) the original or a certified copy of lender's title
insurance policy; and
(vi) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any.
The Trustee agrees to execute and deliver (or cause the Custodian to
execute and deliver) to the Depositor on or prior to the Closing Date an
acknowledgment of receipt of the original Mortgage Note (with any exceptions
noted), substantially in the form attached as Exhibit F-3 hereto.
The Master Servicer, in its capacity as Seller under the Mortgage Loan
Purchase Agreement, shall promptly (and in no event later than 60 Business Days
following the Closing Date (or Subsequent Transfer Date, with respect to the
Subsequent Mortgage Loans)) submit or cause to be submitted for recording, at
the Seller's expense and at no expense to the Trust Fund, the Trustee or the
Certificate Insurer, in the appropriate public office for real property records,
each Assignment referred to in Sections 2.01(iii) and (iv) above. In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, the Seller shall promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded.
If any of the documents referred to in Section 2.01(ii), (iii) or (iv)
above has as of the Closing Date (or Subsequent Transfer Date, with respect to
Subsequent Mortgage Loans) been submitted for recording but either (x) has not
been returned from the applicable public recording office or (y) has been lost
or such public recording office has retained the original of such document, the
obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trustee or the Custodian no later than the
Closing Date (or Subsequent Closing Date, with respect to Subsequent Mortgage
Loans), of a copy of each such document certified by the Seller in the case of
(x) above or the applicable public recording office in the case of (y) above to
be a true and complete copy of the original that was submitted for recording and
(2) if such copy is certified by the Seller, delivery to the Trustee or the
Custodian, promptly upon receipt thereof of either the original or a copy of
such document certified by the applicable public recording office to be a true
and complete copy of the original. If the original lender's title insurance
policy, or a certified copy thereof, was not delivered pursuant to Section
2.01(v) above, the Seller shall deliver or cause to be delivered to the Trustee
or the Custodian, the original or a copy of a written commitment or interim
binder or preliminary report of title issued by the title insurance or escrow
company, with the original or a certified copy thereof to be delivered to the
Trustee or the Custodian, promptly upon receipt thereof. The Seller shall
deliver or cause to be delivered to the Trustee or the Custodian promptly
41
upon receipt thereof any other documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Seller
shall have 90 days to cure such defect or deliver such missing document to the
Trustee or the Custodian. If the Seller does not cure such defect or deliver
such missing document within such time period, the Seller shall either
repurchase or substitute for such Mortgage Loan in accordance with Section 2.03.
The Seller shall cause the Assignments of Mortgage which were delivered in blank
and cause to be completed and shall cause all Assignments referred to in Section
2.01(iii) hereof and, to the extent necessary, in Section 2.01(iv) hereof to be
recorded; provided, however, the Seller need not cause to be recorded any
Assignment which relates to a Mortgage Loan in any jurisdiction under the laws
of which, as evidenced by an Opinion of Counsel delivered by the Seller to the
Trustee, the Certificate Insurer and the Rating Agencies, the recordation of
such assignment is not necessary to protect the Trustee's interest in the
related Mortgage Loan; provided, however, notwithstanding the delivery of any
Opinion of Counsel, each Assignment of Mortgage shall be submitted for recording
by the Seller in the manner described above, at no expense to the Trust Fund or
Trustee, upon the earliest to occur of: (i) reasonable direction by Holders of
Certificates entitled to at least 25% of the Voting Rights or the Certificate
Insurer, (ii) the occurrence of a Master Servicer Event of Termination, (iii)
the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Seller, (iv) the occurrence of a servicing transfer as described in Section 7.02
hereof and (iv) if the Seller is not the Master Servicer and with respect to any
one Assignment of Mortgage, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage.
Notwithstanding the foregoing, if the Seller fails to pay the cost of recording
the Assignments of Mortgage, such expense will be paid by the Trustee and the
Trustee shall be reimbursed for such expenses by the Trust. The Seller shall be
required to deliver such assignments for recording within 30 days of the Closing
Date (or Subsequent Transfer Date, with respect to Subsequent Mortgage Loans).
The Seller shall furnish the Trustee, or its designated agent, with a copy of
each assignment of Mortgage submitted for recording. In the event that any such
Assignment is lost or returned unrecorded because of a defect therein, the
Seller shall promptly have a substitute Assignment prepared or have such defect
cured, as the case may be, and thereafter cause each such Assignment to be duly
recorded. In the event that any Mortgage Note is endorsed in blank as of the
Closing Date (or Subsequent Transfer Date, with respect to Subsequent Mortgage
Loans), promptly following the Closing Date (or Subsequent Transfer Date, with
respect to Subsequent Mortgage Loans) the Seller shall cause to be completed
such endorsements "Pay to the order of Norwest Bank Minnesota, National
Association, as Trustee, without recourse."
The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement.
In addition, on or prior to the Closing Date, the Seller shall cause
the Certificate Insurer to deliver the Policy to the Trustee.
The Master Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in
42
accordance with this Agreement within two weeks of their execution; provided,
however, that the Master Servicer shall provide the Custodian with a certified
true copy of any such document submitted for recordation within two weeks of its
execution, and shall provide the original of any document submitted for
recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within 270 days
of its submission for recordation. In the event that the Master Servicer cannot
provide a copy of such document certified by the public recording office within
such 270 day period, the Master Servicer shall deliver to the Custodian, within
such 270 day period, an Officer's Certificate of the Master Servicer which shall
(A) identify the recorded document, (B) state that the recorded document has not
been delivered to the Custodian due solely to a delay caused by the public
recording office, (C) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, if known, and (D) specify the date the applicable recorded document
is expected to be delivered to the Custodian, and, upon receipt of a copy of
such document certified by the public recording office, the Master Servicer
shall immediately deliver such document to the Custodian.
In
the event the appropriate public recording office will not certify as to the
accuracy of such document, the Master Servicer shall deliver a copy of such
document certified by an officer of the Master Servicer to be a true and
complete copy of the original to the Custodian.
Section 2.02. Acceptance by Trustee.
---------------------
The Trustee acknowledges the receipt of the Policy and, subject to the
provisions of Section 2.01 and subject to the review described below and any
exceptions noted on the exception report described in the next paragraph below,
the documents referred to in Section 2.01 above and all other assets included in
the definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "Trust Fund" in trust for the exclusive use and benefit of all
present and future Certificateholders and the Certificate Insurer.
The Trustee agrees, for the benefit of the Certificateholders and the
Certificate Insurer, to review, or that it has reviewed pursuant to Section 2.01
(or to cause the Custodian to review or that it has caused the Custodian to have
reviewed) each Mortgage File on or prior to the Closing
Date,
with respect to each Initial Mortgage Loan or the Subsequent Transfer Date, with
respect to each Subsequent Mortgage Loan (or, with respect to any document
delivered after the Startup Day, within 45 days of receipt and with respect to
any Qualified Substitute Mortgage, within 45 days after the assignment thereof).
The Trustee further agrees, for the benefit of the Certificateholders and the
Certificate Insurer, to certify in substantially the form attached hereto as
Exhibit F-1, within 45 days after the Closing Date, with respect to each Initial
Mortgage Loan and the Subsequent Transfer Date, with respect to each Subsequent
Mortgage Loan (or, with respect to any document delivered after the Startup Day,
within 45 days of receipt and with respect to any Qualified Substitute Mortgage,
within 45 days after the assignment thereof) that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or any Mortgage Loan specifically identified in the exception report annexed
thereto as not being covered by such certification), (i) all documents required
to be delivered to it pursuant Section 2.01 of this Agreement are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (1) and (2) of the
43
Mortgage Loan Schedule accurately reflects information set forth in the Mortgage
File. It is herein acknowledged that, in conducting such review, the Trustee (or
the Custodian, as applicable) is under no duty or obligation 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 have actually been recorded or that they are other than
what they purport to be on their face.
Prior to the first anniversary date of this Agreement the Trustee shall
deliver (or cause the Custodian to deliver) to the Depositor, the Master
Servicer and the Certificate Insurer a final certification in the form annexed
hereto as Exhibit F-2 evidencing the completeness of the Mortgage Files, with
any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
(or the Custodian, as applicable) finds any document or documents constituting a
part of a Mortgage File to be missing or defective in any material respect, at
the conclusion of its review the Trustee shall so notify the Seller, the
Depositor, the Master Servicer and the Certificate Insurer. In addition, upon
the discovery by the Seller, Depositor or the Master Servicer (or upon receipt
by the Trustee of written notification of such breach) of a breach of any of the
representations and warranties made by the Seller in the related Mortgage Loan
Purchase Agreement in respect of any Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests of the related Certificateholders in
such Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties to this Agreement and the Certificate Insurer.
The Depositor and the Trustee intend that the assignment and transfer
herein contemplated constitute a sale of the Yield Maintenance Agreement and the
Mortgage Loans, the related Mortgage Notes and the related documents, conveying
good title thereto free and clear of any liens and encumbrances, from the
Depositor to the Trustee and that such property not be part of the Depositor's
estate or property of the Depositor in the event of any insolvency by the
Depositor. In the event that such conveyance is deemed to be, or to be made as
security for, a loan, the parties intend that the Depositor shall be deemed to
have granted and does hereby grant to the Trustee a first priority perfected
security interest in all of the Depositor's right, title and interest in and to
the Yield Maintenance Agreement and the Mortgage Loans, the related Mortgage
Notes and the related documents, and that this Agreement shall constitute a
security agreement under applicable law.
Section 2.03. Repurchase or Substitution of Mortgage Loans by the
Seller.
---------------------------------------------------
(a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders or the Certificate Insurer, the Trustee shall
promptly notify the Seller, the Certificate Insurer and the Master Servicer of
such defect, missing document or breach and request that the Seller deliver such
missing document or cure such defect or breach within 90 days from the date the
Seller was notified of such missing document, defect or breach, and if the
Seller does not deliver such missing document or cure such defect or breach in
all material respects during such
44
period, the Trustee shall enforce the Seller's obligation under the Mortgage
Loan Purchase Agreement and cause the Seller to repurchase such Mortgage Loan
from the Trust Fund at the Purchase Price on or prior to the Determination Date
following the expiration of such 90 day period (subject to Section 2.03(e));
provided that, in connection with any such breach that could not reasonably have
been cured within such 90 day period, if the Seller shall have commenced to cure
such breach within such 90 day period, the Seller shall be permitted to proceed
thereafter diligently and expeditiously to cure the same within the additional
period provided under the Mortgage Loan Purchase Agreement. The Purchase Price
for the repurchased Mortgage Loan shall be deposited in the Collection Account,
and the Trustee, upon receipt of written certification from the Master Servicer
of such deposit, shall release to the Seller the related Mortgage File and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Seller shall furnish to it and as shall be necessary to
vest in the Seller any Mortgage Loan released pursuant hereto and the Trustee
shall have no further responsibility with regard to such Mortgage File (it being
understood that the Trustee shall have no responsibility for determining the
sufficiency of such assignment for its intended purpose). In lieu of
repurchasing any such Mortgage Loan as provided above, the Seller may cause such
Mortgage Loan to be removed from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans in the manner and subject to the limitations set forth in Section 2.03(d).
It is understood and agreed that the obligation of the Seller to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which such
a breach has occurred and is continuing shall constitute the sole remedy against
the Seller respecting such omission, defect or breach available to the Trustee
on behalf of the Certificateholders and the Certificate Insurer.
(b) Subject to Section 2.03(e), within 90 days of the earlier of
discovery by the Depositor or receipt of notice by the Depositor of the breach
of any representation or warranty of the Depositor set forth in Section 2.06
with respect to any Mortgage Loan, which materially adversely affects the value
of such Mortgage Loan or the interest therein of the Certificateholders or the
Certificate Insurer, the Depositor shall (i) cure such breach in all material
respects, (ii) repurchase the Mortgage Loan from the Trust at the Purchase Price
or (iii) cause such Mortgage Loan to be removed from the Trust Fund (in which
case it shall become a Deleted Mortgage Loan) and substituted for by one or more
Qualified Substitute Mortgage Loans by the Seller in the manner and subject to
the limitations set forth in Section 2.03(d). If any such breach is a breach of
any of the representations and warranties included in Section 2.06(xi), and the
Depositor is unable to cure such breach, the Depositor shall cause the Seller to
repurchase or substitute the smallest number of Mortgage Loans as shall be
required to make such representation or warranty true and correct. The Purchase
Price for any repurchased Mortgage Loan shall be delivered to the Master
Servicer for deposit in the Collection Account, and, upon receipt thereof, the
Master Servicer shall at the Depositor's direction release to the Depositor the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment furnished by the Depositor, in each case without
recourse, as the Depositor shall furnish to it and as shall be necessary to vest
in the Depositor any Mortgage Loan released pursuant hereto.
(c) Within 90 days of the earlier of discovery by the Master Servicer
or receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.05 which
materially and adversely affects the interests of the Certificateholders
45
or the Certificate Insurer in any Mortgage Loan, the Master Servicer shall cure
such breach in all material respects.
(d) Any substitution of Qualified Substitute Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 2.03(a) must be effected prior to the
last Business Day that is within two years after the Closing Date. As to any
Deleted Mortgage Loan for which the Seller substitutes a Qualified Substitute
Mortgage Loan or Loans, such substitution shall be effected by the Seller
delivering to the Trustee, for such Qualified Substitute Mortgage Loan or Loans,
the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other
documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Adjustment (as described below), if any, in
connection with such substitution. The Trustee shall acknowledge receipt for
such Qualified Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, shall review such documents as specified in Section 2.02 and deliver
to the Master Servicer and the Certificate Insurer, with respect to such
Qualified Substitute Mortgage Loan or Loans, a certification substantially in
the form attached hereto as Exhibit F-1, with any applicable exceptions noted
thereon. Within one year of the date of substitution, the Trustee shall deliver
to the Master Servicer and the Certificate Insurer a certification substantially
in the form of Exhibit F-2 hereto with respect to such Qualified Substitute
Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in the month of
substitution are not part of the Trust Fund and will be retained by the Seller.
For the month of substitution, distributions to Certificateholders will reflect
the collections and recoveries in respect of such Deleted Mortgage Loan in the
Due Period preceding the month of substitution and the Seller shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. The Seller shall give or cause to be given written notice
to the Certificateholders and the Certificate Insurer that such substitution has
taken place, shall amend the Mortgage Loan Schedule to reflect the removal of
such Deleted Mortgage Loan from the terms of this Agreement and the substitution
of the Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of
such amended Mortgage Loan Schedule to the Trustee and the Certificate Insurer.
Upon such substitution by the Seller, such Qualified Substitute Mortgage Loan or
Loans shall constitute part of the Mortgage Pool and shall be subject in all
respects to the terms of this Agreement and the Mortgage Loan Purchase
Agreement, including all applicable representations and warranties thereof
included in the Mortgage Loan Purchase Agreement as of the date of substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (the "Substitution Adjustment"), if any, by
which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds
the aggregate, as to each such Qualified Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Mortgage Rate.
On the date of such substitution, the Seller will deliver or cause to be
delivered to the Master Servicer for deposit in the Collection Account an amount
equal to the Substitution Adjustment, if any, and the Trustee, upon receipt of
the related Qualified Substitute Mortgage Loan or Loans and certification by the
Master Servicer of such deposit, shall release to the Seller the related
Mortgage File or Files and shall execute and deliver
46
such instruments of transfer or assignment, in each case without recourse, as
the Seller shall deliver to it and as shall be necessary to vest therein any
Deleted Mortgage Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and deliver to
the Trustee and the Certificate Insurer an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed on the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of the Code or on "contributions after
the startup date" under Section 860G(d)(l) of the Code, or (b) either REMIC I or
REMIC II to fail to qualify as a REMIC at any time that any Certificate is
outstanding. If such Opinion of Counsel can not be delivered, then such
substitution may only be effected at such time as the required Opinion of
Counsel can be given.
(e) Upon discovery by the Seller, the Master Servicer, the Certificate
Insurer 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 within two Business Days give written notice thereof
to the other parties and the Certificate Insurer. In connection therewith, the
Seller or the Depositor, as the case may be, shall repurchase or, subject to the
limitations set forth in Section 2.03(d), substitute one or more Qualified
Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. Such repurchase or substitution shall be made (i) by the Seller
if the affected Mortgage Loan's status as a non-qualified mortgage is or results
from a breach of any representation, warranty or covenant made by the Seller
under the Mortgage Loan Purchase Agreement, or (ii) the Depositor, if the
affected Mortgage Loan's status as a non-qualified mortgage is a breach of any
representation or warranty of the Depositor set forth in Section 2.06, or if its
status as a non-qualified mortgage is a breach of no representation or warranty.
Any such repurchase or substitution shall be made in the same manner as set
forth in Section 2.03(a), if made by the Seller, or Section 2.03(b), if made by
the Depositor. The Trustee shall reconvey to the Depositor or the Seller, as the
case may be, 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
repurchased for breach of a representation or warranty.
Section 2.04. Intentionally Omitted.
---------------------
Section 2.05. Representations, Warranties and Covenants of the Master
Servicer.
-------------------------------------------------------
The Master Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee, the Certificate Insurer and the
Certificateholders and to the Depositor that as of the Closing Date or as of
such date specifically provided herein:
(i) The Master Servicer is duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its formation
and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in the states
where the 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 or to ensure the enforceability
or validity of each Mortgage Loan; the Master Servicer has the 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
47
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 evidences the valid, binding and enforceable obligation of
the Master Servicer, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally; and 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) 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;
(iii) The execution and delivery of this Agreement by the Master
Servicer and the performance and compliance with its obligations and
covenants hereunder do not require the consent or approval of any
governmental authority or, if such consent or approval is required, it
has been obtained;
(iv) This Agreement, and all documents and instruments
contemplated hereby which are executed and delivered by the Master
Servicer, constitute and will constitute valid, legal and binding
obligations of the Master Servicer, enforceable in accordance with
their respective terms, except as the enforcement thereof may be
limited by applicable bankruptcy laws and general principles of equity;
(v) [Reserved];
(vi) The Master Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vii) There is no action, suit, proceeding or investigation
pending or, to its knowledge, threatened against the Master Servicer
that, either individually or in the aggregate, (A) may result in any
change in the business, operations, financial condition, properties or
assets of the Master Servicer that might prohibit or materially and
adversely affect the performance by such Master Servicer of its
obligations under, or validity or enforceability of, this Agreement, or
(B)may result in any material impairment of the right or ability of the
Master Servicer to carry on its business substantially as now
conducted, or (C) may result in any material liability on the part of
the Master Servicer, or (D) would draw into question the validity or
enforceability of this Agreement or of any action taken or to be taken
in connection with the obligations of the Master Servicer contemplated
herein, or (E) would otherwise be likely to impair materially the
ability of the Master Servicer to perform under the terms of this
Agreement;
48
(viii) Neither this Agreement nor any information, certificate of
an officer, statement furnished in writing or report delivered to the
Trustee by the Master Servicer in connection with the transactions
contemplated hereby contains any untrue statement of a material fact;
(ix) The Master Servicer covenants that its computer and other
systems used in servicing the Mortgage Loans will be modified to
operate in a manner such that on and after January 1, 2000 (i) the
Master Servicer can service the Mortgage Loans in accordance with the
terms of this Agreement and (ii) the Master Servicer can operate its
business in the same manner as it is operating on the date hereof;
(x) The information set forth in the Prepayment Charge Schedule
(including the Prepayment Charge Summary attached thereto) is complete,
true and correct in all material respects on the date or dates when
such information is furnished and each Prepayment Charge is permissible
and enforceable in accordance with its terms (except to the extent that
the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws affecting creditor's
rights generally or the collectibility thereof may be limited due to
acceleration in connection with a foreclosure) under applicable state
law; and
(xi) The Master Servicer will not waive any Prepayment Charge
unless it is waived in accordance with the standard set forth in
Section 3.01.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor, the Certificate Insurer and the Certificateholders. Upon discovery by
any of the Depositor, the Master Servicer, the Seller or the Trustee of a breach
of any of the foregoing representations, warranties and covenants which
materially and adversely affects the value of any Mortgage Loan, Prepayment
Charge or the interests therein of the Certificateholders or the Certificate
Insurer, the party discovering such breach shall give prompt written notice (but
in no event later than two Business Days following such discovery) to the Master
Servicer, the Seller, the Certificate Insurer and the Trustee. Notwithstanding
the foregoing, within 90 days of the earlier of discovery by the Master Servicer
or receipt of notice by the Master Servicer of the breach of the representation
or covenant of the Master Servicer set forth in Sections 2.05(x) or 2.05(xi)
above which materially and adversely affects the interests of the Holders of the
Class P Certificates in any Prepayment Charge, the Master Servicer shall remedy
such breach as follows: (a) if the representation made by the Master Servicer in
Section 2.05(x) above is breached and a Principal Prepayment has occurred in the
applicable Prepayment Period, the Master Servicer must pay the amount of the
scheduled Prepayment Charge, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account, net of any
amount previously collected by the Master Servicer and paid by the Master
Servicer, for the benefit of the Holders of the Class P Certificates, in respect
of such Prepayment Charge; and (b) if any of the covenants made by the Master
Servicer in Section 2.05(xi) above is breached, the Master Servicer must pay the
amount of such waived Prepayment Charge, for the benefit of the holders of the
Class P Certificates, by depositing such amount into the Collection Account. The
foregoing shall not, however, limit any remedies available to the
Certificateholders, the Depositor, the Certificate Insurer or the Trustee on
behalf of the Certificateholders, pursuant to the Mortgage Loan Purchase
Agreement signed by the
49
Master Servicer in its capacity as Seller, respecting a breach of the
representations, warranties and covenants of the Master Servicer in its capacity
as Seller contained in the Mortgage Loan Purchase Agreement.
Section 2.06. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders and the Certificate Insurer as follows:
(i) This agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general an except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the Depositor
to the Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor had good and marketable title to each Mortgage Loan (insofar
as such title was conveyed to it by the Seller) subject to no prior
lien, claim, participation interest, mortgage, security interest,
pledge, charge or other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title interest in the Mortgage Loans to the Trustee on behalf of
the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or
defraud any of its creditors;
(v) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware,
with full corporate power and authority to own its assets and conduct
its business as presently being conducted;
(vi) The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Depositor is a party or by which it or
its properties may be bound, which default might result in any material
adverse changes in the financial condition, earnings, affairs or
business of the Depositor or which might materially and adversely
affect the properties or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement by
the Depositor, and the consummation of the transactions contemplated
thereby, do not and will not result in a material breach or violation
of any of the terms or provisions of, or, to the knowledge of the
Depositor, constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Depositor is a party or by which the Depositor is bound or to which any
of the property or assets of the Depositor is subject, nor will such
50
actions result in any violation of the provisions of the articles of
incorporation or by-laws of the Depositor or, to the best of the
Depositor's knowledge without independent investigation, any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Depositor or any of its properties or
assets (except for such conflicts, breaches, violations and defaults as
would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body of the United States or any other jurisdiction is
required for the issuance of the Certificates, or the consummation by
the Depositor of the other transactions contemplated by this Agreement,
except such consents, approvals, authorizations, registrations or
qualifications as (a) may be required under State securities or Blue
Sky laws, (b) have been previously obtained or (c) the failure of which
to obtain would not have a material adverse effect on the performance
by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement;
(ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a
party or of which any of its properties is the subject: (a) which if
determined adversely to the Depositor would have a material adverse
effect on the business, results of operations or financial condition of
the Depositor; (b) asserting the invalidity of this Agreement or the
Certificates; (c) seeking to prevent the issuance of the Certificates
or the consummation by the Depositor of any of the transactions
contemplated by this Agreement, as the case may be; or (d) which might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this
Agreement;
(x) The Initial Mortgage Loans have original terms to maturity
ranging from 10 to 30 years;
(xi) No more than approximately 34.08%; 6.09%, 5.95%, 5.79% and
5.09% of the Initial Mortgage Loans, by Cut-off Date Principal Balance
will be secured by Mortgaged Properties located in California,
Massachusetts, Illinois, New York and Florida, respectively; and
approximately 81.73% of the Initial Mortgage Loans, by Cut-off Date
Principal Balance will be secured by real property with a single family
residence erected thereon and approximately 2.76% of the Initial
Mortgage Loans, by the Cut-off Date Principal Balance are secured by
condominiums;
(xii) As of the Cut-off Date, each Initial Mortgage Loan, had a
Loan-to-Value Ratio that was less than or equal to 96.30%;
(xiii) With respect to each Fixed Rate Mortgage Loan, the Mortgage
Note related thereto bears a fixed Mortgage Rate; and with respect to
each Adjustable Rate Mortgage Loan, the Mortgage Rate will be adjusted
on each Adjustment Date to equal the Index plus
51
the Gross Margin, rounded to the nearest or next highest 0.125%,
subject to the Periodic Rate Cap, the Maximum Mortgage Rate and the
Minimum Mortgage Rate; and
(xiv) The average Cut-off Date Principal Balance of the Initial
Mortgage Loans is $248,148.
Section 2.07. Issuance of Certificates.
------------------------
The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery to it of the Mortgage Files, subject to the provisions of Sections
2.01 and 2.02, together with the assignment to it of all other assets included
in the Trust Fund, receipt of which is hereby acknowledged. Concurrently with
such assignment and delivery and in exchange therefor, the Trustee, pursuant to
the written request of the Depositor executed by an officer of the Depositor,
has executed, authenticated and delivered to or upon the order of the Depositor,
the Certificates in authorized denominations. The interests evidenced by the
Certificates, constitute the entire beneficial ownership interest in the Trust
Fund.
Section 2.08. Conveyance of the Subsequent Mortgage Loans.
-------------------------------------------
(a) Subject to the conditions set forth in paragraph (b) below in
consideration of the Trustee's delivery on the Subsequent Transfer Dates to or
upon the order of the Depositor of all or a portion of the balance of funds in
the Pre-Funding Account, the Depositor shall on any Subsequent Transfer Date
sell, transfer, assign, set over and convey without recourse to the Trust Fund
but subject to the other terms and provisions of this Agreement all of the
right, title and interest of the Depositor in and to (i) the Subsequent Mortgage
Loans identified on the Mortgage Loan Schedule attached to the related
Subsequent Transfer Instrument delivered by the Depositor on such Subsequent
Transfer Date, (ii) principal due and interest accruing on the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date and (iii) all items
with respect to such Subsequent Mortgage Loans to be delivered pursuant to
Section 2.01 and the other items in the related Mortgage Files; provided,
however, that the Depositor reserves and retains all right, title and interest
in and to principal received and interest accruing on the Subsequent Mortgage
Loans prior to the related Subsequent Cut-off Date. The transfer to the Trustee
for deposit in the Mortgage Pool by the Depositor of the Subsequent Mortgage
Loans identified on the Mortgage Loan Schedule shall be absolute and is intended
by the Depositor, the Master Servicer, the Trustee and the Certificateholders to
constitute and to be treated as a sale of the Subsequent Mortgage Loans by the
Depositor to the Trust Fund. The related Mortgage File for each Subsequent
Mortgage Loan shall be delivered to the Trustee at least three Business Days
prior to the related Subsequent Transfer Date.
The purchase price paid by the Trustee from amounts released from
the Pre-Funding Account shall be one-hundred percent (100%) of the aggregate
Stated Principal Balance of the Subsequent Mortgage Loans so transferred (as
identified on the Mortgage Loan Schedule provided by the Depositor). This
Agreement shall constitute a fixed-price purchase contract in accordance
with Section 860G(a)(3)(A)(ii) of the Code.
(b) The Depositor shall transfer to the Trustee for deposit in the
Mortgage Pool the Subsequent Mortgage Loans and the other property and rights
related thereto as described in
52
paragraph (a) above, and the Trustee shall release funds from the Pre-Funding
Account, only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the Trustee, the Certificate
Insurer and the Rating Agencies with a timely Addition Notice and shall
have provided any information reasonably requested by the Trustee with
respect to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument, which shall include a Mortgage
Loan Schedule listing the Subsequent Mortgage Loans, and the Master
Servicer, in its capacity as Seller, shall have delivered a computer
file containing such Mortgage Loan Schedule to the Trustee at least
three Business Days prior to the related Subsequent Transfer Date;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument, substantially in the
form of Exhibit N, the Depositor shall not be insolvent nor shall it
have been rendered insolvent by such transfer nor shall it be aware of
any pending insolvency;
(iv) such sale and transfer shall not result in a material adverse
tax consequence to the Trust Fund or the Certificateholders;
(v) the Funding Period shall not have terminated;
(vi) the Depositor shall not have selected the Subsequent Mortgage
Loans in a manner that it believed to be adverse to the interests of
the Certificateholders;
(vii) the Depositor shall have delivered to the Trustee a
Subsequent Transfer Instrument confirming the satisfaction of the
conditions precedent specified in this Section 2.08 and, pursuant to
the Subsequent Transfer Instrument, assigned to the Trustee without
recourse for the benefit of the Certificateholders all the right, title
and interest of the Depositor, in, to and under the Subsequent Mortgage
Loan Purchase Agreement, to the extent of the Subsequent Mortgage
Loans;
(viii) [reserved];
(ix) the Depositor shall have delivered to the Trustee an Opinion
of Counsel addressed to the Trustee and the Rating Agencies with
respect to the transfer of the Subsequent Mortgage Loans substantially
in the form of the Opinion of Counsel delivered to the Trustee on the
Closing Date regarding the true sale of the Subsequent Mortgage Loans;
and
(x) the Depositor shall have received the written consent of the
Certificate Insurer to the transfer of the Subsequent Loans.
(c) The obligation of the Trust Fund to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the satisfaction of
the conditions set forth in the
53
immediately following paragraph and the accuracy of the following
representations and warranties with respect to each such Subsequent Mortgage
Loan determined as of the applicable Subsequent Cut-off Date: (i) such
Subsequent Mortgage Loan may not be 30 or more days delinquent as of the related
Subsequent Cut-off Date; (ii) the original term to stated maturity of such
Subsequent Mortgage Loan will not be less than 120 months and will not exceed
360 months; (iii) the Subsequent Mortgage Loan may not provide for negative
amortization; (iv) such Subsequent Mortgage Loan will not have a loan-to-value
ratio greater than 95%; (v) such Subsequent Mortgage Loans will have, as of the
Subsequent Cut-off Date, a weighted average term since origination not in excess
of 6 months; (vi) such Subsequent Mortgage Loan, if a Fixed Rate Mortgage Loan,
shall have a Mortgage Rate that is not less than 7.000% or greater than 14.000%;
(vii) such Subsequent Mortgage Loan shall have been serviced by the Master
Servicer since originated or purchased by the Depositor; (viii) such Subsequent
Mortgage Loan must have a first payment date occurring on or before December 1,
1999; (ix) if the Subsequent Mortgage Loan is an Adjustable Rate Mortgage Loan,
the Subsequent Mortgage Loan will have a Gross Margin not less than 4.200%; (x)
if the Subsequent Mortgage Loan is an Adjustable Rate Mortgage Loan, the
Subsequent Mortgage Loan will have a Maximum Mortgage Rate not less than
12.950%; (xi) if the Subsequent Mortgage Loan is an Adjustable Rate Mortgage
Loan, the Subsequent Mortgage Loan will have a Minimum Mortgage Rate not less
than 7.000%; and (xii) such Subsequent Mortgage Loan shall have been
underwritten in accordance with the criteria set forth under "Option One
Mortgage Corporation-- Underwriting Standards" in the Prospectus Supplement.
In addition, following the purchase of any Subsequent Mortgage Loan by
the Trust, the Mortgage Loans (including such Subsequent Mortgage Loans) will as
of the Subsequent Cut-off Date: (i) have a weighted average original term to
stated maturity of not more than 342 months; (ii) have a weighted average
Mortgage Rate of not less than 9.500% and not more than 9.700%; (iii) have a
weighted average loan-to-value ratio of not more than 78%; (iv) have no Mortgage
Loan with a principal balance in excess of $750,000, and (v) have no more than
28.33% of Fixed Rate Mortgage Loan, in each case, as applicable, by aggregate
principal balance of the Mortgage Loans as of the Subsequent Cut-off Date. In
addition, the Adjustable Rate Mortgage Loans will as of the Subsequent Cut-off
Date have a weighted average Gross Margin not less than 5.600% by aggregate
principal balance of the Adjustable Rate Mortgage Loans as of the Subsequent
Cut-off Date. In the sole discretion of the Certificate Insurer, Subsequent
Mortgage Loans with characteristics varying from those set forth above may be
purchased by the Trust; provided, however that the addition of such Mortgage
Loans will not materially affect the aggregate characteristics of the Mortgage
Pool.
Section 2.09. Conveyance of Uncertificated REMIC I Regular Interests;
Acceptance of REMIC II by the Trustee. The Company, concurrently with the
execution and delivery hereof, does hereby transfer, assign, set over and
otherwise convey to the Trustee without recourse all the right, title and
interest of the Depositor in and to the Uncertificated REMIC I Regular Interests
for the benefit of the Certificateholders and the Certificate Insurer. The
Trustee acknowledges receipt of the Uncertificated REMIC I Regular Interests
(which are uncertificated) and declares that it holds and will hold the same in
trust for the exclusive use and benefit of all present and future
Certificateholders and the Certificate Insurer.
54
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Master Servicer.
-----------------------------------------
The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Trust and in the best interests of and for the benefit of the
Certificateholders and the Certificate Insurer (as determined by the Master
Servicer in its reasonable judgment) in accordance with the terms of this
Agreement and the Mortgage Loans and, to the extent consistent with such terms,
in the same manner in which it services and administers similar mortgage loans
for its own portfolio, giving due consideration to customary and usual standards
of practice of mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:
(i) any relationship that the Master Servicer, any Sub-Servicer or
any Affiliate of the Master Servicer or any Sub-Servicer may have with
the related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Master Servicer or any Affiliate of the Master Servicer;
(iii) the Master Servicer's obligation to make Advances or
Servicing Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any
particular transaction.
To the extent consistent with the foregoing, the Master Servicer (a) shall seek
to maximize the timely and complete recovery of principal and interest on the
Mortgage Notes and (b) shall waive (or permit a subservicer to waive) a
Prepayment Charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans and (ii) either (A)
such waiver would, in the reasonable judgement of the Master Servicer, maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and the related Mortgage Loan and, if such waiver is made in connection
with a refinancing of the related Mortgage Loan, such refinancing is related to
a default or a reasonably foreseeable default or (B) such waiver is made in
connection with a refinancing of the related Mortgage Loan unrelated to a
default or a reasonably foreseeable default where (x) the related mortgagor has
stated to the Master Servicer or an applicable subservicer an intention to
refinance the related Mortgage Loan and (y) the Master Servicer has concluded in
its reasonable judgement that the waiver of such Prepayment Charge would induce
such mortgagor to refinance with the Master Servicer. If a Prepayment Charge is
waived as permitted by meeting the standards described in clauses (i) and
(ii)(B) above, then the Master Servicer is required to pay the amount of such
waived Prepayment Charge, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account together
with and at the time that the amount prepaid on the related Mortgage Loan is
required to be deposited into the Collection Account. Notwithstanding any other
provisions of this Agreement, any payments made by the Master Servicer in
respect of any waived Prepayment Charges pursuant to clauses (i) and (ii)(B)
above shall be deemed to be paid outside of the Trust Fund. Subject only to the
above-described servicing
55
standards and the terms of this Agreement and of the Mortgage Loans, the Master
Servicer shall have full power and authority, acting alone or through
Sub-Servicers as provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Master Servicer in its own name or in the name of a Sub-Servicer is hereby
authorized and empowered by the Trustee when the Master Servicer believes it
appropriate in its best judgment in accordance with the servicing standards set
forth above, to execute and deliver, on behalf of the Certificateholders and the
Trustee, and upon notice to the Trustee, 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 the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Trustee and
Certificateholders. The Master Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Master Servicer shall also comply in the performance of this Agreement with
all reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17, the Trustee shall execute, at the
written request of the Master Servicer, and furnish to the Master Servicer and
any Sub-Servicer any special or limited powers of attorney and other documents
necessary or appropriate to enable the Master Servicer or any Sub-Servicer to
carry out their servicing and administrative duties hereunder; provided, such
limited powers of attorney or other documents shall be prepared by the Master
Servicer and submitted to the Trustee for execution. The Trustee shall not be
liable for the actions of the Master Servicer or any Sub-Servicers under such
powers of attorney.
Subject to Section 3.09 hereof, 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 timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09, and further as provided in Section 3.11.
Any cost incurred by the Master Servicer or by Sub-Servicers in effecting the
timely payment of taxes and assessments on a Mortgaged Property shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
unpaid Principal Balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.04) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the Principal Balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or Treasury regulations promulgated thereunder) and (B) cause either REMIC I or
REMIC II to fail to qualify as a REMIC under the Code or the imposition of any
tax on "prohibited transactions" or "contributions after the startup date" under
the REMIC Provisions.
56
Section 3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
----------------------------------------------------
(a) The Master Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that any Sub-Servicer shall be acceptable to the Certificate
Insurer and provided such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating or any shadow rating on any Class
of Certificates. The Trustee is hereby authorized to acknowledge, at the request
of the Master Servicer, any Sub-Servicing Agreement that meets the requirements
applicable to Sub-Servicing Agreements set forth in this Agreement and that is
otherwise permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business in the
state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement and (ii) a Xxxxxxx Mac or Xxxxxx Mae approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Master Servicer
will examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub-Servicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders without the
consent of the Certificate Insurer and the Holders of Certificates entitled to
at least 66% of the Voting Rights; provided, further, that the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights shall not
be required (i) to cure any ambiguity or defect in a Sub-Servicing Agreement,
(ii) to correct, modify or supplement any provisions of a Sub-Servicing
Agreement, or (iii) to make any other provisions with respect to matters or
questions arising under a Sub-Servicing Agreement, which, in each case, shall
not be inconsistent with the provisions of this Agreement. Any variation without
the consent of the Certificate Insurer and the Holders of Certificates entitled
to at least 66% of the Voting Rights from the provisions set forth in Section
3.08 relating to insurance or priority requirements of Sub- Servicing Accounts,
or credits and charges to the Sub-Servicing Accounts or the timing and amount of
remittances by the Sub-Servicers to the Master Servicer, are conclusively deemed
to be inconsistent with this Agreement and therefore prohibited. The Master
Servicer shall deliver to the Trustee and the Certificate Insurer copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof, promptly
upon the Master Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Trustee, the Certificateholders and the Certificate
Insurer, shall enforce the obligations of each Sub- Servicer under the related
Sub-Servicing Agreement and of the Seller under the Mortgage Loan Purchase
Agreement, including, without limitation, any obligation to make advances in
respect of delinquent payments as required by a Sub-Servicing Agreement, or to
purchase a Mortgage Loan on account of missing or defective documentation or on
account of a breach of a representation,
57
warranty or covenant, as described in Section 2.03(a). Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Sub-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 Loans,
or (ii) from a specific recovery of costs, expenses or attorneys' fees against
the party against whom such enforcement is directed. Enforcement of the Mortgage
Loan Purchase Agreement against the Seller shall be effected by the Master
Servicer to the extent it is not the Seller, and otherwise by the Trustee in
accordance with the foregoing provisions of this paragraph.
Section 3.03. Successor Sub-Servicers.
-----------------------
The Master Servicer or the Certificate Insurer shall be entitled to
terminate any Sub-Servicing Agreement and the rights and obligations of any
Sub-Servicer pursuant to any Sub-Servicing Agreement in accordance with the
terms and conditions of such Sub-Servicing Agreement. In the event of
termination of any Sub-Servicer, all servicing obligations of such Sub-Servicer
shall be assumed simultaneously by the Master Servicer without any act or deed
on the part of such Sub- Servicer or the Master Servicer, and the Master
Servicer either shall service directly the related Mortgage Loans or shall enter
into a Sub-Servicing Agreement with a successor Sub-Servicer which qualifies
under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Master Servicer, the Trustee (if
the Trustee is acting as Master Servicer) or the Certificate Insurer without
fee, in accordance with the terms of this Agreement, in the event that the
Master Servicer (or the Trustee, if such party is then acting as Master
Servicer) shall, for any reason, no longer be the Master Servicer (including
termination due to a Master Servicer Event of Termination).
Section 3.04. Liability of the Master Servicer.
--------------------------------
Notwithstanding any Sub-Servicing Agreement or the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee, the Certificateholders and the Certificate Insurer for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-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. The Master Servicer shall be entitled to enter
into any agreement with a Sub- Servicer for indemnification of the Master
Servicer by such Sub-Servicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
Section 3.05. No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders.
---------------------------------------------------------
58
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Master Servicer alone, and the Trustee, Certificateholders or the Certificate
Insurer shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Sub-Servicer except as
set forth in Section 3.06. The Master Servicer shall be solely liable for all
fees owed by it to any Sub-Servicer, irrespective of whether the Master
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
--------------------------------------------------------
In the event the Master Servicer shall for any reason no longer be the
servicer (including by reason of the occurrence of a Master Servicer Event of
Termination), the Trustee shall thereupon assume all of the rights and
obligations of the Master Servicer under each Sub-Servicing Agreement that the
Master Servicer may have entered into, unless the Trustee or the Certificate
Insurer elects to terminate any Sub-Servicing Agreement in accordance with its
terms as provided in Section 3.03. Upon such assumption, the Trustee (or the
successor servicer appointed pursuant to Section 7.02) shall be deemed, subject
to Section 3.03, to have assumed all of the departing Master Servicer's interest
therein and to have replaced the departing Master Servicer as a party to each
Sub-Servicing Agreement to the same extent as if each Sub-Servicing Agreement
had been assigned to the assuming party, except that (i) the departing Master
Servicer shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) neither the Trustee nor any successor Master Servicer shall be deemed
to have assumed any liability or obligation of the Master Servicer that arose
before it ceased to be the Master Servicer.
The Master Servicer at its expense shall, upon request of Trustee,
deliver to the assuming party all documents and records relating to each
Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party. All Servicing Transfer Costs
shall be paid by the predecessor Master Servicer upon presentation of reasonable
documentation of such costs, and if such predecessor Master Servicer defaults in
its obligation to pay such costs, such costs shall be paid by the successor
Master Servicer or the Trustee (in which case the successor Master Servicer or
the Trustee, as applicable, shall be entitled to reimbursement therefor from the
assets of the Trust).
Section 3.07. Collection of Certain Mortgage Loan Payments.
--------------------------------------------
The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or, if applicable, any penalty interest, or (ii) extend the due
dates for the Monthly Payments due on a Mortgage Note for a period of not
greater
59
than 180 days; provided, however, that any extension pursuant to clause (ii)
above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, except as provided below. In the event of
any such arrangement pursuant to clause (ii) above, the Master Servicer shall
make timely advances on such Mortgage Loan during such extension pursuant to
Section 4.04 and in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangement. Notwithstanding
the foregoing, in the event that any Mortgage Loan is in default or, in the
judgment of the Master Servicer, such default is reasonably foreseeable, the
Master Servicer, consistent with the standards set forth in Section 3.01, may
also waive, modify or vary any term of such Mortgage Loan (including
modifications that would change the Mortgage Rate, forgive the payment of
principal or interest or extend the final maturity date of such Mortgage Loan),
accept payment from the related Mortgagor of an amount less than the Stated
Principal Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor (any and all such waivers, modifications, variances,
forgiveness of principal or interest, postponements, or indulgences collectively
referred to herein as "forbearance"), provided, however, that in no event shall
the Master Servicer grant any such forbearance (other than as permitted by the
second sentence of this Section) with respect to any one Mortgage Loan more than
once in any 12 month period or more than three times over the life of such
Mortgage Loan. The Master Servicer's analysis supporting any forbearance and the
conclusion that any forbearance meets the standards of Section 3.01 (including
the standard that such forbearance will maximize the timely and complete
recovery of principal and interest on the Mortgage Notes) shall be reflected in
writing in the Mortgage File and shall be provided to the Certificate Insurer
upon request.
Section 3.08. Sub-Servicing Accounts.
----------------------
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Master Servicer for deposit in the Collection Account not later
than two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Master Servicer shall be deemed to
have received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
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The Master Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts"),
into which all Escrow Payments shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Master Servicer shall deposit in
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the clearing account in which it customarily deposits payments and collections
on mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Master
Servicer's receipt thereof, all Escrow Payments collected on account of the
Mortgage Loans and shall thereafter deposit such Escrow Payments in the
Servicing Accounts, in no event more than two Business Days after the receipt of
such Escrow Payments, all Escrow Payments collected on account of the Mortgage
Loans for the purpose of effecting the timely payment of any such items as
required under the terms of this Agreement. Withdrawals of amounts from a
Servicing Account may be made only to (i) effect payment of taxes, assessments,
hazard insurance premiums, and comparable items in a manner and at a time that
assures that the lien priority of the Mortgage is not jeopardized (or, with
respect to the payment of taxes, in a manner and at a time that avoids the loss
of the Mortgaged Property due to a tax sale or the foreclosure as a result of a
tax lien); (ii) reimburse the Master Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) out of related collections for
any Servicing Advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.14 (with respect to hazard insurance); (iii) refund
to Mortgagors any sums as may be determined to be overages; (iv) pay interest,
if required and as described below, to Mortgagors on balances in the Servicing
Account; or (v) clear and terminate the Servicing Account at the termination of
the Master Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement in accordance with Article X. In the event
the Master Servicer shall deposit in a Servicing Account any amount not required
to be deposited therein, it may at any time withdraw such amount from such
Servicing Account, any provision herein to the contrary notwithstanding. The
Master Servicer will be responsible for the administration of the Servicing
Accounts and will be obligated to make Servicing Advances to such accounts when
and as necessary to avoid the lapse of insurance coverage on the Mortgaged
Property, or which the Master Servicer knows, or in the exercise of the required
standard of care of the Master Servicer hereunder should know, is necessary to
avoid the loss of the Mortgaged Property due to a tax sale or the foreclosure as
a result of a tax lien. If any such payment has not been made and the Master
Servicer receives notice of a tax lien with respect to the Mortgage being
imposed, the Master Servicer will, within 10 business days of such notice,
advance or cause to be advanced funds necessary to discharge such lien on the
Mortgaged Property. As part of its servicing duties, the Master Servicer or
Sub-Servicers shall pay to the Mortgagors interest on funds in the Servicing
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Servicing Accounts is insufficient, to pay such interest from
its or their own funds, without any reimbursement therefor.
Section 3.10. Collection Account, Initial Deposit Account and
Distribution Account.
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(a) On behalf of the Trust Fund, the Master Servicer shall establish
and maintain, or cause to be established and maintained, one or more accounts
(such account or accounts, the "Collection Account"), held in trust for the
benefit of the Trustee, the Certificateholders and the Certificate Insurer. On
behalf of the Trust Fund, the Master Servicer shall deposit or cause to be
deposited in the clearing account in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Master Servicer's receipt thereof, and shall thereafter deposit in the
Collection Account, in no event more than two Business Days after the Master
Servicer's receipt thereof, as and when received or as otherwise required
hereunder, the following payments and collections received or made by it
subsequent to the Cut-off Date or Subsequent Cut-off Date, as
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applicable, (other than in respect of principal or interest on the Mortgage
Loans due on or before the Cut-off Date or Subsequent Cut-off Date, as
applicable) or payments (other than Principal Prepayments) received by it on or
prior to the Cut-off Date or Subsequent Cut-off Date, as applicable, but
allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments (but not Prepayment Charges), on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other than
proceeds collected in respect of any particular REO Property and
amounts paid in connection with a purchase of Mortgage Loans and REO
Properties pursuant to Section 10.01);
(iv) any amounts required to be deposited pursuant to Section 3.12
in connection with any losses realized on Permitted Investments with
respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Master Servicer
pursuant to the second paragraph of Section 3.14(a) in respect of any
blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03 or Section 10.01;
(vii) all amounts required to be deposited in connection with
Substitution Adjustments pursuant to Section 2.03; and
(viii) all Prepayment Charges collected by the Master Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans.
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of Servicing Fees, late
payment charges, assumption fees, insufficient funds charges and ancillary
income need not be deposited by the Master Servicer in the Collection Account
and may be retained by the Master Servicer as additional compensation. In the
event the Master Servicer shall deposit in the Collection Account any amount not
required to be deposited therein, it may at any time withdraw such amount from
the Collection Account, any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Trustee, the Certificateholders
and the Certificate Insurer. On behalf of the Trust Fund, the Master Servicer
shall deliver to the Trustee in immediately available funds for deposit in the
Distribution Account on or before the Close of Business New York time (i) on the
Master Servicer Remittance Date, that portion of the Available Funds (calculated
without regard to the references in the
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definition thereof to amounts that may be withdrawn from the Distribution
Account) for the related Distribution Date then on deposit in the Collection
Account and the amount of all Prepayment Charges collected by the Master
Servicer in connection with the Principal Prepayment of any of the Mortgage
Loans then on deposit in the Collection Account, and (ii) on each Business Day
as of the commencement of which the balance on deposit in the Collection Account
exceeds $75,000 following any withdrawals pursuant to the next succeeding
sentence, the amount of such excess, but only if the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account." If the balance on deposit in the Collection Account
exceeds $75,000 as of the commencement of business on any Business Day and the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account," the Master Servicer shall, on or
before the Close of Business New York time on such Business Day, withdraw from
the Collection Account any and all amounts payable or reimbursable to the Master
Servicer, the Trustee, the Seller or any Sub-Master Servicer pursuant to Section
3.11 and shall pay such amounts to the Persons entitled thereto.
On behalf of the Trust Fund, the Trustee shall establish and maintain
the Initial Deposit Account, held in trust for the benefit of Certificateholders
and the Certificate Insurer. On the Closing Date, the Depositor shall remit or
cause to be remitted to the Trustee, for deposit in the Initial Deposit Account,
and the Trustee shall deposit the Initial Deposit, to the extent received by it,
into the Initial Deposit Account. The Initial Deposit Account shall be treated
as an "outside reserve fund" under applicable Treasury regulations and shall not
be part of either REMIC. Any investment earnings on funds in the Initial Deposit
Account shall be treated as owned by the Depositor and will be taxable to the
Depositor. The Trustee shall be required to withdraw such earnings from the
Initial Deposit Account and remit the same to the Depositor on the first
Distribution Date (or as soon as received if such funds are not available on
such Distribution Date), and shall thereupon terminate such account.
(c) Funds in the Collection Account, the Initial Deposit Account and
the Distribution Account may be invested in Permitted Investments in accordance
with the provisions set forth in Section 3.12. The Master Servicer shall give
notice to the Trustee and the Certificate Insurer of the location of the
Collection Account maintained by it when established and prior to any change
thereof. The Trustee shall give notice to the Master Servicer, the Depositor and
the Certificate Insurer of the location of the Distribution Account and the
Initial Deposit Account when established and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be delivered
by the Master Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; provided,
however, that the Trustee shall have the sole authority to withdraw any funds
held pursuant to this subsection (d). In the event the Master Servicer shall
deliver to the Trustee for deposit in the Distribution Account any amount not
required to be deposited therein, it may at any time request that the Trustee
withdraw such amount from the Distribution Account and remit to it any such
amount, any provision herein to the contrary notwithstanding. In addition, the
Master Servicer, with respect to items (i) through (iv) below, shall deliver to
the Trustee from time to time for deposit, and the Trustee, with respect to
items (i) through (iv) below, shall so deposit, in the Distribution Account:
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(i) any Advances, as required pursuant to Section 4.04;
(ii) any amounts required to be deposited pursuant to Section
3.23(d) or (f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 10.01;
(iv) any Compensating Interest to be deposited pursuant to Section
3.24 in connection with any Prepayment Interest Shortfall; and
(v) any amounts required to be paid to the Trustee pursuant to the
Agreement, including, but not limited to Section 3.06 and Section 7.02.
(e) [Reserved].
(f) The Master Servicer shall deposit in the Collection Account any
amounts required to be deposited pursuant to Section 3.12(b) in connection with
losses realized on Permitted Investments
with respect to funds held in the Collection Account.
Section 3.11. Withdrawals from the Collection Account and Distribution
Account.
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(a) The Master Servicer shall, from time to time, make withdrawals from
the Collection Account for any of the following purposes or as described in
Section 4.04:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Section
3.10(b) or permitted to be so remitted pursuant to the first sentence
of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Master Servicer
for (a) any unreimbursed Advances to the extent of amounts received
which represent Late Collections (net of the related Servicing Fees) of
Monthly Payments, Liquidation Proceeds and Insurance Proceeds on
Mortgage Loans with respect to which such Advances were made in
accordance with the provisions of Section 4.04; (b) any unreimbursed
Advances with respect to the final liquidation of a Mortgage Loan that
are Nonrecoverable Advances, but only to the extent that Late
Collections, Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan are insufficient to reimburse the Master
Servicer for such unreimbursed Advances; or (c) subject to Section 3.13
and Section 4.04(b), any unreimbursed Advances to the extent of funds
held in the Collection Account for future distribution that were not
included in Available Funds for the preceding Distribution Date;
(iii) subject to Section 3.16(d), to pay the Master Servicer or
any Sub-Servicer (a) any unpaid Servicing Fees, (b) any unreimbursed
Servicing Advances with respect to each Mortgage Loan, but only to the
extent of any Late Collections, Liquidation Proceeds and Insurance
Proceeds received with respect to such Mortgage Loan, and (c) any
Servicing
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Advances with respect to the final liquidation of a Mortgage Loan that
are Nonrecoverable Advances, but only to the extent that Late
Collections, Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan are insufficient to reimburse the Master
Servicer or any Sub-Servicer for Servicing Advances;
(iv) to pay to the Master Servicer as servicing compensation (in
addition to the Servicing Fee) on the Master Servicer Remittance Date
any interest or investment income earned on funds deposited in the
Collection Account;
(v) to pay to the Seller, with respect to each Mortgage Loan that
has previously been purchased or replaced pursuant to Section 2.03 or
Section 3.16(c) all amounts received thereon subsequent to the date of
purchase or substitution, as the case may be;
(vi) to reimburse the Master Servicer for any Advance or Servicing
Advance previously made which the Master Servicer has determined to be
a Nonrecoverable Advance in accordance with the provisions of Section
4.04;
(vii) to pay, or to reimburse the Master Servicer for Servicing
Advances in respect of, expenses incurred in connection with any
Mortgage Loan pursuant to Section 3.16(b);
(viii) to reimburse the Master Servicer for expenses incurred by
or reimbursable to the Master Servicer pursuant to Section 6.03;
(ix) to pay itself any Prepayment Interest Excess; and
(x) to clear and terminate the Collection Account pursuant to
Section 10.01.
The foregoing requirements for withdrawal from the Collection Account
shall be exclusive. In the event the Servicer shall deposit in the Collection
Account any amount not required to be deposited therein, it may at any time
withdraw such amount from the Collection Account, any provision herein to the
contrary notwithstanding.
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, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi) and (vii) above. The
Master Servicer shall provide written notification to the Trustee, on or prior
to the next succeeding Master Servicer Remittance Date, upon making any
withdrawals from the Collection Account pursuant to subclause (vi) above;
provided that an Officer's Certificate in the form described under Section
4.04(d) shall suffice for such written notification to the Trustee in respect
hereof.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions in accordance with Section 4.01;
65
(ii) to pay any amounts in respect of taxes pursuant to Section
9.01(g);
(iii) to clear and terminate the Distribution Account pursuant to
Section 10.01;
(iv) to pay any amounts required to be paid to the Trustee
pursuant to this Agreement, including but not limited to funds required
to be paid pursuant to Section 3.06 and Section 7.02; and
(v) to pay to the Master Servicer, the Master Servicer Portion of
any interest or investment income earned on funds deposited in the
Distribution Account, and to pay to the Trustee, any remaining interest
or investment income earned on funds deposited in the
Distribution Account.
Section 3.12. Investment of Funds in the Interest Coverage Account,
Collection Account, Initial Deposit Account and the Distribution Account.
(a) The Master Servicer may direct any depository institution
maintaining the Interest Coverage Account and the Collection Account, at the
direction of the Depositor the Trustee shall direct any depository institution
maintaining the Initial Deposit Account and at the direction of the Master
Servicer the Trustee shall direct any depository institution maintaining the
Distribution Account (each such account, for purposes of this Section 3.12, an
"Investment Account"), to invest the funds in such Investment Account in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon or if such investment is managed or advised by a Person other
than the Trustee or an Affiliate of the Trustee, and (ii) no later than the date
on which such funds are required to be withdrawn from such account pursuant to
this Agreement, if the Trustee is the obligor thereon or if such investment is
managed or advised by the Trustee or any Affiliate. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in an Investment Account shall be made in the name of the Trustee (in
its capacity as such), or in the name of a nominee of the Trustee. The Trustee
shall be entitled to sole possession (except with respect to investment
direction of funds held in the Interest Coverage Account, the Initial Deposit
Account and the Collection Account and any income and gain realized thereon)
over each such investment, and any certificate or other instrument evidencing
any such investment shall be delivered directly to the Trustee or its agent,
together with any document of transfer necessary to transfer title to such
investment to the Trustee or its nominee. In the event amounts on deposit in an
Investment Account are at any time invested in a Permitted Investment payable on
demand, the Trustee shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the
last day such Permitted Investment may otherwise mature
hereunder in an amount equal to the lesser of (1) all
amounts then payable thereunder and (2) the amount
required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that
such Permitted Investment would not
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constitute a Permitted Investment in respect of funds
thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds deposited
in the Interest Coverage Account, Collection Account and any REO Account held by
or on behalf of the Master Servicer and from the investment of funds deposited
in the Distribution Account (to the extent of the Master Servicer Portion) shall
be for the benefit of the Master Servicer and shall be subject to its withdrawal
in accordance with Section 3.11 or Section 3.23, as applicable, or subject to
withdrawal by the Trustee from the Distribution Account with respect to the
Master Servicer Portion of income and gain in the Distribution Account. The
Master Servicer shall deposit in the Interest Coverage Account, Collection
Account or any REO Account, as applicable (or shall remit to the Trustee for
deposit in the Distribution Account with respect to the Master Servicer Portion)
the amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such account immediately upon realization of such
loss.
(c) All income and gain realized from the investment of funds deposited
in the Distribution Account (other than with respect to the Master Servicer
Portion) shall be for the benefit of the Trustee. The Trustee shall deposit in
the Distribution Account the amount of any loss (other than the Master Servicer
Portion) of principal incurred in respect of any such Permitted Investment made
with funds in such accounts immediately upon realization of such loss. All
income and gain realized from the investment of funds deposited in the Initial
Deposit Account shall be for the benefit of the Depositor. The Depositor shall
remit from its own funds to the Trustee for deposit in the Initial Deposit
Account the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Certificate Insurer or the Holders of Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.
Section 3.13. Use of Funds Held for Future Distribution.
-----------------------------------------
The Master Servicer may, pursuant to Section 3.11(ii), reimburse itself
for unreimbursed Advances from funds held in the Collection Account for future
distribution that were not included in Available Funds for the preceding
Distribution Date upon written consent from the Certificate Insurer; provided,
however, that the Master Servicer is obligated to redeposit such amounts into
the Distribution Account on or before the Master Servicer Remittance Date
relating to the Distribution Date on which such amounts are to be distributed to
the extent funds in the Collection Account are insufficient to make the required
distribution on such Distribution Date. On or before each such reimbursement,
the Master Servicer shall give written notice to the Trustee and the Certificate
Insurer of the amount of such reimbursement. The Master Servicer shall cease
using funds held in the Collection Account for future distribution for such
purpose upon the earliest to occur of: (i) the long-term senior unsecured debt
obligations of Block Financial Corporation, one of the guarantors
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of certain obligations of the Master Servicer under this Agreement, fall below a
rating of "A" by S&P or Xxxxx'x; (ii) a change in ownership of the Master
Servicer; or (iii) the Certificate Insurer in its sole discretion withdraws its
consent in writing. Notwithstanding the foregoing, the Certificate Insurer may
in its sole discretion waive the requirements of clause (i) or clause (ii)
above.
Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage.
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(a) The Master Servicer shall cause to be maintained for each Mortgage
Loan hazard insurance with extended coverage on the Mortgaged Property in an
amount which is at least equal to the lesser of the current Principal Balance of
such Mortgage Loan and the amount necessary to fully compensate for any damage
or loss to the improvements that are a part of such property on a replacement
cost basis, in each case in an amount not less than such amount as is necessary
to avoid the application of any coinsurance clause contained in the related
hazard insurance policy. The Master Servicer shall also cause to be maintained
hazard insurance with extended coverage on each REO Property in an amount which
is at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) the outstanding
Principal Balance of the related Mortgage Loan at the time it became an REO
Property. The Master Servicer will comply in the performance of this Agreement
with all reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by the Master Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11, if received
in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.23, if received in respect of an REO Property. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating distributions to Certificateholders and the
Certificate Insurer, be added to the unpaid Principal Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Master Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid Principal Balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
In the event that the Master Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer
shall, in the event that there shall not have been maintained on the
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related Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee, Certificateholders and
the Certificate Insurer, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy.
(b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Xxxxxx Mae or Xxxxxxx Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from Xxxxxx Mae or Xxxxxxx Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of Xxxxxx Mae or Xxxxxxx Mac, unless the Master Servicer has obtained a waiver
of such requirements from Xxxxxx Mae or Xxxxxxx Mac. The Master Servicer shall
be deemed to have complied with this provision if an Affiliate of the Master
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Master Servicer. Any such errors and omissions policy
and fidelity bond shall by its terms not be cancelable without thirty days'
prior written notice to the Trustee. The Master Servicer shall also cause each
Sub-Servicer to maintain a policy of insurance covering errors and omissions and
a fidelity bond which would meet such requirements.
Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
----------------------------------------------
The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Master Servicer shall not be required to take such action if in its
sole business judgment the Master Servicer believes it is not in the best
interests of the Trust Fund and shall not exercise any such rights if prohibited
by law from doing so. If the Master Servicer reasonably believes it is unable
under applicable law to enforce such "due-on-sale" clause, or if any of the
other conditions set forth in the proviso to the preceding sentence apply, the
Master Servicer will enter into an assumption and modification agreement from or
with the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Master Servicer is also authorized 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
the Mortgagor and becomes liable under the Mortgage Note, provided that no such
substitution shall be effective unless such person satisfies the underwriting
criteria of the Master Servicer and has a credit risk rating at least equal to
that of the original Mortgagor. In connection with any assumption or
substitution, the Master Servicer shall apply such underwriting standards and
follow such practices and procedures as shall be normal and usual in its general
mortgage servicing activities and
69
as it applies to other mortgage loans owned solely by it. The Master Servicer
shall not take or enter into any assumption and modification agreement, however,
unless (to the extent practicable in the circumstances) it shall have received
confirmation, in writing, of the continued effectiveness of any applicable
hazard insurance policy. Any fee collected by the Master Servicer in respect of
an assumption, modification or substitution of liability agreement shall be
retained by the Master Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the Mortgage Note
(including but not limited to the related Mortgage Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Master Servicer shall notify the Trustee that
any such substitution, modification or assumption agreement has been completed
by forwarding to the Trustee the executed original of such substitution,
modification or assumption agreement, which document 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.
The Master Servicer shall be entitled to any Prepayment Interest
Excess, which it may withdraw from the Collection Account pursuant to Section
3.11(a).
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Master Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.
Section 3.16. Realization Upon Defaulted Mortgage Loans.
-----------------------------------------
(a) The Master Servicer shall use its best efforts, consistent with
Servicing Standard, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans (including selling
any such Mortgage Loans other than converting the ownership of the related
properties) as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07. The Master Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will be recoverable as Servicing Advances by the Master
Servicer as contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the provision that, in any case in which Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Master Servicer shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Master Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Master Servicer shall not, on behalf of the Trustee, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise
70
acquire possession of, or take any other action with respect to, such Mortgaged
Property, if, as a result of any such action, the Trustee, the Trust Fund, the
Certificateholders or the Certificate Insurer would be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or "operator" of
such Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Master Servicer has also previously
determined, based on its reasonable judgment and a report prepared by a Person
who regularly conducts environmental audits using customary industry standards,
that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal, state or
local law or regulation, or that if any such materials are present for
which such action could be required, that it would be in the best
economic interest of the Trust Fund to take such actions with respect
to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section
3.16 shall be advanced by the Master Servicer, subject to the Master Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(vii), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund; provided that any amounts disbursed by the
Master Servicer pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to Section 4.04(d). The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(iii) and (a)(vii), such right
of reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.
(c) The Master Servicer may at its option purchase from the Mortgage
Pool, any Mortgage Loan or related REO Property that is 90 days or more
delinquent, which the Master Servicer determines in good faith will otherwise
become subject to foreclosure proceedings (evidence of such determination to be
delivered in writing to the Trustee and the Certificate Insurer prior to
purchase), at a price equal to the Purchase Price; provided, however, that (i)
unless the Certificate Insurer
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otherwise consents in writing, the Master Servicer shall purchase any such
Mortgage Loans or related REO Properties on the basis of delinquency, purchasing
the most delinquent Mortgage Loans or related REO Properties first and (ii)
after it has purchased 3.00% of the Mortgage Loans or related REO Properties, by
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
pursuant to clause (i) above, the Master Servicer must also obtain the consent
of the Certificate Insurer prior to any further purchases, provided that failure
of the Certificate Insurer to respond within five Business Days following actual
receipt of any such request for consent by the Master Servicer shall be deemed
to constitute consent to the additional purchases identified in such request for
consent. The Purchase Price for any Mortgage Loan or related REO Property
purchased hereunder shall be deposited in the Distribution Account, and the
Trustee, upon receipt of such deposit, shall release or cause to be released to
the Master Servicer the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Master Servicer shall furnish and as shall be necessary to vest in the Master
Servicer title to any Mortgage Loan or related REO Property released pursuant
hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to unpaid Servicing
Fees; second, to reimburse the Master Servicer or any Sub-Servicer for any
related unreimbursed Servicing Advances pursuant to Section 3.11(a)(iii) and
Advances pursuant to Section 3.11(a)(ii); third, to accrued and unpaid interest
on the Mortgage Loan, to the date of the Final Recovery Determination, or to the
Due Date prior to the Distribution Date on which such amounts are to be
distributed if not in connection with a Final Recovery Determination; and
fourth, as a recovery of principal of the Mortgage Loan. The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the Master
Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).
Section 3.17. Trustee to Cooperate; Release of Mortgage Files.
-----------------------------------------------
(a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full shall be escrowed in
a manner customary for such purposes, the Master Servicer shall deliver to the
Trustee two executed copies of a Request for Release in the form of Exhibit E
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 3.10 have been or
will be so deposited) signed by a Servicing Officer (or in a mutually agreeable
electronic format that will, in lieu of a signature on its face, originate from
a Servicing Officer) and shall request delivery to it of the Mortgage File. Upon
receipt of such certification and request, the Trustee shall, within five
Business Days, release and send by overnight mail, at the expense of the Master
Servicer, the related Mortgage File to the Master Servicer. The Trustee agrees
to indemnify the Master Servicer, out of its own funds, for any loss, liability
or expense (other than special, indirect, punitive or consequential damages
which will not be paid by the Trustee) incurred by the Master Servicer as a
proximate result of the Trustee's breach of its obligations pursuant to this
Section 3.17. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Collection
Account or the Distribution Account. The Trustee will provide to the Certificate
Insurer upon written request an updated listing of any Mortgage Files released
pursuant to this Section 3.17(a) no more frequently than four times per year.
72
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, upon any
request made by or on behalf of the Master Servicer and delivery to the Trustee
of two copies of a Request for Release in the form of Exhibit E signed by a
Servicing Officer (or in a mutually agreeable electronic format that will, in
lieu of a signature on its face, originate from a Servicing Officer), release
the related Mortgage File to the Master Servicer, and the Trustee shall, at the
direction of the Master Servicer, execute such documents as shall be necessary
to the prosecution of any such proceedings. Such Request for Release shall
obligate the Master Servicer to return each and every document previously
requested from the Mortgage File to the Trustee when the need therefor by the
Master Servicer no longer exists, unless the Mortgage Loan has been liquidated
and the Liquidation Proceeds relating to the Mortgage Loan have been deposited
in the Collection Account or the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Master Servicer has delivered, or caused to be
delivered, to the Trustee an additional Request for Release certifying as to
such liquidation or action or proceedings. Upon the request of the Trustee or
the Certificate Insurer, the Master Servicer shall provide notice to the Trustee
and the Certificate Insurer of the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of two copies of a Request for Release from a Servicing
Officer stating that such Mortgage Loan was liquidated and that all amounts
received or to be received in connection with such liquidation that are required
to be deposited into the Collection Account have been so deposited, or that such
Mortgage Loan has become an REO Property, one copy of such Request for Release
with respect to such Mortgage Loan shall be released by the Trustee to the
Master Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Master Servicer or the Sub-Servicer, as the
case may be, and upon the request of the Certificate Insurer the Master Servicer
shall deliver or cause to be delivered to the Certificate Insurer copies of, any
court pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Each such certification shall include a request that such
pleadings or documents be executed by the Trustee and a statement as to the
reason such documents or pleadings are required and that the execution and
delivery thereof by the Trustee will not invalidate or otherwise affect the lien
of the Mortgage, except for the termination of such a lien upon completion of
the foreclosure or trustee's sale.
Section 3.18. Servicing Compensation.
----------------------
As compensation for the activities of the Master Servicer hereunder,
the Master Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Master Servicer shall
be entitled to recover unpaid Servicing Fees out of Insurance Proceeds or
Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii) and out of
amounts derived from the
73
operation and sale of an REO Property to the extent permitted by Section 3.23.
The right to receive the Servicing Fee may not be transferred in whole or in
part except in connection with the transfer of all of the Master Servicer's
responsibilities and obligations under this Agreement; provided, however, that
the Master Servicer may pay from the Servicing Fee any amounts due to a Sub-
Servicer pursuant to a Sub-Servicing Agreement entered into under Section 3.02.
Additional servicing compensation in the form of assumption fees, late
payment charges, insufficient funds charges, ancillary income or otherwise
(other than Prepayment Charges) shall be retained by the Master Servicer only to
the extent such fees or charges are received by the Master Servicer. The Master
Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to withdraw from
the Collection Account and pursuant to Section 3.23(b) to withdraw from any REO
Account, as additional servicing compensation, interest or other income earned
on deposits therein, subject to Section 3.12 and Section 3.24. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including premiums for the insurance
required by Section 3.14, to the extent such premiums are not paid by the
related Mortgagors or by a Sub-Servicer and servicing compensation of each
Sub-Servicer) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
The Master Servicer shall be entitled to any Prepayment Interest
Excess, which it may withdraw from the Collection Account pursuant to Section
3.11(a)(ix).
Section 3.19. Reports to the Trustee; Collection Account Statements.
-----------------------------------------------------
Not later than twenty days after each Distribution Date, the Master
Servicer shall forward, upon request, to the Trustee, the Certificate Insurer
and the Depositor the most current available bank statement for the Collection
Account. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Master Servicer to the
Trustee.
Section 3.20. Statement as to Compliance.
--------------------------
The Master Servicer will deliver to the Trustee, the Certificate
Insurer and the Depositor not later than 90 days following the end of the fiscal
year of the Master Servicer (which, as of the Closing Date, ends on the last day
of April), commencing in 2000, an Officers' Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Master Servicer
during the preceding year and of performance under this Agreement has been made
under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, the Master Servicer has fulfilled all of 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. Copies of any such
statement shall be provided by the Trustee to any Certificateholder and to any
Person identified to the Trustee as a prospective transferee of a Certificate,
upon request at the expense of the requesting party, provided such statement is
delivered by the Master Servicer to the Trustee.
Section 3.21. Independent Public Accountants' Servicing Report.
------------------------------------------------
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Not later than 90 days following the end of each fiscal year of the
Master Servicer, commencing in 2000, the Master Servicer, at its expense, shall
cause a nationally recognized firm of independent certified public accountants
to furnish to the Master Servicer a report stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Master Servicer which includes an assertion that the Master Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to the
servicing of residential mortgage loans during the most recently completed
fiscal year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report such firm may rely, as to matters relating
to the direct servicing of residential mortgage loans by Sub-Servicers, upon
comparable reports of firms of independent certified public accountants rendered
on the basis of examinations conducted in accordance with the same standards
(rendered within one year of such report) with respect to those Sub-Servicers.
Immediately upon receipt of such report, the Master Servicer shall furnish a
copy of such report to the Trustee, the Certificate Insurer and each Rating
Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided that
such statement is delivered by the Master Servicer to the Trustee.
Section 3.22. Access to Certain Documentation; Filing of Reports by
Trustee.
-----------------------------------------------------
(a) The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Master Servicer designated by it. In addition, access to the documentation
regarding the Mortgage Loans will be provided to any Certificateholder, the
Certificate Insurer, the Trustee and to any Person identified to the Master
Servicer as a prospective transferee of a Certificate, upon reasonable request
during normal business hours at the offices of the Master Servicer designated by
it at the expense of the Person requesting such access.
(b) Within 15 days after each Distribution Date, the Trustee shall file
with the Securities and Exchange Commission via the Electronic Data Gathering
and Retrieval System (XXXXX), a Form 8-K with a copy of the statement to
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2000, the Trustee shall file a Form 15 Suspension Notification with
respect to the Trust Fund, if applicable. Prior to March 30, 2000, the Trustee
shall file a Form 10-K, in substance conforming to industry standards, with
respect to the Trust Fund. The Depositor hereby grants to the Trustee a limited
power of attorney to execute and file each such document on behalf of the
Depositor. Such power of attorney shall continue until the earlier of (i)
receipt by the Trustee from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust Fund. The Depositor agrees to
promptly furnish to the Trustee, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement and the Mortgage Loans as the Trustee reasonably deems appropriate to
prepare and file
75
all necessary reports with the Securities and Exchange Commission. The Trustee
shall have no responsibility to file any items with the Securities and Exchange
Commission other than those specified in this Section.
Section 3.23. Title, Management and Disposition of REO Property.
-------------------------------------------------
(a) The deed or certificate of sale of any REO Property shall be taken
in the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Master Servicer, on behalf
of REMIC I, shall either sell any REO Property by the end of the third full
taxable year after the taxable year in which such REMIC acquires ownership of
such REO Property for purposes of Section 860G(a)(8) of the Code or request from
the Internal Revenue Service, no later than 60 days before the day on which the
three-year grace period would otherwise expire, an extension of such three-year
period, unless the Master Servicer shall have delivered to the Trustee an
Opinion of Counsel, addressed to the Trustee, the Certificate Insurer and the
Depositor, to the effect that the holding by the REMIC of such REO Property
subsequent to three years after its acquisition will not result in the
imposition on the REMIC of taxes on "prohibited transactions" thereof, as
defined in Section 860F of the Code, or cause either REMIC I or REMIC II to fail
to qualify as a REMIC under Federal law at any time that any Certificates are
outstanding. The Master Servicer shall manage, conserve, protect and operate
each REO Property for the Certificateholders solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by either REMIC I or REMIC II of
any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code, or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions.
(b) The Master Servicer shall separately account for all funds
collected and received in connection with the operation of any REO Property and
shall establish and maintain, or cause to be established and maintained, with
respect to REO Properties an account held in trust for the Trustee for the
benefit of the Certificateholders and the Certificate Insurer (the "REO
Account"), which shall be an Eligible Account. The Master Servicer shall be
permitted to allow the Collection Account to serve as the REO Account, subject
to separate ledgers for each REO Property. The Master Servicer shall be entitled
to retain or withdraw any interest income paid on funds deposited in the REO
Account.
(c) The Master Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Master Servicer manages and operates similar property owned
by the Master Servicer or any of its Affiliates, all on such terms and for such
period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, and shall
thereafter deposit in the REO Account, in no event more than two Business Days
after the Master Servicer's receipt thereof, all revenues received by it with
respect to an REO Property and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of such REO Property including,
without limitation:
76
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.
Notwithstanding the foregoing, neither the Master Servicer nor the
Trustee shall:
(A) authorize the Trust Fund to enter into, renew or extend any
New Lease with respect to any REO Property, if the New Lease by its
terms will give rise to any income that does not constitute Rents from
Real Property;
(B) authorize any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(C) authorize any construction on any REO Property, other than the
completion of a building or other improvement thereon, and then only if
more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of the
Code; or
(D) authorize any Person to Directly Operate any REO Property on
any date more than 90 days after its date of acquisition by the Trust
Fund;
unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trustee and the Certificate Insurer, to the effect that
such action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any time that
it is held by the REMIC, in which case the Master Servicer may take such actions
as are specified in such Opinion of Counsel.
The Master Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
(1) the terms and conditions of any such contract shall not be
inconsistent herewith;
(2) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation
77
and management of such REO Property, including those listed above and
remit all related revenues (net of such costs and expenses) to the
Master Servicer as soon as practicable, but in no event later than
thirty days following the receipt thereof by such Independent
Contractor;
(3) none of the provisions of this Section 3.23(c) relating to any
such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Master Servicer of any of its
duties and obligations to the Trustee on behalf of the
Certificateholders and the Certificate Insurer with respect to the
operation and management of any such REO Property; and
(4) the Master Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such REO
Property.
The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c), the
Master Servicer may from time to time make withdrawals from the REO Account for
any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in
respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and Advances made in respect of
such REO Property or the related Mortgage Loan. On the Master Servicer
Remittance Date, the Master Servicer shall withdraw from each REO Account
maintained by it and deposit into the Distribution Account in accordance with
Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a), each
REO Disposition shall be carried out by the Master Servicer at such price and
upon such terms and conditions as the Master Servicer shall deem necessary or
advisable, as shall be normal and usual in its Servicing Standard.
(f) The proceeds from the REO Disposition, net of any amount required
by law to be remitted to the Mortgagor under the related Mortgage Loan and net
of any payment or reimbursement to the Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution Date
in
78
accordance with Section 4.01. Any REO Disposition shall be for cash only (unless
changes in the REMIC Provisions made subsequent to the Startup Day allow a sale
for other consideration).
(g) The Master Servicer shall file information returns with respect to
the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Section 3.24. Obligations of the Master Servicer in Respect of
Prepayment Interest Shortfalls.
------------------------------------------------
Not later than the Close of Business on each Master Servicer Remittance
Date, the Master Servicer shall remit to the Collection Account an amount
("Compensating Interest") equal to the lesser of (A) the aggregate of the
Prepayment Interest Shortfalls for the related Distribution Date and (B) its
aggregate Servicing Fee received in the related Due Period. The Master Servicer
shall not have the right to reimbursement for any amounts remitted to the
Trustee in respect of Compensating Interest. Such amounts so remitted shall be
included in the Available Funds and distributed therewith on the next
Distribution Date. The Master Servicer shall not be obligated to pay
Compensating Interest with respect to Relief Act Interest Shortfalls.
Section 3.25. [Reserved].
Section 3.26. Obligations of the Master Servicer in Respect of Mortgage
Rates and Monthly Payments.
---------------------------------------------------------
In the event that a shortfall in any collection on or liability with
respect to the Mortgage Loans in the aggregate results from or is attributable
to adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Master Servicer in a manner not consistent with the terms
of the related Mortgage Note and this Agreement, the Master Servicer, upon
discovery or receipt of notice thereof, immediately shall deposit in the
Collection Account from its own funds the amount of any such shortfall and shall
indemnify and hold harmless the Trust Fund, the Trustee, the Certificate
Insurer, the Depositor and any successor servicer in respect of any such
liability. Such indemnities shall survive the termination or discharge of this
Agreement. Notwithstanding the foregoing, this Section 3.26 shall not limit the
ability of the Master Servicer to seek recovery of any such amounts from the
related Mortgagor under the terms of the related Mortgage Note, as permitted by
law.
Section 3.27. Solicitations.
From and after the Closing Date, the Master Servicer agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents and Affiliates, or by any independent contractors or independent mortgage
brokerage companies on the Master Servicer's behalf, to personally, by telephone
or mail, solicit the Mortgagor under any Mortgage Loan for the purpose of
refinancing such Mortgage Loan; provided, that the Master Servicer may solicit
any Mortgagor for
79
whom the Master Servicer has received a request for verification of mortgage, a
request for demand for payoff, a mortgagor initiated written or verbal
communication indicating a desire to prepay the related Mortgage Loan, another
mortgage company has pulled a credit report on the mortgagor or the mortgagor
initiates a title search; provided further, it is understood and agreed that
promotions undertaken by the Master Servicer or any of its Affiliates which (i)
concern optional insurance products or other additional products or (ii) are
directed to the general public at large, including, without limitation, mass
mailings based on commercially acquired mailing lists, newspaper, radio and
television advertisements shall not constitute solicitation under this Section,
nor is the Master Servicer prohibited from responding to unsolicited requests or
inquiries made by a Mortgagor or an agent of a Mortgagor.
Section 3.28. Reserve Funds.
-------------
On the Closing Date, the Depositor shall purchase the Yield Maintenance
Agreement from National and assign all of its rights thereunder to the Trust
Fund for the benefit of the Certificateholders, the Certificate Insurer and the
Seller. In addition, no later than the Closing Date, the Trustee shall establish
and maintain with itself (i) a separate, segregated trust account titled,
"Reserve Fund I, Norwest Bank Minnesota, National Association, as Trustee, in
trust for registered Holders of Option One Mortgage Loan Trust 1999-3,
Asset-Backed Certificates, Series 1999-3" and (ii) a separate, segregated trust
account titled, "Reserve Fund II, Norwest Bank Minnesota, National Association,
as Trustee, in trust for registered Holders of Option One Mortgage Loan Trust
1999-3, Asset-Backed Certificates, Series 1999-3. No funds will be deposited
into either Reserve Fund on the Closing Date. Upon receipt thereof from National
pursuant to the Yield Maintenance Agreement, the Trustee shall deposit into
Reserve Fund I an amount equal to the Reserve Fund I Addition to the extent
received under the Yield Maintenance Agreement. On each Distribution Date as to
which there is a Net WAC Rate Carryover Amount payable to the Class A
Certificates, the Trustee will deposit into Reserve Fund I the amounts described
in Section 4.01(a)(vi). On each Distribution Date, the Trustee will distribute
amounts available in Reserve Fund I in the amounts and priorities set forth in
Section 4.01. Each Reserve Fund shall be an Eligible Account. Amounts held in
the Reserve Funds from time to time shall continue to constitute assets of the
Trust Fund until released from the related Reserve Fund pursuant to Section
4.01. The Reserve Funds constitute "outside reserve funds" within the meaning of
Treasury Regulation ss.1.860G-2(h) and neither the Reserve Funds nor the Yield
Maintenance Agreement are or will be assets of either REMIC at any time. The
Holders of the Residual Certificates are the owners of Reserve Fund I and the
Seller (or the assignee of the Seller's rights thereto) is the owner of Reserve
Fund II (and each of these parties is the owner of a portion of the Yield
Maintenance Agreement through the ownership of the related Reserve Fund) for all
federal tax purposes and amounts transferred by REMIC II to Reserve Fund I are
treated as amounts distributed by REMIC II to the Holders of the Residual
Certificates. The Trustee shall keep records that accurately reflect the funds
on deposit in the Reserve Funds. The Trustee shall invest the Reserve Funds in
Permitted Investments as directed by the Majority Certificateholders of the
Residual Certificates. On each Distribution Date (or as soon as received if such
funds are not available on such Distribution Date), the Trustee shall distribute
any interest on the Reserve Funds to the Holders of the Residual Certificates.
For each Distribution Date, the Trustee shall deposit into Reserve Fund
II, the excess of the amount paid by National to the Trustee pursuant to the
Yield Maintenance Agreement over the
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Reserve Fund I Addition. In the event of the early termination of the Yield
Maintenance Agreement, the Trustee shall use amounts paid by National to the
Trustee to purchase another Yield Maintenance Agreement with substantially
similar terms to the Yield Maintenance Agreement with National, on terms and
with a counterparty satisfactory to the Certificate Insurer.
For each Distribution Date for which a Deficiency Amount exists, the
Trustee shall pay to the Certificate Insurer from Reserve Fund II, the
Deficiency Amount and on each Distribution Date, the Trustee shall pay to the
Certificate Insurer from Reserve Fund II, any remaining amounts owing to the
Certificate Insurer under the Insurance Agreement for reimbursement for prior
draws made on the Policy and any other amounts owing to the Certificate Insurer
under the Insurance Agreement, in each case, to the extent funds are available
in Reserve Fund II to make such payments.
On each Distribution Date from amounts available in Reserve Fund II
(taking into account the payment to the Certificate Insurer in the preceding
paragraph and any distributions pursuant to Section 4.01), the Trustee will (A)
withdraw the excess of (i) the aggregate of the amounts in Reserve Fund I,
Reserve Fund II and the Overcollateralized Amount over (ii) the
Overcollateralization Target Amount, and pay such amount to the Seller or the
Seller's designee.
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ARTICLE IV
FLOW OF FUNDS
Section 4.01. Distributions.
(a) On the first Distribution Date, the Initial Deposit will be
transferred from the Initial Deposit Account to the Distribution Account for
inclusion in the Available Funds for such Distribution Date. On each
Distribution Date the Trustee shall withdraw from the Distribution Account, or
from Reserve Fund I, to the extent of the amounts in clauses (B)(i) and (ii) of
the definition of Available Funds, the Available Funds (to the extent of the
portion of Available Funds that remains in the Distribution Account after taking
into account any amounts withdrawn from the Distribution Account pursuant to
Section 8.05, to the extent such amounts have not previously been reimbursed),
and make the following disbursements and transfers as described below and to the
extent of Available Funds remaining (provided that amounts included in Available
Funds from payments under the Policy shall be used only to make the related
distribution for the Class A Certificates and Class S Certificates and for no
other purpose).
(i) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for the Premium Amount and Premium
Supplement payable in respect of the Class A Certificates and Class S
Certificates;
(ii) CONCURRENTLY, to the Holders of the Class A Certificates and the
Class S Certificates, the related Interest Distributable Amount for each such
Class for such Distribution Date;
(iii) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for reimbursement for prior draws made on
the Policy in respect of the Class A Certificates and the Class S Certificates
and any other amounts owing to the Certificate Insurer under the Insurance
Agreement with respect to the Class A Certificates and the Class S Certificates;
provided, however, such amounts will be paid FIRST by the Trustee out of Reserve
Fund I, and if amounts available in Reserve Fund I are insufficient to pay the
required amounts under this subclause (iii), the Trustee will pay such amounts
from Available Funds;
(iv) to the Holders of the Class A Certificates, an amount equal to the
Basic Principal Distribution Amount;
(v) to the Holders of the Class A Certificates, an amount equal to the
Extra Principal Distribution Amount;
(vi) to Reserve Fund I, the amount of any Net WAC Rate Carryover
Amount, if any;
(vii) if such Distribution Date follows the Prepayment Period during
which occurs the latest date on which a Prepayment Charge may be required to be
paid in respect of any Mortgage Loans, to the Holders of the Class P
Certificates, in reduction of the Certificate Principal Balance thereof, until
the Certificate Principal Balance thereof is reduced to zero; and
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(viii) any remaining amounts to the Holders of the Residual
Certificates (in respect of the Class R-II Interest).
On each Distribution Date, after making distributions as described
above, the Trustee will (A) withdraw from Reserve Fund I the lesser of (i) the
excess of (a) the aggregate of the amount in Reserve Fund I and the
Overcollateralized Amount over (b) the Overcollateralization Target Amount and
(ii) the Net WAC Rate Carryover Amount, and will distribute the same to the
Holders of the Class A Certificates and (B) after taking into account the
distribution pursuant to clause (A) above, withdraw the excess of (i) the
aggregate of the amount in Reserve Fund I and the Overcollateralized Amount over
(ii) the Overcollateralization Target Amount, and distribute the same to the
Holders of the Residual Certificates (in respect of the Class R-II Interest).
On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Mortgage Loans received during the related Prepayment Period
and any Master Servicer Prepayment Charge Amounts paid by the Master Servicer
during the related Prepayment Period will be withdrawn from the Distribution
Account and distributed by the Trustee to the Holders of the Class P
Certificates and shall not be available for distribution to the Holders of any
other Class of Certificates. The payment of the foregoing amounts to the Holders
of the Class P Certificates shall not reduce the Certificate Principal Balances
thereof.
(b) Method of Distribution. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution), in the case of Certificateholders of the Regular
Certificates, by check or money order mailed to such Certificateholder at the
address appearing in the Certificate Register, or by wire transfer.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.
(c) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Depositor, the Master Servicer or the
Seller shall have any responsibility therefor except as otherwise provided by
applicable law.
(d) Distribution of Insured Payments. With respect to any Distribution
Date, in the event of an Insured Payment, the Trustee shall make such payments
from the amount drawn under the Policy for the purposes specified in the Policy.
The Certificate Insurer shall be deemed to be the assignee of the Holders of the
Class A Certificates and the Class S Certificates to the extent of any amount of
Insured Payments disbursed by the Trustee from proceeds of the Policy and to
such extent, shall be the subrogee of each such Holder of such Certificates;
provided, however, that any such
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right of subrogation inuring to the Certificate Insurer hereunder or otherwise
shall be and is subordinated to the rights under this Agreement of the Holders
of such Certificates and in accordance
with Section 11.04.
Section 4.02. Reserved.
Section 4.03. Statements.
(a) On each Distribution Date, based, as applicable, on information
provided to it by the Master Servicer, the Trustee shall prepare and make
available to each Holder of the Regular Certificates, the Master Servicer, the
Rating Agencies and the Certificate Insurer, a statement as to
the distributions made on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date
to the Holders of each Class of Regular Certificates (other than the
Class S Certificates), separately identified, allocable to principal
and the amount of the distribution made to the Holders of the Class P
Certificates allocable to Prepayment Charges and Master Servicer
Prepayment Charge Payment Amounts;
(ii) the amount of the distribution made on such Distribution Date
to the Holders of each Class of Regular Certificates (other than the
Class P Certificates) allocable to interest, separately identified;
(iii) the Overcollateralized Amount, the Overcollateralization
Release Amount, the Overcollateralization Deficiency Amount and the
Overcollateralization Target Amount as of such Distribution Date and
the Excess Overcollateralized Amount for the Mortgage Pool for such
Distribution Date;
(iv) the aggregate amount of servicing compensation received by
the Master Servicer with respect to the related Due Period and such
other customary information as the Trustee deems necessary or
desirable, or which a Certificateholder reasonably requests, to enable
Certificateholders to prepare their tax returns;
(v) the aggregate amount of Advances for the related Due Period;
(vi) the Pool Balance at the Close of Business at the end of the
related Due Period;
(vii) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans as of the related Determination Date and the number and
aggregate principal balance of all Subsequent Mortgage Loans added
during the preceding Prepayment Period;
(viii) the number and aggregate unpaid principal balance of
Mortgage Loans that were (A) Delinquent (exclusive of Mortgage Loans in
bankruptcy or foreclosure and REO Properties) (1) 30 to 59 days, (2) 60
to 89 days and (3) 90 or more days, (B) as to which foreclosure
proceedings have been commenced and Delinquent (1) 30 to 59 days, (2)
60 to
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89 days and (3) 90 or more days, (C) in bankruptcy and Delinquent (1)
30 to 59 days, (2) 60 to 89 days and (3) 90 or more days, in each case
as of the Close of Business on the last day of the calendar month
preceding such Distribution Date and (D) REO Properties;
(ix) with respect to any Mortgage Loan that became an REO Property
during the preceding Prepayment Period, the loan number of such
Mortgage Loan, the unpaid principal balance and the Principal Balance
of such Mortgage Loan as of the date it became an REO Property;
(x) the total number and cumulative principal balance of all REO
Properties as of the Close of Business of the last day of the preceding
Prepayment Period;
(xi) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xii) the aggregate amount of Realized Losses incurred during the
related Prepayment Period and the cumulative amount of Realized Losses;
(xiii) the aggregate amount of extraordinary Trust Fund expenses
withdrawn from the Collection Account for such Distribution Date;
(xiv) the Certificate Principal Balance of the Class A
Certificates and the Notional Amount of the Class S Certificates, after
giving effect to the distributions made on such Distribution Date;
(xv) the Interest Distributable Amount and the respective portions
thereof, if any, remaining unpaid following the distributions made in
respect of the Class A Certificates and the Class S Certificates on
such Distribution Date;
(xvi) the aggregate amount of any Prepayment Interest Shortfalls
and the Unpaid Interest Shortfall Amount for such Distribution Date, to
the extent not covered by payments by the Master Servicer pursuant to
Section 3.26;
(xvii) the aggregate Premium Amount to be paid to the Certificate
Insurer;
(xviii) the Net WAC Rate Carryover Amount, if any, for such
Distribution Date and the amount remaining unpaid after reimbursements
therefor on such Distribution Date;
(xix) any Overcollateralization Deficiency Amount after giving
effect to the distribution of principal on such Distribution Date;
(xx) whether the Step Up Cumulative Loss Test and/or Step Up
Spread Squeeze Test have been met and the cumulative realized losses,
as a percentage of the original Pool Balance;
(xxi) the Available Funds;
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(xxii) the Pass-Through Rate for the Class A Certificates for such
Distribution Date;
(xxiii) [reserved];
(xxiv) the aggregate Principal Balance of Mortgage Loans purchased
by the Master Servicer or Seller during the related Prepayment Period
and indicating the Section of this Agreement requiring or allowing the
purchase of each such Mortgage Loan;
(xxv) the number of delinquent Mortgage Loans sold during the
preceding Prepayment Period, the aggregate outstanding principal
balance of such Mortgage Loans and the aggregate sale price;
(xxvi) the amount on deposit in the Pre-Funding Account, the
Interest Coverage Account and each Reserve Fund;
(xxvii) the amount of the Reserve Fund I Addition, any amounts
added to Reserve Fund I pursuant to Section 4.01(a)(vi) and the amount
of any funds paid from each Reserve Fund separately identifying the use
of such funds;
(xxviii) amounts rendered under the Yield Maintenance Agreement;
and
(xxix) for the distribution occurring on the Distribution Date
immediately following the end of the related Funding Period, the
balance on deposit in the Pre-Funding Account that has not been used to
purchase Subsequent Mortgage Loans and that is being distributed to the
Class A Certificates as a mandatory prepayment of principal, if any, on
such Distribution Date.
The Trustee will make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, the Rating Agencies and the
Certificate Insurer via the Trustee's internet website and its fax-on-demand
service. The Trustee's fax-on-demand service may be accessed by calling (301)
815-6610. The Trustee's internet website shall initially be located at
"xxx.xxxxxxx.xxx". Assistance in using the website or the fax-on-demand service
can be obtained by calling the Trustee's customer service desk at (301)
815-6600. Parties that are unable to use the above distribution options are
entitled to have a paper copy mailed to them via first class mail by calling the
customer service desk and indicating such. The Trustee shall have the right to
change the way such statements are distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Trustee shall provide timely and adequate notification to all above parties
regarding any such changes.
In the case of information furnished pursuant to subclauses (i) through
(iii) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Cut-off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall, upon written request, furnish to each Person who at any
time during the calendar year was a
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Certificateholder of a Regular Certificate, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information set forth in subclauses (i) through (iii)
above, 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 prepared and furnished by the Trustee to Certificateholders
pursuant to any requirements of the Code as are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.
(e) The Trustee hereby agrees to disclose the Premium Amount to any
Person upon request.
Section 4.04. Remittance Reports; Advances.
----------------------------
(a) On the second Business Day following each Determination Date but in
no event later than the Master Servicer Remittance Date, the Master Servicer
shall deliver to the Trustee and National by telecopy or electronic mail (or by
such other means as the Master Servicer and the Trustee may agree from time to
time) a Remittance Report with respect to the related Distribution Date. Not
later than the Close of Business New York time on the Master Servicer Remittance
Date, the Master Servicer shall deliver or cause to be delivered to the Trustee
in addition to the information provided on the Remittance Report, such other
information reasonably available to it with respect to the Mortgage Loans as the
Trustee may reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.01 and to prepare the statements to
Certificateholders contemplated by Section 4.03. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by the Master Servicer.
(b) The amount of Advances to be made by the Master Servicer for any
Distribution Date shall equal, subject to Section 4.04(d), the sum of (i) the
aggregate amount of Monthly Payments (net of the related Servicing Fee), due
during the related Due Period in respect of the Mortgage Loans, which Monthly
Payments were delinquent on a contractual basis as of the Close of Business on
the related Determination Date and (ii) with respect to each REO Property, which
REO Property was acquired during or prior to the related Due Period and as to
which REO Property an REO Disposition did not occur during the related Due
Period, an amount equal to the excess, if any, of the REO Imputed Interest on
such REO Property for the most recently ended calendar month, over the net
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income from such REO Property transferred to the Distribution Account pursuant
to Section 3.23 for distribution on such Distribution Date. For purposes of the
preceding sentence, the Monthly Payment on each Balloon Mortgage Loan with a
delinquent Balloon Payment is equal to the assumed monthly payment that would
have been due on the related Due Date based on the original principal
amortization schedule for the such Balloon Mortgage Loan.
On or before the Close of Business New York time on the Master Servicer
Remittance Date, the Master Servicer shall remit in immediately available funds
to the Trustee for deposit in the Distribution Account an amount equal to the
aggregate amount of Advances, if any, to be made in respect of the Mortgage
Loans and REO Properties for the related Distribution Date either (i) from its
own funds or (ii) from the Collection Account, to the extent of funds held
therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.04, used by the
Master Servicer in discharge of any such Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Advances to be made
by the Master Servicer with respect to the Mortgage Loans and REO Properties.
Any amounts held for future distribution used by the Master Servicer to make an
Advance as permitted in the preceding sentence or withdrawn by the Master
Servicer as permitted in Section 3.11(a)(ii) in reimbursement of Advances
previously made shall be appropriately reflected in the Master Servicer's
records and replaced by the Master Servicer by deposit in the Collection Account
on or before any future Master Servicer Remittance Date to the extent that the
Available Funds for the related Distribution Date (determined without regard to
Advances to be made on the Master Servicer Remittance Date) shall be less than
the total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make Advances or reimburse for
previously made Advances. The Trustee will provide notice to the Master Servicer
by telecopy by the Close of Business on any Master Servicer Remittance Date in
the event that the amount remitted by the Master Servicer to the Trustee on such
date is less than the Advances required to be made by the Master Servicer for
the related Distribution Date, as set forth in the related Remittance Report.
(c) The obligation of the Master Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
Mortgage Loan is paid in full or until the recovery of all Liquidation Proceeds
thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance or Servicing Advance, if
made, would constitute a Nonrecoverable Advance, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the Depositor and the
Trustee.
Section 4.05. Pre-Funding Account.
-------------------
(a) No later than the Closing Date, the Trustee shall establish
and maintain a segregated trust account that is an Eligible Account, which shall
be titled "Pre-Funding Account,
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Norwest Bank Minnesota, National Association, as trustee for the registered
holders of Option One Mortgage Loan Trust 1999-3, Asset-Backed Certificates,
Series 1999-3" (the "Pre-Funding Account"). The Trustee shall, promptly upon
receipt, deposit in the Pre-Funding Account and retain therein the Original
Pre-Funded Amount remitted on the Closing Date to the Trustee by the Depositor.
Funds deposited in the Pre-Funding Account shall be held in trust by the Trustee
for the Certificateholders for the uses and purposes set forth herein.
(b) The Trustee will invest funds deposited in the Pre-Funding
Account as directed by the Depositor in Permitted Investments with a maturity
date no later than the second Business Day preceding each Distribution Date. For
federal income tax purposes, the Depositor shall be the owner of the Pre-Funding
Account and shall report all items of income, deduction, gain or loss arising
therefrom. All income and gain realized from investment of funds deposited in
the Pre-Funding Account shall be for the sole and exclusive benefit of the
Master Servicer and shall be remitted by the Trustee to the Master Servicer no
later than the first Business Day following receipt of such income and gain by
the Trustee. The Master Servicer shall deposit in the Pre-Funding Account the
amount of any net loss incurred in respect of any such Permitted Investment
immediately upon realization of such loss without any right of reimbursement
therefor. At no time will the Pre- Funding Account be an asset of REMIC I or
REMIC II.
(c) Amounts on deposit in the Pre-Funding Account shall be
withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall withdraw
from the Pre- Funding Account an amount equal to 100% of the
Stated Principal Balances of the Subsequent Mortgage Loans
transferred and assigned to the Trustee for deposit in the
Mortgage Pool on such Subsequent Transfer Date and pay such amount
to or upon the order of the Depositor upon satisfaction of the
conditions set forth in Section 2.08 with respect to such transfer
and assignment;
(ii) If the amount on deposit in the Pre-Funding Account has not
been reduced to zero during the Funding Period, on the day
immediately following the termination of the Funding Period, the
Trustee shall deposit into the Distribution Account any amounts
remaining in the Pre-Funding Account for distribution in
accordance with the terms hereof;
(iii) To withdraw any amount not required to be deposited in the
Pre-Funding Account or deposited therein in error; and
(iv) To clear and terminate the Pre-Funding Account upon the
earlier to occur of (A) the Distribution Date immediately
following the end of the Funding Period and (B) the termination of
this Agreement, with any amounts remaining on deposit therein
being paid to the Holders of the Certificates then entitled to
distributions in respect of principal.
Withdraws pursuant to clauses (i), (ii) and (iii) shall be treated as
contributions of cash to REMIC I on the date of withdrawal.
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Section 4.06. Interest Coverage Account.
-------------------------
(a) No later than the Closing Date, the Trustee shall establish
and maintain a segregated trust account that is an Eligible Account, which shall
be titled "Interest Coverage Account, Norwest Bank Minnesota, National
Association, as trustee for the registered holders of Option One Mortgage Loan
Trust 1999-3, Asset-Backed Certificates, Series 1999-3" (the "Interest Coverage
Account"). The Trustee shall, promptly upon receipt, deposit in the Interest
Coverage Account and retain therein the Interest Coverage Amount remitted on the
Closing Date to the Trustee by the Depositor. Funds deposited in the Interest
Coverage Account shall be held in trust by the Trustee for the
Certificateholders for the uses and purposes set forth herein.
(b) For federal income tax purposes, the Depositor shall be the
owner of the Interest Coverage Account and shall report all items of income,
deduction, gain or loss arising therefrom. At no time will the Interest Coverage
Account be an asset of REMIC I or REMIC II. All income and gain realized from
investment of funds deposited in the Interest Coverage Account shall be for the
sole and exclusive benefit of the Master Servicer and shall be remitted by the
Trustee to the Master Servicer no later than the first Business Day following
receipt of such income and gain by the Trustee. The Master Servicer shall
deposit in the Interest Coverage Account the amount of any net loss incurred in
respect of any such Permitted Investment immediately upon realization of such
loss.
(c) On each Distribution Date during the Funding Period and on the
Distribution Date immediately following the end of the Funding Period, the
Trustee shall withdraw from the Interest Coverage Account, to the extent funds
are available therefore, and deposit in the Distribution Account an amount, as
provided in the related Remittance Report, equal to (i) 30 days' interest on the
Original Pre-Funded Amount calculated at an annual rate equal to the weighted
average of the Net Mortgage Rates of the Mortgage Loans as of the commencement
of the related Due Period, minus (ii) the sum of (1) any interest payments
received on Subsequent Mortgage Loans during the related Due Period and (2) any
Advances in respect of interest portions of delinquent Monthly Payments on the
Subsequent Mortgage Loans conveyed to the Trustee during the related Due Period.
Such withdrawal and deposit shall be treated as a contribution of cash by the
Depositor to REMIC I on the date thereof.
(d) Upon the earlier of (i) the Distribution Date immediately
following the end of the Funding Period, (ii) the reduction of the Certificate
Principal Balance of the Class A Certificates to zero or (iii) the termination
of this Agreement in accordance with Section 10.01, any amount remaining on
deposit in the Interest Coverage Account after distributions pursuant to
paragraph (c) above shall be withdrawn by the Trustee and paid to the Depositor
or its designee.
Section 4.07. Distributions on the Uncertificated REMIC I Regular
Interests.
---------------------------------------------------
On each Distribution Date, the Trustee shall cause the Available Funds,
in the following order of priority, to be distributed by REMIC I to REMIC II on
account of the Uncertificated REMIC I Regular Interests or withdrawn from the
Distribution Account and distributed to the Holders of the Class R-I
Certificates, as the case may be:
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(i) first, to the Holders of Uncertificated REMIC I Regular Interest
LTB, in an amount equal to (A) the Uncertificated Accrued Interest for
such Distribution Date, plus (B) any amounts in respect thereof
remaining unpaid from previous Distribution Dates and second,
CONCURRENTLy, to Holders of Uncertificated REMIC I Regular Interest LTA
and to Holders of Uncertificated REMIC I Regular Interest LTP in an
amount equal to (A) the Uncertificated Accrued Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining
unpaid from previous Distribution Dates; and
(ii) second, to the Holders of the Uncertificated REMIC I Regular
Interests, in an amount equal to the remainder of the Available Funds
(less Available Funds used to reimburse the Certificate Insurer
pursuant to Section 4.01(a)(iii)) for such Distribution Date after the
distributions made pursuant to clause (i) above, allocated as follows:
(a) to the Holders of Uncertificated REMIC I Regular
Interest LTP, on the Distribution Date immediately
following the expiration of the latest Prepayment
Charge as identified on the Prepayment Charge
Schedule or any Distribution Date thereafter until
$100 has been distributed pursuant to this clause;
(b) to the Holders of Uncertificated REMIC I Regular
Interest LTA, until the Uncertificated Principal
Balance of Uncertificated REMIC I Regular Interest
LTA is reduced to zero;
(c) to the Holders of Uncertificated REMIC I Regular
Interest LTB, until the Uncertificated Principal
Balance of Uncertificated REMIC I Regular Interest
LTB is reduced to zero; then
(d) any remaining amount to the Holders of the Class R-I
Certificates.
Section 4.08. Allocation of Principal Losses.
------------------------------
All Realized Losses on the Mortgage Loans not otherwise covered by
payments from Reserve Fund I pursuant to Section 4.07 shall be allocated by the
Trustee on each Distribution Date to Uncertificated REMIC I Regular Interest LTA
until the Uncertificated Principal Balance has been reduced to zero and then to
Uncertificated REMIC I Regular Interest LTB until the Uncertificated Principal
Balance has been reduced to zero.
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ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
----------------
Each of the Class A, Class S, Class P and Class R Certificates shall be
substantially in the forms annexed hereto as exhibits, and shall, on original
issue, be executed, authenticated and delivered by the Trustee to or upon the
order of the Depositor concurrently with the sale and assignment to the Trustee
of the Trust Fund. The Class A Certificates shall be initially evidenced by one
or more Certificates representing a Percentage Interest with a minimum dollar
denomination of $50,000 and integral dollar multiples of $1.00 in excess
thereof, except that one Certificate of such Class of Certificates may be in a
different denomination so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Certificate Principal Balance of such
Class on the Closing Date. The Class S Certificates shall be initially evidenced
by one or more Certificates representing a Percentage Interest with a minimum
Notional Amounts of $50,000 and integral dollar multiples of $1.00 in excess
thereof, except that one Certificate of each such Class of Certificates may be
in a different denomination so that the sum of the denominations of all
outstanding Certificates of such Class shall equal the Notional Amount of such
Class on the Closing Date. The Class P Certificates and the Class R Certificates
are issuable in any Percentage Interests; provided, however, that the sum of all
such percentages for each such Class totals 100% and no more than ten
Certificates of each Class may be issued.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee substantially in the form provided for
herein, and such authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Class A Certificates
shall be Book-Entry Certificates. The other Classes of Certificates shall not be
Book-Entry Certificates.
Section 5.02. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar 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.
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Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Class R Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute on behalf of the Trust and authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or his attorney duly authorized in writing. In addition,
with respect to each Class R Certificate, the holder thereof may exchange, in
the manner described above, such Class R Certificate for two separate
certificates, each representing such holder's respective Percentage Interest in
the Class R-I Interest and the Class R-II Interest as evidenced by the Class R
Certificate.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of such Certificates may not
be transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall for all
purposes deal with the Depository as representative of the Certificate Owners of
the Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners; and (vii)
the direct participants of the Depository shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Depository, and the Depository may be treated by the Trustee and its
agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
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 Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between
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the terms of any such Letter of Representation and this Agreement, the terms of
this Agreement shall control.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Master Servicer Event
of Termination, the Certificate Owners of the Class A Certificates representing
Percentage Interests of such Class aggregating not less than 51% advise the
Trustee and Depository through the Financial Intermediaries and the Depository
Participants in writing that the continuation of a book-entry system through the
Depository to the exclusion of definitive, fully registered certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate Registrar
of the Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall, at the
Depositor's expense, in the case of (ii) above, or the Seller's expense, in the
case of (i) and (iii) above, execute on behalf of the Trust and authenticate the
Definitive Certificates. Neither the Depositor nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee, the Certificate Registrar, the Master
Servicer, any Paying Agent and the Depositor shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
(d) No transfer, sale, pledge or other disposition of any Class P or
Class R Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, except with respect to
the initial transfer of any Class P or Class R Certificates by the Depositor (i)
unless such transfer is made in reliance upon Rule 144A (as evidenced by the
investment letter delivered to the Trustee, in substantially the form attached
hereto as Exhibit J) under the 1933 Act, the Trustee and the Depositor shall
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 or is being
made pursuant to the 1933 Act, which Opinion of Counsel shall not be an expense
of the Trustee or the Depositor or (ii) the Trustee shall require the transferor
to execute a transferor certificate (in substantially the form attached hereto
as Exhibit L) and the transferee to execute an investment letter (in
substantially the form attached hereto as Exhibit J) acceptable to and in form
and substance reasonably satisfactory to the Depositor and the Trustee
certifying to the Depositor and the Trustee the facts surrounding such transfer,
which investment letter shall not be an expense of the Trustee or the Depositor.
The Holder of a Class P or Class R 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.
Except with respect to the initial transfer of the Class P and Class R
Certificates, no transfer of the Class P or Class R Certificates shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate, acceptable to and in form and substance
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satisfactory to the Trustee and the Depositor, (such requirement is satisfied
only by the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit I hereto, as appropriate), to the effect
that such transferee is not an employee benefit plan or arrangement subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code, nor a person
acting on behalf of any such plan or arrangement nor using the assets of any
such plan or arrangement to effect such transfer or (ii) in the case of any such
Class P or Class R Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel satisfactory to the Trustee which Opinion of Counsel shall
not be an expense of either the Trustee or the Trust, addressed to the Trustee,
to the effect that the purchase or holding of such Class P or Class R
Certificate is permissible under applicable law, will not constitute or result
in any non-exempt prohibited transaction under Section 406 or ERISA or Section
4975 of the Code (or comparable provisions of any subsequent enactments), and
will not subject the Trustee, the Depositor or the Servicer to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in this Agreement.
Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) 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 Class R Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a PRO RATA undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit K hereto from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent for any Person
who is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Class R Certificates.
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(iv) Any attempted or purported transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
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, become a Holder of a Class R
Certificate, then the prior Holder of such Class R Certificate that is
a Permitted Transferee shall, upon discovery that the registration of
transfer of such Class R Certificate was not in fact permitted by this
Section, be restored to all rights as Holder thereof retroactive to the
date of registration of transfer of such Class R Certificate. The
Trustee shall be under no liability to any Person for any registration
of transfer of a Class R Certificate that is in fact not permitted by
this Section or for making any distributions due on such Class R
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 Trustee received the documents specified in clause (iii). The
Trustee shall be entitled to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time
such distributions were made all distributions made on such Class R
Certificate. Any such distributions so recovered by the Trustee shall
be distributed and delivered by the Trustee to the prior Holder of such
Class R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right but
not the obligation, without notice to the Holder of such Class R
Certificate or any other Person having an Ownership Interest therein,
to notify the Depositor to arrange for the sale of such Class R
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Depositor or its affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Class R
Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Holder of such Class R Certificate
may be liable for any amount due under this Section 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 (v) 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 Class R Certificate as a result of
its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee upon receipt of
reasonable compensation will provide to the Internal Revenue Service,
and to the persons specified in Sections 860E(e)(3) and (6) of the
Code, information needed to compute the tax imposed under Section
860E(e)(5) of the Code on transfers of residual interests to
disqualified organizations.
The foregoing provisions of this Section 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 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 either REMIC I or REMIC II hereunder to
fail to qualify as a REMIC.
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(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar 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.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If (i) 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 (ii) there is delivered to
the Trustee, the Depositor, the Certificate Insurer and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute on behalf of the Trust, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trustee or the
Certificate Registrar 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) in connection therewith. Any duplicate Certificate issued
pursuant to this Section, shall constitute complete and indefeasible 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 5.04. Persons Deemed Owners.
---------------------
The Master Servicer, the Depositor, the Trustee, the Certificate
Insurer, the Certificate Registrar, any Paying Agent and any agent of the Master
Servicer, the Depositor, the Trustee, the Certificate Insurer, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and for all other purposes whatsoever, and none of the Master Servicer, the
Trust, the Certificate Insurer, the Trustee nor any agent of any of them shall
be affected by notice to the contrary.
Section 5.05. Appointment of Paying Agent.
---------------------------
(a) The Paying Agent shall make distributions to Certificateholders
from the Distribution Account pursuant to Section 4.01 and shall report the
amounts of such distributions to the
Trustee.
The duties of the Paying Agent may include the obligation (i) to withdraw funds
from the Collection Account pursuant to Section 3.11(a) and for the purpose of
making the distributions referred to above and (ii) to distribute statements and
provide information to Certificateholders as required hereunder. The Paying
Agent hereunder shall at all times be an entity duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authorities. The Paying Agent
shall initially be the Trustee. The Trustee may appoint a successor
97
to act as Paying Agent, which appointment shall be reasonably satisfactory to
the Depositor and the Certificate Insurer.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and shall agree that it shall comply with all
requirements of the Code regarding the withholding of payments in respect of
Federal income taxes due from Certificate Owners and otherwise comply with the
provisions of this Agreement applicable to it.
ARTICLE VI
THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Master Servicer and the Depositor.
--------------------------------------------------
The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by Master
Servicer herein. The Depositor shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon
and undertaken by the Depositor.
Section 6.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor.
----------------------------------------------------
Any entity into which the Master Servicer or Depositor may be merged or
consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Master Servicer or the Depositor shall be a party, or
any corporation succeeding to the business of the Master Servicer or the
Depositor, shall be the successor of the Master Servicer or the Depositor, 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 Master Servicer
shall satisfy all the requirements of Section 7.02 with respect to the
qualifications of a successor Master Servicer.
Section 6.03. Limitation on Liability of the Master Servicer and
Others.
--------------------------------------------------
Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Trust or the Certificateholders for any action taken or for refraining from the
taking of any action by the Master Servicer in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer or any such Person against any liability
which would otherwise be imposed by reason of its willful misfeasance, bad faith
or negligence in the performance of duties of the Master Servicer or by reason
of its reckless disregard of its obligations and duties of the Master Servicer
hereunder; provided, further, that this provision shall not be construed to
entitle the Master Servicer to indemnity in the event that amounts advanced by
the Master Servicer to retire any senior lien
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exceed Liquidation Proceeds (in excess of related liquidation expenses) realized
with respect to the related Mortgage Loan. The preceding sentence shall not
limit the obligations of the Master Servicer pursuant to Section 8.05. The
Master Servicer and any director or officer or employee or agent of 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 Master Servicer and any director or officer or employee or agent of the
Master Servicer shall be indemnified by the Trust 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 its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder. The
Master Servicer may undertake any such action which it may deem necessary or
desirable in respect of this Agreement, and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event,
unless the Depositor or the Master Servicer acts without the consent of the
Certificate Insurer prior to an Insurer Default or without the consent of
Holders of Certificates entitled to at least 51% of the Voting Rights after an
Insurer Default, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust and the Master Servicer shall be entitled to be reimbursed therefor from
the Collection Account as and to the extent provided in Section 3.11, any such
right of reimbursement being prior to the rights of the Certificateholders to
receive any amount in the Collection Account. The Master Servicer's right to
indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Master Servicer pursuant to Section 6.04 or
7.01 with respect to any losses, expenses, costs or liabilities arising prior to
such resignation or termination (or arising from events that occurred prior to
such resignation or termination). This paragraph shall apply to the Master
Servicer solely in its capacity as Master Servicer hereunder and in no other
capacities.
Section 6.04. Master Servicer Not to Resign.
-----------------------------
Subject to the provisions of Section 7.01 and Section 6.02, the Master
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of its obligations or duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it
or its subsidiaries or Affiliates, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer or its subsidiaries or Affiliates at the date of this Agreement or (ii)
upon satisfaction of the following conditions: (a) the Master Servicer has
proposed a successor servicer to the Trustee in writing and such proposed
successor servicer is reasonably acceptable to the Trustee and the Certificate
Insurer; (b) each Rating Agency shall have delivered a letter to the Trustee
prior to the appointment of the successor servicer stating that the proposed
appointment of such successor servicer as Master Servicer hereunder will not
result in the reduction or withdrawal of the then current rating of the Class A
Certificates or the ratings that are in effect without taking into account the
Policy and (c) such proposed successor servicer is reasonably acceptable to the
Certificate Insurer, as evidenced by a letter to the Trustee; provided, however,
that no such resignation by the Master Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Trustee shall have
assumed the Master Servicer's
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responsibilities and obligations hereunder or the Trustee shall have designated
a successor servicer in accordance with Section 7.02. Any such resignation shall
not relieve the Master Servicer of responsibility for any of the obligations
specified in Sections 7.01 and 7.02 as obligations that survive the resignation
or termination of the Master Servicer. Any such determination permitting the
resignation of the Master Servicer pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee. Any
such determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
Section 6.05. Delegation of Duties.
--------------------
In the ordinary course of business, the Master Servicer at any time may
delegate any of its duties hereunder to any Person, including any of its
Affiliates, who agrees to conduct such duties in accordance with standards
comparable to those set forth in Section 3.01. Such delegation shall not relieve
the Master Servicer of its liabilities and responsibilities with respect to such
duties and shall not constitute a resignation within the meaning of Section
6.04. Except as provided in Section 3.02, no such delegation is permitted that
results in the delegee subservicing any Mortgage Loans. The Master Servicer
shall provide the Trustee and the Certificate Insurer with 60 days prior written
notice prior to the delegation of any of its duties to any Person other than any
of the Master Servicer's Affiliates or their respective successors and assigns.
Section 6.06. Reserved.
--------
Section 6.07. Inspection.
----------
Each of the Seller and the Master Servicer shall afford the Certificate
Insurer, upon reasonable notice, during normal business hours, access to all
records maintained by the Seller and the Master Servicer, respectively, in
respect of its rights and obligations hereunder and access to officers of the
Master Servicer and the Seller responsible for such obligations. Upon request,
the Master Servicer and the Seller, respectively, shall furnish to the
Certificate Insurer its most recent publicly available financial statements and
such other information relating to its capacity to perform its obligations under
this Agreement.
ARTICLE VII
DEFAULT
Section 7.01. Master Servicer Events of Termination.
-------------------------------------
(a) If any one of the following events ("Master Servicer Events of
Termination") shall occur and be continuing:
(i) (A) The failure by the Master Servicer to make any Advance; or
(B) any other failure by the Master Servicer to deposit in the
Collection Account or Distribution Account any deposit required to be
made under the terms of this Agreement which continues unremedied
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for a period of one Business Day after the date upon which written
notice of such failure shall have been given to the Master Servicer and
the Certificate Insurer by the Trustee or to the Trustee by the
Certificate Insurer or by any Holders of a Regular Certificate
evidencing at least 25% of the Voting Rights; or
(ii) The failure by the Master Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30
days, or the failure by the Master Servicer duly to observe or perform,
in any material respect, any other covenants, obligations or agreements
of the Master Servicer as set forth in this Agreement, which failure
continues unremedied for a period of 30 days, after the date (A) 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 to the Trustee by the Certificate Insurer or by any Holders of a
Regular Certificate evidencing at least 25% of the Voting Rights or (B)
actual knowledge of such failure by a Servicing Officer of the Master
Servicer; or
(iii) The entry against the Master Servicer of a decree or order
by a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 days; or
(iv) The Master Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator
or similar person in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to the
Master Servicer or of or relating to all or substantially all of its
property; or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged, unbonded or unstayed for a
period of 60 days; 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
(v) a Performance Test Violation occurs under the Insurance
Agreement and the Certificate Insurer so notifies the Trustee;
(b) then, and in each and every such case, so long as a Master Servicer
Event of Termination shall not have been remedied within the applicable grace
period, (x) with respect solely to clause (i)(A) above, if such Advance is not
made by 5:00 P.M., New York time, on the Business Day immediately following the
Master Servicer Remittance Date (provided the Trustee shall give the Master
Servicer notice of such failure to advance by 5:00 P.M. New York time on the
Master Servicer Remittance Date), the Trustee shall at the direction of the
Certificate Insurer or may with the consent of the Certificate Insurer terminate
all of the rights and obligations of the Master Servicer
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under this Agreement and the Trustee, or a successor servicer appointed in
accordance with Section 7.02, shall immediately make such Advance and assume,
pursuant to Section 7.02, the duties of a successor Master Servicer and (y) in
the case of (i)(B), (ii), (iii), (iv) and (v) above, the Trustee shall, at the
direction of the Certificate Insurer or the Holders of each Class of Regular
Certificates evidencing Percentage Interests aggregating not less than 51% (with
the consent of the Certificate Insurer), by notice then given in writing to the
Master Servicer (and to the Trustee if given by Holders of Certificates or the
Certificate Insurer), terminate all of the rights and obligations of the Master
Servicer as servicer under this Agreement. Any such notice to the Master
Servicer shall also be given to each Rating Agency, the Depositor and the
Seller. On or after the receipt by the Master Servicer (and by the Trustee if
such notice is given by the Holders or the Certificate Insurer) 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;
and, without limitation, and 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 each
Mortgage Loan and related documents or otherwise. The Master Servicer agrees to
cooperate with the Trustee (or the applicable successor Master Servicer) in
effecting the termination of the responsibilities and rights of the Master
Servicer hereunder, including, without limitation, the delivery to the Trustee
of all documents and records requested by it to enable it to assume the Master
Servicer's functions under this Agreement within ten Business Days subsequent to
such notice, the transfer within one Business Day subsequent to such notice to
the Trustee (or the applicable successor Master Servicer) and the Certificate
Insurer for the administration by it of all cash amounts that shall at the time
be held by the Master Servicer and to be deposited by it in the Collection
Account, the Distribution Account, any REO Account or any Servicing Account or
that have been deposited by the Master Servicer in such accounts or thereafter
received by the Master Servicer with respect to the Mortgage Loans or any REO
Property received by the Master Servicer. All reasonable 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 shall be
paid by the predecessor Master Servicer (or if the predecessor Master Servicer
is the Trustee, the initial Master Servicer) upon presentation of reasonable
documentation of such costs and expenses and to the extent not paid by the
Master Servicer, by the Trust.
(c) The Master Servicer hereby covenants and agrees to act as the
Master Servicer under this Agreement for an initial term, commencing on the
Closing Date and ending on March 31, 2000, which term shall be extendable in its
sole discretion by the Certificate Insurer for successive terms of three
calendar months thereafter, until the termination of the Trust Fund pursuant to
Article X. Each such notice of extension (a "Master Servicer Extension Notice")
shall be delivered by the Certificate Insurer to the Trustee, the Depositor and
the Master Servicer. The Master Servicer hereby agrees that, upon its receipt of
any such Master Servicer Extension Notice, the Master Servicer shall become
bound for the duration of the term covered by such Master Servicer Extension
Notice to continue as the Master Servicer subject to and in accordance with the
other provisions of this Agreement. The Master Servicer agrees that if as of the
fifteenth (15th) day prior to the last day of any term of the Master Servicer
the Master Servicer shall not have received any Master Servicer Extension Notice
from the Certificate Insurer, the Master Servicer shall within five (5) days
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thereafter, give written notice of such non-receipt to the Certificate Insurer,
the Trustee and the Depositor. The failure of the Certificate Insurer to deliver
a Master Servicer Extension Notice by the end of a calendar term shall result in
the termination of the Master Servicer. If the term of the Master Servicer shall
expire without the Certificate Insurer having delivered to the Master Servicer a
Master Servicer Extension Notice, but the Master Servicer shall continue without
objection from the Depositor, the Trustee or the Certificate Insurer to perform
the functions of servicer hereunder (and in the absence of ground for
termination under any agreement referred to in Section 7.01), the Master
Servicer shall be entitled to receive a prorated portion of the Servicing Fee
specified hereunder for the time during which it shall so act; provided, that it
is understood and agreed that the foregoing provision for payment of the
prorated Servicing Fee is intended solely to avoid unjust enrichment of the
Trust Fund and does not contemplate or give rise to any implicit renewal of the
Master Servicer's term. The foregoing provisions of this paragraph shall not
apply to the Trustee in the event the Trustee succeeds to the rights and
obligations of the Master Servicer and the Trustee shall continue in such
capacity until the earlier of the termination of this Agreement pursuant to
Article X or the appointment of a successor Master Servicer.
Section 7.02. Trustee to Act; Appointment of Successor.
----------------------------------------
(a) Within 90 days of the time the Master Servicer (and the Trustee, if
notice is sent by the Holders) receives a notice of termination pursuant to
Section 7.01 or 6.04 or if a Master Servicer Extension Notice is not delivered
or contemplated by Section 7.01, the Trustee (or such other successor Master
Servicer as is acceptable to the Certificate Insurer and approved in accordance
with this Agreement) shall be the successor in all respects to the Master
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer by the terms and provisions hereof arising on and after its succession.
Notwithstanding the foregoing, the parties hereto agree that the Trustee, in its
capacity as successor Master Servicer, immediately will assume all of the
obligations of the Master Servicer to make advances. Notwithstanding the
foregoing, the Trustee, in its capacity as successor Master Servicer, shall not
be responsible for the lack of information and/or documents that it cannot
obtain through reasonable efforts. As compensation therefor, the Trustee (or
such other successor Master Servicer) 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, (i) if the Trustee is
unwilling to act as successor Master Servicer or (ii) if the Trustee is legally
unable so to act, the Certificate Insurer shall appoint a successor Master
Servicer, and if the Certificate Insurer does not, the Trustee shall appoint or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank or other mortgage loan or home equity loan
servicer having a net worth of not less than $50,000,000 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, that the appointment of any such successor Master Servicer shall be
acceptable to the Certificate Insurer, as evidenced by the Certificate Insurer's
prior written consent which consent shall not be unreasonably withheld and,
provided further, will not result in the qualification, reduction or withdrawal
of the ratings assigned to the Certificates or the ratings that are in effect
without taking into account the Policy by the Rating Agencies as evidenced by a
letter to such effect from the Rating Agencies. Pending appointment of a
successor to the Master Servicer hereunder, unless the Trustee is prohibited by
law from so acting, the Trustee shall act in such capacity as hereinabove
provided. In
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connection with such appointment and assumption, the successor shall be entitled
to receive compensation out of payments on Mortgage Loans in an amount equal to
the compensation which the Master Servicer would otherwise have received
pursuant to Section 3.18 (or such other compensation as the Trustee and such
successor shall agree, not to exceed the Servicing Fee). 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 to pay any deductible under an insurance policy
pursuant to Section 3.14 or to indemnify the Trustee pursuant to Section 3.06),
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. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
All Servicing Transfer Costs shall be paid by the predecessor Master Servicer
upon presentation of reasonable documentation of such costs, and if such
predecessor Master Servicer defaults in its obligation to pay such costs, such
costs shall be paid by the successor Master Servicer or the Trustee (in which
case the successor Master Servicer or the Trustee, as applicable, shall be
entitled to reimbursement therefor from the assets of the Trust).
(b) Any successor, including the Trustee, to the Master Servicer as
servicer shall during the term of its service as servicer continue to service
and administer the Mortgage Loans for the benefit of Certificateholders and the
Certificate Insurer, and maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Master
Servicer hereunder and 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 3.14.
Section 7.03. Waiver of Defaults.
------------------
The Certificate Insurer or the Majority Certificateholders may with the
consent of the Certificate Insurer, on behalf of all Certificateholders, waive
any events permitting removal of the Master Servicer as servicer pursuant to
this Article VII, provided, however, that the Majority Certificateholders may
not waive a default in making a required distribution on a Certificate without
the consent of the Holder of such Certificate. Upon any waiver of a past
default, such default shall cease to exist and any Master Servicer Event of
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Trustee to
the Rating Agencies.
Section 7.04. Notification to Certificateholders.
----------------------------------
(a) Upon any termination or appointment of a successor the Master
Servicer pursuant to this Article VII or Section 6.04, the Trustee shall give
prompt written notice thereof to the Certificate Insurer, the Certificateholders
at their respective addresses appearing in the Certificate Register and
each Rating Agency.
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Master Servicer Event of Termination for five Business Days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such
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an event, the Trustee shall transmit by mail to all Certificateholders notice of
such occurrence unless such default or Master Servicer Event of Termination
shall have been waived or cured. Such notice shall be given to the Certificate
Insurer promptly after any such occurrence.
Section 7.05. Survivability of Master Servicer Liabilities.
--------------------------------------------
Notwithstanding anything herein to the contrary, upon termination of
the Master Servicer hereunder, any liabilities of the Master Servicer which
accrued prior to such termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee.
-----------------
The Trustee, prior to the occurrence of a Master Servicer Event of
Termination and after the curing of all Master Servicer Events of Termination
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If a Master Servicer Event of
Termination has occurred (which has not been cured) of which a Responsible
Officer has knowledge, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his 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
conform to the requirements of this Agreement; provided, however, that the
Trustee will not be responsible for the accuracy or content of any such
resolutions, certificates, statements, opinions, reports, documents or other
instruments. If any such instrument is found not to conform to the requirements
of this Agreement in a material manner the Trustee shall take such action as it
deems appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's satisfaction, the Trustee will provide notice thereof
to the Certificate Insurer and will, at the expense of the Seller, which expense
shall be reasonable given the scope and nature of the required action, take such
further action as directed by the Certificate Insurer.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) prior to the occurrence of a Master Servicer Event of
Termination, and after the curing of all such Master Servicer Events of
Termination which may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or
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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;
(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 shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Certificate Insurer or in
accordance with the direction of the Majority Certificateholders (with
the consent of the Certificate Insurer, so long as no Insurer Default
exists) relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising or
omitting to exercise any trust or power conferred upon the Trustee,
under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with the obligations of the
Master Servicer referred to in clauses (i) and (ii) of Section 7.01(a)
unless a Responsible Officer of the Trustee at the Corporate Trust
Office obtains actual knowledge of such failure or the Trustee receives
written notice of such failure from the Master Servicer, the
Certificate Insurer, or the Majority Certificateholders.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the 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 Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
Section 8.02. Certain Matters Affecting the Trustee.
-------------------------------------
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be protected
in acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document reasonably believed
by it to be genuine and to have been signed or presented by the proper
party or parties, and the manner of obtaining consents and of
evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe;
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(ii) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders or the
Certificate Insurer, pursuant to the provisions of this Agreement,
unless such Certificateholders and the Certificate Insurer shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby; the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) prior to the occurrence of a Master Servicer Event of
Termination and after the curing of all Master Servicer Events of
Termination which may have occurred, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
documents, unless requested in writing to do so by the Certificate
Insurer or the Majority Certificateholder (with the consent of the
Certificate Insurer, so long as no Insurer Default exists and is
continuing); provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer or, if paid by the
Trustee, shall be reimbursed by the Master Servicer upon demand and, if
not reimbursed by the Master Servicer, shall be reimbursed by the
Trust. Nothing in this clause (v) shall derogate from the obligation of
the Master Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability
and makes no representation as to any acts or omissions hereunder of
the Master Servicer until such time as the Trustee may be required to
act as Master Servicer pursuant to Section 7.02 and thereupon only for
the acts or omissions of the Trustee as successor Master Servicer;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian; and
(viii) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
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Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
-----------------------------------------------------
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Master Servicer, or for the use or application of any
funds paid to the Master Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Collection 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 7.02); 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 7.02); the compliance by the Depositor, the Seller
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 prior to the Trustee's receipt of notice or other discovery of
any non-compliance therewith or any breach thereof; 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 Master Servicer (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 7.02), any Sub- 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 7.02), or any
Sub-Servicer taken in the name of the Trustee; the failure of the Master
Servicer or any Sub-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 7.02); 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 duty
to review the Mortgage Files pursuant to Section 2.01. The Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder (unless the Trustee shall have
become the successor Master Servicer).
Section 8.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee and may transact any banking and trust business with the
Seller, the Master Servicer, the Depositor or their Affiliates.
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Section 8.05. Seller to Pay Trustee Expenses.
------------------------------
The Seller will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ and any amounts paid by the Trustee for
the recording of Assignments of Mortgage pursuant to Section 2.01) except any
such expense, disbursement or advance as may arise from its negligence or bad
faith or which is the responsibility of Certificateholders or the Trustee
hereunder. In addition, the Seller covenants and agrees to indemnify the Trustee
and its officers, directors, employees and agents from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses incurred
in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence of the Trustee in the performance
of its duties hereunder or by reason of the Trustee's reckless disregard of
obligations and duties hereunder. This section shall survive termination of this
Agreement or the resignation or removal of any Trustee hereunder. If the Seller
defaults in its obligations to pay or reimburse the Trustee any amount as
required under this Section 8.05, the Trustee shall be entitled to be paid or
reimbursed such amount at any time from the assets of the Trust Fund consisting
of any amounts on deposit at such time in the Collection Account or the
Distribution Account.
Section 8.06. Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall at all times be an entity duly organized
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of Baa3 by Xxxxx'x and a short-term rating of at least A-1 by S&P,
and subject to supervision or examination by federal or state authority. If such
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section 8.06, the combined capital and surplus of such
entity shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time such
Trustee is appointed Trustee to the effect that the Trust will not be a taxable
entity under the laws of such state. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 8.06, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07.
Section 8.07. Resignation or Removal of Trustee.
---------------------------------
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer, the Certificate Insurer and each Rating Agency. Upon receiving such
notice of resignation, the Depositor shall promptly appoint a successor Trustee
(approved in writing by the Certificate Insurer, so long as such approval shall
not be unreasonably withheld) 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
having accepted appointment within 30 days after the giving of
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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 8.06 and shall fail to resign after written
request therefor by the Certificate Insurer or the Depositor, with the consent
of the Certificate Insurer (so long as no Insurer Default exists) or if at any
time the Trustee shall be legally unable to act, 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 Depositor, the Certificate Insurer or the Master Servicer
may remove the Trustee. If the Depositor, Certificate Insurer or the Master
Servicer removes the Trustee under the authority of the immediately preceding
sentence, the Depositor shall promptly appoint a successor Trustee (approved in
writing by the Certificate Insurer, so long as such approval is not unreasonably
withheld) by written instrument, in duplicate, one copy of which instrument
shall be delivered to the Trustee so removed and one copy to the successor
trustee.
The Majority Certificateholders may, with the prior written consent of
the Certificate Insurer (so long as no Insurer Default exists and is
continuing), at any time remove the Trustee by written instrument or instruments
delivered to the Master Servicer, the Depositor and the Trustee; the Depositor
shall thereupon use its best efforts to appoint a successor trustee in
accordance with this Section.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08.
Notwithstanding anything to the contrary contained herein, so long as
no Insurer Default exists, the Trustee may not be removed by the Depositor or
the Certificateholders without the prior written consent of the Certificate
Insurer, which consent shall not be unreasonably withheld.
Section 8.08. Successor Trustee.
-----------------
Any successor Trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, the Certificate Insurer, 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. The Depositor, the Master Servicer and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.
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Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.08, the successor Trustee shall mail notice of the appointment of
a successor Trustee hereunder to all Holders of Certificates at their addresses
as shown in the Certificate Register and to each Rating Agency.
Notwithstanding anything to the contrary contained herein, so long as
no Insurer Default exists, the appointment of any successor Trustee pursuant to
any provision of this Agreement will be subject to the prior written consent of
the Certificate Insurer, which consent shall not be unreasonably withheld.
Section 8.09. Merger or Consolidation of Trustee.
----------------------------------
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such entity shall be eligible under the provisions of
Section 8.06 and 8.08, 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.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or any Mortgaged Property may at the time be located, the
Depositor 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 and the Certificate Insurer to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Master Servicer and the Trustee
may consider necessary or desirable. Any such co-trustee or separate trustee
shall be subject to the written approval of the Master Servicer and the
Certificate Insurer (so long as no Insurer Default exists and is continuing). If
the Master Servicer and the Certificate Insurer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case a Master Servicer Event of Termination shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06, and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08. The Master Servicer shall be responsible
for the fees of any co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) 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 (it being understood that such separate trustee or
co-trustee is not
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authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the 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 or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Master Servicer and the Trustee, with the consent of the
Certificate Insurer (so long as no Insurer Default exists and is
continuing), acting jointly may at any time accept the resignation of
or remove any separate trustee or co-trustee except that following the
occurrence of a Master Servicer Event of Termination, the Trustee
acting alone may accept the resignation or remove any separate trustee
or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor, the Certificate Insurer and the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 8.11. 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 the Trust 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 8.12. Trustee May Enforce Claims Without Possession of
Certificates.
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(a) 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 proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. 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 and the
Certificate Insurer in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Master
Servicer, the Certificate Insurer and each Certificateholder 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 Depositor, the Master Servicer, the Certificate Insurer and any requesting
Certificateholder with its most recent financial statements. The Trustee shall
cooperate fully with the Seller, the Master Servicer, the Depositor, the
Certificate Insurer and such Certificateholder and shall make available to the
Seller, the Master Servicer, the Depositor, the Certificate Insurer and such
Certificateholder for review and copying such books, documents or records as may
be requested with respect to the Trustee's duties hereunder. The Seller, the
Depositor, the Master Servicer, the Certificate Insurer and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 8.13. Suits for Enforcement.
---------------------
In case a Master Servicer Event of Termination or other default by the
Master Servicer or the Depositor hereunder shall occur and be continuing, the
Trustee, shall, at the direction of the Certificate Insurer, or may, with the
consent of the Certificate Insurer, may proceed to protect and enforce its
rights and the rights of the Certificateholders or the Certificate Insurer 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, and subject to the foregoing, shall deem most
effectual to protect and enforce any of the rights of the Trustee, the
Certificate Insurer and the Certificateholders.
Section 8.14. 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 8.15. 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
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inventory, accounting or appraisal of the Trust with any court, agency or body
at any time or in any manner whatsoever.
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01. REMIC Administration.
--------------------
(a) REMIC elections as set forth in the Preliminary Statement shall be
made by the Trustee on Form 1066 or other appropriate federal tax or information
return for the taxable year ending on the last day of the calendar year in which
the Certificates are issued. The regular interests and residual interest in the
REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of the
REMIC within the meaning of section 860G(a)(9) of the Code.
(c) The Master Servicer shall pay any and all tax related expenses (not
including taxes) of the REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to the REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Master Servicer in fulfilling its duties hereunder. The Master
Servicer shall be entitled to reimbursement of expenses to the extent provided
in clause (i) above from the Collection Account.
(d) The Trustee shall prepare, and the Trustee shall sign and file, all
of the REMIC's federal and state tax and information returns as the direct
representative each of REMIC I and REMIC II. The expenses of preparing and
filing such returns shall be borne by the Trustee.
(e) The Holder of the Class R Certificate at any time holding the
largest Percentage Interest thereof shall be the "tax matters person" as defined
in the REMIC Provisions (the "Tax Matters Person") with respect to the REMIC and
shall act as Tax Matters Person for each of REMIC I and REMIC II. The Trustee,
as agent for the Tax Matters Person, shall perform on behalf of each REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions, or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, if required by the Code, the REMIC Provisions, or other such
guidance, the Trustee, as agent for the Tax Matters Person, shall provide (i) to
the Treasury or other governmental authority such information as is necessary
for the application of any tax relating to the transfer of a Residual
Certificate to any disqualified person or organization and (ii) to the
Certificateholders such information or reports as are required by the Code or
REMIC Provisions.
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(f) The Trustee, the Master Servicer and the Holders of Certificates
shall take any action or cause the REMIC to take any action necessary to create
or maintain the status of each of REMIC I and REMIC II REMIC as a REMIC under
the REMIC Provisions and shall assist each other as necessary to create or
maintain such status. Neither the Trustee, the Master Servicer nor the Holder of
any Residual Certificate shall take any action, cause either REMIC to take any
action or fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger
the status of such REMIC as a REMIC or (ii) result in the imposition of a tax
upon the REMIC (including but not limited to the tax on prohibited transactions
as defined in Code Section 860F(a)(2) and the tax on prohibited contributions
set forth on Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless the Trustee and the Master Servicer have received an Opinion of
Counsel (at the expense of the party seeking to take such action) to the effect
that the contemplated action will not endanger such status or result in the
imposition of such a tax. In addition, prior to taking any action with respect
to either REMIC or the assets therein, or causing the REMIC to take any action,
which is not expressly permitted under the terms of this Agreement, any Holder
of a Residual Certificate will consult with the Trustee and the Master Servicer,
or their respective designees, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to the REMIC, and no
such Person shall take any such action or cause either REMIC to take any such
action as to which the Trustee or the Master Servicer has advised it in writing
that an Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due any and
all taxes imposed on both REMIC I and REMIC II by federal or state governmental
authorities. To the extent that such Trust taxes are not paid by a Residual
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of
current or future amounts otherwise distributable to the Holder of the Residual
Certificate in REMIC I and REMIC II or, if no such amounts are available, out of
other amounts held in the Distribution Account, and shall reduce amounts
otherwise payable to Holders of regular interests in REMIC I and REMIC II, as
the case may be.
(h) The Trustee, as agent for the Tax Matters Person, shall, for
federal income tax purposes, maintain books and records with respect to REMIC I
and REMIC II on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to either REMIC
I or REMIC II, except as expressly provided in this Agreement with respect to
eligible substitute mortgage loans.
(j) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which either REMIC I or REMIC II will receive a fee or other
compensation for services.
(k) On or before April 15 of each calendar year beginning in 2000, the
Master Servicer shall deliver to the Trustee and each Rating Agency an Officer's
Certificate stating the Master Servicer's compliance with the provisions of this
Section 9.01.
(l) The Trustee will apply for an Employee Identification Number from
the Internal Revenue Service via a Form SS-4 or other acceptable method for all
tax entities.
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Section 9.02. Prohibited Transactions and Activities.
--------------------------------------
Neither the Depositor, the Master Servicer nor the Trustee shall sell,
dispose of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of either REMIC I or REMIC II pursuant to
Article X of this Agreement, (iv) a substitution pursuant to Article II of this
Agreement or (v) a repurchase of Mortgage Loans pursuant to Article II of this
Agreement, nor acquire any assets for either REMIC, nor sell or dispose of any
investments in the Distribution Account for gain, nor accept any contributions
to either REMIC after the Closing Date, unless it has received an Opinion of
Counsel (at the expense of the party causing such sale, disposition, or
substitution) that such disposition, acquisition, substitution, or acceptance
will not (a) affect adversely the status of either REMIC I or REMIC II as a
REMIC or of the interests therein other than the Residual Certificates as the
regular interests therein, (b) affect the distribution of interest or principal
on the Certificates, (c) result in the encumbrance of the assets transferred or
assigned to the Trust Fund (except pursuant to the provisions of this Agreement)
or (d) cause either REMIC I or REMIC II to be subject to a tax on prohibited
transactions or prohibited contributions pursuant to the REMIC Provisions.
The Trustee shall treat the Reserve Funds as "outside reserve funds"
within the meaning of Treasury regulation 1.860G-2(h) that is owned by the Class
R Certificateholders and that is not an asset of either REMIC. The Trustee shall
treat the rights of the Holders of the Regular Certificates to receive payments
from Reserve Fund I as rights in the Yield Maintenance Agreement written by the
Holders of the Class R Certificates in favor of the Holders of the Regular
Certificates. Thus, each Holder of the Regular Certificates shall be treated as
representing ownership not only of Uncertificated REMIC I Regular Interests, but
also ownership of an interest in an interest rate cap contract. For purposes of
determining the issue price of the Uncertificated REMIC I Regular Interests, the
Trustee shall assume that the Yield Maintenance Agreement has a value equal to
the Yield Maintenance Agreement Purchase Price.
Section 9.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.
---------------------------------------------------------
In the event that either REMIC I or REMIC II fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Master Servicer of its duties
and obligations set forth herein, the Master Servicer shall indemnify the
Trustee and the Holder of the related Residual Certificate against any and all
losses, claims, damages, liabilities or expenses ("Losses") resulting from such
negligence; provided, however, that the Master Servicer shall not be liable for
any such Losses attributable to the action or inaction of the Trustee, the
Depositor or the Holder of such Residual Certificate, as applicable, nor for any
such Losses resulting from misinformation provided by the Holder of such
Residual Certificate on which the Master Servicer has relied. The foregoing
shall not be deemed to limit or restrict the rights and remedies of the Holder
of such Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Master Servicer
have any liability (1) for any action or omission that is taken in accordance
with and in compliance with the express terms of, or which is expressly
permitted by the terms of, this Agreement, (2) for any Losses other than arising
out of a negligent performance by the Master Servicer of its duties and
obligations set forth
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herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).
Section 9.04. [Reserved].
----------
ARTICLE X
TERMINATION
Section 10.01. Termination.
-----------
(a) The respective obligations and responsibilities of the Seller, the
Master Servicer, the Depositor and the Trustee created hereby (other than the
obligation of the Trustee to make certain payments to Certificateholders after
the final Distribution Date and the obligation of the Master Servicer to send
certain notices as hereinafter set forth) shall terminate upon notice to the
Trustee upon the later of (A) the payment in full of all amounts owing to the
Certificate Insurer unless the Certificate Insurer shall otherwise consent and
(B) the earliest of (i) the Distribution Date on which the Certificate Principal
Balance of the Class A Certificates has been reduced to zero, (ii) the final
payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the
optional purchase by the Seller or the Certificate Insurer of the Mortgage Loans
as described below and (iv) the Distribution Date in December 2029.
Notwithstanding the foregoing, 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. James's, living on the date hereof.
The Master Servicer or, if such option is not exercised by the Master
Servicer, the Certificate Insurer may, at its option, terminate this Agreement
on any date on which the aggregate of the Principal Balances of the Mortgage
Loans on such date is equal to or less than 10% of the sum of the aggregate
Principal Balances of the Initial Mortgage Loans on the Cut-off Date plus the
Original Pre-Funded Amount, by purchasing, on the next succeeding Distribution
Date, all of the outstanding Mortgage Loans and REO Properties at a price equal
to the greater of the Stated Principal Balance of the Mortgage Loans and REO
Properties or the market value of the Mortgage Loans and REO Properties, in each
case plus accrued and unpaid interest thereon at the weighted average of the
Mortgage Rates through the end of the Due Period preceding the final
Distribution Date plus unreimbursed Servicing Advances, Advances, any amount
owed the Certificate Insurer under the Insurance Agreement, any unpaid Servicing
Fees allocable to such Mortgage Loans and REO Properties and any accrued and
unpaid Net WAC Rate Carryover Amount (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Master Servicer shall deposit in the Distribution Account all
amounts then on deposit in the Collection Account, which deposit shall be deemed
to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price and the delivery of an opinion of counsel in form and
substance acceptable to the Certificate Insurer that such termination
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is a "Qualified Transaction" under Section 860F of the Code. The Seller shall
indemnify the Certificate Insurer for any claims under the Policy due to the
Seller's exercise of such option.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee upon the Trustee receiving notice of such date from the Master Servicer,
by letter to the Certificate Insurer and the 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 Distribution
Date upon which final distribution of the Certificates will be made upon
presentation and surrender of such Certificates at the office or agency of the
Trustee therein designated, (2) the amount of any such final distribution and
(3) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Section 4.01 for such
Distribution Date. On the final Distribution Date, the Trustee will withdraw
from the Distribution Account and remit to the Certificate Insurer the lesser of
(x) the amount available for distribution on such final Distribution Date, net
of any portion thereof necessary to pay holders of Class A Certificates and the
Class S Certificates pursuant to Section 4.01 and due and unpaid Monthly
Advances and Servicing Fees and any amount payable or reimbursable to the
Trustee pursuant to this Agreement, including, but not limited to, Section 3.06
and Section 7.02, (y) the unpaid amounts due and owing to the Certificate
Insurer pursuant to Section 4.01 and the Insurance Agreement.
(d) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate Servicing Account for
the benefit of such Certificateholders, and the Seller (if the Seller has
exercised its right to purchase the Mortgage Loans) 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 nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholder shall be entitled to all unclaimed funds and other assets
which remain subject hereto, and the Trustee upon transfer of such funds shall
be discharged of any responsibility for such funds, and the Certificateholders
shall look to the Class R Certificateholder for payment.
Section 10.02. Additional Termination Requirements.
-----------------------------------
(a) In the event that the Certificate Insurer or the Seller exercises
its purchase option as provided in Section 10.01, REMIC I and REMIC II shall be
terminated in accordance with the following additional requirements, unless the
Trustee shall have been furnished with an Opinion of
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Counsel to the effect that the failure of the Trust to comply with the
requirements of this Section 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 either REMIC or REMIC II constituting part of the Trust Fund to fail
to qualify as a REMIC at any time that any Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Master Servicer shall adopt and the Trustee shall sign a plan of
complete liquidation of REMIC I and REMIC II meeting the requirements
of a "Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust Fund to the Certificate
Insurer or the Master Servicer, as applicable, for cash pursuant to the
terms of the plan of complete liquidation; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Holders of each of the Class A
Certificates, the related Class Certificate Principal Balance, plus one
month's interest thereon at the applicable Pass-Through Rate and (B) to
the Certificate Insurer, all amounts owing to the Certificate Insurer
under this Agreement and the Insurance Agreement and the Trust shall
terminate at such time.
(b) By their acceptance of Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation (and the Certificateholders hereby appoint the Trustee
as their attorney in fact to sign such plan) as appropriate or upon the written
request of the Certificate Insurer and (ii) to take such other action in
connection therewith as may be reasonably required to carry out such plan of
complete liquidation all in accordance with the terms hereof.
ARTICLE XI
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 11.01. Rights of the Certificate Insurer To Exercise Rights of
Class A and Class S Certificateholders.
-------------------------------------------------------
Each of the Depositor, the Master Servicer, the Trustee, and, by
accepting its Certificate, each Class A Certificateholder and Class S
Certificateholder, agrees that unless an Insurer Default has occurred and is
continuing, the Certificate Insurer shall have the right to exercise all rights
of the Class A Certificateholders and Class S Certificateholders under this
Agreement (except with respect to the matters discussed in the second paragraph
of Section 12.01) without any further consent of the Class A Certificateholders
and Class S Certificateholders, including, without limitation:
(a) the right to require the Seller to repurchase or substitute for
Mortgage Loans pursuant to Section 2.03;
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(b) the right to give notices of breach or to terminate the rights and
obligations of the Master Servicer as Master Servicer pursuant to Section 7.01;
(c) the right to direct the actions of the Trustee during the
continuance of a Master Servicer Event of Termination pursuant to Sections 7.01
and 7.02;
(d) the right to consent to or direct any waivers of Master Servicer
Events of Termination pursuant to Section 7.03;
(e) the right to direct the Trustee to investigate certain matters
pursuant to Section 8.02(a)(v); and
(f) the right to remove the Trustee pursuant to Section 8.07 hereof.
In addition, each Class A Certificateholder and each Class S
Certificateholder agrees that, unless an Insurer Default has occurred and is
continuing, the rights specifically set forth above may be exercised by the
Class A Certificateholders and the Class S Certificateholders only with the
prior written consent of the Certificate Insurer.
Section 11.02. Trustee To Act Solely with Consent of the Certificate
Insurer.
-----------------------------------------------------
Unless an Insurer Default has occurred and is continuing, the Trustee
shall not:
(a) agree to any amendment pursuant to Section 12.01; provided,
however, that in the event that an Insurer Default has occurred and is
continuing, the Certificate Insurer's consent shall be required for an amendment
that would affect the Certificate Insurer's right to reimbursement; or
(b) undertake any litigation pursuant to Section 8.02(a)(iii);
without the prior written consent of the Certificate Insurer which consent shall
not be unreasonably withheld.
Section 11.03. Trust Fund and Accounts Held for Benefit of the
Certificate Insurer.
-----------------------------------------------
The Trustee shall hold the Trust Fund and the Mortgage Files for the
benefit of the Certificateholders and the Certificate Insurer and all references
in this Agreement (including, without limitation, in Sections 2.01 and 2.02) and
in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer. The Trustee shall cooperate in all
reasonable respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement and the Certificates.
The Master Servicer hereby acknowledges and agrees that it shall
service and administer the Mortgage Loans and any REO Properties, and shall
maintain the Collection Account and any REO Account, for the benefit of the
Certificateholders and for the benefit of the Certificate Insurer, and all
references in this Agreement (including, without limitation, in Section 3.01) to
the benefit of or
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actions on behalf of the Certificateholders shall be deemed to include the
Certificate Insurer. Unless an Insurer Default has occurred and is continuing,
the Master Servicer shall not terminate any sub-servicing agreements without
cause without the prior consent of the Certificate Insurer. Unless an Insurer
Default has occurred and is continuing, neither the Master Servicer nor the
Depositor shall undertake any litigation pursuant to Section 6.03 (other than
litigation to enforce their respective rights hereunder) without the prior
consent of the Certificate Insurer.
Section 11.04. Claims Upon the Policy; Policy Payments Account.
-----------------------------------------------
(a) If, by the Close of Business on the third Business Day prior to a
Distribution Date, the Trustee determines that a Deficiency Amount for any
Distribution Date is greater than zero, then the Trustee shall give notice to
the Certificate Insurer by telephone or telecopy of the amount of such
Deficiency Amount. Such notice of such Deficiency Amount shall be confirmed in
writing in the form set forth as Exhibit A to the Endorsement of the Policy, to
the Certificate Insurer and the Fiscal Agent (as defined in the Policy), if any,
at or before 10:00 a.m. New York time on the second Business Day prior to such
Distribution Date. Following Receipt (as defined in the Policy) by the
Certificate Insurer of such notice in such form, the Certificate Insurer or the
Fiscal Agent will pay any amount payable under the Policy on the later to occur
of (i) 12:00 noon New York time on the second Business Day following such
receipt and (ii) 12:00 noon New York time on the Distribution Date to which such
deficiency relates, as provided in the Endorsement to the Policy.
(b) The Trustee shall establish a separate special purpose trust
account for the benefit of Holders of the Class A Certificates and the
Certificate Insurer referred to herein as the "Policy Payments Account" over
which the Trustee shall have exclusive control and sole right of withdrawal. The
Trustee shall deposit any amount paid under the Policy in the Policy Payments
Account and distribute such amount only for purposes of payment to Holders of
Class A Certificates or the Class S Certificates of the Insured Payment for
which a claim was made, and such amount may not be applied to satisfy any costs,
expenses or liabilities of the Master Servicer, the Trustee or the Trust Fund.
Amounts paid under the Policy shall be transferred to the Distribution Account
in accordance with the next succeeding paragraph and disbursed by the Trustee to
Holders of Class A Certificates or the Class S Certificates in accordance with
Section 4.01(c) or Section 10.01, as applicable. It shall not be necessary for
such payments to be made by checks or wire transfers separate from the checks or
wire transfers used to pay the Insured Payment with other funds available to
make such payment. However, the amount of any payment of principal of or
interest on the Class A Certificates or Class S Certificates to be paid from
funds transferred from the Policy Payments Account shall be noted as provided in
paragraph (c) below in the Certificate Register and in the statement to be
furnished to Holders of the Class A Certificates and the Class S Certificates
pursuant to Section 4.03. Funds held in the Policy Payments Account shall not be
invested.
On any Distribution Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Trustee as a result of
any claim under the Policy, to the extent required to make the Insured Payment
on such Distribution Date, shall be withdrawn from the Policy Payments Account
and deposited in the Distribution Account and applied by the Trustee, together
with the other funds to be withdrawn from the Distribution Account pursuant to
Section 4.01(c) or Section 10.01, as applicable, directly to the payment in full
of the Insured Payment due on the Class A Certificates. Funds received by the
Trustee as a result of any claim under the Policy shall be
121
deposited by the Trustee in the Policy Payments Account and used solely for
payment to the Holders of the Class A Certificates and the Class S Certificates
and may not be applied to satisfy any costs, expenses or liabilities of the
Master Servicer, the Trustee, or the Trust Fund. Any funds remaining in the
Policy Payments Account on the first Business Day following a Distribution Date
shall be remitted to the Certificate Insurer, pursuant to the instructions of
the Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Class A Certificate or any
Class S Certificate from moneys received under the Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and
Fiscal Agent of any proceeding or the institution of any action, of which a
Responsible Officer of the Trustee has actual knowledge seeking the avoidance as
a preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any Insured Payment made with respect to
the Class A Certificates. Each Holder of the Class A Certificates and the Class
S Certificates, by its purchase of such Certificates, the Master Servicer, and
the Trustee hereby agree that the Certificate Insurer (so long as no Insurer
Default has occurred and is continuing) may at any time during the continuation
of any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedeas or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Certificate Insurer shall be
subrogated to the rights of the Master Servicer, the Trustee, and each Holder of
the Class A Certificates and the Class S Certificates in the conduct of any such
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Preference Claim.
(e) Until otherwise directed by the Certificate Insurer, any payment to
the Certificate Insurer from Reserve Fund II pursuant to Section 3.28 in respect
of a current Deficiency Amount shall be deposited by the Trustee in the Policy
Payments Account and treated in all respects as a payment by the Certificate
Insurer under the Policy. The notice of such Deficiency Amount referred to in
subsection (a) hereof shall identify the amount of such transfer and the
additional amount, if any, necessary to be paid pursuant to the Policy.
Section 11.05. Effect of Payments by the Certificate Insurer;
Subrogation.
----------------------------------------------
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates or any of
the Class S Certificates which is made with moneys received pursuant to the
terms of the Policy shall not be considered payment of such Class A Certificates
or Class S Certificates, as applicable, from the Trust Fund and shall not result
in the payment of or the provision for the payment of the principal of or
interest on such Certificates within the meaning of Section 4.01. The Depositor,
the Master Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Class A Certificate or a Class S Certificate agrees, that
without the need for any further action on the part of the Certificate Insurer,
the Depositor, the Master Servicer or the Trustee (a) to the extent the
Certificate Insurer makes payments, directly or indirectly,
122
on account of principal of or interest on any Class A Certificates or Class S
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to the rights of such Holders to receive such principal and
interest from the Trust Fund and (b) the Certificate Insurer shall be paid such
principal and interest but only from the sources and in the manner provided
herein for the payment of such principal and interest.
The Trustee and the Master Servicer shall cooperate in all respects
with any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement
without limiting the rights or affecting the interests of the Holders
as otherwise set forth herein.
Section 11.06. Notices to the Certificate Insurer.
----------------------------------
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the
Certificateholders shall also be sent to the Certificate Insurer.
Section 11.07. Third-Party Beneficiary.
-----------------------
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 11.08. Trustee to Hold the Policy.
--------------------------
The Trustee will hold the Policy in trust as agent for the Holders of
the Class A Certificates and the Class S Certificates for the purpose of making
claims thereon and distributing the proceeds thereof. Upon the later of (i) the
date upon which the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero, the Pass-Through Rate on the Class S
Certificates is 0.00% per annum and all Insured Payments have been made and (ii)
the date the Term of the Policy (as defined in the Policy) ends, the Trustee,
shall surrender the Policy to the Certificate Insurer for cancellation. Each
Holder of Class A Certificates and each Holder of Class S Certificates, by
accepting its Certificates, appoints the Trustee as attorney-in-fact for the
purpose of making claims on the Policy.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Amendment.
---------
This Agreement may be amended from time to time by Seller, the
Depositor, the Master Servicer and the Trustee; and without the consent of the
Certificateholders, but only with the consent of the Certificate Insurer (which
consent shall not be unreasonably withheld), (i) to cure any ambiguity, (ii) to
correct or supplement any provisions herein which may be defective or
inconsistent with any other provisions herein or (iii) to make any other
provisions with respect to matters or
123
questions arising under this Agreement or the Policy, as the case may be, which
shall not be inconsistent with the provisions of this Agreement; provided,
however, that any such action listed in clause (i) through (iii) above shall be
deemed not to adversely affect in any respect the interests of any
Certificateholder, if evidenced by (i) written notice to the Depositor, the
Master Servicer and the Trustee from the Rating Agencies that such action will
not result in the reduction or withdrawal of the rating of any outstanding Class
of Certificates with respect to which it is a Rating Agency or (ii) an Opinion
of Counsel delivered to the Master Servicer and the Trustee.
In addition, this Agreement may be amended from time to time by Seller,
the Depositor, the Master Servicer and the Trustee with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld) with the
consent of the Majority Certificateholders for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment or waiver shall (x)
reduce in any manner the amount of, or delay the timing of, payments on the
Certificates or distributions or payments under the Policy which are required to
be made on any Certificate without the consent of the Holder of such
Certificate, (y) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a 66% Percentage Interest in such Class, or (z) reduce
the percentage of Voting Rights required by clause (y) above without the consent
of the Holders of all Certificates of such Class then outstanding. Upon approval
of an amendment, a copy of such amendment shall be sent to the Rating Agencies.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a tax on either REMIC I or REMIC II constituting
part of the Trust Fund pursuant to the REMIC Provisions or cause either REMIC
constituting part of the Trust to fail to qualify as a REMIC at any time that
any Certificates are outstanding and that the amendment is being made in
accordance with the terms hereof.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is Seller or the Master Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to the
Master Servicer, the Certificate Insurer and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 12.01 to approve the particular form of any proposed amendment;
instead it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to, enter into any
amendment pursuant to Section 12.01 that affects its rights, duties and
immunities under this Agreement or otherwise.
124
Section 12.02. Recordation of Agreement; Counterparts.
--------------------------------------
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Trust, but only upon direction of
Certificateholders or the Certificate Insurer accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together
constitute but one and the same instrument.
Section 12.03. Limitation on Rights of Certificateholders.
------------------------------------------
The death or incapacity of any Certificateholder shall not (i) operate
to terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall
have any right to vote 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.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights 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 15 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 is understood
and intended, and 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 of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, 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
125
and enforcement of the provisions of this Section 12.03 each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 12.04. Governing Law; Jurisdiction.
---------------------------
This Agreement shall be construed in accordance with the laws of the
State of New York, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. With respect to any
claim arising out of this Agreement, each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further irrevocably waives the right to object,
with respect to such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.
Section 12.05. Notices.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, or by express delivery service, to (a) in the
case of Seller and/or Master Servicer, Option One Mortgage Corporation, 0 Xxx
Xxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X'Xxxxx, or such other
address or telecopy number as may hereafter be furnished to the Depositor and
the Trustee in writing by Seller, (b) in the case of the Trustee, Norwest Bank
Minnesota, National Association, 00000 Xxxxxx Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx
00000, Attention: Option One Mortgage Loan Trust Series 1999-3, with a copy to
Norwest Bank Minnesota, National Association, Sixth and Marquette, Xxxxxxxxxxx,
Xxxxxxxxx 00000, Attention: Option One Series 1999-3, or such other address or
telecopy number as may hereafter be furnished to the Depositor, Seller and the
Master Servicer in writing by the Trustee, (c) in the case of the Depositor,
Option One Mortgage Acceptance Corporation, 0 Xxx Xxxx, Xxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxxx X'Xxxxx, or such other address or telecopy number as
may be furnished to Seller, the Master Servicer and the Trustee in writing by
the Depositor, and (d) in the case of the Certificate Insurer, Financial
Security Assurance Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Surveillance Department. 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. Notice of any
Master Servicer Default shall be given by telecopy and by certified mail. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the manner
set forth above.
Section 12.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms
126
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 12.07. Article and Section References.
------------------------------
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
Section 12.08. Notice to the Rating Agencies.
-----------------------------
(a) Each of the Trustee and the Master Servicer shall be obligated to
use its best reasonable efforts promptly to provide notice to the Rating
Agencies with respect to each of the following of which a Responsible Officer of
the Trustee or Master Servicer, as the case may be, has actual
knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Master Servicer Event of Termination
that has not been cured or waived;
(iii) the resignation or termination of the Master Servicer or the
Trustee;
(iv) the final payment to Holders of the Certificates of any
Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Master Servicer
pursuant to Section 7.02 hereof, any event that would result in the
inability of the Trustee to make Advances.
(b) In addition, (i) the Trustee shall promptly make available to each
Rating Agency copies of each Statement to Certificateholders described in
Section 4.03 hereof; and
(i) the Master Servicer shall promptly furnish to each Rating
Agency copies of the following:
(a) each annual statement as to compliance described in
Section 3.20 hereof;
(b) each annual independent public accountants' servicing
report described in Section 3.21 hereof; and
(c) each notice delivered pursuant to Section 7.01(a) hereof
which relates to the fact that the Master Servicer has not
made an Advance.
Any such notice pursuant to this Section 12.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by
127
express delivery service to Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx,
Xxx Xxxx, XX 00000, Attention: MBS Monitoring/Option One Mortgage Loan Trust
1999-3; and Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc., 00
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Mortgage Surveillance
Group.
Section 12.09. Further Assurances.
------------------
Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders nor the Trustee shall have any obligation to consent
to any amendment or modification of this Agreement unless they have been
provided reasonable security or indemnity against their out-of-pocket expenses
(including reasonable attorneys' fees) to be incurred in connection therewith.
Section 12.10. Benefits of Agreement.
---------------------
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders, the Certificate
Insurer and the parties hereto and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Section 12.11. Acts of Certificateholders.
--------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing, and such action shall become effective when
such instrument or instruments are delivered to the Trustee, Seller and the
Master Servicer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "act" of the
Certificateholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee and the Trust, if made in the manner provided in this Section 12.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificate.
128
IN WITNESS WHEREOF, Seller, the Depositor, the Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.
OPTION ONE MORTGAGE ACCEPTANCE
CORPORATION,
as Depositor
By: /s/ Xxxxxxx X. X'Xxxxx
------------------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Vice President
OPTION ONE MORTGAGE CORPORATION,
as Master Servicer
By: /s/ Xxxxxxx X. X'Xxxxx
------------------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: /s/ Xxxxxxx X. X'Xxxxx
------------------------------------------
Name: Xxx Xxxx
Title: Assistant Vice President
129
STATE OF _________________ )
) ss.:
COUNTY OF ________________ )
On the __th day of October, 1999 before me, a notary public in and for
said State, personally appeared Xxxxxxx X. X'Xxxxx known to me to be a Senior
Vice President of Option One Mortgage Acceptance Corporation, a Delaware
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------------------------
Notary Public
STATE OF _________________ )
) ss.:
COUNTY OF ________________ )
On the __th day of October, 1999 before me, a notary public in and for
said State, personally appeared Xxxxxxx X. X'Xxxxx known to me to be a Senior
Vice President of Option One Mortgage Corporation, a corporation that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------------------------
Notary Public
STATE OF _________________ )
) ss.:
COUNTY OF ________________ )
On the ___th day of October, 1999 before me, a notary public in and for
said State, personally appeared Xxx Xxxx, known to me to be Assistant Vice
President of Norwest Bank Minnesota, National Association, a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said association, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------------------------
Notary Public
EXHIBIT A-1
FORM OF CLASS A CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : [_____________]
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) October l, 1999
First Distribution Date : November 26, 1999
Initial Certificate Principal
Balance of this Certificate
("Denomination") : [$____________]
Original Class Certificate
Principal Balance of this Class : $144,750,000.00
Percentage Interest : 100%
Pass-Through Rate : Variable
CUSIP : 68389F AL 8
Class : A
Assumed Maturity Date : December 25, 2029
A-1-1
Option One Mortgage Loan Trust 1999-3
Asset-Backed Certificates,
Series 1999-3
Class A
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first and second lien, fixed and
adjustable rate mortgage loans (the "Mortgage Loans")
OPTION ONE MORTGAGE ACCEPTANCE CORPORATION, as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class A
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer, or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A Certificate (obtained by dividing the
Denomination of this Class A Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Option One Mortgage
Acceptance Corporation (the "Depositor"). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of October 1, 1999 (the "Agreement")
among the Depositor, Option One Mortgage Corporation, as master servicer (the
"Master Servicer"), and Norwest Bank Minnesota, National Association, a national
banking association, as Trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class A Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class A Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-1-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: [___________] , 1999
OPTION ONE MORTGAGE LOAN TRUST 1999-3
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By
---------------------------------------
This is one of the Class A Certificates
referenced in the within-mentioned Agreement
By
---------------------------------------
Authorized Signatory of
Norwest Bank Minnesota,
National Association, as Trustee
A-1-3
[Reverse of Class A Certificate]
OPTION ONE MORTGAGE LOAN TRUST 1999-3
Asset-Backed Certificates,
Series 1999-3
This Certificate is one of a duly authorized issue of Certificates
designated as Option One Mortgage Loan Trust 1999-3, Asset-Backed Certificates,
Series 1999-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time, with the consent of the Certificate Insurer, by the Depositor, the Master
Servicer and the Trustee and of Holders of the requisite percentage of the
Percentage Interests of each Class of Certificates affected by such amendment,
as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
A-1-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Initial Mortgage Loans as of the Cut-off
Date plus the Original Pre-Funded Amount, the Master Servicer may purchase, in
whole, from the Trust the Mortgage Loans at a purchase price determined as
provided in the Agreement. In the event that no such optional termination
occurs, the obligations and responsibilities created by the Agreement will
terminate upon notice to the Trustee upon the later of (A) the payment in full
of all amounts owing to the Certificate Insurer unless the Certificate Insurer
shall otherwise consent, (B) the final payment or other liquidation of the last
Mortgage Loan in the Trust and (C) the Distribution Date in [________]. In no
event, however, will the trust created by the Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
living at the date of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-1-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
--------------------
----------------------------------------
Signature by or on behalf of assignor
A-1-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
_______________________________________________________________________________
for the account of ___________________________________________________________,
account number _________________, or, if mailed by check, to __________________
______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________.
This information is provided by _________________________________________,
the assignee named above, or _________________________________________________,
as its agent.
X-0-0
XXXXXX X-0
FORM OF CLASS S CERTIFICATES
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS OCTOBER 28, 1999. BASED ON
THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE LOANS PREPAY AT THE
PREPAYMENT ASSUMPTION (AS DEFINED IN THE PROSPECTUS SUPPLEMENT), USED SOLELY FOR
THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES, THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $_________ OF OID PER $100,000 OF INITIAL NOTIONAL
AMOUNT, THE YIELD TO MATURITY IS _____% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $______ PER $100,000 OF INITIAL
NOTIONAL AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT
THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR
AT ANY OTHER RATE.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT HAVE A CERTIFICATE PRINCIPAL BALANCE AND WILL NOT
ENTITLE THE HOLDERS THEREOF TO DISTRIBUTIONS OF PRINCIPAL.
Certificate No. : [_____________]
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) October l, 1999
First Distribution Date : November 26, 1999
Initial Notional Amount of this
Certificate ("Denomination")
: $--------------
Original Class Certificate
Principal Balance of this Class : $15,000,000.00
Percentage Interest : 100%
Pass-Through Rate : Variable
CUSIP : 68389F AM 6
Class : S
Assumed Maturity Date : December 25, 2029
A-2-1
Option One Mortgage Loan Trust 1999-3
Asset-Backed Certificates,
Series 1999-3
Class S
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first and second lien, fixed and
adjustable rate mortgage loans (the "Mortgage Loans")
OPTION ONE MORTGAGE ACCEPTANCE CORPORATION, as Depositor
The Notional Amount of this Class S Certificate at any time may be less
than the Notional Amount set forth on the face hereof, as described herein. This
Class S Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Depositor, the Master Servicer, or the Trustee referred
to below or any of their respective affiliates.
This certifies that Option One Mortgage Securities Corp. is the registered
owner of the Percentage Interest evidenced by this Class S Certificate (obtained
by dividing the Denomination of this Class S Certificate by the Original
Notional Amount) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Option One Mortgage
Acceptance Corporation (the "Depositor"). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of October 1, 1999 (the "Agreement")
among the Depositor, Option One Mortgage Corporation, as master servicer (the
"Master Servicer"), and Norwest Bank Minnesota, National Association, a national
banking association, as Trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class S Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class S Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Class S
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class S Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-2-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: October __, 1999
OPTION ONE MORTGAGE LOAN TRUST 1999-3
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By
--------------------------------------
This is one of the Class S Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------
Authorized Signatory of
Norwest Bank Minnesota,
National Association, as Trustee
A-2-3
Reverse of Class S Certificate
OPTION ONE MORTGAGE LOAN TRUST 1999-3
Asset-Backed Certificates,
Series 1999-3
This Certificate is one of a duly authorized issue of Certificates
designated as Option One Mortgage Loan Trust 1999-3, Asset-Backed Certificates,
Series 1999-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time, with the consent of the Certificate Insurer, by the Depositor, the Master
Servicer and the Trustee and of Holders of the requisite percentage of the
Percentage Interests of each Class of Certificates affected by such amendment,
as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
A-2-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Initial Mortgage Loans as of the Cut-off
Date plus the Original Pre-Funded Amount, the Master Servicer or the Certificate
Insurer may purchase, in whole, from the Trust the Mortgage Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the later of (A) the
payment in full of all amounts owing to the Certificate Insurer unless the
Certificate Insurer shall otherwise consent, (B) the final payment or other
liquidation of the last Mortgage Loan in the Trust and (C) the Distribution Date
in December 2029. In no event, however, will the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants living at the date of the Agreement of a certain person named
in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-2-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
--------------------------------
-------------------------------------
Signature by or on behalf of assignor
A-2-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
_______________________________________________________________________________
for the account of ___________________________________________________________,
account number _________________, or, if mailed by check, to __________________
______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________.
This information is provided by _________________________________________,
the assignee named above, or _________________________________________________,
as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS P CERTIFICATE
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS OCTOBER 28, 1999. BASED ON
THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE LOANS PREPAY AT THE
PREPAYMENT ASSUMPTION (AS DEFINED IN THE PROSPECTUS SUPPLEMENT), USED SOLELY FOR
THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES, THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $_________ OF OID PER $1,000 OF INITIAL CLASS
CERTIFICATE BALANCE, THE YIELD TO MATURITY IS _____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $______ PER $1,000 OF
INITIAL CLASS CERTIFICATE BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE. SOLELY FOR U.S. FEDERAL INCOME
TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
A-3-1
Certificate No. : [_____________]
Cut-off Date : With respect to any Mortgage Loan, the later
of (i) the date of origination of such
Mortgage Loan or (ii) October 1,1999
First Distribution Date : November 26, 1999
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $100.00
Original Class Certificate
Principal Balance of this Class : [$____________]
Percentage Interest : 100%
Class : P
A-3-2
Option One Mortgage Loan Trust 1999-3
Asset-Backed Certificates,
Series 1999-3
Class P
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting of first and second lien, fixed and variable
rate mortgage loans (the "Mortgage Loans")
OPTION ONE MORTGAGE ACCEPTANCE CORPORATION, as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class P
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class P
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer, or the Trustee referred to
below or any of their respective affiliates.
This certifies that Option One Mortgage Securities Corp. is the registered
owner of the Percentage Interest evidenced by this Class P Certificate (obtained
by dividing the Denomination of this Class P Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Option One Mortgage
Acceptance Corporation (the "Depositor"). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of October 1, 1999 (the "Agreement")
among the Depositor, Option One Mortgage Corporation, as master servicer (the
"Master Servicer"), and Norwest Bank Minnesota, National Association, a national
banking association, as Trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class P Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class P Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
This Certificate does not have a pass-through rate and will be entitled to
distributions only to the extent set forth in the Agreement.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability
A-3-3
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee, or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate of this Class to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
opinion of counsel satisfactory to the Trustee as described above shall be void
and of no effect.
Reference is hereby made to the further provisions of this Class P
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class P Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-3-4
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: [_____________], 1999
OPTION ONE MORTGAGE LOAN TRUST 1999-3
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee
By
--------------------------------------
This is one of the Class P Certificates
referenced in the within-mentioned Agreement
By
----------------------------------------
Authorized Signatory of
Norwest Bank Minnesota, National Association,
a national banking association, as Trustee
A-3-5
[Reverse of Class P Certificate]
Option One Mortgage Loan Trust 1999-3
Asset-Backed Certificates,
Series 1999-3
This Certificate is one of a duly authorized issue of Certificates
designated as Option One Mortgage Loan Trust 1999-3, Asset-Backed Certificates,
Series 1999-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time, with the consent of the Certificate Insurer, by the Depositor, the Master
Servicer and the Trustee and of Holders of the requisite percentage of the
Percentage Interests of each Class of Certificates affected by such amendment,
as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein
A-3-6
set forth, Certificates are exchangeable for new Certificates of the same Class
in authorized denominations and evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Initial Mortgage Loans as of the Cut-off
Date plus the Original Pre-Funded Amount, the Master Servicer may purchase, in
whole, from the Trust the Mortgage Loans at a purchase price determined as
provided in the Agreement. In the event that no such optional termination
occurs, the obligations and responsibilities created by the Agreement will
terminate upon notice to the Trustee upon the later of (A) the payment in full
of all amounts owing to the Certificate Insurer unless the Certificate Insurer
shall otherwise consent, (B) the final payment or other liquidation of the last
Mortgage Loan in the Trust and (C) the Distribution Date in December 2029. In no
event, however, will the trust created by the Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
living at the date of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-3-7
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_______________________________________________________
________________________________________________________________________________
Dated:
-------------------------------
---------------------------------------
Signature by or on behalf of assignor
A-3-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
_______________________________________________________________________________
for the account of ___________________________________________________________,
account number _________________, or, if mailed by check, to __________________
______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________.
This information is provided by _________________________________________,
the assignee named above, or _________________________________________________,
as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS R CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
Certificate No. : [ ]
Percentage Interest : 100%
A-4-1
OPTION ONE MORTGAGE LOAN TRUST 1999-3
Asset-Backed Certificates,
Series 1999-3
Class R
evidencing the Percentage Interest in the distributions allocable
to the Certificates of the above-referenced Class with respect to
the Trust consisting primarily of a pool of first and second lien
fixed and variable rate mortgage loans (the "Mortgage Loans")
OPTION ONE MORTGAGE ACCEPTANCE CORPORATION, as Depositor
This Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Depositor, the Master Servicer or the Trustee referred
to below or any of their respective affiliates.
This certifies that Option One Mortgage Securities Corp. is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in a Trust consisting primarily of the Mortgage Loans
deposited by Option One Mortgage Acceptance Corporation (the "Depositor"). The
Trust was created pursuant to a Pooling and Servicing Agreement dated as of
October 1, 1999 (the "Agreement") among the Depositor, Option One Mortgage
Corporation, as master servicer (the "Master Servicer") and Norwest Bank
Minnesota, National Association, a national banking association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate does not have a principal balance or pass-through rate and
will be entitled to distributions only to the extent set forth in the Agreement.
In addition, any distribution of the proceeds of any remaining assets of the
Trust will be made only upon presentment and surrender of this Certificate at
the Corporate Trust Office or the office or agency maintained by the Trustee in
Minneapolis, Minnesota.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability
A-4-2
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee, or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate of this Class to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
opinion of counsel satisfactory to the Trustee as described above shall be void
and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. Pursuant to the Agreement, The Trustee will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to disqualified organizations, if any person
other than a Permitted Transferee acquires an Ownership Interest on a Class R
Certificate in violation of the restrictions mentioned above.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
officer of the Trustee.
* * *
A-4-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: [October ], 1999
OPTION ONE MORTGAGE LOAN TRUST 1999-3
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Trustee
By
--------------------------------------
This is one of the Class R Certificates
referenced in the within-mentioned Agreement
By
--------------------------------------
Authorized Signatory of
Norwest Bank Minnesota, National Association,
a national banking association, as Trustee
A-4-4
[Reverse of Class R Certificate]
Option One Mortgage Loan Trust 1999-3
Asset-Backed Certificates,
Series 1999-3
This Certificate is one of a duly authorized issue of Certificates
designated as Option One Mortgage Loan Trust 1999-3, Asset-Backed Certificates,
Series 1999-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time, with the consent of the Certificate Insurer, by the Depositor, the Master
Servicer and the Trustee and of Holders of the requisite percentage of the
Percentage Interests of each Class of Certificates affected by such amendment,
as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein
A-4-5
set forth, Certificates are exchangeable for new Certificates of the same Class
in authorized denominations and evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Initial Mortgage Loans as of the Cut-off
Date plus the Original Pre-Funded Amount, the Master Servicer may purchase, in
whole, from the Trust the Mortgage Loans at a purchase price determined as
provided in the Agreement. In the event that no such optional termination
occurs, the obligations and responsibilities created by the Agreement will
terminate upon notice to the Trustee upon the later of (A) the payment in full
of all amounts owing to the Certificate Insurer unless the Certificate Insurer
shall otherwise consent, (B) the final payment or other liquidation of the last
Mortgage Loan in the Trust and (C) the Distribution Date in December 2029. In no
event, however, will the trust created by the Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
living at the date of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-4-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: _____________________________________________________
_______________________________________________________________________________
Dated:__________________
--------------------------------------
Signature by or on behalf of assignor
A-4-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
_______________________________________________________________________________
for the account of ___________________________________________________________,
account number _________________, or, if mailed by check, to __________________
______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________.
This information is provided by _________________________________________,
the assignee named above, or _________________________________________________,
as its agent.
A-4-8
EXHIBIT B
[RESERVED]
A-4-9
EXHIBIT C
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
C-1
OPTION ONE MORTGAGE ACCEPTANCE CORPORATION,
as Purchaser
and
OPTION ONE MORTGAGE CORPORATION,
as Seller
MORTGAGE LOAN PURCHASE AGREEMENT
Dated as of October 26, 1999
Fixed Rate and Adjustable Rate Mortgage Loans
Option One Mortgage Loan Trust 1999-3
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions............................................................................1
ARTICLE II.
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01 Sale of Mortgage Loans.................................................................2
Section 2.02 Obligations of Seller Upon Sale........................................................2
Section 2.03 Payment of Purchase Price for the Mortgage Loans.......................................4
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01 Seller Representations and Warranties Relating to the Mortgage Loans...................5
Section 3.02 Seller Representations and Warranties.................................................12
Section 3.03 Remedies for Breach of Representations and Warranties.................................13
ARTICLE IV.
SELLER'S COVENANTS
Section 4.01 Covenants of the Seller...............................................................15
ARTICLE V.
INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS
Section 5.01 Indemnification.......................................................................15
ARTICLE VI.
TERMINATION
Section 6.01 Termination...........................................................................18
i
ARTICLE VII. MISCELLANEOUS PROVISIONS
Section 7.01 Amendment.............................................................................19
Section 7.02 Governing Law.........................................................................19
Section 7.03 Notices...............................................................................19
Section 7.04 Severability of Provisions............................................................19
Section 7.05 Counterparts..........................................................................19
Section 7.06 Further Agreements....................................................................19
Section 7.07 Intention of the Parties..............................................................20
Section 7.08 Successors and Assigns; Assignment of Purchase Agreement..............................20
Section 7.09 Survival..............................................................................20
Schedule I Mortgage Loans..............................................................................I-1
ii
MORTGAGE LOAN PURCHASE AGREEMENT, dated as of October 26, 1999
(the "Agreement"), between Option One Mortgage Corporation (the "Seller") and
Option One Mortgage Acceptance Corp. (the "Purchaser").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Seller is the owner of (a) the notes or other
evidence of indebtedness (the "Mortgage Notes") so indicated on Schedule I
hereto referred to below, and (b) the other documents or instruments
constituting the Mortgage File (collectively, the "Mortgage Loans"); and
WHEREAS, the Seller, as of the date hereof, owns the mortgages
(the "Mortgages") on the properties (the "Mortgaged Properties") securing such
Mortgage Loans, including rights to (a) any property acquired by foreclosure or
deed in lieu of foreclosure or otherwise and (b) the proceeds of any insurance
policies covering the Mortgage Loans or the Mortgaged Properties or the obligors
on the Mortgage Loans; and
WHEREAS, the Seller owns the Yield Maintenance Agreement
Purchase Price (as defined in the Pooling and Servicing Agreement).
WHEREAS, the parties hereto desire that the Seller sell the
Mortgage Loans and the Yield Maintenance Agreement Purchase Price to the
Purchaser pursuant to the terms of this Agreement; and
WHEREAS, pursuant to the terms of a Pooling and Servicing
Agreement dated as of October 1, 1999 (the "Pooling and Servicing Agreement")
among the Purchaser as depositor, the Seller as master servicer, and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"), the Purchaser
will convey the Mortgage Loans and the Yield Maintenance Agreement Purchase
Price to Option One Mortgage Loan Trust 1999-3 (the "Trust").
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions. All capitalized terms used but not defined
herein and below shall have the meanings assigned thereto in the Pooling and
Servicing Agreement.
"SELLER INFORMATION": The information in the Prospectus
Supplement as follows: under "SUMMARY OF TERMS--Mortgage
Loans," the fifth bullet point under "RISK
FACTORS--Unpredictability of Prepayments and Effect on
Yields," the third and fourth sentences under "RISK
FACTORS--Balloon Loan Risks," the fourth bullet point under
"RISK FACTORS--Interest Generated by the Mortgage Loans May Be
Insufficient to Create or Maintain Overcollateralization," the
third and fourth sentences under "RISK FACTORS--Effect of
Mortgage Loan Rates on the Class A
CERTIFICATES," the second sentence under "RISK FACTORS--High
Loan-to-Value Ratios Increase Risk of Loss," the chart under
"RISK FACTORS--Geographic Concentration," the first and third
sentences under "RISK FACTORS--Nature of the Mortgage Loans,"
"THE MORTGAGE POOL," "OPTION ONE MORTGAGE CORPORATION," the
fifth sentence of the first paragraph, the third and fourth
sentences of the second paragraph and the sixth and ninth
sentences of the fourth paragraph under "YIELD, PREPAYMENT AND
MATURITY CONSIDERATIONS."
ARTICLE II.
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01 Sale of Mortgage Loans.
----------------------
(a) The Seller, concurrently with the execution and delivery
of this Agreement, does hereby sell, assign, set over, and otherwise convey to
the Purchaser, without recourse, (b) all of its right, title and interest in and
to each Mortgage Loan, including the related Cut-Off Date Principal Balance, all
interest accruing thereon on and after the Cut-Off Date and all collections in
respect of interest and principal due on or after the Cut-Off Date; (c) property
which secured such Mortgage Loan and which has been acquired by foreclosure or
deed in lieu of foreclosure; (d) its interest in any insurance policies in
respect of the Mortgage Loans; (e) the Yield Maintenance Agreement Purchase
Price and (f) all proceeds of any of the foregoing.
(b) In connection with the transactions contemplated by
Section 2.08 of the Pooling and Servicing Agreement, the Seller hereby agrees
that the Purchaser shall be under no obligation to purchase any Subsequent
Mortgage Loans unless (i) the conditions precedent and the representations and
warranties contained in Section 2.08 of the Pooling and Servicing Agreement and
the Subsequent Transfer Instrument, substantially in the form of Exhibit 5, are
satisfied and (ii) each Subsequent Mortgage Loan satisfies the representations
and warranties contained in Section 6 of this Agreement. The sale of Subsequent
Mortgage Loans by the Seller to the Depositor shall be effected in accordance
with the terms of Section 2.08 of the Pooling and Servicing Agreement pursuant
to a Subsequent Mortgage Loan Purchase Agreement substantially in the form of
this Agreement.
Section 2.02 OBLIGATIONS OF SELLER UPON SALE. In connection with any
transfer pursuant to Section 2.01 hereof, the Seller further agrees, at its own
expense on or prior to the Closing Date, (a) to indicate in its books and
records that the Mortgage Loans have been sold to the Purchaser pursuant to this
Agreement and (b) to deliver to the Purchaser and the Trustee a computer file
containing a true and complete list of all such Mortgage Loans specifying for
each such Mortgage Loan, as of the Cut-Off Date, (i) its account number and (ii)
the Cut-Off Date Principal Balance. Such file, which forms a part of Exhibit D
to the Pooling and Servicing Agreement, shall also be marked as Schedule I to
this Agreement and is hereby incorporated into and made a part of this
Agreement.
2
In connection with any conveyance by the Seller, the Seller
shall on behalf of the Purchaser deliver to, and deposit with the Trustee, as
assignee of the Purchaser, on or before the Closing Date, the following
documents or instruments with respect to each Mortgage Loan:
(i) the original Mortgage Note, endorsed either (A) in blank, in which
case the Trustee shall cause the endorsement to be completed or (B) in the
following form: "Pay to the order of Norwest Bank Minnesota, National
Association, as Trustee, without recourse", or with respect to any lost Mortgage
Note, an original Lost Note Affidavit stating that the original mortgage note
was lost, misplaced or destroyed, together with a copy of the related mortgage
note; provided, however, that such substitutions of Lost Note Affidavits for
original Mortgage Notes may occur only with respect to Mortgage Loans, the
aggregate Cut-off Date Principal Balance of which is less than or equal to 1.00%
of the Pool Balance as of the Cut-off Date;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed pursuant to a
power of attorney, with evidence of recording thereon or, if such Mortgage or
power of attorney has been submitted for recording but has not been returned
from the applicable public recording office, has been lost or is not otherwise
available, a copy of such Mortgage or power of attorney, as the case may be,
certified to be a true and complete copy of the original submitted for
recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned either (A) in blank or
(B) to "Norwest Bank Minnesota, National Association, as Trustee, without
recourse";
(iv) an original copy of any intervening assignment of Mortgage showing
a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance
policy; and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
The Seller hereby confirms to the Purchaser and the Trustee
that it has made the appropriate entries in its general accounting records, to
indicate that such Mortgage Loans have been transferred to the Trustee and
constitute part of the Trust in accordance with the terms of the Pooling
and Servicing Agreement.
If any original Mortgage Note referred to in Section 2.02(i)
cannot be located, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon delivery to the Trustee, as assignee of the
Purchaser, of a photocopy of the original of such Mortgage Note, with an
original Lost Note Affidavit. If any of the documents referred to in Sections
2.02(ii), (iii) or (iv) above has, as of the Closing Date, been submitted for
recording but either (x) has not been returned from the applicable public
recording office or (y) has been lost or such public recording office has
retained the original of such document, the obligations of the Seller to deliver
such documents shall be deemed to be satisfied upon (1) delivery to the Trustee,
as assignee of the Purchaser, of a copy
3
of each such document certified by the Seller in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Seller, delivery to the Trustee promptly upon receipt
thereof of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Purchaser, the Certificate Insurer and
the Trustee by the Seller if delivery pursuant to clause (2) above will be made
more than 180 days after the Closing Date. If the original lender's title
insurance policy was not delivered pursuant to Section 2.02(vi) above, the
Seller shall deliver or cause to be delivered to the Trustee, promptly after
receipt thereof, the original lender's title insurance policy. The Seller shall
deliver or cause to be delivered to the Trustee, promptly upon receipt thereof,
any other original documents constituting a part of a Mortgage File received
with respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.
The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the Mortgage Loans and other property, now existing and
hereafter created, conveyed to it pursuant to Section 2.01.
The parties hereto intend that the transaction set forth
herein be a sale by the Seller to the Purchaser of all the Seller's right, title
and interest in and to the Mortgage Loans, the Yield Maintenance Agreement
Purchase Price and other property described above. In the event the transaction
set forth herein is deemed not to be a sale, the Seller hereby grants to the
Purchaser a security interest in all of the Seller's right, title and interest
in, to and under the Mortgage Loans, the Yield Maintenance Agreement Purchase
Price and other property described above, whether now existing or hereafter
created, to secure all of the Seller's obligations hereunder; and this Agreement
shall constitute a security agreement under applicable law. The Seller and the
Purchaser shall, to the extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Mortgage Loans and the Yield Maintenance Agreement
Purchase Price, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of the Pooling and Servicing Agreement.
Section 2.03 Payment of Purchase Price for the Mortgage Loans.
------------------------------------------------
(a) In consideration of the sale of the Mortgage Loans and the
Yield Maintenance Agreement Purchase Price from the Seller to the Purchaser on
the Closing Date, the Purchaser agrees to pay to the Seller on the Closing Date
(the "Purchase Price") (i) by transfer of immediately available funds, an amount
equal to $ 144,750,000.00 and (ii) the Class S Certificates, the Class P
Certificates and the Class R Certificates (collectively the "Option One
Certificates") which Option One Certificates shall be registered in the name of
Option One Mortgage Securities Corp. The Seller shall pay, and be billed
directly for, all expenses incurred by the Purchaser in connection with the
issuance of the Certificates, including, without limitation, printing fees
incurred in connection with the prospectus relating to the Certificates, blue
sky registration fees and expenses, fees and expenses of Purchaser's counsel,
fees of the rating agencies requested to rate the Certificates, accountant's
fees and expenses and the fees and expenses of the Trustee and other
out-of-pocket costs, if any.
4
(b) Within thirty Business Days of the Closing Date, the
Seller, at its own expense, shall submit for recording each Assignment of
Mortgage in favor of the Trustee as transferee of the Purchaser pursuant to the
Pooling and Servicing Agreement in the appropriate real property or other
records. With respect to any Assignment of Mortgage as to which the related
recording information is unavailable within the applicable time period set forth
above, such Assignment of Mortgage shall be submitted for recording within
thirty Business Days after receipt of such information but in no event later
than one year from the date such Assignment of Mortgage is otherwise required to
be recorded pursuant to this Section 2.04(b). The Trustee shall be required to
retain a copy of each Assignment of Mortgage submitted for recording. In the
event that any such Assignment of Mortgage is lost or returned unrecorded
because of a defect therein, the Seller shall promptly prepare a substitute
Assignment of Mortgage or cure such defect, as the case may be, and shall be
required to submit each such Assignment of Mortgage for recording. Any failure
of the Seller to comply with this Section shall result in the obligation of the
Seller to repurchase or substitute a Qualified Substitute Mortgage Loan for the
related Mortgage Loan pursuant to the provisions of the Pooling and Servicing
Agreement. Notwithstanding the foregoing, however, the Seller need not cause to
be recorded any Assignment which relates to a Mortgage Loan in any jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel delivered by the
Seller to the Trustee, the Certificate Insurer and the Rating Agencies, the
recordation of such assignment is not necessary to protect the Trustee's
interest in the related Mortgage Loan; provided, however, notwithstanding the
delivery of any Opinion of Counsel, each Assignment of Mortgage shall be
submitted for recording by the Seller in the manner described above, at no
expense to the Trust Fund or Trustee, upon the earliest to occur of: (i)
reasonable direction by the Certificate Insurer or Holders of Certificates
entitled to at least 25% of the Voting Rights, (ii) the occurrence of a Master
Servicer Event of Termination, (iii) the occurrence of a bankruptcy, insolvency
or foreclosure relating to the Seller, (iv) the occurrence of a servicing
transfer as described in Section 7.02 of the Pooling and Servicing Agreement and
(iv) if the Seller is not the Master Servicer and with respect to any one
Assignment of Mortgage, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01 SELLER REPRESENTATIONS AND WARRANTIES RELATING TO THE
MORTGAGE LOANS. The Seller hereby represents and warrants with respect to the
Mortgage Loans to the Purchaser that as of the Closing Date or as of such date
specifically provided herein:
(a) The Seller has good title to and is the sole owner and
holder of the Mortgage Loan.
(b) Immediately prior to the transfer and assignment to the
Purchaser, the Note and the Mortgage Loan were not subject to an assignment or
pledge, and the Seller has full right and authority to sell and assign the
Mortgage Loan.
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(c) The Seller is transferring such Mortgage Loan to the
Purchaser free and clear of any and all liens, pledges, charges or security
interests of any nature encumbering the Mortgage Loans.
(d) The information set forth on Schedule I is true and
correct in all material respects as of the Cut-off Date or such other date as
may be indicated in such schedule.
(e) The Mortgage Loan has been acquired, serviced, collected
and otherwise dealt with by the Seller and any affiliate of the Seller in
compliance with all applicable federal, state and local laws and regulations and
the terms of the related Note and Mortgage.
(f) The related Note and Mortgage are genuine and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
(g) The related Mortgage is a valid and enforceable first or
second lien on the related Mortgaged Property, which Mortgaged Property is free
and clear of all encumbrances and liens (including mechanics liens) having
priority over the first or second lien of the Mortgage except for: (i) liens for
real estate taxes and assessments not yet due and payable; (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions generally
or specifically reflected or considered in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and referred to in the
appraisal made in connection with the origination of the related Mortgage Loan,
(iii) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by such Mortgage and (iv) the first lien on the Mortgaged Property, in the case
of Mortgages that are second liens.
(h) Any security agreement, chattel mortgage or equivalent
document related to such Mortgage Loan establishes and creates a valid and
enforceable first or second lien on the related Mortgaged Property.
(i) As of the Cut-off Date, each Scheduled Payment required to
be made on or prior to September 1, 1999 has been paid and no Mortgage Loan has
been dishonored. No Mortgage Loan has been thirty or more days delinquent more
than one time in the twelve months preceding the Cut-off Date (assuming that a
"rolling" thirty day delinquency is considered to be one time delinquent).
(j) The Seller has not advanced funds, or induced, solicited
or knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan under the Mortgage Loan.
(k) The Seller has not impaired, waived, altered or modified
the related Mortgage or Note in any material respect, or satisfied, canceled,
rescinded or subordinated such Mortgage or
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Note in whole or in part or released all or any material portion of the
Mortgaged Property from the lien of the Mortgage, or executed any instrument of
release, cancellation, rescission or satisfaction of the Note or Mortgage.
(l) As of the Cut-off Date, the Mortgage has not been
satisfied, canceled or subordinated, in whole or in part, or rescinded, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part (except for a release that does not materially impair the security of
the Mortgage Loan or a release the effect of which is reflected in the
Loan-to-Value Ratio for the Mortgage Loan as set forth in the Schedule of
Mortgage Loans), nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission.
(m) No condition exists which could give rise to any right of
rescission, set off, counterclaim, or defense including, without limitation, the
defense of usury, and no such right has been asserted.
(n) To Seller's knowledge, there is no proceeding pending for
the total or partial condemnation and no eminent domain proceedings pending
affecting any Mortgaged Property.
(o) Each Mortgage Loan is covered by either (i) a mortgage
title insurance policy or other generally acceptable form of insurance policy
customary in the jurisdiction where the Mortgaged Property is located or (ii) if
generally acceptable in the jurisdiction where the Mortgaged Property is
located, an attorney's opinion of title given by an attorney licensed to
practice law in the jurisdiction where the Mortgaged Property is located. All of
the Seller's rights under such policies, opinions or other instruments shall be
transferred and assigned to Purchaser upon sale and assignment of the Mortgage
Loans hereunder. The title insurance policy has been issued by a title insurer
licensed to do business in the jurisdiction where the Mortgaged Property is
located, insuring the original lender, its successor and assigns, as to the
first or second priority lien of the Mortgage in the original principal amount
of the Mortgage Loan, subject to the exceptions contained in such policy. Seller
is the sole insured of such mortgagee title insurance policy, and such mortgagee
title insurance policy is in full force and effect and will be in force and
effect upon the consummation of the transactions contemplated by this Agreement.
Neither the Seller nor any affiliate of the Seller has made, and Seller has no
knowledge of, any claims under such mortgagee title insurance policy. Seller is
not aware of any action by a prior holder and neither Seller nor any affiliate
of the Seller has done, by act or omission, anything which could impair the
coverage or enforceability of such mortgagee title insurance policy or the
accuracy of such attorney's opinion of title.
(p) There is no material default, breach, violation or event
of acceleration existing under the related Mortgage or the related Note and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a material default, breach, violation or
event of acceleration, other than a payment delinquency that is for a payment
due after the date specified in (i) above. Neither the Seller nor any affiliate
of the Seller has waived any default, breach, violation or event of
acceleration.
(q) With respect to any Mortgage Loan which provides for an
adjustable interest rate, all rate adjustments have been performed in accordance
with the terms of the related Note or subsequent modifications, if any.
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(r) To Seller's knowledge, there are no delinquent taxes,
ground rents, water charges, sewer rents, assessments, insurance premiums,
leasehold payments, including assessments payable in future installments or
other outstanding charges, affecting the related Mortgaged Property.
(s) No foreclosure proceedings are pending against the
Mortgaged Property and the Mortgage Loan is not subject to any pending
bankruptcy or insolvency proceeding, and to the Seller's best knowledge, no
material litigation or lawsuit relating to the Mortgage Loan is pending.
(t) The Mortgage Loan obligates the mortgagor thereunder to
maintain a hazard insurance policy ("Hazard Insurance") in an amount at least
equal to the lesser of (i) the maximum insurable value of such improvements or
(ii) the principal balance of the Mortgage Loan with a standard mortgagee
clause, in either case in an amount sufficient to avoid the application of any
"co-insurance provisions", and, if it was in place at origination of the
Mortgage Loan, flood insurance, at the mortgagor's cost and expense. If the
Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency ("FEMA") as having special flood hazards, a
flood insurance policy is in effect which met the requirements of FEMA at the
time such policy was issued. The Mortgage obligates the Mortgagor to maintain
the Hazard Insurance and, if applicable, flood insurance policy at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
the Mortgagor's cost and expense, and to seek reimbursement therefor from the
Mortgagor. The Mortgaged Property is covered by Hazard Insurance.
(u) The Note is not and has not been secured by any collateral
except the lien of the corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage.
(v) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the Mortgagee thereunder. The Mortgage contains
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including (i) in the
case of a Mortgage designated as a deed of trust, by trustee's sale or judicial
foreclosure and (ii) otherwise by judicial foreclosure. Since the date of
origination of the Mortgage Loan, the Mortgaged Property has not been subject to
any bankruptcy proceeding or foreclosure proceeding and the Mortgagor has not
filed for protection under applicable bankruptcy laws. There is no homestead or
other exemption available to the Mortgagor that would interfere with the right
to sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage. In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, as been properly designated and
currently so serves and is named in the Mortgage, and no fees or expenses are or
will become payable by Purchaser to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the related Mortgagor. The
Mortgagor has not notified the Seller or any affiliate of the Seller and the
Seller has no knowledge of any relief requested or allowed to the Mortgagor
under the Soldiers and Sailors Civil Relief Act of 1940.
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(w) Except as set forth in the appraisal which forms part of
the related Mortgage File, the Mortgaged Property, normal wear and tear
excepted, is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to affect materially and adversely the
value of the Mortgaged Property as security for the Mortgage Loan or the use for
which the premises were intended.
(x) To Seller's knowledge, there was no fraud involved in the
origination of the Mortgage Loan by the mortgagee or by the Mortgagor, any
appraiser or any other party involved in the origination of the Mortgage Loan.
(y) Each Mortgage File contains an appraisal of the Mortgaged
Property indicating an appraised value equal to the appraised value identified
for such Mortgaged Property on the Schedule of Mortgage Loans. Each appraisal
has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989.
(z) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located.
(aa) No improvements on the related Mortgaged Property (upon
which value was given) encroach on adjoining properties (and in the case of a
condominium unit, such improvements are within the project with respect to that
unit), and no improvements on adjoining properties encroach upon the Mortgaged
Property unless there exists in the Mortgage File a title policy with
endorsements which insure against losses sustained by the insured as a result of
such encroachments.
(bb) Each Mortgage Loan was originated or acquired by a
savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved by the Secretary of HUD, such that the
origination procedures relating to such Mortgage Loan would not prevent the
Class A from being "mortgage related securities" as such term is defined in
Section 3 of the Securities Exchange Act of 1934.
(cc) (i) Principal payments on the Mortgage Loan commenced no
more than sixty days after the proceeds of the Mortgage Loan were disbursed and
(ii) each Note is payable on the first day of each month.
(dd) Other than with respect to not more than approximately
11.26% of the Mortgage Loans (by aggregate principal balance of the Mortgage
Loans as of the Cut-off Date), which are "balloon payment" mortgage loans, each
Mortgage Loan is fully amortizing.
(ee) The Mortgage Loan bears interest at the Mortgage Rate and
the Note does not permit negative amortization. No Mortgage Loan bearing
interest at an adjustable rate permits the Mortgagor to convert the Mortgage
Loan to a fixed rate Mortgage Loan.
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(ff) With respect to escrow deposits, if any, all such
payments are in the possession of, or under the control of, the Master Servicer
and there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. No escrow deposits or
escrow advances or other charges or payments due the Master Servicer have been
capitalized under any Mortgage or the related Note.
(gg) No Mortgage Loan contains provisions pursuant to which
Scheduled Payments are: (i) paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on behalf
of the Mortgagor; (ii) paid by any source other than the Mortgagor or (iii)
contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature.
(hh) As of the origination date of each Mortgage Loan, the
related Mortgaged Property is lawfully permitted to be occupied under applicable
law.
(ii) No law relating to servicing, collection or notification
practices and no law relating to origination practices, has been violated in
connection with any Mortgage Loan transferred to the Purchaser pursuant to this
Agreement, including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws. The Mortgage Loan has been serviced in accordance with the
terms of the Note.
(jj) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property.
(kk) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the Mortgagee to advance additional funds thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to the Note or
Mortgage.
(ll) There are no mechanics' or similar liens or claims that
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
that are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage.
(mm) As to each fixed rate Mortgage Loan, interest is
calculated on the Note on the basis of twelve 30-day months and a 360 day year,
and, as to each adjustable rate Mortgage Loan, interest is calculated on the
Note on the basis of the number of days in the related interest accrual period.
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(nn) The Mortgaged Property consists of detached or
semi-detached one- to four family dwelling units, townhouses, individual
condominium units and individual units in planned
unit developments, and manufactured homes.
(oo) Each Mortgage Loan constitutes a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code.
(pp) The Mortgage Loans were not intentionally selected by the
Seller in a manner intended to adversely affect the Purchaser or the Trust.
(qq) The representations, warranties and covenants, set forth
in this Section shall survive the Closing Date.
(rr) The Mortgage Loans have original terms to maturity
ranging from 10 to 30 years.
(ss) With respect to the Mortgage Loans, no more than
approximately 34.08%; 6.09% and 5.95 % of the Mortgage Loans, by Cut-off Date
Principal Balance will be secured by Mortgaged Properties located in California,
Massachusetts and Illinois; and approximately 81.73% of the Mortgage Loans, by
Cut-off Date Principal Balance will be secured by real property with a single
family residence erected thereon and approximately 2.76% of the Mortgage Loans,
by the Cutoff Date Principal Balance are secured by condominiums.
(tt) As of the Cut-off Date, each Mortgage Loan, had a
Loan-to-Value Ratio that was less than or equal to 96.30%.
(uu) With respect to each Mortgage Loan, the Mortgage Note
related thereto bears a fixed Mortgage Rate or adjustable Mortgage Rate which
will be adjusted on each Adjustment Date to equal the Index plus the Gross
Margin, rounded to the nearest 0.125%, subject to the Periodic Rate Cap, the
Maximum Mortgage Rate and the Minimum Mortgage Rate.
(vv) The average Cut-off Date Principal Balance of the
Mortgage Loans is $248,148.00.
Section 3.02 SELLER REPRESENTATIONS AND WARRANTIES. The Seller
represents, warrants and covenants to the Purchaser as of the Closing Date or as
of such other date specifically provided herein or in the applicable Assignment
and Conveyance:
(i) The Seller is duly organized, validly existing
and in good standing as a corporation under the laws of the State of California
and is and will remain in compliance with the laws of each state in which any
Mortgaged Property is located to the extent necessary to ensure the
enforceability of each Mortgage Loan in accordance with the terms of this
Agreement;
(ii) The Seller has the full power and authority to
hold each Mortgage Loan, to sell each Mortgage Loan, to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated by this
Agreement. The Seller has duly authorized the
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execution, delivery and performance of this Agreement, has duly executed and
delivered this Agreement and this Agreement, assuming due authorization,
execution and delivery by the Purchaser, constitutes a legal, valid and binding
obligation of the Seller, enforceable against it in accordance with its terms
except as the enforceability thereof may be limited by bankruptcy, insolvency or
reorganization;
(iii) The execution and delivery of this Agreement by
the Seller and the performance of and compliance with the terms of this
Agreement will not violate the Seller's articles of incorporation or by-laws or
constitute a default under or result in a breach or acceleration of, any
material contract, agreement or other instrument to which the Seller is a party
or which may be applicable to the Seller or its assets;
(iv) The Seller is not in violation of, and the
execution and delivery of this Agreement by the Seller and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over the
Seller or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Seller or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder;
(v) The Seller is a HUD approved mortgagee pursuant
to Section 203 and Section 211 of the National Housing Act. No event has
occurred, including but not limited to a change in insurance coverage, which
would make the Seller unable to comply with HUD eligibility requirements or
which would require notification to HUD;
(vi) The Seller does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vii) Immediately prior to the payment of the
Purchase Price for each Mortgage Loan, the Seller was the owner of the related
Mortgage and the indebtedness evidenced by the related Mortgage Note and upon
the payment of the Purchase Price by the Purchaser, in the event that the Seller
retains record title, the Seller shall retain such record title to each
Mortgage, each related Mortgage Note and the related Mortgage Files with respect
thereto in trust for the Purchaser as the owner thereof and only for the purpose
of servicing and supervising the servicing of each Mortgage Loan;
(viii) There are no actions or proceedings against,
or investigations known to it of, the Seller before any court, administrative or
other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans or the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit or
materially and adversely affect the performance by the Seller of its obligations
under, or validity or enforceability of, this Agreement;
(ix) No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Seller
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of, or compliance by the Seller with, this Agreement or the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained;
(x) The consummation of the transactions contemplated
by this Agreement are in the ordinary course of business of the Seller, and the
transfer assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions;
(xi) The information delivered by the Seller to the
Purchaser with respect to the Seller's loan loss, foreclosure and delinquency
experience on mortgage loans underwritten to similar standards as the Mortgage
Loans and covering mortgaged properties similar to the Mortgaged Properties, is
true and correct in all material respects as of the date of such report; and
(xii) Except with respect to any statement regarding
the intentions of the Purchaser, or any other statement contained herein the
truth or falsity of which is dependant solely upon the actions of the Purchaser,
this Agreement does not contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements contained herein not
misleading. The written statements, reports and other documents prepared and
furnished or to be prepared and furnished by the Seller pursuant to this
Agreement or in connection with the transactions contemplated hereby taken in
the aggregate do not contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements contained therein not
misleading.
Section 3.03 Remedies for Breach of Representations and Warranties. It
is understood and agreed that the representations and warranties set forth in
Subsections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to the
Purchaser and shall inure to the benefit of the Purchaser, notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment or the
examination or lack of examination of any Mortgage File. With respect to the
representations and warranties contained herein that are made to the knowledge
or the best knowledge of the Seller or as to which the Seller has no knowledge,
if it is discovered that the substance of any such representation and warranty
is inaccurate and the inaccuracy materially and adversely affects the value of
the related Mortgage Loan, or the interest therein of the Purchaser or the
Purchaser's assignee, designee or transferee, then notwithstanding the Seller's
lack of knowledge with respect to the substance of such representation and
warranty being inaccurate at the time the representation and warranty was made,
such inaccuracy shall be deemed a breach of the applicable representation and
warranty and the Seller shall take such action described in the following
paragraphs of this Section 3.03 in respect of such Mortgage Loan. Upon discovery
by either the Seller, the Master Servicer or the Purchaser of a breach of any of
the foregoing representations and warranties that materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser (or
which materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan), the party discovering such breach shall give prompt
written notice to the others.
Within 60 days of the earlier of either discovery by or notice
to the Seller of any breach of a representation or warranty that materially and
adversely affects the value of a Mortgage Loan or the Mortgage Loans, the Seller
or the Master Servicer, as the case may be, shall use its best
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efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Seller shall, at the Purchaser's option, repurchase
such Mortgage Loan at the Purchase Price. In the event that a breach shall
involve any representation or warranty set forth in Subsection 3.01 and such
breach cannot be cured within 60 days of the earlier of either discovery by or
notice to the Seller or Servicer, as applicable, of such breach, all of the
Mortgage Loans shall, at the Purchaser's option, be repurchased by the Seller at
the Purchase Price. The Seller may, at the request of the Purchaser and assuming
the Seller has a Qualified Substitute Mortgage Loan, rather than repurchase the
Mortgage Loan as provided above, remove such Mortgage Loan and substitute in its
place a Qualified Substitute Mortgage Loan or Loans. If the Seller does not
provide a Qualified Substitute Mortgage Loan or Loans, it shall repurchase the
deficient Mortgage Loan. Any repurchase of a Mortgage Loan(s) pursuant to the
foregoing provisions of this Section 3.03 shall occur on a date designated by
the Purchaser and shall be accomplished by deposit in accordance with Section
2.03 of the Pooling and Servicing Agreement. Any repurchase or substitution
required by this Section shall be made in a manner consistent with Section 2.03
of the Pooling and Servicing Agreement.
At the time of substitution or repurchase of any deficient
Mortgage Loan, the Purchaser and the Seller shall arrange for the reassignment
of the deficient or repurchased Mortgage Loan to the Seller and the delivery to
the Seller of any documents held by the Trustee relating to the deficient or
repurchased Mortgage Loan. In the event the Purchase Price is deposited in the
Collection Account, the Seller shall, simultaneously with such deposit, give
written notice to the Purchaser that such deposit has taken place. Upon such
repurchase, the related Mortgage Loan Schedule shall be amended to reflect the
withdrawal of the repurchased Mortgage Loan from this Agreement.
As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Seller shall
effect such substitution by delivering to the Purchaser or its designee for such
Qualified Substitute Mortgage Loan or Loans the Mortgage Note, the Mortgage, the
Assignment and such other documents and agreements as are required by the
Custodial Agreement, with the Mortgage Note endorsed as required therein. The
Seller shall deposit in the Collection Account the Monthly Payment less the
Servicing Fee due on such Qualified Substitute Mortgage Loan or Loans in the
month following the date of such substitution. Monthly Payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution will be
retained by the Seller. For the month of substitution, distributions to the
Purchaser will include the Monthly Payment due on such Deleted Mortgage Loan in
the month of substitution, and the Seller shall thereafter be entitled to retain
all amounts subsequently received by the Seller in respect of such Deleted
Mortgage Loan. Upon such substitution, the Qualified Substitute Mortgage Loans
shall be subject to the terms of this Agreement in all respects, and the Seller
shall be deemed to have made with respect to such Qualified Substitute Mortgage
Loan or Loans as of the date of substitution, the covenants, representations and
warranties set forth in Subsections 3.01 and 3.02.
It is understood and agreed that the representations and
warranties set forth in Section 3.01 shall survive delivery of the respective
Mortgage Files to the Trustee on behalf of the Purchaser.
It is understood and agreed that the obligations of the Seller
set forth in Section 3.03 to cure, repurchase and substitute for a defective
Mortgage Loan and to indemnify the Purchaser as
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provided in Section 5.01 constitute the sole remedies of the Purchaser
respecting a missing or defective document or a breach of the representations
and warranties contained in Section 3.01.
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ARTICLE IV.
SELLER'S COVENANTS
Section 4.01 COVENANTS OF THE SELLER. The Seller hereby covenants that
except for the transfer hereunder, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loan, or any interest therein; the Seller will notify
the Trustee, as assignee of the Purchaser, of the existence of any Lien on any
Mortgage Loan immediately upon discovery thereof, and the Seller will defend the
right, title and interest of the Trust, as assignee of the Purchaser, in, to and
under the Mortgage Loans, against all claims of third parties claiming through
or under the Seller; provided, however, that nothing in this Section 4.01 shall
prevent or be deemed to prohibit the Seller from suffering to exist upon any of
the Mortgage Loans any Liens for municipal or other local taxes and other
governmental charges if such taxes or governmental charges shall not at the time
be due and payable or if the Seller shall currently be contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves with respect thereto.
ARTICLE V.
INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS
Section 5.01 Indemnification.
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(a) The Seller agrees to indemnify and hold harmless the
Purchaser, each of its directors, each of its officers and each person or entity
who controls the Purchaser or any such person, within the meaning of Section 15
of the Securities Act, against any and all losses, claims, damages or
liabilities, joint and several, as incurred, to which the Purchaser, or any such
person or entity may become subject, under the Securities Act or otherwise, and
will reimburse the Purchaser, each such director and officer and each such
controlling person for any legal or other expenses incurred by the Purchaser or
such controlling person in connection with investigating or defending any such
losses, claims, damages or liabilities, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus Supplement or any amendment or supplement to the
Prospectus Supplement approved in writing by the Seller or the omission or the
alleged omission to state therein a material fact necessary in order to make the
statements in the Prospectus Supplement or any amendment or supplement to the
Prospectus Supplement approved in writing by the Seller, in the light of the
circumstances under which they were made, not misleading, but only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission relates to the Seller Information contained in the Prospectus
Supplement, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the information on any computer tape furnished to the
Purchaser or any affiliate thereof by or on behalf of the Seller containing
information regarding the assets of the Trust or (iii) any untrue statement or
alleged untrue statement of any material fact contained in any information
provided by the Seller to the Purchaser or any affiliate thereof, or any
material omission from the information purported to be provided thereby, and
disseminated to the Certificate Insurer, Price Waterhouse Coopers or
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prospective investors (directly or indirectly through available information
systems) in connection with the issuance, marketing or offering of the
Certificates. This indemnity agreement will be in addition to any liability
which the Seller may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless the
Seller, each of its officers, directors and each person or entity who controls
the Seller or any such person, against any and all losses, claims, damages or
liabilities, joint and several, to which the Seller, or any such person or
entity may become subject, under the Securities Act or otherwise, and will
reimburse the Seller for any legal or other expenses incurred by the Seller,
each such officer and director and such controlling person in connection with
investigating or defending any such losses, claims, damages or liabilities
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus Supplement or any
amendment or supplement to the Prospectus Supplement or the omission or the
alleged omission to state therein a material fact necessary in order to make the
statements in the Prospectus Supplement or any amendment or supplement to the
Prospectus Supplement, in the light of the circumstances under which they were
made, not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission is not contained in the
Seller Information in the Prospectus Supplement. This indemnity agreement will
be in addition to any liability which the Purchaser may otherwise have.
(c) Promptly after receipt by any indemnified party under this
Article V of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Article V, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Article V except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify any indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this Article V.
If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Article V for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised in writing by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel
17
reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Purchaser, if the indemnified parties
under this Article V consist of the Purchaser, or by the Seller, if the
indemnified parties under this Article V consist of the Seller.
Each indemnified party, as a condition of the indemnity
agreements contained in Section 5.01 (a) and (b) hereof, shall use its best
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. No indemnifying party shall be liable for any settlement of any
such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to consent to a settlement of any action, the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if such settlement is entered into more
than 30 days after receipt by such indemnifying party of the aforesaid request
and the indemnifying party has not previously provided the indemnified party
with written notice of its objection to such settlement. No indemnifying party
shall effect any settlement of any pending or threatened proceeding in respect
of which an indemnified party is or could have been a party and indemnity is or
could have been sought hereunder, without the written consent of such
indemnified party, unless settlement includes an unconditional release of such
indemnified party from all liability and claims that are the subject matter of
such proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Article is
for any reason held to be unenforceable although applicable in accordance with
its terms, the Seller, on the one hand, and the Purchaser, on the other, shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Seller and
the Purchaser in such proportions as shall be appropriate to reflect the
relative benefits received by the Seller on the one hand and the Purchaser on
the other from the sale of the Mortgage Loans such that the Purchaser is
responsible for the lesser of (i) 0.25% thereof and (ii) 0.25% of the aggregate
proceeds to the Seller from the sale of the Mortgage Loans and the Seller shall
be responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each officer
and director of the Purchaser and each person, if any, who controls the
Purchaser within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as the Purchaser and each director of the Seller, each
officer of the Seller, and each person, if any, who controls the Seller within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Seller.
18
(e) The Seller agrees to indemnify and to hold each of the
Purchaser, the Trustee, the Certificate Insurer, each of the officers and
directors of each such entity and each person or entity who controls each such
entity or person and each Certificateholder harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Purchaser, the Trustee, the
Certificate Insurer, or any such person or entity and any Certificateholder may
sustain in any way (i) related to the failure of the Seller to perform its
duties in compliance with the terms of this Agreement, (ii) arising from a
breach by the Seller of its representations and warranties in Section 3.01 of
this Agreement or (iii) related to the origination or prior servicing of the
Mortgage Loans by reason of any acts, omissions, or alleged acts or omissions of
the Seller, the originator or any servicer. The Seller shall immediately notify
the Purchaser, the Trustee, the Certificate Insurer and each Certificateholder
if a claim is made by a third party with respect to this Agreement. The Seller
shall assume the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Purchaser, the
Trustee, the Certificate Insurer or any such person or entity and/or any
Certificateholder in respect of such claim.
ARTICLE VI.
TERMINATION
Section 6.01 TERMINATION. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate,
except for the Seller's indemnity obligations as provided herein upon the
termination of the Trust as provided in Article X of the Pooling and
Servicing Agreement.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.01 AMENDMENT. This Agreement may be amended from time to time
by the Seller and the Purchaser, by written agreement signed by the Seller and
the Purchaser.
Section 7.02 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 7.03 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, postage prepaid, addressed as
follows:
if to the Seller:
Option One Mortgage Corporation
0 Xxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxxx
19
or such other address as may hereafter be furnished to the Purchaser in writing
by the Seller.
if to the Purchaser:
Option One Mortgage Acceptance Corporation
0 Xxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxxx
or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.
Section 7.04 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions of terms of this Agreement shall be held
invalid for any reason whatsoever, 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 of
enforceability of the other provisions of this Agreement.
Section 7.05 COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original and such
counterparts, together, shall constitute one and the same
agreement.
Section 7.06 FURTHER AGREEMENTS. The Purchaser and the Seller each
agree to execute and deliver to the other such additional documents, instruments
or agreements as may be necessary or reasonable and appropriate to effectuate
the purposes of this Agreement or in connection with the issuance of any Series
of Certificates representing interests in the Mortgage Loans.
Without limiting the generality of the foregoing, as a further
inducement for the Purchaser to purchase the Mortgage Loans from the Seller, the
Seller will cooperate with the Purchaser in connection with the sale of any of
the securities representing interests in the Mortgage Loans. In that connection,
the Seller will provide to the Purchaser any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request and will provide to the
Purchaser such additional representations and warranties, covenants, opinions of
counsel, letters from auditors, and certificates of public officials or officers
of the Seller as are reasonably required in connection with such transactions
and the offering of investment grade securities rated by the Rating Agencies.
Section 7.07 Intention of the Parties. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling, the
Mortgage Loans and the Yield Maintenance Agreement Purchase Price rather than
pledging the Mortgage Loans to secure a loan by the Purchaser to the Seller.
Accordingly, the parties hereto each intend to treat the transaction for Federal
income tax purposes and all other purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans and the Yield Maintenance
Agreement Purchase Price. The Purchaser will have the right to review the
Mortgage Loans and the related Mortgage Files to determine the characteristics
of the Mortgage Loans which will affect the Federal income tax consequences of
owning the
20
Mortgage Loans and the Seller will cooperate with all reasonable requests made
by the Purchaser in the course of such review.
Section 7.08 SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Seller, the Purchaser, the Trustee and the Certificate Insurer. The Certificate
Insurer shall be a third party beneficiary hereof and may enforce the terms
hereof as if a party hereto. The obligations of the Seller under this Agreement
cannot be assigned or delegated to a third party without the consent of the
Purchaser which consent shall be at the Purchaser's sole discretion, except that
the Purchaser acknowledges and agrees that the Seller may assign its obligations
hereunder to any Person into which the Seller is merged or any corporation
resulting from any merger, conversion or consolidation to which the Seller is a
party or any Person succeeding to the business of the Seller. The parties hereto
acknowledge that the Purchaser is acquiring the Mortgage Loans and the Yield
Maintenance Agreement Purchase Price for the purpose of contributing them to a
trust that will issue a Series of Certificates representing undivided interests
in such Mortgage Loans. As an inducement to the Purchaser to purchase the
Mortgage Loans and the Yield Maintenance Agreement Purchase Price, the Seller
acknowledges and consents to the assignment by the Purchaser to the Trustee of
all of the Purchaser's rights against the Seller pursuant to this Agreement
insofar as such rights relate to Mortgage Loans and the Yield Maintenance
Agreement Purchase Price transferred to the Trustee and to the enforcement or
exercise of any right or remedy against the Seller pursuant to this Agreement by
the Trustee. Such enforcement of a right or remedy by the Trustee shall have the
same force and effect as if the right or remedy had been enforced or exercised
by the Purchaser directly.
Section 7.09 SURVIVAL. The representations and warranties set forth in
Sections 3.01 and 3.02 and the provisions of Article V hereof shall survive the
purchase of the Mortgage Loans and the Yield Maintenance Agreement Purchase
Price hereunder.
21
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed to this Mortgage Loan Purchase Agreement by their
respective officers thereunto duly
authorized as of the day and year fist above written.
OPTION ONE MORTGAGE ACCEPTANCE
CORPORATION,
as Purchaser
By:
------------------------------------------
Name:
Title:
OPTION ONE MORTGAGE CORPORATION
as Seller
By:
------------------------------------------
Name:
Title:
22
STATE OF __________________ )
)ss.:
COUNTY OF _________________ )
On the ___ day of October, 1999 before me, a Notary Public in and for
said State, personally appeared known to me to be a Vice President of OPTION ONE
MORTGAGE ACCEPTANCE CORPORATION, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------
Notary Public
STATE OF ____________ )
)ss.:
COUNTY OF ___________ )
On the ____ day of October, 1999 before me, a Notary Public in and for
said State, personally appeared known to me to be a ______________ of OPTION ONE
MORTGAGE CORPORATIOIN, the corporation that executed the within instrument, and
also known to me to be the person who executed it on behalf of said corporation,
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
---------------------
Notary Public
SCHEDULE I
MORTGAGE LOANS
--------------
AVAILABLE UPON REQUEST
EXHIBIT D
MORTGAGE LOAN SCHEDULE
D-1
EXHIBIT E
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, National Association,
0000 00xx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000
Attn: Inventory Control
Re: Pooling and Servicing Agreement dated as of October 1, 1999 among Option
One Mortgage Acceptance Corporation, as Depositor, Option One Mortgage
Corporation, as Master Servicer and Norwest Bank Minnesota, National
Association, as Trustee
In connection with the administration of the Mortgage Loans held by you as
Trustee pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt of the Trustee's
Mortgage File Or the Mortgage Loan described below, for the reason
indicated.
MORTGAGE LOAN NUMBER:
MORTGAGOR NAME, ADDRESS & ZIP CODE:
REASON FOR REQUESTING DOCUMENTS (check one):
_______1. Mortgage Paid in Full
_______2. Foreclosure
_______3. Substitution
_______4. Other Liquidation (Repurchases, etc.)
_______5. Nonliquidation Reason:_____________________
Address to which Trustee should
deliver the Trustee's Mortgage File:
_______________________________________________________________________________
_______________________________________________________________________________
By:
-------------------------------------
(authorized signer)
Issuer:
---------------------------------
E-1
Address:
--------------------------------
--------------------------------
Date:
--------------------------------
TRUSTEE
Norwest Bank Minnesota, National Association
Please acknowledge the execution of the above request by your
signature and date below:
------------------------------ --------------
Signature Date
Documents returned to Trustee:
------------------------------ --------------
Trustee Date
E-2
EXHIBIT F-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION
______________________
Date
Option One Mortgage Acceptance Corporation
0 Xxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of October 1, 1999 among Option One Mortgage Acceptance Corporation, as
Depositor, Option One Mortgage Corporation, as Master Servicer and Norwest Bank
Minnesota, National Association, as Trustee with respect to Option One Mortgage
Loan Trust 1999-3, Asset-Backed Certificates, Series 1999-3
-------------------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement,
subject to review of the contents thereof, the undersigned, as Trustee, hereby
certifies that it (or its custodian) has received the documents listed in
Section 2.01 of the Pooling and Servicing Agreement for each Mortgage File
pertaining to each Mortgage Loan listed on Exhibit D, to the Pooling and
Servicing Agreement, subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined herein
shall have the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Certificate is subject in all respects to the terms of Section
2.02 of the Pooling and Servicing Agreement and the Pooling and Servicing
Agreement sections cross-referenced therein.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
as Trustee
By:
------------------------------------
Name:
Title:
F-1-1
EXHIBIT F-2
FORM OF TRUSTEE'S FINAL CERTIFICATION
_____________________________
[Date]
Option One Mortgage Acceptance Corporation
0 Xxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT"),
dated as of October 1, 1999 among Option One Mortgage Acceptance Corporation, as
Depositor, Option One Mortgage Corporation, as Master Servicer and Norwest Bank
Minnesota, National Association, as Trustee with respect to Option One Mortgage
Loan Trust 1999-3, Asset-Backed Certificates, Series 1999-3
-------------------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Trustee, hereby certifies that as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage loan paid in full or
listed on Schedule I hereto) it (or its custodian) has received the applicable
documents listed in Section 2.01 of the Pooling and Servicing Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement. This
Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:
-------------------------------------
Name:
Title:
F-2-1
EXHIBIT F-3
FORM OF RECEIPT OF MORTGAGE NOTE
Option One Mortgage Acceptance Corporation
0 Xxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Option One Mortgage Loan Trust 1999-3,
Asset-Backed Certificates Series 1999-3
---------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.01 of the Pooling and Servicing Agreement, dated as
of October 1, 1999, among Option One Mortgage Acceptance Corporation as
Depositor, Option One Mortgage Loan Corporation as Master Servicer and Norwest
Bank Minnesota, National Association as Trustee (the "Trustee"), we hereby
acknowledge the receipt of the original Mortgage Notes (a copy of which is
attached hereto as Exhibit 1) with any exceptions thereto listed on Exhibit 2.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Name:
Title:
F-3-1
EXHIBIT G
[Reserved]
G-1
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
---------------------------
Personally appeared before me the undersigned authority to administer
oaths, _________________________ who first being duly sworn deposes and says:
Deponent is _________________________ of _________________________ , successor
by merger to _________________________ ("Seller") and who has personal knowledge
of the facts set out in this affidavit.
On _________________________, _________________________ did execute and
deliver a promissory note in the principal amount of $__________________.
That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.
Seller executes this Affidavit for the purpose of inducing Norwest Bank
Minnesota, National Association, as trustee on behalf of Option One Mortgage
Loan Trust 1999-3, Asset- Backed Certificates Series 1999-3, to accept the
transfer of the above described loan from Seller.
Seller agrees to indemnify Norwest Bank Minnesota, National Association,
Option One Mortgage Acceptance Corporation and Option One Mortgage Corporation
harmless for any losses incurred by such parties resulting from the above
described promissory note has been lost or misplaced.
By:__________________________
__________________________
STATE OF )
) SS:
COUNTY OF )
On this ______ day of ______________, 199_, before me, a Notary Public, in
and for said County and State, appeared , who acknowledged the extension of the
foregoing and who, having been duly sworn, states that any representations
therein contained are true.
Witness my hand and Notarial Seal this _________ day of 199_.
__________________________
__________________________
My commission expires ____________________.
H-1-1
EXHIBIT I
FORM OF ERISA REPRESENTATION
Option One Mortgage Acceptance Corporation
0 Xxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Option One Mortgage Loan Trust 1999-3,
Asset-Backed Certificates, Series 1999-3
----------------------------------------
Ladies and Gentlemen:
1. The undersigned is the of (the "Transferee") a [corporation duly
organized] and existing under the laws of ____________, on behalf of which he
makes this affidavit.
2. The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
other retirement arrangement, including individual retirement accounts and
annuities, Xxxxx plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101,
and (iii) will not be transferred to any entity that is deemed to be investing
in plan assets within the meaning of the DOL regulation at 29 C.F.R. ss. 2510.3-
101.
3. The Transferee hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Option One Mortgage
Acceptance Corporation, as Depositor, Option One Mortgage Corporation, as Master
Servicer (the "Master Servicer") and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee"), no transfer of the ERISA-Restricted
Certificates shall be permitted to be made to any person unless the Depositor
and Trustee have received a certificate from such transferee in the form hereof.
I-1-1
IN WITNESS WHEREOF, the Transferee executed this certificate.
______________________________
[Transferee]
By:___________________________
Name:
Title:
I-1-2
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
[Depositor]
[Depositor Address]
[Trustee]
[Trustee Address]
Re: Option One Mortgage Loan Trust 1999-3,
Asset-Backed Certificates Series 1999-3
---------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has
J-1
executed and delivered to you a certificate to substantially the same effect as
this certificate, and (3) the purchaser or transferee has otherwise complied
with any conditions for transfer set forth in the Pooling and Servicing
Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:______________________________
Authorized Officer
J-2
FORM OF RULE 144A INVESTMENT LETTER
[DATE]
[Depositor]
[Depositor Address]
[Trustee]
[Trustee Address]
Re: Option One Mortgage Loan Trust 1999-3,
Asset-Backed Certificates Series 1999-3
---------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to
J-3
whom notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from registration
under the Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:______________________________
Authorized Officer
J-4
ANNEX 1 TO EXHIBIT J
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $ 1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
__________ CORPORATION, ETC. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or charitable
organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended.
__________ BANK. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially confined
to banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual financial statements, a copy of
which is attached hereto.
__________ SAVINGS AND LOAN. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over any
such institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial statements,
a copy of which is attached hereto.
__________ BROKER-DEALER. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
____________________
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
J-5
__________ INSURANCE COMPANY. The Buyer is an insurance company whose
primary and predominant business activity is the writing of insurance
or the reinsuring of risks underwritten by insurance companies and
which is subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the District of
Columbia.
__________ STATE OR LOCAL PLAN. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
__________ ERISA PLAN. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income Security Act
of 1974.
__________ INVESTMENT ADVISOR. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
__________ SMALL BUSINESS INVESTMENT COMPANY. Buyer is a small
business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
__________ BUSINESS DEVELOPMENT COMPANY. Buyer is a business
development company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940.
iii. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit (v)
loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
iv. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
v. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will
J-6
continue to rely on the statements made herein because one or more sales to the
Buyer may be in reliance on Rule 144A.
vi. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
_________________________________________
Print Name of Buyer
By:______________________________________
Name:
Title:
Date:____________________________________
J-7
ANNEX 2 TO EXHIBIT J
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyers Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
__________ The Buyer owned $_________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
__________ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $___________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
J-8
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
________________________________________
Print Name of Buyer or Adviser
By:_____________________________________
Name:
Tide:
IF AN ADVISER:
________________________________________
Print Name of Buyer
Date:___________________________________
J-9
EXHIBIT K
AFFIDAVIT OF TRANSFER OF R CERTIFICATES
PURSUANT TO SECTION 5.02(d)
OPTION ONE MORTGAGE LOAN TRUST 1999-3,
ASSET-BACKED CERTIFICATES, SERIES 1999-3
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of , the proposed Transferee of an
Ownership Interest in Class R Certificates (the "Certificate") issued pursuant
to the Pooling and Servicing Agreement, (the "Agreement"), relating to the
above-referenced Certificates, among Option One Mortgage Acceptance Corporation,
as Depositor, Option One Mortgage Corporation, as Master Servicer (the "Master
Servicer") and Norwest Bank Minnesota, National Association, as Trustee (the
"Trustee"). Capitalized terms used, but not defined herein or in Exhibit 1
hereto, shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf of
the Transferee.
2. The Transferee is, as of the date hereof and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) to a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership,
K-1
trust or estate, and certain cooperatives and, except as may be provided in
Treasury Regulations, persons holding interests in pass-through entities as a
nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 5.02(d) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit K to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is _____________.
9. The Transferee is a U.S. Person as defined in Code Section
7701-(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor is it acting on
behalf of such a plan.
K-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ___ day of __________, ___.
[NAME OF TRANSFEREE]
By:_____________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
______________________________
[Assistant] Secretary
Personally appeared before me the above-named ____________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ____________________ of the Transferee, and
acknowledged that he executed the same as his free act and deed and the free act
and deed of the Transferee.
Subscribed and sworn before me this __ day of _______, ___.
________________________________________
NOTARY PUBLIC
My Commission expires the ___ day of ____, ___.
K-3
EXHIBIT 1 to EXHIBIT K
Certain Definitions
-------------------
"Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the United
States, any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
unless such organization is subject to the tax imposed by Section 511 of the
Code, (iii) any organization described in Section 1381(a)(2)(C) of the Code,
(iv) an "electing large partnership" within the meaning of Section 775 of the
Code or (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel provided by nationally recognized counsel to the Trustee that the
holding of an ownership interest in a Class R Certificate by such Person may
cause the Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in the Class R Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof, if all of its activities are subject
to tax and, a majority of its board of directors is not selected by a
governmental unit. The term "United States", "state" and "international
organizations" shall have the meanings set forth in Section 7701 of the Code.
"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.
"Permitted Transferee": Any Transferee of a Residual Certificate other
than a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
K-4
EXHIBIT 2 TO EXHIBIT K
Section 5.02(d) of the Agreement
--------------------------------
(d) No transfer, sale, pledge or other disposition of any Class P or
Class R Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, except with respect to
the initial transfer of any Class P or Class R Certificates by the Depositor (i)
unless such transfer is made in reliance upon Rule 144A (as evidenced by the
investment letter delivered to the Trustee, in substantially the form attached
hereto as Exhibit J) under the 1933 Act, the Trustee and the Depositor shall
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 or is being
made pursuant to the 1933 Act, which Opinion of Counsel shall not be an expense
of the Trustee or the Depositor or (ii) the Trustee shall require the transferor
to execute a transferor certificate (in substantially the form attached hereto
as Exhibit L) and the transferee to execute an investment letter (in
substantially the form attached hereto as Exhibit J) acceptable to and in form
and substance reasonably satisfactory to the Depositor and the Trustee
certifying to the Depositor and the Trustee the facts surrounding such transfer,
which investment letter shall not be an expense of the Trustee or the Depositor.
The Holder of a Class P or Class R 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.
Except with respect to the initial transfer of the Class P and Class R
Certificates, no transfer of the Class P or Class R Certificates shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Depositor, (such requirement is satisfied
only by the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit I hereto, as appropriate), to the effect
that such transferee is not an employee benefit plan or arrangement subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code, nor a person
acting on behalf of any such plan or arrangement nor using the assets of any
such plan or arrangement to effect such transfer or (ii) in the case of any such
Class P or Class R Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel satisfactory to the Trustee which Opinion of Counsel shall
not be an expense of either the Trustee or the Trust, addressed to the Trustee,
to the effect that the purchase or holding of such Class P or Class R
Certificate is permissible under applicable law, will not constitute or result
in any non-exempt prohibited transaction under Section 406 or ERISA or Section
4975 of the Code (or comparable provisions of any subsequent enactments), and
will not subject the Trustee, the Depositor or the Servicer to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in this Agreement.
K-5
Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) 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 Class R Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and
shall promptly notify the Trustee of any change or impending
change in its status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a PRO RATA
undivided interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a
condition to registration of the transfer, require delivery
to it, in form and substance satisfactory to it, of each of
the following:
(A) an affidavit in the form of Exhibit K hereto from the
proposed transferee to the effect that such transferee
is a Permitted Transferee and that it is not acquiring
its Ownership Interest in the Class R Certificate that
is the subject of the proposed transfer as a nominee,
trustee or agent for any Person who is not a Permitted
Transferee; and
(B) a covenant of the proposed transferee to the effect
that the proposed transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the
Class R Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the
provisions of this Section 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, become a Holder of a Class R Certificate,
then the prior Holder of such Class R Certificate that is a
Permitted Transferee shall, upon discovery that the
registration of transfer of such Class R Certificate was not
in fact permitted by this Section, be restored to all rights
as Holder thereof retroactive to the date of registration of
transfer of such Class R Certificate. The Trustee shall be
under no liability to any Person for any registration of
transfer of a Class R Certificate that is in fact not
permitted by this Section or for making any distributions
due on such Class R 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 Trustee
received the documents specified in clause (iii). The
Trustee shall be
K-6
entitled to recover from any Holder of a Class R Certificate
that was in fact not a Permitted Transferee at the time such
distributions were made all distributions made on such Class
R Certificate. Any such distributions so recovered by the
Trustee shall be distributed and delivered by the Trustee to
the prior Holder of such Class R Certificate that is a
Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of
the restrictions in this Section, then the Trustee shall
have the right but not the obligation, without notice to the
Holder of such Class R Certificate or any other Person
having an Ownership Interest therein, to notify the
Depositor to arrange for the sale of such Class R
Certificate. The proceeds of such sale, net of commissions
(which may include commissions payable to the Depositor or
its affiliates in connection with such sale), expenses and
taxes due, if any, will be remitted by the Trustee to the
previous Holder of such Class R Certificate that is a
Permitted Transferee, except that in the event that the
Trustee determines that the Holder of such Class R
Certificate may be liable for any amount due under this
Section 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 (v) 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 Class R Certificate as a result of its
exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of
the restrictions in this Section, then the Trustee upon
receipt of reasonable compensation will provide to the
Internal Revenue Service, and to the persons specified in
Sections 860E(e)(3) and (6) of the Code, information needed
to compute the tax imposed under Section 860E(e)(5) of the
Code on transfers of residual interests to disqualified
organizations.
The foregoing provisions of this Section 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 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 either REMIC I or REMIC
II hereunder to fail to qualify as a REMIC.
K-7
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Option One Mortgage Acceptance Corporation
0 Xxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Option One Mortgage Loan Trust 1999-3,
Asset-Backed Certificates Series 1999-3
---------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act, (c)
to the extent we are disposing of a Class [ ] Certificate, we have no knowledge
the Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [ ] Certificate is to impede the assessment or collection
of tax.
Very truly yours,
[_________________]
By:_____________________________________
K-8
EXHIBIT M
Form of Liquidation Report
Customer Name:
Account Number:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
Date last paid
Date of foreclosure
Date of REO
Date of REO Disposition
Property Sale Price/Estimated Market Value at disposition
2. Liquidation Proceeds
Principal Prepayment $_________________
Property Sale Proceeds _________________
Insurance Proceeds _________________
Other (itemize) _________________
Total Proceeds $_________________
3. Liquidation Expenses
Servicing Advances $_________________
Delinquency Advances _________________
Monthly Advances _________________
Servicing Fees _________________
Other Servicing Compensation _________________
Total Advances $_________________
4. Net Liquidation Proceeds $_________________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $_________________
6. Loss, if any (Item 5 minus Item 4) $_________________
M-1
EXHIBIT N
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
Pursuant to this Subsequent Transfer Instrument, dated __________,
1999 (the "Instrument"), between Option One Mortgage Acceptance Corporation as
seller (the "Depositor"), and Norwest Bank Minnesota, National Association as
trustee of the Option One Mortgage Loan Trust 1999-3 Asset-Backed Certificates,
Series 1999-3, as purchaser (the "Trustee"), and pursuant to the Pooling and
Servicing Agreement, dated as of October 1, 1999 (the "Pooling and Servicing
Agreement"), among the Depositor as depositor, Option One Mortgage Corporation
as master servicer and the Trustee as trustee, the Depositor and the Trustee
agree to the sale by the Depositor and the purchase by the Trustee, on behalf of
the Trust, of the Mortgage Loans listed on the attached Schedule of Mortgage
Loans (the "Subsequent Mortgage Loans").
Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the Pooling and Servicing Agreement.
Section 1. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.
(a) The Depositor does hereby sell, transfer, assign, set over and
convey to the Trustee, on behalf of the Trust, without recourse, all of its
right, title and interest in and to the Subsequent Mortgage Loans, and including
all amounts due on the Subsequent Mortgage Loans after the related Subsequent
Cut-off Date, and all items with respect to the Subsequent Mortgage Loans to be
delivered pursuant to Section 2.01 of the Pooling and Servicing Agreement;
provided, however that the Depositor reserves and retains all right, title and
interest in and to amounts due on the Subsequent Mortgage Loans on or prior to
the related Subsequent Cut-off Date. The Depositor, contemporaneously with the
delivery of this Agreement, has delivered or caused to be delivered to the
Trustee each item set forth in Section 2.01 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Depositor of the Subsequent
Mortgage Loans identified on the Mortgage Loan Schedule shall be absolute and is
intended by the Depositor, the Master Servicer, the Trustee and the
Certificateholders to constitute and to be treated as a sale by the Depositor to
the Trust Fund.
(b) The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, in, to and under the Subsequent
Mortgage Loan Purchase Agreement, dated the date hereof, between the Depositor
as purchaser and the Master Servicer as seller, to the extent of the Subsequent
Mortgage Loans, a copy of which agreement is annexed hereto as Attachment G.
(c) Additional terms of the sale are set forth on Attachment A hereto.
Section 2. REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT.
(a) The Depositor hereby confirms that each of the conditions
precedent and the representations and warranties set forth in Section 2.08 of
the Pooling and Servicing Agreement are satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing Agreement
are hereby ratified and confirmed; provided, however, that in the event of any
conflict, the provisions of this Instrument shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. RECORDATION OF INSTRUMENT.
To the extent permitted by applicable law, this Instrument, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of 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 at the Certificateholders' expense on direction of the related
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Mortgage Loans.
Section 4. GOVERNING LAW.
This Instrument shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to principles of conflicts of law.
Section 5. COUNTERPARTS.
This Instrument may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same instrument.
Section 6. SUCCESSORS AND ASSIGNS.
This Instrument shall inure to the benefit of and be binding upon the
Depositor and the Trustee and their respective successors and assigns.
OPTION ONE MORTGAGE ACCEPTANCE
CORPORATION
By:_______________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee for Option One Mortgage
Loan Trust 1999-3, Asset-Backed
Certificates, Series 1999-3
By:_______________________________
Name:
Title:
Attachments
A. Additional terms of sale.
B. Schedule of Subsequent Mortgage Loans.
C. Depositor's Officer's certificate.
D. Opinions of Depositor's counsel (bankruptcy, corporate).
E. Trustee's Certificate.
F. Opinion of Trustee's Counsel.
G. Subsequent Mortgage Loan Purchase Agreement.
M-4
ATTACHMENT A
------------
EXHIBIT O
---------
FORM OF ADDITION NOTICE
[Date]
[Trustee]
___________________
___________________
Re: Pooling and Servicing Agreement, dated as of October 1, 1999,
among Option One Mortgage Acceptance Corporation, Option One
Mortgage Corporation and Norwest Bank Minnesota, National
Association, relating to Option One Mortgage Loan Trust 1999-3,
Asset-Backed Certificates, Series 1999-3
----------------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.08 of the referenced Pooling and Servicing
Agreement, Option One Mortgage Acceptance Corporation has designated Subsequent
Mortgage Loans to be sold to the Trust on [DATE], with an aggregate principal
balance of $___________________. Capitalized terms not otherwise defined herein
have the meaning set forth in the Pooling and Servicing Agreement.
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
OPTION ONE MORTGAGE
ACCEPTANCE
CORPORATION
By:_______________________________
Name:
Title:
Acknowledged and Agreed:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By:______________________________________
Name:
Title:
M-1
EXHIBIT P
SCHEDULE OF PROJECTED PRINCIPAL BALANCES
BALANCE PROJECTED BALANCE PROJECTED BALANCE PROJECTED
DETERMINATION DATE PRINCIPAL BALANCES DETERMINATION DATE PRINCIPAL BALANCES DETERMINATION DATE PRINCIPAL BALANCES
--------------------- ------------------- --------------------- ------------------ ------------------------- ------------------
November 22, 1999 ... $ 0.00 April 22, 2002 ..... $27,509,957.93 September 22, 2004 ...... $18,216,632.21
December 22, 1999 ... 0.00 May 22, 2002 ....... 27,124,335.91 October 22, 2004 ........ 17,969,604.50
January 22, 2000 .... 0.00 June 22, 2002 ...... 26,743,649.12 November 22, 2004 ....... 17,725,751.72
February 22, 2000 ... 0.00 July 22, 2002 ...... 26,367,835.46 December 22, 2004 ....... 17,485,033.81
March 22, 2000 ...... 0.00 August 22, 2002 .... 25,996,833.64 January 22, 2005 ........ 17,247,411.20
April 22, 2000 ...... 0.00 September 22, 2002 . 25,630,586.11 February 22, 2005 ....... 17,012,844.83
May 22, 2000 ........ 0.00 October 22, 2002 ... 25,269,031.11 March 22, 2005 .......... 16,781,296.10
June 22, 2000 ....... 0.00 November 22, 2002 .. 24,912,108.63 April 22, 2005 .......... 16,552,726.94
July 22, 2000 ....... 0.00 December 22, 2002 .. 24,559,774.10 May 22, 2005 ............ 16,327,099.71
August 22, 2000 ..... 0.00 January 22, 2003 ... 24,211,960.90 June 22, 2005 ........... 16,104,377.28
September 22, 2000 .. 0.00 February 22, 2003 .. 23,868,607.65 July 22, 2005 ........... 15,884,522.96
October 22, 2000 .... 0.00 March 22, 2003 ..... 23,529,658.23 August 22, 2005 ......... 15,667,500.54
November 22, 2000 ... 34,886,994.20 April 22, 2003 ..... 23,195,057.22 September 22, 2005 ...... 15,453,274.24
December 22, 2000 ... 34,406,977.68 May 22, 2003 ....... 22,864,749.89 October 22, 2005 ........ 15,241,808.76
January 22, 2001 .... 33,933,079.82 June 22, 2003 ...... 22,538,682.23 November 22, 2005 and any
February 22, 2001 ... 33,465,223.68 July 22, 2003 ...... 22,216,800.88 Balance Determination Date
March 22, 2001 ...... 33,003,333.29 August 22, 2003 .... 21,899,053.14 thereafter .............. 0.00
April 22, 2001 ...... 32,547,333.65 September 22, 2003 . 21,585,386.99
May 22, 2001 ........ 32,097,150.68 October 22, 2003 ... 21,275,751.07
June 22, 2001 ....... 31,652,711.22 November 22, 2003 .. 20,970,094.64
July 22, 2001 ....... 31,213,943.06 December 22, 2003 .. 20,668,367.61
August 22, 2001 ..... 30,780,774.87 January 22, 2004 ... 20,370,520.52
September 22, 2001 .. 30,353,136.22 February 22, 2004 .. 20,076,504.53
October 22, 2001 .... 29,930,957.56 March 22, 2004 ..... 19,786,271.42
November 22, 2001 ... 29,514,324.80 April 22, 2004 ..... 19,499,950.13
December 22, 2001 ... 29,103,067.56 May 22, 2004 ....... 19,223,864.16
January 22, 2002 .... 28,697,067.96 June 22, 2004 ...... 18,960,933.49
February 22, 2002 ... 28,296,259.88 July 22, 2004 ...... 18,708,701.10
March 22, 2002 ...... 27,900,578.03 August 22, 2004 .... 18,461,839.87
SCHEDULE I
PREPAYMENT PREMIUM SCHEDULE
