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EXHIBIT 4.3
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SALE AND SERVICING AGREEMENT
Among
ADVANTA REVOLVING HOME EQUITY LOAN TRUST
1998-A
as Issuer,
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of June 1, 1998
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TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
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Parties..................................................................................................1
Recitals.................................................................................................1
Article I DEFINITIONS; RULES OF CONSTRUCTION.............................................................1
Section 1.1. Definitions.....................................................................1
"Accepted Servicing Practices".....................................................................1
"Account"..........................................................................................2
"Addition Notice"..................................................................................2
"Additional Balance"...............................................................................2
"AMHC".............................................................................................2
"Appraised Value"..................................................................................2
"Assignment of Mortgage"...........................................................................2
"Authorized Officer"...............................................................................2
"Business Day".....................................................................................2
"Capitalized Interest Account".....................................................................2
"Certificate"......................................................................................2
"Civil Relief Act".................................................................................3
"Class A Note".....................................................................................3
"Class A Principal Balance"........................................................................3
"Closing Date".....................................................................................3
"Code".............................................................................................3
"Combined Loan-to-Value Ratio".....................................................................3
"Credit Limit".....................................................................................3
"Credit Limit Utilization Rate"....................................................................3
"Credit Line Agreement"............................................................................3
"Cut-Off Date".....................................................................................3
"Cut-Off Date Pool Balance"........................................................................4
"Cut-Off Date Principal Balance"...................................................................4
"Date-of-Payment Loans"............................................................................4
"Debt Service Reduction"...........................................................................4
"Defective Mortgage Loan"..........................................................................4
"Deficient Valuation"..............................................................................4
"Delinquent".......................................................................................4
"Depository".......................................................................................4
"Designated Depository Institution"................................................................4
"Determination Date"...............................................................................5
"Direct Participant" or "DTC Participant"..........................................................5
"Document Delivery Requirements"...................................................................5
"Draw".............................................................................................5
"Draw Period"......................................................................................5
"Event of Servicing Termination"...................................................................5
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"FDIC".............................................................................................5
"FHLMC"............................................................................................5
"First Mortgage Loan"..............................................................................5
"Foreclosure Profit"...............................................................................5
"FNMA".............................................................................................6
"Highest Lawful Rate"..............................................................................6
"Holder" or "Noteholder"...........................................................................6
"Indemnification Agreement"........................................................................6
"Indenture":.......................................................................................6
"Indenture Trustee"................................................................................6
"Indenture Trustee's Fee"..........................................................................6
"Indirect Participant":............................................................................6
"Initial Cut-Off Date".............................................................................6
"Initial Mortgage Loans"...........................................................................6
"Initial Premium"..................................................................................6
"Insurance Agreement"..............................................................................6
"Insurance Policy".................................................................................6
"Insurance Proceeds"...............................................................................7
"Insurer"..........................................................................................7
"Interest Collections".............................................................................7
"Interest Remittance Amount".......................................................................7
"Issuer" or "Trust"...............................................................................7
"Late Payment Rate"................................................................................7
"Lifetime Rate Cap"................................................................................7
"Liquidated Mortgage Loan".........................................................................7
"Liquidation Expenses".............................................................................7
"Liquidation Proceeds".............................................................................8
"Liquidation Report"...............................................................................8
"Loan Purchase Price"..............................................................................8
"Loan Rate"........................................................................................8
"Loan Rate Cap"....................................................................................8
"Margin"...........................................................................................8
"Master Servicer"..................................................................................8
"Master Servicer Affiliate"........................................................................8
"Master Servicer's Trust Receipt"..................................................................8
"Minimum Monthly Payment"..........................................................................8
"Minimum Originator's Interest"....................................................................9
"Xxxxx'x"..........................................................................................9
"Mortgage".........................................................................................9
"Mortgage Files"...................................................................................9
"Mortgage Loan Schedule"...........................................................................9
"Mortgage Loans"...................................................................................9
"Mortgaged Property"...............................................................................9
"Mortgagor"........................................................................................9
"Net Liquidation Proceeds".........................................................................9
"Nonrecoverable Advance"...........................................................................9
"Note Account"....................................................................................10
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"Officer's Certificate"...........................................................................10
"Operative Documents".............................................................................10
"Original Class A Principal Balance"..............................................................10
"Original Principal Amount".......................................................................10
"Original Principal Balance"......................................................................10
"Originator"......................................................................................10
"Originator's Interest"...........................................................................10
"Outstanding".....................................................................................10
"Owner Trustee"...................................................................................11
"Payment Date"....................................................................................11
"Percentage Interest".............................................................................11
"Person"..........................................................................................11
"Policy"..........................................................................................11
"Pool Balance"....................................................................................11
"Pool Certification"..............................................................................11
"Pool Factor".....................................................................................11
"Pre-Funded Mortgage Loans".......................................................................11
"Pre-Funding Period"..............................................................................11
"Pre-Funding Transfer Date".......................................................................11
"Prepaid Installment".............................................................................11
"Preference Amount"...............................................................................12
"Prepayment"......................................................................................12
"Preservation Expenses"...........................................................................12
"Prime"...........................................................................................12
"Principal and Interest Account"..................................................................12
"Principal Balance"...............................................................................12
"Principal Collections"...........................................................................12
"Principal Remittance Amount".....................................................................12
"Prospectus"......................................................................................13
"Prospectus Supplement"...........................................................................13
"Qualified Replacement Mortgage"..................................................................13
"Realized Loss"...................................................................................13
"Record Date".....................................................................................13
"Register"........................................................................................14
"Registrar".......................................................................................14
"Registration Statement"..........................................................................14
"Reimbursement Amount"............................................................................14
"REO Property"....................................................................................14
"Remittance Date".................................................................................14
"Remittance Period"...............................................................................14
"Replacement Cut-Off Date"........................................................................14
"Representation Letter"...........................................................................14
"Standard & Poor's"...............................................................................14
"Schedule of Mortgage Loans"......................................................................15
"Second Mortgage Loan"............................................................................15
"Securities Act"..................................................................................15
"Senior Lien".....................................................................................15
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"Servicing Advance"...............................................................................15
"Servicing Fee"...................................................................................15
"Servicing Fee Rate"..............................................................................15
"Sponsor".........................................................................................15
"Subsequent Cut-Off Date".........................................................................15
"Subsequent Mortgage Loans".......................................................................15
"Subsequent Transfer Agreement"...................................................................15
"Subsequent Transfer Date"........................................................................15
"Substitution Amount".............................................................................15
"Sub-Servicer"....................................................................................16
"Sub-Servicing Agreement".........................................................................16
"Telerate Screen Page 3750".......................................................................16
"Termination Fees"................................................................................16
"Transfer Date"...................................................................................16
"Transfer Notice Date"............................................................................16
"Trust Agreement".................................................................................16
"Trust Collateral Value"..........................................................................16
"Trust Estate"....................................................................................16
"Underwriter".....................................................................................17
Section 1.2. Use of Words and Phrases.......................................................17
Section 1.3. Captions; Table of Contents....................................................17
Section 1.4. Opinions.......................................................................17
Article II CONVEYANCE OF MORTGAGE LOANS.................................................................17
Section 2.1. Conveyance of the Initial Mortgage Loans.......................................17
Section 2.2. Acceptance by Indenture Trustee; Certain Substitutions of
Mortgage Loans; Certification by Indenture Trustee...........................20
Section 2.3. Cooperation Procedures.........................................................24
Section 2.4. Conveyance of the Subsequent Mortgage Loans....................................24
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor...........................26
Article III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER............27
Section 3.1. Representations and Warranties of the Sponsor..................................27
Section 3.2. Representations and Warranties of the Master Servicer..........................29
Section 3.3. Representations and Warranties of the Sponsor with Respect to
the Mortgage Loans; Retransfer of Certain Mortgage Loans.....................31
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect to the
Mortgage Loans In Certain Situations.........................................38
Article IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS...............................................39
Section 4.1. Master Servicer and Sub-Servicers..............................................39
Section 4.2. Collection of Certain Mortgage Loan Payments...................................42
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Section 4.3. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers................................................................43
Section 4.4. Successor Sub-Servicers........................................................43
Section 4.5. Liability of Master Servicer...................................................43
Section 4.6. No Contractual Relationship Between Sub-Servicer and Indenture
Trustee or the Class A Noteholders...........................................43
Section 4.7. Assumption or Termination of Sub-Servicing Agreement by
Indenture Trustee............................................................44
Section 4.8. Principal and Interest Account.................................................44
Section 4.9. Servicing Advances.............................................................46
Section 4.10. Purchase of Mortgage Loans.....................................................46
Section 4.11. Maintenance of Insurance.......................................................46
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements....................47
Section 4.13. Realization Upon Defaulted Mortgage Loans......................................48
Section 4.14. Indenture Trustee to Cooperate; Release of Mortgage Files......................49
Section 4.15. Servicing Compensation.........................................................51
Section 4.16. Annual Statement as to Compliance..............................................52
Section 4.17. Annual Independent Certified Public Accountants' Reports.......................52
Section 4.18. Access to Certain Documentation and Information Regarding the
Mortgage Loans...............................................................52
Section 4.19. Assignment of Agreement........................................................52
Article V SERVICING TERMINATION.........................................................................53
Section 5.1. Events of Servicing Termination................................................53
Section 5.2. Inspections by Insurer; Errors and Omissions Insurance.........................57
Section 5.3. Merger, Conversion, Consolidation or Succession to Business of
Master Servicer..............................................................57
Section 5.4. Notification to Noteholders....................................................57
Article VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER.................................................57
Section 6.1. Administrative Duties with Respect to the Indenture............................57
Section 6.2. Records........................................................................59
Section 6.3. Additional Information to be Furnished to the Issuer...........................59
Article VII MISCELLANEOUS...............................................................................59
Section 7.1. Compliance Certificates and Opinions...........................................59
Section 7.2. Form of Documents Delivered to the Indenture Trustee...........................60
Section 7.3. Acts of Class A Noteholders....................................................61
Section 7.4. Notices, etc. to Indenture Trustee.............................................61
Section 7.5. Notices and Reports to Class A Noteholders; Waiver of Notices..................61
Section 7.6. Rules by Indenture Trustee.....................................................62
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Section 7.7. Successors and Assigns.........................................................62
Section 7.8. Severability...................................................................62
Section 7.9. Benefits of Agreement..........................................................62
Section 7.10. Legal Holidays.................................................................62
Section 7.11. Governing Law..................................................................63
Section 7.12. Counterparts...................................................................63
Section 7.13. Usury..........................................................................63
Section 7.14. Amendment......................................................................63
Section 7.15. The Insurer....................................................................64
Section 7.16. Notices........................................................................64
Section 7.17. Limitation of Liability........................................................66
SCHEDULE I -- Schedule of Mortgage Loans
EXHIBIT A -- Form of Contents of Mortgage Loan File
EXHIBIT B -- Form of Credit Line Agreement
EXHIBIT C -- Form of Certificate Regarding Prepaid Loans
EXHIBIT D -- Form of Trustee's Acknowledgement of Receipt
EXHIBIT E -- Form of Certification
EXHIBIT F -- Form of Master Servicer's Trust Receipt
EXHIBIT G -- Subsequent Transfer Agreement
EXHIBIT H -- Form of Addition Notice
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SALE AND SERVICING AGREEMENT, dated as of June 1, 1998, by and
among ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1998-A (the "Trust" or the
"Issuer"), ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation, in
its capacity as Sponsor of the Trust (the "Sponsor"), ADVANTA MORTGAGE CORP.
USA, a Delaware corporation, in its capacity as master servicer (the "Master
Servicer"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking
association, in its capacity as Indenture Trustee (the "Indenture Trustee").
WHEREAS, the Issuer desires to purchase a portfolio of
Mortgage Loans arising in connection with Credit Line Agreements originated by
Advanta National Bank (the "Originator");
WHEREAS the Sponsor has purchased such Mortgage Loans from the
Originator and is willing to sell such Mortgage Loans to the Issuer;
WHEREAS, the Issuer desires to purchase Subsequent Mortgage
Loans arising in connection with Credit Line Agreements to be originated by the
Originator.
WHEREAS, the Sponsor has an agreement to purchase such
Subsequent Mortgage Loans from the Originator and is willing to sell such
Subsequent Mortgage Loans to the Issuer; and
WHEREAS, the Master Servicer has agreed to service the
Mortgage Loans, which constitute the principal assets of the Trust Estate;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Sponsor, the Master Servicer, the Issuer
and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions. For all purposes of this Agreement,
the following terms shall have the meanings set forth below, unless the context
clearly indicates otherwise. In addition, capitalized terms used herein and not
defined herein shall have their respective meanings as set forth in the
Indenture.
"Accepted Servicing Practices": The Master Servicer's normal
servicing practices in servicing and administering mortgage loans for its own
account, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located and will give due
consideration to the Insurer's and the Noteholders' reliance on the Master
Servicer.
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"Account": Any account established in accordance with Section
4.8 hereof and Section 8.3 of the Indenture.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust pursuant to Section 2.4(b) of this Agreement, a
notice in the form of Exhibit H hereto, which shall be given not later than five
Business Days prior to the related Subsequent Transfer Date, of the Sponsor's
designation of Subsequent Mortgage Loans to be sold to the Trust and the
aggregate Principal Balance of such Subsequent Mortgage Loans.
"Additional Balance": As to any Mortgage Loan and day, the
aggregate amount of all Draws conveyed to the Trust pursuant to Section 2.1.
"Agreement": This Sale and Servicing Agreement, as it may be
amended from time to time, and including the Exhibits hereto.
"AMHC": Advanta Mortgage Holding Company, a Delaware
corporation and the corporate parent of Advanta Mortgage Corp. USA, and the
indirect corporate parent of Advanta Mortgage Conduit Services, Inc.
"Appraised Value": As to any Mortgaged Property, the value
established by a drive-by inspection or a full appraisal of such Mortgaged
Property in order to establish compliance with the underwriting criteria then in
effect in connection with the application for the Mortgage Loan secured by such
Mortgaged Property.
"Assignment of Mortgage": With respect to each Mortgage Loan,
an assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loans to the Indenture Trustee for the benefit of the Class A
Noteholders.
"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Agreement,
and whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York or
the State of California or in the city in which the principal corporate trust
office of the Indenture Trustee is located, are authorized or obligated by law
or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest
Account established in accordance with Section 8.3 of the Indenture and
maintained by the Indenture Trustee.
"Certificate": As defined in the Trust Agreement.
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"Civil Relief Act": The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
"Class A Note": Any Note designated as a "Class A Note" on the
face thereof, in the form of Exhibit A to the Indenture. The Class A Notes shall
be issued with an initial aggregate Class A Principal Balance equal to the
Original Class A Principal Balance therefor.
"Class A Principal Balance": As of any time of determination,
the Original Class A Principal Balance of the Class A Notes less any amounts
actually distributed theretofore as principal thereon to the Class A Notes of
the Class A Notes on all prior Payment Dates.
"Closing Date": June 24, 1998.
"Code": The Internal Revenue Code of 1986, as amended, and
any successor statute.
"Combined Loan-to-Value Ratio": With respect to any Mortgage
Loan as of any date, the percentage equivalent of a fraction, the numerator of
which is the sum of (i) the Credit Limit and (ii) the outstanding principal
balance as of the date of execution of the related Credit Line Agreement (or as
of any subsequent date, if any, as of which such outstanding principal balance
may be determined in connection with an increase in the Credit Limit for such
Mortgage Loan) of any mortgage loan or mortgage loans that are senior in
priority to the Mortgage Loan and which is secured by the same Mortgaged
Property and the denominator of which is the lesser of (i) the Appraised Value
of the related Mortgaged Property as set forth in the Mortgage File on such date
of execution or on such subsequent date, if any, or (ii) in the case of a
Mortgaged Property purchased within one year of such date of execution, the
purchase price thereof.
"Credit Limit": As to any Mortgage Loan, the maximum principal
balance permitted under the terms of the related Credit Line Agreement.
"Credit Limit Utilization Rate": As to any Mortgage Loan, the
percentage equivalent of a fraction, the numerator of which is the Principal
Balance for such Mortgage Loan and the denominator of which is the related
Credit Limit.
"Credit Line Agreement": With respect to any Mortgage Loan,
the related home equity line of credit agreement, security instrument and
promissory note executed by the related Mortgagor and any amendment or
modification thereof.
"Cut-Off Date": With respect to each Initial Mortgage Loan,
the Initial Cut-Off Date. With respect to any Subsequent Mortgage Loan, the
Subsequent Cut-Off Date related to such Subsequent Mortgage Loan. With respect
to each Qualified Replacement Mortgage, the Replacement Cut-off Date related to
such Qualified Replacement Mortgage.
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"Cut-Off Date Pool Balance": The aggregate Principal Balances
of all the Mortgage Loans as of the related Cut-Off Date; as of the Initial
Cut-Off Date, $75,130,216.06.
"Cut-Off Date Principal Balance": With respect to any Mortgage
Loan, the unpaid principal balance thereof as of the related Cut-Off Date.
"Date-of-Payment Loans": Any Mortgage Loan as to which,
pursuant to the Credit Line Agreement relating thereto, interest is computed and
charged to the Mortgagor at the rate on the outstanding principal balance of
such Credit Line Agreement based on the number of days elapsed between receipt
of the Mortgagor's last payment through receipt of the Mortgagor's most current
payment.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Minimum Monthly Payment
due on such Mortgage Loan.
"Defective Mortgage Loan": A Mortgage Loan determined not to
satisfy the criteria set forth in this Agreement.
"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 United
States Bankruptcy Code.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month), then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Depository": The Depository Trust Company, 0 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the
Principal and Interest Account, an institution whose deposits are insured by the
Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
long-term deposits of which shall be rated (x) A or better by Standard & Poor's
and (y) A2 or better by Moody's and in one of the two highest short-term rating
categories, unless otherwise approved in writing by the Insurer and each of
Moody's and Standard & Poor's, and which is any of the following: (i) a federal
savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, (iv) a principal subsidiary of
a bank holding company, or
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(v) approved in writing by the Insurer, Moody's and Standard & Poor's and, in
each case acting or designated by the Master Servicer as the depository
institution for the Principal and Interest Account; provided, however, that any
such institution or association shall have combined capital, surplus and
undivided profits of at least $100,000,000. Notwithstanding the foregoing, the
Principal and Interest Account may be held by an institution otherwise meeting
the preceding requirements except that the only applicable rating requirement
shall be that the unsecured and uncollateralized debt obligations thereof shall
be rated Baa3 or better by Moody's if such institution has trust powers and the
Principal and Interest Account is held by such institution in its trust capacity
and not in its commercial capacity.
"Determination Date": As to each Payment Date, the third
Business Day next preceding such Payment Date or such earlier day as shall be
agreed to by the Insurer and Indenture Trustee.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds the Class A
Notes from time to time as a securities depository.
"Document Delivery Requirements": The Sponsor's obligations to
deliver certain legal documents, to prepare and record certain Mortgage
assignments or to deliver certain opinions relating to Mortgage assignments, in
each case with respect to the Mortgage Loans upon certain conditions as set
forth in Section 2.1 hereof.
"Draw": With respect to any Mortgage Loan, an additional
borrowing by the Mortgagor subsequent to the related Cut-Off Date in accordance
with the related Credit Line Agreement.
"Draw Period": With respect to any Mortgage Loan, the period
of time whereby a Mortgagor may make a Draw under the related Credit Line
Agreement; such period not exceed ten years, unless extended at the option of
the Originator and/or the Master Servicer.
"Event of Servicing Termination": As defined in Section 5.1
hereof.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Mortgaged Property.
"Foreclosure Profit": With respect to a Liquidated Mortgage
Loan, the amount, if any, by which (i) the aggregate of its Net Liquidation
Proceeds exceeds (ii) the related Principal Balance (plus accrued and unpaid
interest thereon at the applicable Loan
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Rate from the date interest was last paid through the date of receipt of the
final Liquidation Proceeds) of such Liquidated Mortgage Loan immediately prior
to the final recovery of its Liquidation Proceeds.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"Highest Lawful Rate": As defined in Section 7.13.
"Holder" or "Noteholder": means the Person in whose name a
Note is registered on the Note Register.
"Indemnification Agreement": The Indemnification Agreement
dated as of June 24, 1998 among the Sponsor, the Insurer and the Underwriter.
"Indenture": The Indenture dated as of June 1, 1998 between
the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time.
"Indenture Trustee": Bankers Trust Company of California,
N.A., located on the date of execution of this Agreement at 0 Xxxx Xxxxx, 00xx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, not in its individual capacity but solely as
Indenture Trustee under this Agreement, and any successor hereunder.
"Indenture Trustee's Fee": With respect to any Payment Date,
the product of (x) one-twelfth of .015% and (y) the Pool Balance as of the end
of the immediately preceding Remittance Period.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in the Class A Notes.
"Initial Cut-Off Date": With respect to the Initial Mortgage
Loans, the close of business on June 5, 1998.
"Initial Mortgage Loans": Mortgage Loans delivered by the
Sponsor to the Trust on the Closing Date.
"Initial Premium": The initial premium payable by the Sponsor
on behalf of the Trust to the Insurer in consideration of the delivery to the
Indenture Trustee of the Policy.
"Insurance Agreement": The Insurance Agreement dated as of
June 24, 1998 among the Sponsor, the Master Servicer, the Indenture Trustee and
the Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan.
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"Insurance Proceeds": Proceeds paid by any insurer (other
than the Insurer) pursuant to any Insurance Policy covering a Mortgage Loan, or
amounts required to be paid by the Master Servicer pursuant to the last sentence
of the first paragraph of Section 4.11(b), or the penultimate sentence of
Section 4.11(c), net of any component thereof (i) covering any expenses incurred
by or on behalf of the Master Servicer in connection with obtaining such
proceeds, (ii) that is applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures, or (iv) required to be paid to
any holder of a mortgage senior to such Mortgage Loan.
"Insurer": Ambac Assurance Corporation or any successor
thereto, as issuer of the Policy.
"Interest Collections": For any Payment Date, amounts
collected during the related Remittance Period, including the portion of Net
Liquidation Proceeds allocated to interest pursuant to the terms of the Credit
Line Agreements, less the Servicing Fee for the related Remittance Period.
"Interest Remittance Amount": As of any Remittance Date, the
sum, without duplication, of (i) all interest collected by the Master Servicer
during the related Remittance Period with respect to the Mortgage Loans (less
the Servicing Fee), except that with respect to Prepaid Installments, interest
shall be remitted in the related Remittance Period and (ii) all Net Liquidation
Proceeds actually collected by the Master Servicer with respect to the Mortgage
Loan during the related Remittance Period (to the extent such Net Liquidation
Proceeds relate to interest).
"Issuer" or "Trust": Advanta Revolving Home Equity Loan Trust
1998-A created by the Trust Agreement.
"Late Payment Rate": For any Payment Date, the rate of
interest, as it is publicly announced by Citibank, N.A. or its successor at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A. or its successor) plus 2%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under any applicable law limiting interest rates.
"Lifetime Rate Cap": With respect to each Mortgage Loan with
respect to which the related Credit Line Agreement provides for a lifetime rate
cap, the maximum Loan Rate permitted over the life of such Mortgage Loan under
the terms of the related Credit Line Agreement, a form of which is set forth in
Exhibit B hereto.
"Liquidated Mortgage Loan": As defined in Section 4.13(b)
hereof. A Mortgage Loan which is purchased from the Trust pursuant to Section
3.3, 3.4, 3.6(b) or 4.10 hereof is not a "Liquidated Mortgage Loan."
"Liquidation Expenses": Expenses which are incurred by the
Master Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted
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Mortgage Loan, such expenses, including, without limitation, legal fees and
expenses, and any unreimbursed Servicing Advances expended by the Master
Servicer or any Sub-Servicer pursuant to Section 4.9 with respect to the related
Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan, any amounts (including the proceeds of any Insurance Policy but
excluding any amounts drawn on the Policy) recovered by the Master Servicer in
connection with such Liquidated Mortgage Loan, whether through Indenture
Trustee's sale, foreclosure sale or otherwise.
"Liquidation Report": As defined in Section 4.13(b).
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Remittance Date pursuant to Section 2.2(b), 3.3,
3.4, or 4.10 hereof, an amount equal to the Principal Balance of such Mortgage
Loan as of the date of purchase, plus one month's interest on the outstanding
Principal Balance thereof as of the beginning of the preceding Remittance Period
computed at the Loan Rate, if any, together with, without duplication, the
aggregate amount of (i) all delinquent interest, all Servicing Advances
theretofore made with respect to such Mortgage Loan and not subsequently
recovered from the related Mortgage Loan and (ii) any Reimbursement Amount
relating to such Mortgage Loan.
"Loan Rate": With respect to any Mortgage Loan and as of any
day, the per annum rate of interest applicable under the related Credit Line
Agreement to the calculation of interest for such day on the Principal Balance
of such Mortgage Loan.
"Loan Rate Cap": With respect to each Mortgage Loan, the
lesser of (i) the Lifetime Rate Cap, if any, or (ii) the applicable state usury
ceiling, if any.
"Margin": With respect to each Mortgage Loan with an
adjustable rate, the fixed percentage amount set forth in the related Credit
Line Agreement which amount is added to Prime in accordance with the terms of
the related Credit Line Agreement to determine the Loan Rate for such Mortgage
Loan, subject to any maximum.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Master Servicer Affiliate": A Person (i) controlling,
controlled by or under common control with the Master Servicer and (ii) which is
qualified to service residential mortgage loans.
"Master Servicer's Trust Receipt": The Master Servicer's
trust receipt in the form set forth as Exhibit F hereto.
"Minimum Monthly Payment": With respect to any Mortgage Loan
and any month, the minimum amount required to be paid by the related Mortgagor
in that month.
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"Minimum Originator's Interest": With respect to any date, an
amount equal to 2% of the Trust Collateral Value.
"Moody's": Xxxxx'x Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or junior lien on an estate in fee simple interest in real
property securing a Credit Line Agreement.
"Mortgage Files": For each Mortgage Loan, the items listed on
Exhibit A hereto.
"Mortgage Loan Schedule": A schedule of Mortgage Loans
transferred to the Trust, attached hereto as Schedule I, as it may be further
supplemented in connection with subsequent transfers of Subsequent Mortgage
Loans.
"Mortgage Loans": Such of the mortgage loans transferred and
assigned to the Trust pursuant to Section 2.1(a) and 2.4 hereof, together with
any Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the
Mortgage Loans originally so held being identified in the Schedule of Mortgage
Loans. The term "Mortgage Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan." The term "Mortgage Loan" includes any Mortgage Loan
which is Delinquent, which relates to a foreclosure or which relates to a
Mortgaged Property which is REO Property prior to such Mortgaged Property's
disposition by the Trust. Any mortgage loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and assigned
to the Trust by the Sponsor, in fact was not transferred and assigned to the
Trust for any reason whatsoever shall nevertheless be considered a "Mortgage
Loan" for all purposes of this Agreement. The term "Mortgage Loan" includes the
terms "Initial Mortgage Loan" and "Subsequent Mortgage Loan."
"Mortgaged Property": The underlying property securing a
Mortgage Loan.
"Mortgagor": The obligor on a Credit Line Agreement.
"Net Liquidation Proceeds": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of, without duplication, Liquidation Expenses and
unreimbursed Servicing Advances and accrued and unpaid Servicing Fees through
the date of liquidation relating to such Liquidated Mortgage Loan. In no event
shall Net Liquidation Proceeds with respect to any Liquidated Mortgage Loan be
less than zero.
"Nonrecoverable Advance" shall mean, with respect to any
Mortgage Loan, any Servicing Advance previously made and not reimbursed pursuant
to Section 4.9 which, in the good faith business judgment of the Master
Servicer, as evidenced by an Officer's Certificate delivered to the Insurer and
the Indenture Trustee on or prior to the related Remittance Date, would not be
ultimately recoverable.
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"Note Account": The Note Account established in accordance
with Section 8.3 of the Indenture and maintained by the Indenture Trustee.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Indenture Trustee.
"Operative Documents": Collectively, this Agreement, the
Indenture, the Trust Agreement, the Subsequent Transfer Agreements, the Policy,
the Class A Notes, the Indemnification Agreement and the Insurance Agreement.
"Original Class A Principal Balance": $80,000,000.
"Original Principal Amount": With respect to any particular
Class A Note, an amount equal to the product of (i) the Percentage Interest of
such Class A Note and (ii) the Original Class A Principal Balance.
"Original Principal Balance": With respect to each Credit
Line Agreement, the principal amount of such Credit Line Agreement or the
mortgage note relating to a Senior Lien, as the case may be, on the date of
origination thereof.
"Originator": As defined in the Recitals.
"Originator's Interest": As of any Payment Date, is the
excess, if any, of (x) the Trust Collateral Value as of such Payment Date over
(y) the Class A Principal Balance as of such Payment Date (after taking into
account reductions therein on such Payment Date).
"Outstanding": With respect to Class A Notes, as of any date
of determination, all such Class A Notes theretofore executed and delivered
hereunder except:
(i) Class A Notes theretofore cancelled by the
Indenture Trustee or delivered to the Indenture Trustee for
cancellation;
(ii) Class A Notes or portions thereof for which
full and final payment money in the necessary amount has been
theretofore deposited with the Indenture Trustee in trust for the
Class A Noteholders;
(iii) Class A Notes in exchange for or in lieu of
which other Class A Notes have been executed and delivered pursuant
to this Agreement, unless proof satisfactory to the Indenture Trustee
is presented that any such Class A Notes are held by a bona fide
purchaser; and
(iv) Class A Notes alleged to have been mutilated,
destroyed, lost or stolen for which replacement Class A Notes have
been issued as provided for in Section 2.4 of the Indenture.
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"Owner Trustee" : Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors in interest or any successor Owner Trustee under the Trust Agreement.
"Payment Date": Any date on which the Indenture Trustee is
required to make distributions to the Class A Noteholders, which shall be the
25th day of each month, commencing in the month following the Closing Date or,
if such day is not a Business Day, then on the next succeeding Business Day.
"Percentage Interest": As to any Class A Note that amount,
expressed as a percentage, equal to a fraction, the numerator of which is the
Class A Principal Balance of such Class A Note as of the related Cut-Off Date
and the denominator of which is the Original Class A Principal Balance of all
Class A Notes of the same Class; and as to any Certificate, the Percentage
Interest set forth on such Certificate.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Policy": The financial guaranty insurance policy dated June
24, 1998, issued by the Insurer to the Indenture Trustee for the benefit of the
Noteholders.
"Pool Balance": With respect to any date, the Principal
Balances of the Mortgage Loans as of such date.
"Pool Certification": As defined in Exhibit F attached
hereto.
"Pool Factor": A seven-digit decimal which the Indenture
Trustee shall compute monthly expressing the Class A Principal Balance as of
each Payment Date (after giving effect to any distribution of principal on such
Payment Date) as a proportion of the Original Class A Principal Balance. On the
Closing Date, the Pool Factor will be 1.0000000. Thereafter, the Pool Factor
shall decline to reflect reductions in the related Class A Principal Balance
resulting from distributions of principal to the Class A Notes.
"Pre-Funded Mortgage Loans": Subsequent Mortgage Loans
assigned to the Trust in consideration of amounts released to the Originator
from the Pre-Funding Account.
"Pre-Funding Period": The period commencing on the Closing
Date and ending on the earliest to occur of (i) the date on which the amount on
deposit in the Pre-Funding Account (exclusive of any investment earnings) is
less than $100,000, (ii) the date on which a Rapid Amortization Event occurs and
(iii) July 20, 1998.
"Pre-Funding Transfer Date": Any Subsequent Transfer Date on
which Pre-Funded Mortgage Loans are assigned to the Trust.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received prior to the
scheduled due
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date for such installment, intended by the Mortgagor as an early payment thereof
and not as a Prepayment with respect to such Mortgage Loan.
"Preference Amount": As defined in the Policy.
"Prepayment": Any payment of principal of a Mortgage Loan
which is received by the Master Servicer in advance of the scheduled due date
for the payment of such principal (other than the principal portion of any
Prepaid Installment), and the proceeds of any Insurance Policy which are to be
applied as a payment of principal on the related Mortgage Loan shall be deemed
to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Master
Servicer or any Sub-Servicer in connection with a foreclosed Mortgage Loan prior
to the liquidation thereof, including, without limitation, expenditures for real
estate property taxes, hazard insurance premiums, property restoration or
preservation.
"Prime": The "prime" rate of interest charged from time to
time as set forth in the related Credit Line Agreement.
"Principal and Interest Account": Collectively, each
principal and interest account created by the Master Servicer or any
Sub-Servicer pursuant to Section 4.8(a) hereof, or pursuant to any Sub-Servicing
Agreement.
"Principal Balance": As to any Mortgage Loan, other than a
Liquidated Mortgage Loan, and as of any date, the related Cut-Off Date Principal
Balance, plus (i) any Additional Balance in respect of such Mortgage Loan, minus
(ii) all collections credited as principal against the Principal Balance of any
such Mortgage Loan in accordance with the related Credit Line Agreement prior to
such day. For purposes of this definition, a Liquidated Mortgage Loan shall be
deemed to have a Principal Balance of zero as of the first day of the Remittance
Period following the Remittance Period in which such Mortgage Loan becomes a
Liquidated Mortgage Loan and at all times thereafter.
"Principal Collections": As to any Payment Date, the sum of
all payments by or on behalf of Mortgagors and any other amounts constituting
principal (including, but not limited to, and Substitution Amounts any portion
of Insurance Proceeds or Net Liquidation Proceeds allocable to principal of the
applicable Mortgage Loan, but excluding Foreclosure Profits) collected by the
Master Servicer under the Mortgage Loans during the related Remittance Period.
The terms of the related Credit Line Agreement shall determine the portion of
each payment in respect of a Mortgage Loan that constitutes principal or
interest.
"Principal Remittance Amount": As of any Remittance Date, the
sum, without duplication, of (i) the principal actually collected by the Master
Servicer with respect to Mortgage Loans during the related Remittance Period,
(ii) the Principal Balance of each such Mortgage Loan that either was
repurchased by the Sponsor or purchased by the Master Servicer, to the extent
such Principal Balance was actually
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deposited in the Principal and Interest Account on such Remittance Date, (iii)
any Substitution Amounts delivered by the Sponsor in connection with a
substitution of a Mortgage Loan, to the extent such Substitution Amounts were
actually deposited in the Principal and Interest Account on such Remittance
Date, and (iv) all Net Liquidation Proceeds actually collected by the Master
Servicer with respect to such Mortgage Loans during the related Remittance
Period (to the extent such Liquidation Proceeds related to principal).
"Prospectus": That certain Prospectus dated October 30, 1997
naming Advanta Mortgage Conduit Services, Inc. and Advanta Mortgage Corp. USA as
registrants and describing certain mortgage loan asset-backed securities to be
issued from time to time as described in related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement
dated June 19, 1998, describing the Class A Notes issued by the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted
for another pursuant to Section 2.2(b), 3.3 or 3.4 hereof, which (i) bears a
variable rate of interest, (ii) has a Loan Rate at least equal to the Loan Rate
of the Mortgage Loan being replaced, (which shall mean a Mortgage Loan having
the same interest rate index, a margin over such index and a maximum interest
rate at least equal to those applicable to the Mortgage Loan being replaced),
(iii) is of the same or better property type and the same or better occupancy
status as the replaced Mortgage Loan, (iv) shall be of the same or better credit
quality classification (determined in accordance with the respective
Originator's credit underwriting guidelines) as the Mortgage Loan being
replaced, (v) shall mature no later than the Payment Date occurring in August,
2023, (vi) has a Combined Loan-to-Value Ratio as of the Initial Cut-Off Date or
Subsequent Cut-Off Date, as applicable, no higher than the Combined
Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (vii) has a
Principal Balance as of the related Replacement Cut-Off Date equal to or less
than the Principal Balance of the replaced Mortgage Loan as of such Replacement
Cut-Off Date, (viii) is in the same lien position or better. Except with respect
to clause (vi) above, in the event that one or more mortgage loans are proposed
to be substituted for one or more mortgage loans, the Insurer may allow the
foregoing tests to be met on a weighted average basis or other aggregate basis
acceptable to the Insurer, as evidenced by a written approval delivered to the
Indenture Trustee by the Insurer.
"Realized Loss": As to any Liquidated Mortgage Loan, the
amount, if any, by which the Principal Balance thereof as of the date of
liquidation is in excess of Net Liquidation Proceeds realized thereon.
"Record Date": With respect to each Payment Date, the last
day of the calendar month immediately preceding the calendar month in which such
Payment Date occurs.
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"Register": The register maintained by the Indenture Trustee
in accordance with Section 2.3 of the Indenture, in which the names of the Class
A Noteholders are set forth.
"Registrar": The Indenture Trustee, acting in its capacity as
Indenture Trustee appointed pursuant to Section 2.3 of the Indenture, or any
duly appointed and eligible successor thereto.
"Registration Statement": The Registration Statement filed by
the Sponsor with the Securities and Exchange Commission, including all
amendments thereto and including the Prospectus and the Prospectus Supplement
relating to the Class A Notes constituting a part thereof.
"Reimbursement Amount": As of any Payment Date, the sum of
(x)(i) all payments made pursuant to the Policy previously received by the
Indenture Trustee and all Preference Amounts previously paid to the Indenture
Trustee by the Insurer and in each case not previously repaid to the Insurer
pursuant to Section 8.6(b)(vii) of the Indenture plus (ii) interest accrued on
each such payment made pursuant to the Policy not previously repaid calculated
at the Late Payment Rate from the date the Indenture Trustee received the
related payment made pursuant to the Policy and (y)(i) any amounts then due and
owing to the Insurer under the Insurance Agreement plus (ii) interest on such
amounts at the Late Payment Rate. The Insurer shall notify the Indenture Trustee
and the Sponsor of the amount of any Reimbursement Amount.
"REO Property": A Mortgaged Property acquired by the Master
Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
"Remittance Date": Any date on which the Master Servicer is
required to remit monies on deposit in the Principal and Interest Account to the
Indenture Trustee, which shall be the 18th day or, if such day is not a Business
Day, the next preceding Business Day, of each month, commencing in the month
following the month in which the Closing Date occurs.
"Remittance Period": As to any Payment Date, the calendar
month preceding the month of such Payment Date.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter" shall mean letters to, or agreements
with, the Depository to effectuate a book entry system with respect to the Class
A Notes registered in the Register under the nominee name of the Depository.
"Standard & Poor's": Standard & Poor's, a division of The
XxXxxx-Xxxx Companies.
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"Schedule of Mortgage Loans": The Schedule of Mortgage Loans,
attached hereto as Schedule I, as it may be further supplemented in connection
with Subsequent Transfers.
"Second Mortgage Loan": A Mortgage Loan which constitutes a
second priority mortgage lien with respect to the related Mortgaged Property.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Mortgaged Property having a first
priority lien.
"Servicing Advance": As defined in Section 4.9 and Section
4.13 hereof.
"Servicing Fee": With respect to any Payment Date, the
product of (i) one-twelfth of the Servicing Fee Rate and (ii) the aggregate
Principal Balance of the Mortgage Loans as of the opening of business on the
first day of the Remittance Period preceding such Payment Date (or as of the
Initial Cut-Off Date with respect to the first Payment Date).
"Servicing Fee Rate": 0.50% per annum.
"Sponsor": Advanta Mortgage Conduit Services, Inc., a
Delaware Corporation.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loan, the opening of business on the first day of the calendar month in
which the related Subsequent Transfer Date occurs.
"Subsequent Mortgage Loans": The Mortgage Loans assigned to
the Trust pursuant to Section 2.4 of this Agreement, which shall be listed on
the Schedule of Mortgage Loans attached to the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Indenture
Trustee and the Sponsor substantially in the form of Exhibit G hereto, by which
Subsequent Mortgage Loans are assigned to the Trust.
"Subsequent Transfer Date": The date specified in each
Subsequent Transfer Agreement, which must, with respect to any Payment Date, be
a date occurring during the calendar month in which such Payment Date occurs,
and on or prior to the Remittance Date occurring in such month.
"Substitution Amount": In connection with the delivery of any
Qualified Replacement Mortgage, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Principal Balance of the Mortgage Loan being replaced as of such
Replacement Cut-Off Date, an amount equal to such difference together with
accrued and unpaid interest on
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such amount calculated at the Loan Rate net of the Servicing Fee, if any, of the
Mortgage Loan being replaced.
"Sub-Servicer": Any Person with whom the Master Servicer has
entered into a Sub-Servicing Agreement and who satisfies any requirements set
forth in Section 4.3 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the
Master Servicer and any Sub-Servicer relating to the servicing and/or
administration of certain Mortgage Loans as permitted by Section 4.3.
"Telerate Screen Page 3750": The display designated as page
3750 on the Telerate Service (or such other page as may replace page 3750 on
that service for the purpose of displaying London interbank offered rates of
major banks).
"Termination Fees": With respect to Mortgage Loans which
prepay in full or in part and are secured by Mortgaged Properties in certain
jurisdictions, an account termination fee generally not exceeding $500 may be
charged by the Master Servicer and retained as additional servicing compensation
pursuant to Section 4.15. Such Termination Fees may not be applicable to
accounts terminated subsequent to a date designated in the related Credit Line
Agreement which depending on the jurisdiction may be during the Draw Period.
"Transfer Date": As defined in Section 2.5 herein.
"Transfer Notice Date": As defined in Section 2.5 herein.
"Trust Agreement": The Trust Agreement dated as of June 1,
1998 between the Owner Trustee and the Sponsor.
"Trust Collateral Value": As of any Payment Date, the sum of
(i) the Pool Balance at the end of the prior calendar month, (ii) the aggregate
Principal Balances as of the related Cut-Off Dates of all Subsequent Mortgage
Loans previously assigned to the Trust during the calendar month in which such
Payment Date occurs and (iii) the amounts, if any, on deposit in the Pre-Funding
Account at the close of business on such Payment Date.
"Trust Estate": Collectively, all money, instruments and
other property, to the extent such money, instruments and other property are
subject or intended to be held in trust, for the benefit of the Class A
Noteholders and the Insurer (including all proceeds thereof), including the
following: (i) the Initial Mortgage Loans, Qualified Replacement Mortgages and
Subsequent Mortgage Loans; (ii) such amounts, including Eligible Investments, as
from time to time may be held in all Accounts (except as otherwise provided
herein); (iii) any Mortgaged Property, the Class A Noteholder of which has been
effected on behalf of the Trust as a result of foreclosure or acceptance by the
Master Servicer or any Sub-Servicer of a deed in lieu of foreclosure and that
has not been withdrawn from the Trust; (iv) any Insurance Policies relating to
the Mortgage Loans and any rights of the Trust and the Sponsor under any
Insurance Policies; (v) Net Liquidation
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Proceeds with respect to any Liquidated Mortgage Loan; (vi) the Policy; (vii)
such amounts held in the Capitalized Interest Account; and (viii) such amounts
held in the Pre-Funding Account, the Principal and Interest Account and the Note
Account.
"Underwriter": X.X. Xxxxxx Securities Inc.
Section 1.2. Use of Words and Phrases. "Herein," "hereby,"
"hereunder," "hereof," "hereinbefore", "hereinafter" and other equivalent words
refer to this Agreement as a whole and not solely to the particular section of
this Agreement in which any such word is used. The definitions set forth in
Section 1.1 hereof include both the singular and the plural. Whenever used in
this Agreement, any pronoun shall be deemed to include both singular and plural
and to cover all genders. As used herein, any form of the word "include" shall
be deemed to be followed by the words "without limitation."
Section 1.3. Captions; Table of Contents. The captions or
headings in this Agreement and the Table of Contents are for convenience only
and in no way define, limit or describe the scope and intent of any provisions
of this Agreement.
Section 1.4. Opinions. Each opinion with respect to the
validity, binding nature and enforceability of documents or Notes may be
qualified to the extent that the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law) and may state
that no opinion is expressed on the availability of the remedy of specific
enforcement, injunctive relief or any other equitable remedy. Any opinion
required to be furnished by any Person hereunder must be delivered by counsel
upon whose opinion the addressee of such opinion may reasonably rely, and such
opinion may state that it is given in reasonable reliance upon an opinion of
another, a copy of which must be attached, concerning the laws of a foreign
jurisdiction.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.1. Conveyance of the Initial Mortgage Loans. (a) The
Sponsor, concurrently with the execution and delivery hereof, hereby transfers,
assigns, sets over and otherwise conveys without recourse to the Indenture
Trustee, all right, title and interest of the Sponsor in and to: (i) each
Initial Mortgage Loan listed on the Schedule of Mortgage Loans, including its
Principal Balance (including all Additional Balances) and all collections in
respect thereof received on or after the Initial Cut-Off Date (excluding
payments in respect of accrued interest due prior to the Initial Cut-Off Date);
(ii) property that secured a Mortgage Loan that is acquired by foreclosure or
deed in lieu of foreclosure; (iii) the Sponsor's rights under the hazard
insurance policies; and (iv) all other assets included or to be included in the
Trust for the benefit of Class A Noteholders and the Insurer; provided, however,
neither the Indenture Trustee nor the Trust assumes the obligation under any
Credit Line Agreement that provides for the
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funding of future advances to the Mortgagor thereunder, and neither the Trust
nor the Indenture Trustee shall be obligated or permitted to fund any such
future advances. Additional Balances shall be part of the related Principal
Balance and are hereby transferred to the Trust for application to the
Originator's Interest only on the Closing Date pursuant to this Section 2.1, and
therefor part of the Trust estate. In addition, on or prior to the Closing Date,
the Sponsor shall cause the Insurer to deliver the Policy to the Indenture
Trustee for the benefit of the Class A Noteholders of the Class A Notes. The
foregoing transfer, assignment, set-over and conveyance to the Trust shall be
made to the Indenture Trustee, on behalf of the Trust, and each reference in
this Agreement to such transfer, assignment, set-over and conveyance shall be
construed accordingly.
The Sponsor agrees to take or cause to be taken such actions
and execute such documents (including, without limitation, the filing of all
necessary continuation statements for the UCC-1 financing statements filed in
the State of New York (which shall have been filed within 90 days of the Closing
Date) describing the Mortgage Loans and naming the Sponsor as debtor and the
Indenture Trustee as secured party and any amendments to UCC-1 financing
statements required to reflect a change in the name or corporate structure of
the Sponsor or the filing of any additional UCC-1 financing statements due to
the change in the principal office of the Sponsor (within 90 days of any event
necessitating such filing)) as are necessary to perfect and protect the Class A
Noteholders' and the Insurer's interests in each Mortgage Loan and the proceeds
thereof.
(b) In connection with the transfer and assignment of the
Mortgage Loans, the Sponsor agrees to:
(i) cause to be delivered, without recourse to the
Indenture Trustee, on the Closing Date with respect to the Initial
Mortgage Loans or, on the Subsequent Transfer Date with respect to
Subsequent Mortgage Loans, or, on the Transfer Date with respect to the
Qualified Replacement Mortgage listed on the Schedule of Mortgage
Loans, the items listed as items (a) through (f) in Exhibit A hereto;
and
(ii) cause, within 75 Business Days following the Closing
Date, Assignments of Mortgage to be submitted for recording in the
appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of or purchasers from the
Sponsor to the Indenture Trustee; provided, however, that Assignments
of Mortgage shall not be required to be submitted for recording with
respect to any Mortgage Loan as to which the recordholder is the
Originator (under, with respect to Advanta National Bank, either its
current name, "Advanta National Bank" or its prior name, "Advanta
National Bank USA"), unless the related Mortgaged Property is not
located in a jurisdiction in which, as evidenced by an Opinion of
Counsel acceptable to the Rating Agencies delivered to the Indenture
Trustee within 30 Business Days following the Closing Date, recordation
of such Assignment of Mortgage is not necessary to perfect the lien of
the Indenture Trustee in the related Mortgage Loan.
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All recording, if required pursuant to this Section 2.1, shall
be accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, in those instances where the public
recording office retains the original Mortgage, the assignment of a Mortgage or
the intervening assignments of the Mortgage after it has been recorded, the
Sponsor shall be deemed to have satisfied its obligations hereunder upon
delivery to the Indenture Trustee of a copy of such Mortgage, such assignment or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Copies of all Mortgage assignments and any Assignment of
Mortgage in recordable form received by the Indenture Trustee shall be kept in
the related Mortgage File.
(c) In the case of Initial Mortgage Loans which have been
prepaid in full on or after the Initial Cut-Off Date and prior to the Closing
Date, or with respect to Subsequent Mortgage Loans which have been prepaid in
full on or after the Subsequent Cut-Off Date and prior to the Subsequent
Transfer Date, the Sponsor, in lieu of the foregoing, will deliver within 15
Business Days after the Closing Date, or Subsequent Transfer Date, as
applicable, to the Indenture Trustee a certification of an Authorized Officer in
the form set forth in Exhibit C hereto.
(d) The Sponsor shall transfer, assign, set over and otherwise
convey without recourse, to the Indenture Trustee all right, title and interest
of the Sponsor in and to any Qualified Replacement Mortgage delivered to the
Indenture Trustee on behalf of the Trust by the Sponsor pursuant to Section 2.2,
Section 3.3 or Section 3.4 hereof and all its right, title and interest to
principal collected and interest accruing on such Qualified Replacement Mortgage
on and after the applicable Replacement Cut-Off Date; provided, however, that
the Sponsor shall reserve and retain all right, title and interest in and to
payments of principal and interest due on such Qualified Replacement Mortgage
prior to the applicable Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage therefor, the
Indenture Trustee will transfer, assign, set over and otherwise convey without
recourse, on the Sponsor order, all of its right, title and interest in and to
such released Mortgage Loan and all the Trust's right, title and interest to
principal collected and interest accruing on such released Mortgage Loan on and
after the applicable Replacement Cut-Off Date; provided, however, that the Trust
shall reserve and retain all right, title and interest in and to payments of
principal collected and interest accruing on such released Mortgage Loan prior
to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Indenture Trustee on behalf of the Trust,
the Sponsor agrees to cause to be delivered to the Indenture Trustee the items
described in Section 2.1(b) on the date of such transfer and assignment or, if a
later delivery time is permitted by Section 2.1(b), then no later than such
later delivery time.
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(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage the Indenture
Trustee shall deliver on the date of conveyance of such Qualified Replacement
Mortgage and on the order of the Sponsor (i) the original Credit Line Agreement,
or the certified copy, relating thereto, endorsed without recourse, to the
Sponsor and (ii) such other documents as constituted the Mortgage File with
respect thereto.
(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Sponsor shall prepare a substitute assignment or cure such defect,
as the case may be, and thereafter cause each such assignment to be duly
recorded.
(i) The Sponsor shall reflect on its records that the Mortgage
Loans have been sold to the Trust.
(j) If the Master Servicer's shareholders' equity (on a
consolidated basis with AMHC) calculated pursuant to generally accepted
accounting principles, as evidenced by the Financial Statements (as defined in
the Insurance Agreement, and which the Master Servicer hereby agrees to provide
to the Insurer on a quarterly basis promptly after the same are available),
falls below $5,000,000, then the Sponsor shall promptly prepare and deliver to
the Indenture Trustee the Mortgage assignments. Upon the direction of the
Insurer, the Indenture Trustee shall submit such assignments for recording in
the appropriate jurisdictions. The Master Servicer shall pay the anticipated
recording costs to the Indenture Trustee on the date of delivery of the
assignments to the Indenture Trustee, and if the Master Servicer fails to do so
or the actual recording costs exceed the anticipated recording costs then the
Indenture Trustee shall pay such costs and shall be entitled to reimbursement
therefor from amounts otherwise distributable to the Class A Noteholders.
(k) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Advanta National Bank or of its ultimate corporate
parent are satisfactory to the Insurer, Xxxxx'x and Standard & Poor's, then any
of the Document Delivery Requirements described above may be waived by an
instrument signed by the Insurer, Standard & Poor's and Xxxxx'x (or any
documents theretofore delivered to the Indenture Trustee returned to Advanta
National Bank) on such terms and subject to such conditions as the Insurer,
Xxxxx'x and Standard & Poor's may permit.
Section 2.2. Acceptance by Indenture Trustee; Certain
Substitutions of Mortgage Loans; Certification by Indenture Trustee. (a) The
Indenture Trustee hereby acknowledges its receipt of the Policy and agrees to
execute and deliver on the Closing Date and on each Subsequent Transfer Date and
each Transfer Date an acknowledgment of receipt of the Credit Line Agreements
delivered by the Sponsor in the form attached as Exhibit D hereto, and declares
that it will hold such documents and any amendments, replacement or supplements
thereto, as well as any other assets included in the definition of Trust Estate
and delivered to the Indenture Trustee, as Indenture Trustee in trust upon and
subject to the conditions set forth herein for the benefit of the Class A
Noteholders and the Insurer. The Indenture Trustee further agrees to review any
other documents
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delivered by the Sponsor within 90 days after the Closing Date (or within 90
days with respect to any Subsequent Mortgage Loan or Qualified Replacement
Mortgage after the assignment thereof) and to deliver to the Sponsor, the Master
Servicer and the Insurer a Pool Certification in the form attached hereto as
Exhibit E to the effect that, as to each Mortgage Loan listed in the Schedule of
Mortgage Loans (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such Pool Certification as not covered by such Pool
Certification), (i) all documents required to be delivered to it pursuant to
this Agreement are in its possession and (ii) such documents have been reviewed
by it and on their face appear to relate to such Mortgage Loan; provided,
however, that such Pool Certification shall not be delivered prior to 90 days
after the Closing Date with respect to the Initial Mortgage Loans and 90 days
after the Pre-Funding Period with respect to the Pre-Funded Mortgage Loans. The
Indenture Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to verify
the validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of same or to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face, nor shall the Indenture Trustee be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.
(b) If the Indenture Trustee during such 90-day period finds
any document constituting a part of a Mortgage File which is not properly
executed, has not been received within the specified period, or is unrelated to
the Mortgage Loans identified in the Schedules of Mortgage Loans, or that any
Mortgage Loan does not conform in a material respect to the description thereof
as set forth in the Schedules of Mortgage Loans, the Indenture Trustee shall
promptly so notify the Sponsor and the Insurer. In performing any such review,
the Indenture Trustee may conclusively rely on the Sponsor as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Indenture Trustee's review of the items delivered by the
Sponsor pursuant to Section 2.1(b)(i) is limited solely to confirming that the
documents listed in Section 2.1(b)(i) have been executed and received, on their
face, appear to relate to the Mortgage Files identified in the Schedules of
Mortgage Loans and conform materially to the description thereof in the Schedule
of Mortgage Loans. The Sponsor agrees to use reasonable efforts to remedy a
material defect in a document constituting part of a Mortgage File of which it
is so notified by the Indenture Trustee. If, however, within 60 days after the
Indenture Trustee's notice to it respecting such defect the Sponsor has not
remedied or caused to be remedied the defect and the defect materially and
adversely affects the interest in the related Mortgage Loan of the Class A
Noteholders or of the Insurer, the Sponsor will then on the next succeeding
Business Day (i) substitute in lieu of such Mortgage Loan a Qualified
Replacement Mortgage and, deliver the Substitution Amount applicable thereto to
the Master Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Mortgage Loan at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the Master Servicer for
deposit in the Principal and Interest Account. Upon receipt of any Qualified
Replacement Mortgage or of written notification signed by a Servicing Officer to
the effect that the Loan Purchase Price in respect of a Defective Mortgage Loan
has been deposited into the Principal and Interest Account, then as promptly as
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practicable, the Indenture Trustee shall execute such documents and instruments
of transfer presented by the Sponsor, in each case without recourse,
representation or warranty, and take such other actions as shall reasonably be
requested by the Sponsor to effect such transfer by the Trust of such Defective
Mortgage Loan pursuant to this Section. It is understood and agreed that the
obligation of the Sponsor to accept a transfer of a Defective Mortgage Loan and
to either convey a Qualified Replacement Mortgage or to make a deposit of any
related Loan Purchase Price into the Principal and Interest Account shall
constitute the sole remedy respecting such defect available to Class A
Noteholders, the Indenture Trustee and the Insurer against the Sponsor.
The Sponsor, promptly following the transfer of a Defective
Mortgage Loan from or to the Trust pursuant to this Section, shall deliver an
amended Mortgage Loan Schedule to the Indenture Trustee and the Insurer and
shall make appropriate entries in its general account records to reflect such
transfer. The Sponsor shall, following such retransfer, appropriately xxxx its
records to indicate that it is no longer servicing such Mortgage Loan on behalf
of the Trust. The Sponsor, promptly following such transfer, shall appropriately
xxxx its electronic ledger and make appropriate entries in its general account
records to reflect such transfer.
(c) As to any Qualified Replacement Mortgage, the Sponsor
shall, if required to deliver any such Qualified Replacement Mortgage, deliver
to the Indenture Trustee with respect to such Qualified Replacement Mortgage
such documents and agreements as are required to be held by the Indenture
Trustee in accordance with Section 2.2. For any Remittance Period during which
the Sponsor substitutes one or more Qualified Replacement Mortgages, the Master
Servicer shall determine the Substitution Amount which amount shall be deposited
by the Sponsor in the Principal and Interest Account at the time of
substitution. All amounts received in respect of the Qualified Replacement
Mortgage during the Remittance Period in which the circumstances giving rise to
such substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Principal and Interest Account. All
amounts received by the Master Servicer during the Remittance Period in which
the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust Estate shall be deposited by the
Master Servicer in the Principal and Interest Account. Upon such substitution,
the Qualified Replacement Mortgage shall be subject to the terms of this
Agreement in all respects, and the Sponsor shall be deemed (i) to have made with
respect to such Qualified Replacement Mortgage or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in Section
3.3 and (ii) to have certified that such Mortgage Loan(s) is/are Qualified
Replacement Loan(s). The procedures applied by the Sponsor in selecting each
Qualified Replacement Mortgage shall not be materially adverse to the interests
of the Indenture Trustee, the Class A Noteholders or the Insurer.
(d) The Master Servicer or the Originator may consent to the
placing of a lien senior to that of any Mortgage on the related Mortgaged
Property, provided that
(i) such Mortgage succeeded to a first lien position after the
related Mortgage Loan was conveyed to the Trust and, immediately
following the
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placement of such senior lien, such Mortgage is in a second lien
position and the outstanding principal amount of the mortgage loan
secured by such subsequent senior lien is no greater than the
outstanding principal amount of the senior mortgage loan secured by the
Mortgaged Property as of the date the related Mortgage Loan was
originated; or
(ii) the Mortgage relating to such Mortgage Loan was in a
second lien position as of the related Cut-Off Date and the new senior
lien secures a mortgage loan that refinances an existing first mortgage
loan and the outstanding principal amount and interest rate of the
replacement first mortgage loan immediately following such refinancing
is not greater than the outstanding principal amount and interest rate
of such existing first mortgage loan at the date of origination of such
Mortgage Loan;
provided, further, that such senior lien does not secure a note that provides
for negative amortization. Notwithstanding the foregoing, the Master Servicer or
the Originator can consent to the placing of liens senior to that of a Mortgage
on the related Mortgaged Property only if the Combined Loan-to-Value Ratio and
second mortgage ratio is less than or equal to the original Combined
Loan-to-Value Ratio and second mortgage ratio; provided, however, the Master
Servicer or the Originator may consent to the placing of a senior lien on up to
5% of the Mortgage Loans if the Combined Loan-to-Value Ratios of any such
Mortgage Loan will not increase to greater than 100%; provided, further, that
the Master Servicer or the Originator may only approve modifications if the
related Mortgagor has used the Credit Line Agreement in the past twelve months
and has made timely payments, the current characteristics of the related
Mortgagor meet the Originator's underwriting guidelines used at the time of
origination and the Originator receives verbal verification of employment of the
related Mortgagor.
The Master Servicer or the Originator may also, without prior
approval from the Rating Agencies or the Insurer, increase the Credit Limits on
Mortgage Loans provided that (i) new appraisals are obtained and the Combined
Loan-to-Value Ratios of the Mortgage Loans after giving effect to such increase
are less than or equal to the Combined Loan-to-Value Ratios of the Mortgage
Loans as of the related Cut-Off Date, (ii) such increases are consistent with
the Originator's underwriting policies, (iii) the related Mortgagor has used the
Credit Line Agreement in the past twelve months and has made timely payments and
(iv) the Master Servicer receives verbal verification of employment of the
related Mortgagor. In addition, the Master Servicer may increase the Credit
Limits on Mortgage Loans having aggregate balances of up to 5% of the Pool
Balance, without obtaining new appraisals provided that (i) the increase in the
Credit Limit does not cause the Combined Loan-to-Value Ratios of the Mortgage
Loans to exceed 80%, (ii) the increase is consistent with the Originator's
underwriting policies, (iii) the related Mortgagor has used the Credit Line
Agreement in the past twelve months and has made timely payments and (iv) the
Master Servicer receives verbal verification of employment of the related
Mortgagor.
Furthermore, the Master Servicer or the Originator may,
without prior approval from the Rating Agencies and the Insurer, solicit
Mortgagors for a reduction in
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Loan Rates of no more than .50%; provided that the Originator can only reduce
such Loan Rates on up to 5% of the Mortgage Loans by Pool Balance. Any such
solicitations shall not result in a reduction in the weighted average Margin of
the Mortgage Loans in the pool by more than 2.5 basis points taking into account
any such prior reductions.
Subject to the above limitations, the Originator or the Master
Servicer, may agree to changes in the terms of a Mortgage Loan at the request of
the Mortgagor; provided, that such changes (i) do not materially and adversely
affect the interests of Holders or the Insurer and (ii) are consistent with
Accepted Servicing Practices.
Notwithstanding anything to the contrary, neither the
Originator nor the Master Servicer shall agree to any changes or modifications
in the terms of any Mortgage Loan that, after giving effect to such change or
modifications, would cause any criteria set forth in Section 2.4 to be violated.
Section 2.3. Cooperation Procedures. (a) The Sponsor shall,
in connection with the delivery of each Qualified Replacement Mortgage to the
Indenture Trustee, provide the Indenture Trustee with the information set forth
in the Schedules of Mortgage Loans with respect to such Qualified Replacement
Mortgage.
(b) The Sponsor, the Master Servicer and the Indenture Trustee
covenant to provide each other with all data and information required to be
provided by them hereunder at the times required hereunder, and additionally
covenant reasonably to cooperate with each other in providing any additional
information required by any of them in connection with their respective duties
hereunder.
Section 2.4. Conveyance of the Subsequent Mortgage Loans. (a)
The Sponsor may, on Subsequent Transfer Dates, deliver to the Indenture Trustee
loans eligible to become Subsequent Mortgage Loans on the next following Payment
Date, in exchange, on such Payment Date, for monies released to the Originator
pursuant to Section 8.5(b) of the Indenture, or a corresponding increase in the
Originator's Interest.
Upon assignment of any Pre-Funded Mortgage Loan, the Indenture
Trustee shall release to the Sponsor an amount equal to the Principal Balance
thereof as of the related Subsequent Cut-Off Date from amounts then on deposit
in the Pre-Funding Account.
(b) The Sponsor shall transfer to the Indenture Trustee the
Subsequent Mortgage Loans and the other property and rights related thereto
described in paragraph (a) above only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Sponsor shall have provided the Indenture Trustee,
each Rating Agency and the Insurer with a timely Addition Notice and
shall have provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Mortgage Loans;
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(ii) the Sponsor shall have delivered to the Indenture
Trustee a duly executed written assignment (including an acceptance by
the Indenture Trustee) in substantially the form of Exhibit G (the
"Subsequent Transfer Agreement"), which shall include Schedules of
Mortgage Loans, listing the Subsequent Mortgage Loans and any other
exhibits listed thereon;
(iii) the Master Servicer shall have deposited in the
Principal and Interest Account all collections in respect of the
Subsequent Mortgage Loans received on or after the related Subsequent
Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the
Master Servicer nor the Sponsor was insolvent nor will any of them have
been made insolvent by such transfer nor is any of them aware of any
pending insolvency;
(v) such addition will not result in a material adverse
tax consequence to the Trust or the Class A Noteholders;
(vi) with respect to Subsequent Mortgage Loans which are
Pre-Funded Mortgage Loans, the Pre-Funding Period shall not have
terminated; and
(vii) the Sponsor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and paragraphs (c)
and (d) below and in the related Subsequent Transfer Agreement.
(c) The obligation of the Trust to accept the assignment of a
Subsequent Mortgage Loan on any Subsequent Transfer Date is subject to the
following requirement: such Subsequent Mortgage Loan may not be more than 30
days contractually delinquent as of the related Subsequent Cut-Off Date.
(d) The obligation of the Trust to accept the assignment of a
Subsequent Mortgage Loan on any Subsequent Transfer Date is subject to the
following additional requirements, any of which may be waived or modified in any
respect by the Insurer by a written instrument executed by the Insurer:
(i) No such Subsequent Mortgage Loan may (A) have a Combined
Loan-to-Value Ratio greater than 125%; (B) have a Principal Balance in
excess of $285,000; (C) have a remaining term to stated maturity in
excess of 300 months; (D) have a Loan Rate (as of the related Subsequent
Cut-Off Date) below 8.25%; (E) have a Margin below 0.00%; or (F) be more
than 30 days Delinquent (as of the related Subsequent Cut-off Date).
(ii) After giving effect to the assignment to the Trust of any
such Subsequent Mortgage Loan (A) the weighted average net Loan Rate of
all Mortgage Loans shall be no less than 12.00%; (B) the Mortgage Loans
shall have weighted average Combined Loan-to-Value Ratio no greater than
88.00%; (C) the weighted average margin shall not be less than 3.50%;
(D) the weighted remaining term to stated maturity shall not exceed 275
months; (E) no more the
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1.00% of the Pool Balance as of such Subsequent Transfer Date shall
relate to Mortgaged Properties in any one zip code; and (F) no more
than 10% of the Mortgage Loans have a Combined Loan-to-Value greater
than 100%.
(e) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Sponsor agrees to satisfy the conditions set
forth in Sections 2.1(b)-(j), 2.2 and 2.3.
(f) In connection with the transfer of any Subsequent Mortgage
Loans to the Trust the Sponsor, the Master Servicer and the Indenture Trustee
may, with the prior written consent of the Insurer, amend the definition of
"Specified Overcollateralization Amount" for the purpose of changing the related
Specified Overcollateralization Amount; provided, however, that any such
amendment must comply with the provisions of Sections 7.14(b) and 7.14(d)
hereof.
Section 2.5. Retransfers of Mortgage Loans at Election of
Sponsor . Subject to the conditions set forth below, the Sponsor may, but shall
not be obligated to (except the Sponsor shall be obligated upon a breach of a
representation or warranty), accept the reassignment of Mortgage Loans from the
Trust as of the close of business on a Payment Date (the "Transfer Date"). On
the fifth Business Day (the "Transfer Notice Date") prior to the Transfer Date
designated in such notice, the Sponsor shall give the Indenture Trustee, the
Insurer and the Master Servicer a notice of the proposed reassignment that
contains a list of the Mortgage Loans to be reassigned. Such reassignment of
Mortgage Loans shall be permitted upon satisfaction of the following conditions:
(i) No Rapid Amortization Event has occurred or will occur
as a result of such removal;
(ii) On the Transfer Notice Date the Originator's Interest
(after giving effect to the removal from the Trust of the Mortgage Loans
proposed to be retransferred) is at least equal to the Minimum
Originator's Interest;
(iii) The Overcollateralization Amount as of such Payment
Date (after giving effect to the removal as described in Section 2.5(ii)
above) equals or exceeds the then Specified Overcollateralization
Amount;
(iv) The transfer of any Mortgage Loans on any Transfer
Date during the Managed Amortization Period shall not, in the reasonable
belief of the Sponsor cause a Rapid Amortization Event to occur or an
event which with notice or lapse of time or both would constitute a
Rapid Amortization Event;
(v) On or before the Transfer Date, the Sponsor shall have
delivered to the Indenture Trustee, the Insurer and the Rating Agencies
a revised Mortgage Loan Schedule, reflecting the proposed transfer and
the Transfer Date, and the Master Servicer shall have marked its
servicing records to show that the Mortgage Loans reassigned to the
holder of the Sponsor are no longer owned by the Trust;
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(vi) The Sponsor shall represent and warrant that random
selection procedures were used in selecting the Mortgage Loans and no
other selection procedures were used which are adverse to the interests
of the Sponsor of the Class A Noteholders or the Insurer were utilized
in selecting the Mortgage Loans to be removed from the Trust; and
(vii) The Sponsor shall have delivered to the Indenture
Trustee and the Insurer an Officer's Certificate certifying that the
items set forth in subparagraphs (i) through (vi), inclusive, have been
performed or are true and correct, as the case may be. The Indenture
Trustee may conclusively rely on such Officer's Certificate, shall have
no duty to make inquiries with regard to the matters set forth therein
and shall incur no liability in so relying.
Upon receiving the requisite information from the Sponsor, the Master Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Transfer Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Sponsor the Mortgage
File for each Mortgage Loan being so reassigned, and the Indenture Trustee shall
execute and deliver to the Sponsor such other documents prepared by the Sponsor
as shall be reasonably necessary to reassign such Mortgage Loans to the Sponsor.
Any such transfer of the Trust's right, title and interest in and to Mortgage
Loans shall be without recourse, representation or warranty by or of the
Indenture Trustee or the Trust to the Sponsor.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
Section 3.1. Representations and Warranties of the Sponsor.
The Sponsor hereby represents, warrants and covenants to the Indenture Trustee,
the Master Servicer, the Insurer and to the Class A Noteholders as of the
Closing Date that:
(a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and is in good standing as a foreign corporation in each jurisdiction in
which the nature of its respective business, or the properties owned or
leased by it make such qualification necessary. The Sponsor has all
requisite corporate power and authority to own and operate its
respective properties, to carry out its respective business as presently
conducted and as proposed to be conducted and to enter into and
discharge its respective obligations under this Agreement and the other
Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the
other Operative Documents to which the Sponsor is a party by the Sponsor
and its respective performance and compliance with the terms of this
Agreement and of the other Operative Documents to which it is a party
have been duly authorized by
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all necessary corporate action on the part of the Sponsor and will not
violate the Sponsor's Articles of Incorporation or Bylaws or constitute
a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which the Sponsor is
a party or by which the Sponsor is bound, or violate any statute or any
order, rule or regulation of any court, governmental agency or body or
other tribunal having jurisdiction over the Sponsor or any of its
properties.
(c) This Agreement and the other Operative Documents to
which the Sponsor is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Sponsor enforceable against
it in accordance with the terms hereof and thereof, except as the
enforcement hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law).
(d) The Sponsor is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Sponsor or its properties or
might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which
it is a party.
(e) No litigation is pending or, to the best of the
Sponsor's knowledge, threatened against the Sponsor which litigation
might have consequences that would prohibit its entering into this
Agreement or any other Operative Document to which it is a party or that
would materially and adversely affect the condition (financial or
otherwise) or operations of the Sponsor or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which it is a
party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Sponsor
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report not
misleading.
(g) The statements contained in the Registration
Statement which describe the Sponsor, or matters or activities for which
the Sponsor is responsible in accordance with the Operative Documents or
which are attributed to the Sponsor therein are true and correct in all
material respects, and the Registration Statement does not contain any
untrue statement of a material fact with respect to the Sponsor or omit
to state a material fact required to be stated therein or necessary in
order to make the statements contained therein with respect to the
Sponsor not misleading. To the best of the Sponsor's knowledge
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and belief, the Registration Statement does not contain any untrue
statement of a material fact required to be stated therein or omit to
state any material fact required to be stated therein or necessary to
make the statements contained therein not misleading.
(h) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations,
rights and licenses required to be taken, given or obtained, as the case
may be, by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which the Sponsor make no such representation or warranty), that are
necessary or advisable in connection with the purchase and sale of the
Notes and the execution and delivery by the Sponsor of the Operative
Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken,
and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the
part of the Sponsor and the performance by the Sponsor of its respective
obligations under this Agreement and such of the other Operative
Documents to which it is a party.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the Mortgage
Loans to the Indenture Trustee.
Section 3.2. Representations and Warranties of the Master
Servicer. The Master Servicer hereby represents, warrants and covenants to the
Indenture Trustee, the Sponsor, the Insurer and to the Class A Noteholders as of
the Closing Date that:
(a) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, is, in compliance with the laws of each state in which any
Mortgaged Property is located to the extent necessary to enable it to
perform its obligations hereunder and is in good standing as a foreign
corporation in each jurisdiction in which the nature of its business, or
the properties owned or leased by it make such qualification necessary.
The Master Servicer has all requisite corporate power and authority to
own and operate its properties, to carry out its business as presently
conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative
Documents to which it is a party. The Master Servicer has, on a
consolidated basis with its parent, AMHC, equity of at least $5,000,000,
as determined in accordance with generally accepted accounting
principles.
(b) The execution and delivery of this Agreement by the
Master Servicer and its performance and compliance with the terms of
this
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Agreement and the other Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of
the Master Servicer and will not violate the Master Servicer's Articles
of Incorporation or Bylaws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or
other instrument to which the Master Servicer is a party or by which the
Master Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to
which the Master Servicer is a party, assuming due authorization,
execution and delivery by the other parties hereto and thereto, each
constitutes a valid, legal and binding obligation of the Master
Servicer, enforceable against it in accordance with the terms hereof,
except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at
law).
(d) The Master Servicer is not in default with respect to
any order or decree of any court or any order, regulation or demand of
any federal, state, municipal or governmental agency, which might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Master Servicer or its
properties or might have consequences that would materially and
adversely affect its performance hereunder and under the other Operative
Documents to which the Master Servicer is a party.
(e) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
litigation might have consequences that would prohibit its entering into
this Agreement or any other Operative Document to which it is a party or
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Master Servicer or its properties or
might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which
the Master Servicer is a party.
(f) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to which the
Master Servicer makes no such representation or warranty), that are
necessary or advisable in connection with the execution and delivery by
the Master Servicer of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may
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be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of the Master
Servicer and the performance by the Master Servicer of its obligations
under this Agreement and such of the other Operative Documents to which
it is a party.
It is understood and agreed that the representations and
warranties set forth in this Section 3.2 shall survive delivery of the Mortgage
Loans to the Indenture Trustee.
Upon discovery by the Master Servicer, the Sponsor, the
Insurer or the Indenture Trustee of a breach of any of the representations and
warranties set forth in this Section 3.2 which materially and adversely affects
the interests of the Class A Noteholders or of the Insurer, the party
discovering such breach shall give prompt written notice to the other parties.
Within 60 days of its discovery or its receipt of notice of breach, the Master
Servicer shall cure such breach in all material respects; provided, however,
that if the Master Servicer can demonstrate to the reasonable satisfaction of
the Insurer that it is diligently pursuing remedial action, then the cure period
may be extended with the written approval of the Insurer.
Section 3.3. Representations and Warranties of the Sponsor
with Respect to the Mortgage Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor makes the following representations and
warranties as to the Mortgage Loans on which the Issuer relies in accepting the
Mortgage Loans and on which the Insurer relies in issuing the Policy. Such
representations and warranties speak as of the Closing Date with respect to the
Initial Mortgage Loans, and as of the related Subsequent Transfer Date with
respect to any Subsequent Mortgage Loan (unless otherwise specified below), but
shall in each case survive the sale, transfer, and assignment of the Mortgage
Loans to the Issuer and the pledge thereof to the Indenture Trustee pursuant to
the Indenture:
(i) All of the original or certified documentation set
forth in Section 2.1 (including all material documents related thereto)
with respect to each Initial Mortgage Loan has been or will be delivered
to the Indenture Trustee on the Closing Date or, with respect to any
Subsequent Mortgage Loans, on the related Subsequent Transfer Date, or
as otherwise provided in Section 3.2. All such documentation is true and
accurate in all material respects. Each of the documents and instruments
specified to be included therein has been duly executed and in due and
proper form, and each such document or instrument is in a form generally
acceptable to prudent mortgage lenders that regularly originate or
purchase mortgage loans comparable to the Mortgage Loans for sale to
prudent investors in the secondary market that invest in mortgage loans
such as the Mortgage Loans;
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(ii) Each Mortgage Loan is being serviced by the Master
Servicer or a Person controlling, controlled by or under common control
with the Master Servicer and qualified to service mortgage loans;
(iii) As of the Closing Date with respect to the Initial
Mortgage Loans and the related Subsequent Transfer Date with respect to
any Subsequent Mortgage Loan (unless otherwise specified), and the
applicable Transfer Date with respect to any Qualified Replacement
Mortgage, this Agreement constitutes a valid transfer and assignment to
the Trust of all right, title and interest of the Sponsor in and to the
related Cut-Off Date Principal Balances with respect to the applicable
Mortgage Loans, all monies due or to become due with respect thereto
(excluding payments in respect of accrued interest due prior to the
related Cut-Off Date), and all proceeds of such related Cut-Off Date
Principal Balances with respect to the Mortgage Loans and such funds as
are from time to time deposited in the Principal and Interest Account
(excluding any investment earnings thereon) and all other property
specified in the definition of "Mortgage Loan" as being part of the
corpus of the Trust conveyed to the Trust by the Sponsor, and upon
payment for the Additional Balances, will constitute a valid transfer
and assignment to the Indenture Trustee of all right, title and interest
of the Sponsor in and to the Additional Balances, all monies due or to
become due with respect thereto, and all proceeds of such Additional
Balances and all other property specified in the definition of "Mortgage
Loan" relating to the Additional Balances. However, if this Agreement is
not deemed to be a valid transfer and assignment to the Indenture
Trustee of such right, title and interest, this Agreement shall in any
event constitute a grant of a security interest (as defined in the UCC
as in effect in New York) in such property to the Indenture Trustee on
behalf of the Trust. If this Agreement constitutes the grant of a
security interest to the Trust in such property, and if the Indenture
Trustee maintains possession of the Mortgage File for each Mortgage
Loan, the Trust shall have a first priority perfected security interest
in such property, subject to the effect of Section 9-306 of the UCC with
respect to collections on the Mortgage Loans that are deposited in the
Principal and Interest Account;
(iv) As of the Closing Date with respect to the Initial
Mortgage Loans, the related Subsequent Transfer Date with respect to any
Subsequent Mortgage Loan (unless otherwise specified) and the applicable
Transfer Date with respect to any Qualified Replacement Mortgage and as
of the date any Additional Balance is created, the information set forth
in the Mortgage Loan Schedule for such Mortgage Loans is true and
correct in all material respects;
(v) As of the Closing Date and any Subsequent Transfer
Date, no more than 1.00% of the related Cut-Off Date Pool Balance of the
Mortgage Loans is secured by Mortgaged Properties located within any
single zip code area;
(vi) The Mortgages and Credit Line Agreements have not
been assigned or pledged, and the Sponsor is the sole owner and holder
of the Mortgages and Credit Line Agreements free and clear of any and
all liens, claims,
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encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority,
under all governmental and regulatory bodies having jurisdiction over
the Class A Noteholder of the applicable Mortgage Loan, to sell, assign
or transfer the same;
(vii) As of the Closing Date with respect to the Initial
Mortgage Loans, the Subsequent Transfer Date with respect to the
Subsequent Mortgage Loans and the applicable Transfer Date with respect
to any Qualified Replacement Mortgage, there is no valid offset, defense
or counterclaim of any obligor under any Credit Line Agreement or
Mortgage. Neither the operation of any of the terms of each Credit Line
Agreement and each Mortgage nor the exercise of any right thereunder
will render either the Credit Line Agreement or the Mortgage
unenforceable, in whole or in part, nor subject to any right of
rescission, set-off, claim, counterclaim or defense, including, without
limitation, the defense of usury and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;
(viii) No Minimum Monthly Payment is more than 59 days
delinquent (measured on a contractual basis); and with respect to the
Initial Mortgage Loans no more than 0.23% (by Initial Cut-Off Date Pool
Balance) were 30-59 days delinquent (measured on a contractual basis).
No Subsequent Mortgage Loan will be more than 30 days delinquent;
(ix) As of the related Cut-Off Date with respect to the
Mortgage Loans and the applicable Transfer Date with respect to any
Qualified Replacement Mortgage, each Credit Line Agreement and each
Mortgage Loan is an enforceable obligation of the related Mortgagor,
except as the enforceability thereof may be limited by the bankruptcy,
insolvency or similar laws affecting creditors' rights generally;
(x) The weighted average remaining term to maturity of the
Initial Mortgage Loans on a contractual basis as of the Initial Cut-Off
Date for the Mortgage Loans is approximately 273 months. On each date
that the Loan Rates have been adjusted, interest rate adjustments on the
Mortgage Loans were made in compliance with the related Mortgage and
Credit Line Agreement and applicable law. Over the term of each Initial
Mortgage Loan, the Loan Rate may not exceed the related Loan Rate Cap,
if any. The Loan Rate Caps for the Initial Mortgage Loans range between
16.25% and 24.25%. The Initial Mortgage Loans' margins range between
0.00% and 7.75% and the weighted average margin is approximately 3.59%
as of the related Cut-Off Date for the Initial Mortgage Loans. The Loan
Rates on such Initial Mortgage Loans range between 8.50% and 16.25% and
the weighted average Loan Rate is approximately 12.09%; and
(xi) The Credit Limits on the Initial Mortgage Loans range
between $10,000 and $384,000 with an average of 32,903.27. As of the
Initial Cut-Off Date for the Initial Mortgage Loans, no Initial Mortgage
Loan had a
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principal balance in excess of approximately $284,000 and the average
principal balance of the Initial Mortgage Loans is equal to
approximately $31,641.56
(xii) Each Mortgage Loan being transferred to the Trust is
a Mortgage;
(xiii) Each Subsequent Mortgage Loan complies with the
requirements in Section 2.4 of this Agreement, including without
limitation the conditions described in subsections (c) and (d) of such
Section 2.4;
(xiv) Each Mortgaged Property is improved by a single
(one-to-four) family residential dwelling, which may include
manufactured homes, condominiums and townhouses but shall not include
cooperatives or other property which constitutes other than real
property under applicable state law;
(xv) No Mortgage Loan had a Combined Loan-to-Value Ratio
in excess of 125%;
(xvi) As of the Closing Date with respect to the Initial
Mortgage Loans and the applicable Transfer Date with respect to any
Subsequent Mortgage Loans, each Mortgage is either a valid and
subsisting first or second lien of record on the Mortgaged Property
(subject in the case of any Second Mortgage Loan only to a Senior Lien
on such Mortgaged Property) and subject in all cases to the exceptions
to title set forth in the title insurance policy, with respect to the
related Mortgage Loan, which exceptions are generally acceptable to
banking institutions in connection with their regular mortgage lending
activities, and except for liens for (i) real estate taxes and special
assessments not yet delinquent, (ii) income taxes, (iii) any covenants,
conditions and restrictions, rights of way, easements, and other matters
of public record and such other exceptions to which similar properties
are commonly subject and which do not individually, or in the aggregate,
materially and adversely affect the benefits of the security intended to
be provided by such Mortgage;
(xvii) Immediately prior to the transfer and assignment
herein contemplated, the Sponsor held good and indefeasible title to,
and was the sole owner of, each Mortgage Loan conveyed by the Sponsor
(including its Cut-Off Date Pool Balance), all monies due or to become
due with respect thereto, and all proceeds of such Cut-Off Date Pool
Balances with respect to the Mortgage Loans is subject to no liens,
charges, mortgages, encumbrances or rights of others except liens which
will be released simultaneously with such transfer and assignment; and
immediately upon the transfer and assignment herein contemplated, the
Indenture Trustee will hold good and indefeasible title to, and be the
sole owner of, each Mortgage Loan subject to no liens, charges,
mortgages, encumbrances or rights of others except liens which will be
released simultaneously with such transfer and assignment;
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(xviii) There is no delinquent tax or assessment lien or
mechanic's lien on any Mortgaged Property, and each Mortgaged Property
is free of substantial damage and is in good repair;
(xix) Each Mortgage Loan at the time it was made complied
in all material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act and other consumer protection laws, real estate settlement
procedure, usury, equal credit opportunity, disclosure and recording
laws;
(xx) With respect to each First Mortgage Loan, and, to the
best of the Sponsor's knowledge, with respect to each Second Mortgage
Loan, a lender's title insurance policy, issued in standard California
Land Title Association form or American Land Title Association form, or
other form acceptable in a particular jurisdiction by a title insurance
company authorized to transact business in the state in which the
related Mortgaged Property is situated, was issued on the date of
origination of the Mortgage Loan and as of the Cut-Off Date and each
applicable Transfer Date with respect to the Subsequent Mortgage Loan,
each such policy is valid and remains in full force and effect, or a
title search or guaranty of title customary in the relevant jurisdiction
was obtained with respect to a Mortgage Loan as to which no title
insurance policy or binder was issued.
(xxi) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan, each Credit Line Agreement is the legal, valid, binding
and enforceable obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (whether considered in a proceeding
or action in equity or at law), and all parties to each Mortgage Loan
had full legal capacity to execute all documents relating to such
Mortgage Loan and convey the estate therein purported to be conveyed;
(xxii) The terms of each Credit Line Agreement and each
Mortgage have not been impaired, altered or modified in any respect,
except by a written instrument which (if such instrument is secured by
real property) has been recorded, if necessary, to protect the interest
of the Class A Noteholders and which has been delivered to the Indenture
Trustee. The substance of any such alteration or modification is
reflected on the related Schedule of Mortgage Loans and has been
approved by the primary mortgage guaranty insurer, if any;
(xxiii) Except as otherwise required by law, pursuant to
the statute under which the related Mortgage Loan was made, the related
Credit Line Agreement is not and has not been secured by any collateral,
pledged account or other security except the lien of the corresponding
Mortgage;
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(xxiv) Each Mortgaged Property is located in the state
identified in the Schedule of Mortgage Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
(xxv) There is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property, nor is such a
proceeding currently occurring, and each Mortgaged Property is undamaged
by waste, fire, earthquake or earth movement, flood, tornado or other
casualty, so as to affect adversely the value of the Mortgaged Property
as security for the Mortgage Loan or the use for which the premises were
intended;
(xxvi) With respect to each Second Mortgage Loan, either
(A) no consent for such Mortgage Loan was required by the holder of the
related Senior Lien prior to the making of such Mortgage Loan or (B)
such consent has been obtained and is contained in the related Mortgage
File;
(xxvii) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by Indenture Trustee's sale and (B)
otherwise by judicial foreclosure. There is no homestead or other
exemption available which materially interferes with the right to sell
the related Mortgaged Property at a Indenture Trustee's sale or the
right to foreclose the related Mortgage;
(xxviii) As of the Closing Date with respect to the
Mortgage Loans and the applicable Transfer Date with respect to the
Subsequent Mortgage Loans, there is no default, breach, violation or
event of acceleration existing under any Mortgage or the related Credit
Line Agreement and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration; and the Sponsor
has not waived any default, breach, violation or event of acceleration;
(xxix) To the best knowledge of the Sponsor, all parties
to the Credit Line Agreement and the Mortgage had legal capacity to
execute the Credit Line Agreement and the Mortgage and each Credit Line
Agreement and Mortgage have been duly and properly executed by such
parties;
(xxx) No selection procedures reasonably believed by the
Sponsor to be adverse to the interests of the Class A Noteholders or the
Insurer was utilized in selecting the Mortgage Loans;
(xxxi) No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement which has been
approved by the applicable title insurer (to the extent required by such
title insurer) and which is part of the Mortgage File delivered to the
Indenture Trustee;
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(xxxii) With respect to each Mortgage Loan that is not a
first mortgage loan, the related prior lien requires equal monthly
payments. At the time of origination of each Mortgage Loan that is not a
first mortgage loan, the related prior lien was not more than 30 days
delinquent;
(xxxiii) All required inspections, licenses and
certificates with respect to the use and occupancy of all occupied
portions of all property securing the Mortgages have been made, obtained
or issued, as applicable;
(xxxiv) No more than 78% of the Initial Mortgage Loans are
second mortgage loans;
(xxxv) With respect to each Mortgage Loan that is not a
first mortgage loan, the related prior lien does not provide for
negative amortization;
(xxxvi) With respect to each Mortgage Loan that is not a
first mortgage loan, the maturity date of the Mortgage Loan is prior to
the maturity date of the related prior lien if such prior lien provides
for a balloon payment;
(xxxvii) Each Mortgage Loan is secured by a property
having an appraised value of less than $1,500,000.
(b) Upon the discovery by the Master Servicer, the Sponsor,
the Insurer or the Indenture Trustee of a breach of any of the representations
and warranties made in respect of any Mortgage Loan which materially and
adversely affects the interests of the Class A Noteholders or of the Insurer in
such Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties. The Master Servicer shall promptly notify the
Sponsor of such breach and request that the Sponsor cure such breach or take the
actions described in Section 3.4(b) hereof within the time periods required
thereby, and the Sponsor shall cure such breach or take such actions; provided,
however, that the cure for any breach of a representation and warranty relating
to the characteristics of the Mortgage Loans in the aggregate shall be a
reassignment of, or substitution for, only those Mortgage Loans necessary to
cause such characteristics to be in compliance with the related representation
and warranty. Upon accepting such transfer and making any required deposit into
the Principal and Interest Account or substitution of a Qualified Replacement
Mortgage, as the case may be, the Sponsor shall be entitled to receive an
instrument of assignment or transfer from the Indenture Trustee to the same
extent as set forth in Section 2.2 with respect to the transfer of Mortgage
Loans under that Section.
It is understood and agreed that the obligation of the Sponsor
to accept a transfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Principal and Interest
Account or to substitute an Qualified Replacement Mortgage, as the case may be,
shall constitute the sole remedy against the Sponsor respecting such breach
available to Class A Noteholders of the Class A Notes, the Indenture Trustee on
behalf of the Class A Noteholders of the Class A Notes and the Insurer.
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Section 3.4. Covenants of Sponsor to Take Certain Actions
with Respect to the Mortgage Loans In Certain Situations. (a) With the provisos
and limitations as to remedies set forth in this Section 3.4, upon the discovery
by Sponsor, the Master Servicer, the Sponsor, the Insurer, any Sub-Servicer or
the Indenture Trustee that the representations and warranties set forth in
Section 3.3 of this Agreement were untrue in any material respect as of the
Closing Date (or the Subsequent Transfer Date, or the Transfer Date, as the case
may be) and such breaches of the representations and warranties materially and
adversely affect the interests of the Class A Noteholders or of the Insurer, the
party discovering such breach shall give prompt written notice to the other
parties.
The Sponsor acknowledges that a breach of any representation
or warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan, (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Mortgaged Property or (z) set
forth in clause (viii) of Section 3.3 above constitutes breach of a
representation or warranty which "materially and adversely affects the interests
of the Class A Noteholders or of the Insurer" in such Mortgage Loan.
(b) Upon the earliest to occur of the Sponsor's discovery,
its receipt of notice of breach from any one of the other parties hereto or from
the Insurer or such time as a breach of any representation and warranty
materially and adversely affects the interests of the Class A Noteholders or of
the Insurer as set forth above, the Sponsor hereby covenants and warrants that
it shall promptly cure such breach in all material respects or it shall (or
shall cause an affiliate of the Sponsor to), subject to the further requirements
of this paragraph, on the second Remittance Date next succeeding such discovery,
receipt of notice or such other time (i) substitute in lieu of each Mortgage
Loan which has given rise to the requirement for action by the Sponsor a
Qualified Replacement Mortgage and deliver the Substitution Amount applicable
thereto, together with the aggregate amount of all Servicing Advances
theretofore made with respect to such Mortgage Loan, to the Master Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Mortgage
Loan from the Trust at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the Master Servicer for
deposit in the Principal and Interest Account. It is understood and agreed that
the obligation of the Sponsor to cure the defect, or substitute for, or purchase
any Mortgage Loan as to which a representation or warranty is untrue in any
material respect and has not been remedied shall constitute the sole remedy
available to the Class A Noteholders, the Indenture Trustee or the Insurer.
(c) In the event that any Qualified Replacement Mortgage is
delivered by the Sponsor to the Trust pursuant to Section 2.2, Section 3.3 or
Section 3.4 hereof, the Sponsor shall be obligated to take the actions described
in Section 3.4(b) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Class A Noteholders, the Master Servicer, the Sponsor,
the Insurer, or the Indenture Trustee that the representations and warranties
set forth in Section 3.3 above are untrue in any material respect on the date
such Qualified Replacement Mortgage is conveyed to the Trust such that the
interests of the Class A Noteholders or the Insurer in the related Qualified
Replacement Mortgage are materially and adversely affected; provided,
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however, that for the purposes of this subsection (c) the representations and
warranties set forth in Section 3.3 above referring to items "as of the Initial
Cut-Off Date" or "as of the Subsequent Cut-Off Date" or "as of the related
Cut-Off Date" or "as of the Closing Date" or "as of the Subsequent Transfer
Date" shall be deemed to refer to such items as of the date such Qualified
Replacement Mortgage is conveyed to the Trust.
(d) It is understood and agreed that the covenants set forth
in this Section 3.4 shall survive the pledge of the respective Mortgage Loans
(including Qualified Replacement Mortgage Loans) to the Indenture Trustee on
behalf of the Trust.
ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 4.1. Master Servicer and Sub-Servicers.
(a) Advanta Mortgage Corp. USA agrees to act as the Master
Servicer and to perform all servicing duties under this Agreement subject to the
terms hereof.
(b) The Master Servicer shall service and administer the
Mortgage Loans on behalf of the Indenture Trustee and the Insurer and shall have
full power and authority, acting alone or through one or more Sub-Servicers, to
do 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 the name of a Sub-Servicer,
may, and is hereby authorized and empowered by the Indenture Trustee to, execute
and deliver, on behalf of itself, the Class A Noteholders, the Insurer and the
Indenture Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans, the insurance
policies and accounts related thereto and the properties subject to the
Mortgages in accordance with the terms of this Agreement. Upon the execution and
delivery of this Agreement, and from time to time as may be required thereafter,
the Indenture Trustee shall furnish the Master Servicer or its Sub-Servicers
with any powers of attorney and such other documents as may be necessary or
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties hereunder.
In servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures consistent with Accepted Servicing Practices
and in a manner consistent with recovery under any insurance policy required to
be maintained by the Master Servicer pursuant to this Agreement.
Costs incurred by the Master Servicer in effectuating the
timely payment of taxes and assessments on the property securing a Credit Line
Agreement and foreclosure costs may be added by the Master Servicer to the
amount owing under such Credit Line Agreement where the terms of such Credit
Line Agreement so permit; provided, however, that the addition of any such cost
shall not be taken into account for
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purposes of calculating the principal amount of the Credit Line Agreement and
the Mortgage Loan secured by the Credit Line Agreement or distributions to be
made to Class A Noteholders. Such costs shall be recoverable by the Master
Servicer pursuant to Section 4.9 and 4.13.
(c) Without limiting the generality of the foregoing, the
Master Servicer shall continue, and is hereby authorized and empowered by the
Indenture Trustee, to execute and deliver, on behalf of itself, the Class A
Noteholders, the Insurer and the Indenture Trustee or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the related Properties, including consenting to the
placement of a lien senior to that of any Mortgage on the related Mortgaged
Property; provided, that,
(i) such Mortgage succeeded to a first lien position after
the related Mortgage Loan was conveyed to the Trust and, immediately
following the placement of such senior lien, such Mortgage is in a
second lien position and the outstanding principal amount of the
mortgage loan secured by such subsequent senior lien is no greater than
the outstanding principal amount of the senior mortgage loan secured by
the Mortgaged Property as of the date the related Mortgage Loan was
originated; or
(ii) the Mortgage relating to such Mortgage Loan was in a
second lien position as of the related Cut-Off Date and the new senior
lien secures a mortgage loan that refinances an existing first mortgage
loan and the outstanding principal amount and interest rate of the
replacement first mortgage loan immediately following such refinancing
is not greater than the outstanding principal amount and interest rate
of such existing first mortgage loan at the date of origination of such
Mortgage Loan;
provided, further, that such senior lien does not secure a note that provides
for negative amortization. Notwithstanding the foregoing, the Master Servicer
can consent to the placing of liens senior to that of a Mortgage on the related
Mortgaged Property only if the Combined Loan-to-Value Ratio and second mortgage
ratio is less than or equal to the original Combined Loan-to-Value Ratio and
second mortgage ratio; provided, however, the Master Servicer may consent to the
placing of a senior lien on up to 5% of the Mortgage Loans if the Combined
Loan-to-Value Ratios of any such Mortgage Loan will not increase to greater than
100%; provided, further, that the Master Servicer may only approve modifications
if the related Mortgagor has used the Credit Line Agreement in the past twelve
months and has made timely payments, the current characteristics of the related
Mortgagor are consistent with the Accepted Servicing Practices and the Master
Servicer receives verbal verification of employment of the related Mortgagor.
At the written direction of the Originator, the Master
Servicer may also, without prior approval from the Rating Agencies or the
Insurer, increase the Credit Limits on Mortgage Loans provided that (i) new
appraisals are obtained and the Combined Loan-to-Value
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Ratios of any such Mortgage Loan of the Mortgage Loans after giving effect to
such increase are less than or equal to the Combined Loan-to-Value Ratios of the
Mortgage Loans as of the related Cut-Off Date, (ii) such increases are
consistent with the Accepted Servicing Practices, (iii) the related Mortgagor
has used the Credit Line Agreement in the past twelve months and has made timely
payments and (iv) the Master Servicer receives verbal verification of employment
of the related Mortgagor. In addition, the Master Servicer, at the written
direction of the Originator, may increase the Credit Limits on Mortgage Loans
having aggregate balances of up to 5% of the Pool Balance, without obtaining new
appraisals provided that (i) the increase in the Credit Limit does not cause the
Combined Loan-to-Value Ratios of the Mortgage Loans to exceed 100%, (ii) the
increase is consistent with Accepted Servicing Practices, (iii) the related
Mortgagor has used the Credit Line Agreement in the past twelve months and has
made timely payments and (iv) the Master Servicer receives verbal verification
of employment of the related Mortgagor.
Furthermore, the Master Servicer may, without prior approval
from the Rating Agencies and the Insurer solicit Mortgagors for a reduction in
Loan Rates of no more than .50%; provided that the Master Servicer can only
reduce such Loan Rates on up to 5% of the Mortgage Loans by Pool Balance. Any
such solicitations shall not result in a reduction in the weighted average
Margin of the Mortgage Loans in the pool by more than 2.5 basis points taking
into account any such prior reductions.
Subject to the above limitations, the Master Servicer may
agree to changes in the terms of a Mortgage Loan at the request of the
Mortgagor; provided, that such changes (i) do not materially and adversely
affect the interests of Class A Noteholders or the Insurer and (ii) are
consistent with Accepted Servicing Practices.
Notwithstanding anything to the contrary, the Master Servicer
shall not agree to any changes or modifications in the terms of any Mortgage
Loan that, after giving effect to such change or modification, would cause any
criteria set forth in Section 2.4 to be violated.
(d) The relationship of the Master Servicer (and of any
successor to the Master Servicer as servicer under this Agreement) to the
Indenture Trustee under this Agreement is intended by the parties to be that of
an independent contractor and not that of a joint venturer, partner or agent.
In the event that the rights, duties and obligations of the
Master Servicer are terminated hereunder, any successor to the Master Servicer
in its sole discretion may, to the extent permitted by applicable law, terminate
the existing subservicer arrangements with any subservicer or assume the
terminated Master Servicer's rights under such subservicing arrangements which
termination or assumption will not violate the terms of such arrangements.
(e) The Master Servicer may, and is hereby authorized to,
perform any of its servicing responsibilities with respect to all or certain of
the Mortgage Loans through a Sub-Servicer as it may from time to time designate,
but no such designation of a Sub-Servicer shall serve to release the Master
Servicer from any of its obligations under
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this Agreement. Such Sub-Servicer shall have all the rights and powers of the
Master Servicer with respect to such Mortgage Loans under this Agreement.
(f) Without limiting the generality of the foregoing, but
subject to Sections 4.13 and 4.14, the Master Servicer in its own name or in the
name of a Sub-Servicer may be authorized and empowered pursuant to a power of
attorney executed and delivered by the Indenture Trustee to execute and deliver,
and may be authorized and empowered by the Indenture Trustee, to execute and
deliver, on behalf of itself, the Class A Noteholders and the Indenture Trustee
or any of them, (i) any and all instruments of satisfaction or cancellation or
of partial or full release or discharge and all other comparable instruments
with respect to the Mortgage Loans and with respect to the Properties, (ii) and
to institute foreclosure proceedings or obtain a deed in lieu of foreclosure so
as to effect Class A Noteholdership of any Mortgaged Property on behalf of the
Indenture Trustee, and (iii) to hold title to any Mortgaged Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the Indenture Trustee;
provided, however, that Section 4.14(a) shall constitute a power of attorney
from the Indenture Trustee to the Master Servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Mortgage Loan paid in full (or with respect to which payment in full has been
escrowed). Subject to Sections 4.13 and 4.14, the Indenture Trustee shall
furnish the Master Servicer and any Sub-Servicer with any powers of attorney and
other documents as the Master Servicer or such Sub-Servicer shall reasonably
request to enable the Master Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
(g) The Master Servicer shall give prompt notice to the
Indenture Trustee of any action, of which the Master Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert jurisdiction
over the Trust.
(h) Servicing Advances incurred by the Master Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and assessments or
other charges) on any Mortgaged Property shall be recoverable by the Master
Servicer or such Sub-Servicer to the extent described in Section 4.9 and in
Section 8.6(b)(ix) of the Indenture.
Section 4.2. Collection of Certain Mortgage Loan Payments. (a)
In accordance with Accepted Servicing Practices and subject to the limitations
set forth in Section 4.1, the Master Servicer may in its discretion (i) waive
any assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or other fees which may be
collected in the ordinary course of servicing the Mortgage Loans, (ii) if a
Mortgagor is in default or about to be in default because of a Mortgagor's
financial condition, arrange with the Mortgagor a schedule for the payment of
delinquent payments due on the related Mortgage Loan; provided, however, the
Master Servicer shall not reschedule the payment of delinquent payments more
than one time in any twelve consecutive months with respect to any Mortgagor nor
extend the maturity of any Mortgage Loan beyond the Payment Date in August,
2023; (iii) modify payments of monthly principal and interest on any Mortgage
Loan becoming subject to the terms of the Civil Relief Act, as amended, in
accordance with the Master Servicer's general
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policies of the comparable mortgage loans subject to such Act; or (iv) extend
the maturity date of any Mortgage Loan in connection with the extension of the
related Draw Period (provided, however, that in no event may any such maturity
date be extended to a date which is more than 12 months after the original
maturity date without the Insurer's approval or to a date which is later than
the Payment Date occurring in August, 2023).
(b) The Master Servicer shall hold in escrow on behalf of the
related Mortgagor all Prepaid Installments received by it, and shall apply such
Prepaid Installments as directed by such Mortgagor and as set forth in the
related Credit Line Agreement.
Section 4.3. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers. The Master Servicer may enter into Sub-Servicing Agreements
for any servicing and administration of Mortgage Loans with any institution
which is acceptable to the Insurer in compliance with the laws of each state
necessary to enable it to perform its obligations under such Sub-Servicing
Agreement. The Master Servicer shall give notice to the Insurer of the
appointment of any Sub-Servicer and shall furnish to the Insurer a copy of the
Subservicing Agreement. For purposes of this Agreement, the Master Servicer
shall be deemed to have received payments on Mortgage Loans when any
Sub-Servicer has received such payments. Any such Sub-Servicing Agreement shall
be consistent with and not violate the provisions of this Agreement.
Section 4.4. Successor Sub-Servicers. The Master Servicer may
terminate any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement and to either directly service the
related Mortgage Loans itself or enter into a Sub-Servicing Agreement with a
successor Sub-Servicer that qualifies under Section 4.3.
Section 4.5. Liability of Master Servicer. The Master
Servicer shall not be relieved of its obligations under this Agreement
notwithstanding any Sub-Servicing Agreement or any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or otherwise, and the Master Servicer shall be obligated to the
same extent and under the same terms and conditions as if it 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 such
Sub-Servicing Agreement shall be deemed to limit or modify this Agreement. The
Trust shall not indemnify the Master Servicer for any losses due to the Master
Servicer's or any Sub-Servicer's negligence.
Section 4.6. No Contractual Relationship Between Sub-Servicer
and Indenture Trustee or the Class A Noteholders. Any Sub-Servicing Agreement
and any other transactions or services relating to the Mortgage Loans involving
a Sub-Servicer shall be deemed to be between the Sub-Servicer and the Master
Servicer alone and the Insurer, the Indenture Trustee and the Class A
Noteholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Sub-Servicer
except as set forth in Section 4.7.
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Section 4.7. Assumption or Termination of Sub-Servicing
Agreement by Indenture Trustee. In connection with the assumption of the
responsibilities, duties and liabilities and of the authority, power and rights
of the Master Servicer hereunder by the Indenture Trustee pursuant to the Sale
and Servicing Agreement, it is understood and agreed that the Master Servicer's
rights and obligations under any Sub-Servicing Agreement then in force between
the Master Servicer and a Sub-Servicer may be assumed or terminated by the
Indenture Trustee at its option.
The Master Servicer shall, upon request of the Indenture
Trustee, but at the expense of the Master Servicer, deliver to the assuming
party documents and records relating to each Sub-Servicing Agreement and an
accounting of amounts collected and held by it and otherwise use its best
reasonable efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
Section 4.8. Principal and Interest Account.
(a) The Master Servicer and/or each Sub-Servicer, as
applicable, shall establish in the name of the Trust for the benefit of the
Class A Noteholders and the Insurer and maintain at one or more Designated
Depository Institutions the Principal and Interest Account.
Subject to Subsections (c) and (e) below, the Master Servicer
and any Sub-Servicer shall deposit all receipts related to the Mortgage Loans to
the Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
Within one Business Day of the Closing Date, and on each
Subsequent Transfer Date and each Transfer Date, the Sponsor shall cause the
Master Servicer to deposit to the Principal and Interest Account all receipts
related to the related Mortgage Loans received after the Initial Cut-Off Date or
related Replacement Cut-Off Date or related Subsequent Cut-Off Date, as the case
may be.
(b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC, or (ii) invested
in Eligible Investments. The Principal and Interest Account shall be held in
trust in the name of the Trust and for the benefit of the Class A Noteholders
and the Insurer. Any investment earnings on funds held in the Principal and
Interest Account shall be for the account of the Master Servicer and may only be
withdrawn from the Principal and Interest Account by the Master Servicer
immediately following the remittance of the Monthly Remittance Amounts by the
Master Servicer. Any references herein to amounts on deposit in the Principal
and Interest Account shall refer to amounts net of such investment earnings. The
Master Servicer shall deposit the amount of any investment losses immediately
into the Principal and Interest Account as realized.
(c) Subject to Subsection (e) below, the Master Servicer shall
deposit to the Principal and Interest Account all principal and interest
collections on the Mortgage Loans received on or after the Initial Cut-Off Date
or related Subsequent Cut-Off Date,
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as the case may be, including any Prepayments and Net Liquidation Proceeds, all
Loan Purchase Prices and Substitution Amounts received or paid by the Master
Servicer with respect to the Mortgage Loans and other recoveries or amounts
related to the Mortgage Loans received by the Master Servicer, together with any
amounts which are reimbursable from the Principal and Interest Account, but net
of (i) the Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii)
principal (including Prepayments) collected on the related Mortgage Loans prior
to the Initial Cut-Off Date or related Subsequent Cut-Off Date, as the case may
be, (iii) interest accruing on the related Mortgage Loans prior to the Initial
Cut-Off Date or related Subsequent Cut-Off Date, as the case may be and (iv) Net
Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed the
Principal Balance of the related Mortgage Loan.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Indenture Trustee
of the Monthly Remittance Amounts due on the Remittance
Date;
(B) to pay to itself from any funds in the Principal and
Interest Account any accrued and unpaid Servicing Fees
and reimburse itself pursuant to Section 4.9(a) hereof
for unreimbursed Servicing Advances and Servicing
Advances which have been deemed Nonrecoverable Advances;
(C) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account;
(D) to withdraw amounts that have been deposited to the
Principal and Interest Account in error; and
(E) to clear and terminate the Principal and InterestAccount
following the termination of the Trust Estate pursuant
to Article X or XII of the Indenture.
(ii) On the tenth day of each month, the Master Servicer
shall send to the Indenture Trustee a report, in the form of a computer tape,
detailing the aggregate payments on the total Mortgage Loans during the prior
Remittance Period. Such tape shall be in the form and have the specifications as
may be agreed to between the Master Servicer and the Indenture Trustee from time
to time.
(iii) On each Remittance Date the Master Servicer shall remit
to the Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds, the Interest Remittance Amount and the Principal
Remittance Amount.
(e) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Master Servicer or of the Master Servicer's ultimate
corporate parent are
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satisfactory to the Insurer, Xxxxx'x and Standard & Poor's, then the requirement
to maintain the Principal and Interest Account may be waived by an instrument
signed by the Insurer, Standard & Poor's and Xxxxx'x, and the Master Servicer
may be allowed to co-mingle with its general funds the amounts otherwise
required to be deposited to the Principal and Interest Account, on such terms
and subject to such conditions as the Insurer, Xxxxx'x and Standard & Poor's may
permit.
Section 4.9. Servicing Advances . The Master Servicer will pay
all "out-of-pocket" costs and expenses incurred in the performance of its
servicing obligations, including, but not limited to, the cost of (i)
Preservation Expenses, (ii) any enforcement or judicial proceedings, including
foreclosures, and (iii) the management and liquidation of REO Property, but is
only required to pay such costs and expenses to the extent the Master Servicer
reasonably believes such costs and expenses will increase Net Liquidation
Proceeds on the related Mortgage Loan. Each such amount so paid will constitute
a "Servicing Advance." The Master Servicer may recover Servicing Advances (x)
from the Mortgagors to the extent permitted by the Mortgage Loans, from
Liquidation Proceeds realized upon the liquidation of the related Mortgage Loan,
from Insurance Proceeds, and (y) as provided in Section 8.6(b)(ix) of the
Indenture.
Section 4.10. Purchase of Mortgage Loans . The Master Servicer
may, but is not obligated to, purchase for its own account any Mortgage Loan
which becomes Delinquent, in whole or in part, as to 90 days or more or any
Mortgage Loan as to which enforcement proceedings have been brought by the
Master Servicer or by any Sub-Servicer pursuant to Section 4.13. Any such Loan
so purchased shall be purchased by the Master Servicer on a Remittance Date at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be deposited in the Principal and Interest Account.
Section 4.11. Maintenance of Insurance . (a) The Master
Servicer shall cause to be maintained with respect to each Mortgage Loan a
hazard insurance policy with a generally acceptable carrier that provides for
fire and extended coverage, and which provides for a recovery by the Master
Servicer on behalf of the Trust of insurance proceeds relating to such Mortgage
Loan in an amount not less than the least of (i) the outstanding principal
balance of the Mortgage Loan or (ii) the maximum insurable value of the
Mortgaged Property.
(b) If any Mortgage Loan at the time of origination relates to
a Mortgaged Property in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, the Master
Servicer will cause to be maintained with respect thereto a flood insurance
policy in a form meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable carrier in an
amount representing coverage, and which provides for a recovery by the Master
Servicer on behalf of the Trust of Insurance Proceeds relating to such Mortgage
Loan of not less than the least of (i) the outstanding Principal Balance of the
Mortgage Loan or (ii) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973. The Master Servicer shall indemnify
the Trust and the Insurer out of the Master Servicer's own funds
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for any loss to the Trust and the Insurer resulting from the Master Servicer's
failure to maintain the insurance required by this Section.
It is understood and agreed that such insurance shall be with
insurers approved by the Master Servicer and that no earthquake or other
additional insurance is to be required of any Mortgagor or to be maintained on
property acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. Any cost incurred by the Master Servicer in
maintaining any such insurance shall be added to the amount owing under the
Mortgage Loan where the terms of the Mortgage Loan so permit; provided, however,
that the addition of any such cost shall not be taken into account for purposes
of calculating the principal amount of the Credit Line Agreement or the
distributions to be made to the Class A Noteholders. Such costs shall be
recoverable by the Servicer pursuant to Section 4.9.
(c) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against fire, flood and hazards of extended
coverage on all of the Mortgage Loans, then, to the extent such policy names the
Master Servicer as loss payee and provides coverage in an amount equal to the
aggregate unpaid principal balance on the Mortgage Loans without co-insurance,
and otherwise complies with the requirements of this Section 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 4.11, it being
understood and agreed that such blanket 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 related Mortgaged Property a policy complying with the
preceding paragraphs of this Section 4.11, and there shall have been a loss
which would have been covered by such policy, deposit in the Principal and
Interest Account from the Master Servicer's own funds the difference, if any,
between the amount that would have been payable under a policy complying with
the preceding paragraphs of this Section 4.11 and the amount paid under such
blanket policy. Upon the request of the Indenture Trustee or the Insurer, the
Master Servicer shall cause to be delivered to the Indenture Trustee or the
Insurer, a certified true copy of such policy.
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Master Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Mortgage Loan under any "due-on-sale" clause contained
in the related Mortgage or Credit Line Agreement; provided, however, that the
Master Servicer shall not exercise any such right if (i) the "due-on-sale"
clause, in the reasonable belief of the Master Servicer, is not enforceable
under applicable law or (ii) the Master Servicer reasonably believes that to
permit an assumption of the Mortgage Loan would not materially and adversely
affect the interest of the Class A Noteholders or of the Insurer. In such event,
the Master Servicer shall enter into an assumption and modification agreement
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Credit Line Agreement
and, unless prohibited by applicable law or any of the agreements, guaranties or
assignments relating to the
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Mortgage Loans contained in the Mortgage Files, the Mortgagor remains liable
thereon. If the foregoing is not permitted under applicable law, the Master
Servicer is 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 Mortgagor and becomes liable under the Credit
Line Agreement; provided, however, that to the extent any such substitution of
liability agreement would be delivered by the Master Servicer outside of its
usual procedures for mortgage loans held in its own portfolio the Master
Servicer shall, prior to executing and delivering such agreement, obtain the
prior written consent of the Insurer. The Mortgage Loan, as assumed, shall
conform in all respects to the requirements, representations and warranties of
this Agreement. The Master Servicer shall notify the Indenture Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Indenture Trustee the original copy of such assumption or substitution
agreement, which copy shall be added by the Indenture Trustee to the related
Mortgage File and which 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 responsible for
recording any such assumption or substitution agreements. In connection with any
such assumption or substitution agreement, the required monthly payment on the
related Mortgage Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Master Servicer or the Sub-Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Master Servicer as additional
servicing compensation.
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 any assumption which the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 4.13. Realization Upon Defaulted Mortgage Loans . (a)
The Master Servicer shall foreclose upon or otherwise comparably effect the
ownership on behalf of the Mortgaged Properties relating to defaulted Mortgage
Loans as to which no satisfactory arrangements can be made for collection of
Delinquent payments and which the Master Servicer has not purchased pursuant to
Section 4.10. In connection with such foreclosure or other conversion, the
Master Servicer shall exercise such of the rights and powers vested in it
hereunder, and use the same degree of care and skill in their exercise or use,
as prudent mortgage lenders would exercise or use under the circumstances in the
conduct of their own affairs, including, but not limited to, advancing funds for
the payment of taxes, amounts due with respect to Senior Liens, and insurance
premiums. Any amounts so advanced shall constitute "Servicing Advances" within
the meaning of Section 4.9 hereof.
Notwithstanding the generality of the foregoing provisions,
the Master Servicer shall manage, conserve, protect and operate each REO
Property for the Class A
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Noteholders solely for the purpose of its prompt disposition and sale. Pursuant
to its efforts to sell such REO Property, the Master Servicer shall either
itself or through an agent selected by the Master Servicer protect and conserve
such REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Class A Noteholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Class A Noteholders for the period prior to the sale of such REO
Property. The Master Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Mortgaged Property in determining
whether to foreclose upon or otherwise comparably convert the Class A
Noteholdership of such Mortgaged Property.
(b) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through Indenture
Trustee's sale, foreclosure sale or otherwise, all amounts it expects to recover
from or on account of such defaulted Mortgage Loan, whereupon such Mortgage Loan
shall become a "Liquidated Mortgage Loan" and shall promptly deliver to the
Insurer its customary liquidation report (each, a "Liquidation Report") with
respect to such Mortgage Loan.
Section 4.14. Indenture Trustee to Cooperate; Release of
Mortgage Files. (a) Upon the payment in full of the Principal Balance of any
Mortgage Loan (including the repurchase of any Mortgage Loan or any liquidation
of such Mortgage Loan through foreclosure or otherwise), or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer shall deliver to the
Indenture Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master
Servicer's Trust Receipt, the Indenture Trustee shall promptly release the
related Mortgage File, in trust to (i) the Master Servicer, (ii) an escrow agent
or (iii) any employee, agent or attorney of the Indenture Trustee, in each case
pending its release by the Master Servicer, such escrow agent or such employee,
agent or attorney of the Indenture Trustee, as the case may be. Upon any such
payment in full, or the receipt of such notification that such funds have been
placed in escrow, the Master Servicer is authorized to give, as attorney-in-fact
for the Indenture Trustee and the mortgagee under the Mortgage which secured the
Credit Line Agreement, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Mortgaged Property relating to such Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor of
payment in full, it being understood and agreed that no expense incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Principal and Interest Account. In lieu of
executing any such satisfaction or assignment, as the case may be, the Master
Servicer may prepare and submit to the Indenture Trustee, a satisfaction (or
assignment without recourse, if requested by the Person or Persons entitled
thereto) in form for execution by the Indenture Trustee with all requisite
information completed by the Master Servicer; in such event, the Indenture
Trustee shall execute and acknowledge such satisfaction or assignment, as the
case may be, and deliver the same with the related Mortgage File, as aforesaid.
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(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Insurance Policy, the Indenture Trustee shall (except in the case of the payment
or liquidation pursuant to which the related Mortgage File is released to an
escrow agent or an employee, agent or attorney of the Indenture Trustee), upon
request of the Master Servicer and delivery to the Indenture Trustee of a Master
Servicer's Trust Receipt in the form of Exhibit F hereto, release the related
Mortgage File to the Master Servicer and shall execute such documents as shall
be necessary to the prosecution of any such proceedings, including, without
limitation, an assignment without recourse of the related Mortgage to the Master
Servicer; provided, that there shall not be released and unreturned at any one
time more than 300 Mortgage Files. The Indenture Trustee shall complete in the
name of the Indenture Trustee any endorsement in blank on any Credit Line
Agreement prior to releasing such Credit Line Agreement to the Master Servicer.
Such receipt shall obligate the Master Servicer to return the Mortgage File to
the Indenture Trustee when the need therefor by the Master Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of the liquidation information, in physical or electronic form, a copy of the
Master Servicer's Trust Receipt shall be released by the Indenture Trustee to
the Master Servicer.
(c) The Master Servicer shall have the right to approve
applications of Mortgagors for consent to (i) partial releases of Mortgages,
(ii) alterations to Mortgaged Properties and (iii) removal, demolition or
division of Mortgaged Properties. No application for approval shall be
considered by the Master Servicer unless: (x) the provisions of the related
Credit Line Agreement and Mortgage have been complied with; (y) the Combined
Loan-to-Value Ratio (which may, for this purpose, be determined at the time of
any such action in a manner reasonably acceptable to the Insurer) and the
Mortgagor's debt-to-income ratio after any release does not exceed the maximum
Combined Loan-to-Value Ratio and debt-to-income ratio specified as the
then-current maximum levels under the Originator's underwriting guidelines for a
similar credit grade borrower and (z) the lien priority of the related Mortgage
is not adversely affected. The Master Servicer shall also have the right (such
right to be exercised in an manner consistent with the Master Servicer's normal
servicing practices and consistent with such guidelines as may be approved by
the Rating Agencies and the Insurer) to permit a borrower who is selling his
principal residence and purchasing a new residence to substitute the new
Mortgaged Property as collateral for the related Mortgage Loan so long as the
Combined Loan-to-Value Ratio is no greater and the occupancy and property type
remain the same. In any such event, however, the Master Servicer will generally
require the borrower to make a partial pre-payment in reduction of the principal
amount of the Loan to the extent that the borrower receives proceeds from the
sale of the prior residence that will not be applied to the purchase of the new
residence. Upon receipt by the Indenture Trustee and the Insurer of an Officer's
Certificate executed on behalf of the Master Servicer setting forth the action
proposed to be taken in respect of a particular Mortgage Loan and certifying
that the criteria set forth in the immediately preceding sentence have been
satisfied, the Indenture Trustee shall execute and deliver to the Master
Servicer the consent or partial release so requested by the Master Servicer. A
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proposed form of consent or partial release, as the case may be, shall accompany
any Officer's Certificate delivered by the Master Servicer pursuant to this
paragraph.
(d) No costs associated with the procedures described in this
Section 4.14 shall be an expense of the Trust.
(e) The provisions set forth in Subsections (a) and (b) may be
superseded by any waiver of the Document Delivery Requirement as may be given by
the Insurer, Xxxxx'x and Standard & Poor's pursuant to Section 2.1(k) hereof.
(f) Each Master Servicer's Trust Receipt may be delivered to
the Indenture Trustee (i) via mail or courier, (ii) via facsimile or (iii) by
such other means, including, without limitation, electronic or computer readable
medium, as the Master Servicer and the Indenture Trustee shall mutually agree.
The Indenture Trustee shall promptly release the related Mortgage File(s) within
seven (7) Business Days of receipt of a properly completed Master Servicer's
Trust Receipt pursuant to clauses (i), (ii) or (iii) above or such shorter
period as may be agreed upon by the Master Servicer and the Indenture Trustee.
Receipt of a Master Servicer's Trust Receipt pursuant to clauses (i), (ii) or
(iii) above shall be authorization to the Indenture Trustee to release such
Mortgage Files, provided the Indenture Trustee has determined that such Master
Servicer's Trust Receipt has been executed, with respect to clauses (i) or (ii)
above, or approved, with respect to clause (iii) above, by an Authorized Officer
of the Master Servicer or any Sub-servicer, and so long as the Indenture Trustee
complies with its duties and obligations under this Agreement. If the Indenture
Trustee is unable to release the Mortgage Files within the time frames
previously specified, the Indenture Trustee shall immediately notify the Master
Servicer or any Sub-servicer indicating the reason for such delay, but in no
event shall such notification be later than seven Business Days after receipt of
a Master Servicer's Trust Receipt. If the Master Servicer is required to pay
penalties or damages due solely to the Indenture Trustee's negligent failure to
release the related Mortgage File or the Indenture Trustee's negligent failure
to execute and release documents in a timely manner, the Indenture Trustee shall
be liable for such penalties or damages.
(g) On each day that the Master Servicer remits to the
Indenture Trustee Master Servicer's Trust Receipts pursuant to clauses (ii) or
(iii) above, the Master Servicer or any Sub-servicer shall also submit to the
Indenture Trustee a summary of the total amount of such Master Servicer's Trust
Receipts requested on such day by the same method as described in such clauses
(ii) or (iii) above.
Section 4.15. Servicing Compensation. As compensation for its
activities hereunder, the Master Servicer shall be entitled to retain the amount
of the Servicing Fee with respect to each Mortgage Loan. Additional servicing
compensation in the form of prepayment charges, Termination Fees, release fees,
bad check charges, assumption fees, late payment charges, or any other
servicing-related fees, Net Liquidation Proceeds not required to be deposited in
the Principal and Interest Account pursuant to Section 4.8(c) and similar items
may, to the extent collected from Mortgagors, be retained by the Master
Servicer.
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Section 4.16. Annual Statement as to Compliance. The Master
Servicer, at its own expense, will deliver to the Indenture Trustee, Insurer,
Standard & Poor's and Moody's, on or before the fifteenth of April of each year,
commencing in 1999, an Officer's Certificate stating, as to each signer thereof,
that (i) a review of the activities of the Master Servicer during such preceding
calendar 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 its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment of
all such obligations, specifying each such default known to such officers and
the nature and status thereof including the steps being taken by the Master
Servicer to remedy such defaults.
Section 4.17. Annual Independent Certified Public Accountants'
Reports. On or before the fifteenth of April of each year, commencing in 1999,
the Master Servicer, at its own expense, shall cause to be delivered to the
Indenture Trustee, the Insurer, Standard & Poor's and Moody's a letter or
letters of a firm of independent, nationally recognized certified public
accountants reasonably acceptable to the Insurer stating that such firm has,
with respect to the Master Servicer's overall servicing operations (i) performed
applicable tests in accordance substantially in compliance with the testing
procedures as set forth in Appendix 3 of the Audit Guide for Audits of HUD
Approved Nonsupervised Mortgagees or (ii) examined such operations substantially
in compliance with the requirements of the Uniform Single Attestation Program
for Mortgage Bankers, and in either case stating such firm's conclusions
relating thereto.
Section 4.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Master Servicer shall provide to the
Indenture Trustee, the Insurer, the FDIC and the supervisory agents and
examiners of each of the foregoing access to the documentation regarding the
Mortgage Loans required by applicable state and federal regulations, such access
being afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Master Servicer designated by it.
Upon any change in the format of the computer tape maintained
by the Master Servicer in respect of the Mortgage Loans, the Master Servicer
shall deliver a copy of such computer tape to the Indenture Trustee and in
addition shall provide a copy of such computer tape to the Indenture Trustee and
the Insurer at such other times as the Indenture Trustee or the Insurer may
reasonably request.
Section 4.19. Assignment of Agreement. The Master Servicer may
not assign its obligations under this Agreement, in whole or in part, unless it
shall have first obtained the written consent of the Indenture Trustee and
Insurer, which such consent shall not be unreasonably withheld; provided,
however, that any assignee must meet the eligibility requirements set forth in
Section 5.1(g) hereof for a successor servicer. Notice of any such assignment
shall be given by the Master Servicer to the Indenture Trustee, the Insurer and
Moody's.
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ARTICLE V
SERVICING TERMINATION
Section 5.1. Events of Servicing Termination. (a) If any one
of the following events ("Event of Servicing Termination") shall occur and be
continuing:
(i) The Master Servicer shall fail to deliver to the
Indenture Trustee any proceeds or required payment, which failure
continues unremedied for five Business Days following written notice to
an Authorized Officer of the Master Servicer from the Indenture Trustee
or from Class A Noteholders evidencing Percentage Interest aggregating
not less than 25%.
(ii) The Master Servicer shall (I) apply for or consent to
the appointment of a receiver, Indenture Trustee, liquidator or
custodian or similar entity with respect to itself or its property, (II)
admit in writing its inability to pay its debts generally as they become
due, (III) make a general assignment for the benefit of creditors, (IV)
be adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action
for the purpose of effecting any of the foregoing;
(iii) If without the application, approval or consent of
the Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a Indenture Trustee, receiver, liquidator or custodian or
similar entity with respect to the Master Servicer or of all or any
substantial part of its assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being
contested by the Master Servicer in good faith, the same shall (A)
result in the entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed for any
period of seventy-five (75) consecutive days; or
(iv) The Master Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.2 which
materially and adversely affects the interests of the Class A
Noteholders or Insurer for a period of sixty (60) days after the Master
Servicer's discovery or receipt of notice thereof from the Indenture
Trustee, the Insurer, or Class A Noteholders evidencing Percentage
Interests aggregating not less than 25%; provided, however, that if the
Master Servicer can demonstrate to the reasonable satisfaction of the
Insurer that
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it is diligently pursuing remedial action, then the cure period may be
extended with the written consent of the Insurer.
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Master Servicer, either the
Indenture Trustee, the Insurer or the Class A Noteholders evidencing Percentage
Interests aggregating not less than 51% in each case with the consent of the
Insurer, or the Insurer, by notice then given in writing to the Master Servicer
(and to the Indenture Trustee if given by the Insurer of the Class A
Noteholders) may 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 and the Insurer. On and after
the receipt by the Master Servicer of such written notice, all authority and
power of the Master Servicer under this Agreement, whether with respect to the
Notes or the Mortgage Loans or otherwise, shall pass to and be vested in the
Indenture Trustee pursuant to and under this Section 5.1 and, without
limitation, the Indenture 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 Indenture Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee 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 Note Account, or that have been deposited by the
Master Servicer in the Note Account or thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section 5.1 shall
be paid by the predecessor Master Servicer (or if the predecessor Master
Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of
performance under Section 5.1(i) for a period of two Business Days or under
Section 5.1(iv) for a period of 60 days, shall not constitute an Event of
Servicing Termination if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and such delay or
failure was caused by an act of God or the public enemy, acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods or similar causes. The
preceding sentence shall not relieve the Master Servicer from using its best
efforts to perform its respective obligations in a timely manner in accordance
with the terms of this Agreement and the Master Servicer shall provide the
Indenture Trustee, the Sponsor, the Insurer and the Noteholders with an
Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations. The
Master Servicer shall immediately notify the Indenture Trustee and the Insurer
in writing of any Events of Servicing Termination.
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(b) In addition to the foregoing, the Insurer may remove the
Master Servicer upon the occurrence of an "Event of Servicing Termination" under
the Insurance Agreement.
(c) The Master Servicer shall not resign from the obligations
and duties hereby imposed on it except by mutual written consent of the Sponsor,
the Master Servicer, the Insurer and the Indenture Trustee or upon determination
that its 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, the other activities of the Master Servicer so causing such a
conflict being of a type and nature carried on by the Master Servicer at the
date of this Agreement. Any such determination permitting the resignation of the
Master Servicer shall be evidenced by an opinion of counsel to such effect which
shall be delivered to the Indenture Trustee and the Insurer.
(d) No removal or resignation of the Master Servicer shall
become effective until the Indenture Trustee or a successor servicer shall have
assumed the Master Servicer's responsibilities and obligations in accordance
with this Section.
(e) Upon removal or resignation of the Master Servicer, the
Master Servicer also shall promptly deliver or cause to be delivered to a
successor servicer or the Indenture Trustee all the books and records
(including, without limitation, records kept in electronic form) that the Master
Servicer has maintained for the Mortgage Loans, including all tax bills,
assessment notices, insurance premium notices and all other documents as well as
all original documents then in the Master Servicer's possession.
(f) Any collections received by the Master Servicer after
removal or resignation shall be endorsed by it to the Indenture Trustee and
remitted directly and immediately to the Indenture Trustee or the successor
Master Servicer.
(g) Upon removal or resignation of the Master Servicer, the
Indenture Trustee (x) may solicit bids for a successor servicer as described
below, and (y) pending the appointment of a successor Master Servicer as a
result of soliciting such bids, shall serve as Master Servicer. The Indenture
Trustee shall, if it is unable to obtain a qualifying bid and is prevented by
law from acting as Master Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less than
$5,000,000, as determined in accordance with generally accepted accounting
principles, and acceptable to the Insurer 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. The compensation of any
successor servicer (including, without limitation, the Indenture Trustee) so
appointed shall be the aggregate Servicing Fees, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.8 and 4.15; provided, however, that if the
Indenture Trustee acts as successor Master Servicer then the Sponsor agrees to
pay to the Indenture Trustee at such time that the Indenture Trustee becomes
such successor Master Servicer a fee of twenty-five dollars ($25.00) for each
Mortgage Loan then included in the Trust Estate. The Indenture Trustee shall be
obligated to serve as
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successor Master Servicer whether or not the $25.00 fee described in the
preceding sentence is paid by the Sponsor, but shall in any event be entitled to
receive, and to enforce payment of, such fee from the Originator.
(h) In the event the Indenture Trustee solicits bids as
provided above, the Indenture Trustee shall solicit, by public announcement,
bids from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor Master Servicer shall be entitled
to the full amount of the aggregate Servicing Fees as servicing compensation,
together with the other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided in Sections 4.8 and 4.15. Within
thirty days after any such public announcement, the Indenture Trustee shall
negotiate and effect the sale, transfer and assignment of the servicing rights
and responsibilities hereunder to the qualified party submitting the highest
satisfactory bid. The Indenture Trustee shall deduct from any sum received by
the Indenture Trustee from the successor to the Master Servicer in respect of
such sale, transfer and assignment all costs and expenses of any public
announcement and of any sale, transfer and assignment of the servicing rights
and responsibilities hereunder. After such deductions, the remainder of such sum
shall be paid by the Indenture Trustee to the Master Servicer at the time of
such sale, transfer and assignment to the Master Servicer's successor.
(i) The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The Master Servicer agrees to cooperate with the Indenture
Trustee and any successor Master Servicer in effecting the termination of the
Master Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Indenture Trustee or such successor Master Servicer, as
applicable, all documents and records reasonably requested by it to enable it to
assume the Master Servicer's functions hereunder and shall promptly also
transfer to the Indenture Trustee or such successor Master Servicer, as
applicable, all amounts which then have been or should have been deposited in
the Principal and Interest Account by the Master Servicer or which are
thereafter received with respect to the Mortgage Loans. Neither the Indenture
Trustee nor any other successor Master Servicer shall be held liable by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof caused by (i) the failure of the Master Servicer to deliver,
or any delay in delivering, cash, documents or records to it, or (ii)
restrictions imposed by any regulatory authority having jurisdiction over the
Master Servicer.
(j) The Master Servicer which is being removed or is resigning
shall give notice to the Mortgagors and to Moody's and Standard & Poor's of the
transfer of the servicing to the successor.
(k) The Indenture Trustee shall give notice to the Insurer,
Moody's and Standard & Poor's and to the Class A Noteholders of the occurrence
of any event specified in Section 5.1(a) of which the Indenture Trustee has
actual knowledge.
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Section 5.2. Inspections by Insurer; Errors and Omissions
Insurance. (a) At any reasonable time and from time to time upon reasonable
notice, the Insurer, the Indenture Trustee, or any agents or representatives
thereof may inspect the Master Servicer's servicing operations and discuss the
servicing operations of the Master Servicer with any of its officers or
directors.
(b) The Master Servicer agrees to maintain errors and
omissions coverage and a fidelity bond, each at least to the extent generally
maintained by prudent mortgage loan servicers having servicing portfolios of a
similar size.
Section 5.3. Merger, Conversion, Consolidation or Succession
to Business of Master Servicer. Any corporation into which the Master Servicer
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer shall be a party, or any corporation succeeding to all or
substantially all of the business of the Master Servicer, shall be the successor
of the Master Servicer hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto provided that such
corporation meets the qualifications set forth in Section 5.1(f).
Section 5.4. Notification to Noteholders (a). Upon any
termination or appointment of a successor to the Master Servicer pursuant to
this Article V, the Indenture Trustee shall give prompt written notice thereof
to the Noteholders at their respective addresses appearing in the Note Register,
the Insurer and each Rating Agency.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
Section 6.1. Administrative Duties with Respect to the
Indenture. The Master Servicer shall perform all its duties and the duties of
the Issuer under the Indenture. In addition, the Master Servicer shall consult
with the Owner Trustee as the Master Servicer deems appropriate regarding the
duties of the Issuer under the Indenture. The Master Servicer shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's duties under the Indenture. The Master
Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Master Servicer shall take all necessary action that is the
duty of the Issuer to take pursuant to the Indenture.
(a) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master Servicer set
forth in this Agreement or any of the Documents, the Master Servicer
shall perform such calculations and shall prepare for execution by
the Issuer or the Owner Trustee or
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shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions
as it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to this Agreement or any of the
Operative Documents or under state and federal tax and securities
laws, and at the request of the Owner Trustee shall take all
appropriate action that it is the duty of the Issuer to take
pursuant to this Agreement or any of the Operative Documents. In
accordance with the directions of the Issuer or the Owner Trustee,
the Master Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Mortgage
Loans (including the Operative Documents) as are not covered by any
of the foregoing provisions and as are expressly requested by the
Issuer or the Owner Trustee and are reasonably within the capability
of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of
the Operative Documents to the contrary, the Master Servicer shall
be responsible for promptly notifying the Owner Trustee and the
Indenture Trustee in the event that any withholding tax is imposed
on the Issuer's payments (or allocations of income) with respect to
the Originator's Interest as contemplated by this Agreement. Any
such notice shall be in writing and specify the amount of any
withholding tax required to be withheld by the Owner Trustee or the
Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Operative Documents to the contrary, the Master Servicer shall be
responsible for performance of the duties of the Issuer or the
Sponsor set forth in Section 5.1(a), (b), (c) and (d) of the Trust
Agreement with respect to, among other things, accounting and
reports with respect to the Originator's Interest.
(iv) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Master Servicer may
enter into transactions with or otherwise deal with any of its
Affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Master Servicer's
opinion, no less favorable to the Issuer in any material respect.
(b) Non-Ministerial Matters. With respect to matters that
in the reasonable judgment of the Master Servicer are non-ministerial, the
Master Servicer shall not take any action pursuant to this Article VI unless
within a reasonable time before the taking of such action, the Master Servicer
shall have notified the Owner Trustee and the Insurer of the proposed action and
the Owner Trustee and the Insurer shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(i) the amendment of or any supplement to the Indenture;
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(ii) the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the collection of
the Mortgage Loans);
(iii) the amendment, change or modification of this
Agreement or any of the Operative Documents;
(iv) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees pursuant to
the Indenture or the appointment of Successor Servicers or the
consent to the assignment by the Note Registrar, Paying Agent or
Indenture Trustee of its obligations under the Indenture; and
(v) the removal of the Indenture Trustee.
(c) Exceptions. Notwithstanding anything to the contrary
in this Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders to the
Originator under the Operative Documents, (2) sell the Trust Property pursuant
to Section 12.1 of the Indenture, (3) take any other action that the Issuer
directs the Servicer not to take on its behalf or (4) in connection with its
duties hereunder assume any indemnification obligation of any other Person.
(d) Responsibility. The Indenture Trustee or any
successor Servicer shall not be responsible for any obligations or duties of the
Master Servicer under Section 6.1.
Section 6.2. Records. The Master Servicer shall maintain
appropriate books of account and records relating to services performed under
this Agreement, which books of account and records shall be accessible for
inspection by the Issuer and the Indenture Trustee at any time during normal
business hours.
Section 6.3. Additional Information to be Furnished to the
Issuer. The Master Servicer shall furnish to the Issuer and the Indenture
Trustee from time to time such additional information regarding the Mortgage
Loans as the Issuer and the Indenture Trustee shall reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Compliance Certificates and Opinions. Upon any
application or request by the Sponsor, the Insurer or the Class A Noteholders to
the Indenture Trustee to take any action under any provision of this Agreement,
the Sponsor, the Insurer or the Class A Noteholders, as the case may be, shall
furnish to the Indenture Trustee a certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, except that in the case of any such application
or request as to which the furnishing of any documents is
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specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Agreement shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 7.2. Form of Documents Delivered to the Indenture
Trustee. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate of an Authorized Officer of the Indenture
Trustee may be based, insofar as it relates to legal matters, upon an opinion of
counsel, unless such Authorized Officer knows, or in the exercise of reasonable
care should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations by, one or more Authorized Officers of the Sponsor or of the
Master Servicer, stating that the information with respect to such factual
matters is in the possession of the Sponsor or of the Master Servicer, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Indenture Trustee, stating that
the information with respect to such matters is in the possession of the
Indenture Trustee, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. Any opinion of counsel may be based on
the written opinion of other counsel, in which event such opinion of counsel
shall be accompanied by a copy of such other counsel's opinion and shall include
a statement to the effect that such counsel believes that such counsel and the
Indenture Trustee may reasonably rely upon the opinion of such other counsel.
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Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be consolidated
and form one instrument.
Section 7.3. Acts of Class A Noteholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by the Class A Noteholders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Class A Noteholders in person or by an agent duly appointed
in writing; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby expressly required, to the Sponsor.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Class A
Noteholders 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 Indenture
Trustee and the Trust, if made in the manner provided in this Section.
(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 any 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 an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of the Class A Notes shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by any Class A Noteholder shall bind the Holder
of every Class A Note 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 Indenture Trustee or the Trust in reliance thereon,
whether or not notation of such action is made upon such Class A Notes.
Section 7.4. Notices, etc. to Indenture Trustee. Any request,
demand, authorization, direction, notice, consent, waiver or act of the Class A
Noteholders or other documents provided or permitted by this Agreement to be
made upon, given or furnished to, or filed with the Indenture Trustee by any
Owner, the Insurer or by the Sponsor shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received
by the Indenture Trustee at its Corporate Trust Office as set forth in the
Indenture.
Section 7.5. Notices and Reports to Class A Noteholders;
Waiver of Notices. Where this Agreement provides for notice to Class A
Noteholders of any event
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or the mailing of any report to Class A Noteholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Owner affected by such event or to whom
such report is required to be mailed, at the address of such Owner as it appears
on the Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice or the mailing of such
report. In any case where a notice or report to Class A Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report nor
any defect in any notice or report so mailed to any particular Owner shall
affect the sufficiency of such notice or report with respect to other Class A
Noteholders, and any notice or report which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Class A Noteholders shall be filed with the
Indenture Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Class A Noteholders when such notice
is required to be given pursuant to any provision of this Agreement, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency
that rated any Class A Notes, failure to give such notice shall not affect any
other rights or obligations created hereunder.
Section 7.6. Rules by Indenture Trustee. The Indenture Trustee
may make reasonable rules for any meeting of Class A Noteholders.
Section 7.7. Successors and Assigns. All covenants and
agreements in this Agreement by any party hereto shall bind its successors and
assigns, whether so expressed or not.
Section 7.8. Severability. In case any provision in this
Agreement or in the Class A Notes shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section 7.9. Benefits of Agreement. Nothing in this Agreement
or in the Class A Notes, expressed or implied, shall give to any Person, other
than the Class A Noteholders, the Insurer and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 7.10. Legal Holidays. In any case where the date of
any Payment Date, any other date on which any distribution to any Holder is
proposed to be paid, or
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71
any date on which a notice is required to be sent to any Person pursuant to the
terms of this Agreement shall not be a Business Day, then (notwithstanding any
other provision of the Class A Notes or this Agreement) payment or mailing need
not be made on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made or mailed on the nominal date of any
such Payment Date, or such other date for the payment of any distribution to any
Owner or the mailing of such notice, as the case may be, and no interest shall
accrue for the period from and after any such nominal date, provided such
payment is made in full on such next succeeding Business Day.
Section 7.11. Governing Law. In view of the fact that Class A
Noteholders are expected to reside in many states and outside the United States
and the desire to establish with certainty that this Agreement will be governed
by and construed and interpreted in accordance with the law of a state having a
well-developed body of commercial and financial law relevant to transactions of
the type contemplated herein, this Agreement and each Class A Note shall be
construed in accordance with and governed by the laws of the State of New York
applicable to agreements made and to be performed therein.
Section 7.12. Counterparts. This instrument may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 7.13. Usury. The amount of interest payable or paid on
any Class A Note under the terms of this Agreement shall be limited to an amount
which shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the State of New York or any applicable law of the United
States permitting a higher maximum nonusurious rate that preempts such
applicable New York laws, which could lawfully be contracted for, charged or
received (the "Highest Lawful Rate"). In the event any payment of interest on
any Class A Note exceeds the Highest Lawful Rate, the Trust stipulates that such
excess amount will be deemed to have been paid to the Owner of such Class A Note
inadvertently in error by the Indenture Trustee acting on behalf of the Trust
and the Owner receiving such excess payment shall promptly, upon discovery of
such error or upon notice thereof from the Indenture Trustee on behalf of the
Trust, refund the amount of such excess or, at the option of such Owner, apply
the excess to the payment of principal of such Class A Note, if any, remaining
unpaid in any event, the Indenture Trustee shall not be responsible for any
repayment of such excess payments. In addition, all sums paid or agreed to be
paid to the Indenture Trustee for the benefit of Class A Noteholders of Class A
Notes for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Class A Notes.
Section 7.14. Amendment. (a) The Indenture Trustee, the
Sponsor and the Master Servicer, may at any time and from time to time, with the
prior approval of the Insurer but without the giving of notice to or the receipt
of the consent of the Class A Noteholders, amend this Agreement, and the
Indenture Trustee shall consent to such amendment, for the purpose of (i) curing
any ambiguity, or correcting or supplementing any provision hereof which may be
inconsistent with any other provision hereof, or to
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72
add provisions hereto which are not inconsistent with the provisions hereof, or
(ii) complying with the requirements of the Code and the regulations proposed or
promulgated thereunder; provided, however, that any such action shall not, as
evidenced by an opinion of counsel delivered to the Indenture Trustee,
materially and adversely affect the interests of any Owner (without its written
consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer
may, at any time and from time to time, with the prior approval of the Insurer
but without the giving of notice to or the receipt of the consent of the Class A
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of changing the definition of "Specified
Overcollateralization Amount"; provided, however, that no such change shall
affect the weighted average life of the Class A Notes (assuming an appropriate
prepayment speed as determined by the Underwriter as evidenced in writing) by
more than five percent, as determined by the Underwriter.
(c) This Agreement may also be amended by the Indenture
Trustee, the Sponsor, and the Master Servicer at any time and from time to time,
with the prior written approval of the Insurer and not less than a majority of
the Percentage Interest represented by the Class A Notes then Outstanding, for
the purpose of adding any provisions or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Class A Noteholders hereunder; provided, however, that no such amendment
shall (a) change in any manner the amount of, or change the timing of, payments
which are required to be distributed to any Owner without the consent of the
Owner of such Class A Notes or (b) reduce the aforesaid percentages of
Percentage Interests which are required to consent to any such amendments,
without the consent of all Class A Noteholders then Outstanding.
(d) The Insurer, the Class A Noteholders, Moody's and Standard
& Poor's shall be provided with copies of any amendments to this Agreement,
together with copies of any opinions or other documents or instruments executed
in connection therewith.
Section 7.15. The Insurer. The Insurer is a third-party
beneficiary of this Agreement. Any right conferred to the Insurer shall be
suspended during any period in which the Insurer is in default in its payment
obligations under the Policy except with respect to amendments to this Agreement
pursuant to Section 11.14. During any period of suspension the Insurer's rights
hereunder shall vest in the Class A Noteholders of the Class A Notes and shall
be exercisable by the Class A Noteholders of at least a majority in Percentage
Interest of the Class A Notes then Outstanding. At such time as the Class A
Notes are no longer Outstanding hereunder and the Insurer has been reimbursed
for all payments made pursuant to the Policy to which it is entitled hereunder,
the Insurer's rights hereunder shall terminate.
Section 7.16. Notices. All notices hereunder shall be given as
follows, until any superseding instructions are given to all other Persons
listed below:
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The Indenture Trustee: Bankers Trust Company
of California, N.A.
0 Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: ADVANTA REVOLVING HOME
EQUITY LOAN TRUST 1998-A
Tel: (000) 000-0000
Fax: (000) 000-0000
The Sponsor: ADVANTA Mortgage Conduit
Services, Inc.
00000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Senior Vice President,
Loan Service
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy addressed to the attention of
the General Counsel at the same address.
The Master Servicer: Advanta Mortgage Corp. USA
00000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Senior Vice President,
Loan Service
Tel: (000) 000-0000
Fax: (000) 000-0000
The Insurer: Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Moody's: Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Home Equity
Monitoring Department
Standard & Poor's: Standard & Poor's Ratings Group
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Dept.
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The Trust: Advanta Revolving Home Equity Loan
Trust 1998-A
c/o Wilmington Trust Company, as Owner
Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Section 7.17. Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as Owner Trustee of the Issuer under the Trust Agreement, in the exercise
of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to this Agreement and
by any person claiming by, through or under them and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Sponsor, the Issuer, the Master
Servicer and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized, all as of the
day and year first above written.
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor
By: /s/ XXXXX X. XXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
ADVANTA MORTGAGE CORP. USA, as Master
Servicer
By: /s/ XXXXX X. XXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 1998-A, as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By: /s/ XXXXX XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
Title: Administrative Account
Manager
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., not in its individual
capacity, but solely as Indenture Trustee
By: /s/ XXXXXXX XXXXXXX
--------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Assistant Vice President
[Signature Page of Sale and Servicing Agreement]
76
SCHEDULE I
SCHEDULE OF MORTGAGE LOANS
S-1
77
EXHIBIT A
FORM OF CONTENTS OF MORTGAGE LOAN FILE
--------------------------------------
(a) The original Credit Line Agreement, or a certified copy
thereof, bearing all intervening endorsements, endorsed either (i) "Pay to the
order of Bankers Trust Company of California, N.A., as custodian or trustee
under the applicable custody or trust agreement, without recourse" or (ii) "Pay
to the order of Bankers Trust Company of California, N.A., as custodian or
trustee under the applicable custody or trust agreement, without recourse,
Advanta as Master Servicer," or (iii) "Pay to the order of Bankers Trust Company
of California, N.A., as custodian or trustee" by [Seller, signature, name,
title] and signed in the name of the previous owner by an authorized offer (in
the event that the Mortgage Loan was acquired by the previous owner in a merger
the signature must be in the following form: "[the previous owner], successor by
merger to [name of predecessor]", in the event that the Mortgage Loan was
acquired or originated while doing business under another name, the signature
must be in the following form: "[the previous owner], formerly known as
[previous name]" or (iv) "Pay to the order of Bankers Trust Company, without
recourse". The original Credit Line Agreement should be accompanied by any rider
made in connection with the origination of the related Mortgage Loan.
(b) The original of any guaranty executed in connection with
the Credit Line Agreement (if any).
(c) The original Mortgage with evidence of recording thereon
or copies certified by the related recording office or if the original Mortgage
has not yet been returned from the recording office, a certified copy of the
Mortgage.
(d) The originals of any assumption, modification,
consolidation or extension agreements.
(e) If required, the original Assignment of Mortgage of each
Mortgage Loan to "Bankers Trust Company of California, N.A., as custodian or
trustee", "Bankers Trust Company of California, N.A. as trustee or custodian on
behalf of the Advanta Conduit" or "Bankers Trust Company, as trustee". In the
event that the Mortgage Loan was acquired by the previous owner in a merger, the
Assignment of Mortgage must be the "(previous owner), successor by merger to
(names of predecessor)"; and in the event that the Mortgage Loan was acquired or
originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)."
(f) The originals of all intervening Assignments of Mortgage,
showing a complete chain of assignment from origination to the related Seller,
including warehousing assignments, with evidence of recording thereon (or, if an
original
A-1
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intervening assignment has not been returned from the recording office,
a certified copy thereof.
A-2
79
EXHIBIT B
FORM OF CREDIT LINE AGREEMENTS
------------------------------
[Attached]
B-1
80
EXHIBIT C
FORM OF CERTIFICATE REGARDING PREPAID LOANS
-------------------------------------------
I, Xxxxx X. Xxxxxxx, Senior Vice-President of Advanta Mortgage
Conduit Services, Inc., a Delaware corporation, as sponsor (the "Sponsor"),
hereby certify that between the "Cut-Off Date" (as defined in the Sale and
Servicing Agreement, dated as of June 1, 1998, among the Sponsor, Advanta
Mortgage Corp. USA, a Delaware corporation, as Master Servicer, Advanta
Revolving Home Equity Loan Trust 1998-A, as Issuer, and Bankers Trust Company of
California, N.A., a national banking association, as Indenture Trustee), and the
date hereof, the following schedule of "Mortgage Loans" (each as defined in the
Sale and Servicing Agreement) has been prepaid in full.
Dated: _________________
----------------------------------------
Xxxxx X. Xxxxxxx, Senior Vice-President
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EXHIBIT D
FORM OF TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
-------------------------------------------
Bankers Trust Company of California, N.A., a national banking
association, in its capacity as indenture trustee (the "Indenture Trustee")
under that certain Sale and Servicing Agreement, dated as of June 1, 1998 (the
"Sale and Servicing Agreement"), by and among Advanta Mortgage Conduit Services,
Inc., a Delaware corporation, as Sponsor (the "Sponsor"), Advanta Mortgage Corp.
USA, a Delaware corporation, as Master Servicer, Advanta Revolving Home Equity
Loan Trust 1998-A, as Issuer, and the Indenture Trustee, hereby acknowledges
receipt of the items delivered to it by the Sponsor with respect to the Initial
Mortgage Loans.
The Schedule of Initial Mortgage Loans is attached to this
Receipt.
The Indenture Trustee hereby additionally acknowledges that it
shall review such items as required by Section 2.2(a) of the Sale and Servicing
Agreement and shall otherwise comply with Section 2.2(b) of the Sale and
Servicing Agreement as required thereby.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Indenture Trustee
By:
-------------------------------------
Name:
Title:
Dated: June ___, 1998
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82
EXHIBIT E
FORM OF CERTIFICATION
---------------------
WHEREAS, the undersigned is an Authorized Officer of Bankers
Trust Company of California, N.A., a national banking association, acting in its
capacity as indenture trustee (the "Indenture Trustee") of a certain pool of
mortgage loans (the "Pool") heretofore conveyed in trust to the Indenture
Trustee, pursuant to that certain Sale and Servicing Agreement, dated as of June
1, 1998 (the "Sale and Servicing Agreement"), by and among Advanta Mortgage
Conduit Services, Inc., a Delaware corporation, as Sponsor (the "Sponsor"),
Advanta Mortgage Corp. USA, a Delaware corporation, as Master Servicer, Advanta
Revolving Home Equity Loan Trust 1998-A, as Issuer, and the Indenture Trustee;
and
WHEREAS, the Indenture Trustee is required, pursuant to
Section 2.2(a) of the Sale and Servicing Agreement, to review the Files relating
to the Pool within a specified period following the Closing Day and Subsequent
Transfer Date and to notify the Sponsor promptly of any defects with respect to
the Pool, and the Sponsor is required to remedy such defects or take certain
other action, all as set forth in Section 2.2(b) of the Sale and Servicing
Agreement; and
WHEREAS, Section 2.2(a) of the Sale and Servicing Agreement
requires the Indenture Trustee to deliver this Certification upon the
satisfaction of certain conditions set forth therein;
NOW, THEREFORE, the Indenture Trustee has determined that as
to each Mortgage Loan listed in the Schedule of Mortgage Loans (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
Pool Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to this Agreement are in its possession
and (ii) such documents have been reviewed by it and on their face appear to
relate to such Mortgage Loan. The Indenture Trustee makes no certification
hereby, however, with respect to any intervening assignments or assumption and
modification agreements.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:
-----------------------------------
Name:
Title:
Date:_______________
X-0
00
XXXXXXX X
FORM OF MASTER SERVICER'S TRUST RECEIPT
---------------------------------------
To: Bankers Trust Company of California, N.A.
Xxxxx Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Trust
Date: _________________
In connection with the administration of the mortgage loans
held by you as Indenture Trustee under that certain Sale and Servicing Agreement
dated as of June 1, 1998 by and among Advanta Mortgage Conduit Services, Inc., a
Delaware corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware
corporation, as Master Servicer, Advanta Revolving Home Equity Loan Trust
1998-A, as Issuer, and you (the "Agreement"), the Master Servicer hereby
requests a release of the File held by you as Indenture Trustee with respect to
the following described Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that all amounts
received in connection with the loan have been or will
be credited to the Certificate Account (whichever is
applicable) pursuant to the Agreement.)
_______ 2. Mortgage Loan purchased pursuant to Section 3.3, 3.4, 2.2(b)
or 4.10(b) of the Agreement.
(The Master Servicer hereby certifies that the Loan
Purchase Price has been or will be paid to the
Certificate Account pursuant to the Agreement.)
F-1
84
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a Qualified
Replacement Mortgage has been or will be assigned and
delivered to you along with the related File pursuant
to the Agreement.)
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
The undersigned acknowledges that the above File will be held
by the undersigned in accordance with the provisions of the Agreement and will
be returned to you, except if the Mortgage Loan has been paid in full, or
purchased or substituted for by a Qualified Replacement Mortgage (in which case
the File will be retained by us permanently) and except if the Mortgage Loan is
being foreclosed (in which case the File will be returned when no longer
required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed
to them in the Agreement.
ADVANTA MORTGAGE CORP. USA
By:______________________________
Name:
Title:
F-2
85
EXHIBIT G
SUBSEQUENT TRANSFER AGREEMENT
-----------------------------
Advanta Mortgage Conduit Services, Inc., as seller (the
"Seller"), and Advanta Revolving Home Equity Loan Trust 1998-A, as purchaser
(the "Purchaser"), pursuant to that certain Sale and Servicing Agreement dated
as of June 1, 1998 by and among Advanta Mortgage Conduit Services, Inc., a
Delaware corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware
corporation, as Master Servicer, Advanta Revolving Home Equity Loan Trust
1998-A, a Delaware business trust, and Bankers Trust Company of California,
N.A., as Trustee (the "Sale and Servicing Agreement"), hereby confirm their
understanding with respect to the sale by the Seller and the purchase by the
Purchaser of those Mortgage Loans listed on the attached Schedule of Mortgage
Loans (the "Subsequent Mortgage Loans").
Conveyance of Subsequent Mortgage Loans. The Seller does
hereby irrevocably transfer, assign, set over and otherwise convey to the
Purchaser, without recourse (except as otherwise explicitly provided for herein)
all of its right, title and interest in and to the Subsequent Mortgage Loans,
including specifically, without limitation, the Mortgages, the Files and all
other documents, materials and properties appurtenant thereto and the Credit
Line Agreements, including all interest accruing and principal collected by the
Seller on or with respect to the Subsequent Mortgage Loans on or after the
Subsequent Cut-Off Date, together with all of its right, title and interest in
and to the proceeds received on or after the Subsequent Cut-Off Date of any
related insurance policies on behalf of the Purchaser. The Seller shall deliver
the original Mortgage or mortgage assignment with evidence of recording thereon
(except as otherwise provided by the Sale and Servicing Agreement) and other
required documentation in accordance with the terms set forth in Section 2.4 of
the Sale and Servicing Agreement.
The costs relating to the delivery of the documents specified
in this Subsequent Transfer Agreement and the Sale and Servicing Agreement shall
be borne by the Seller.
Additional terms of the sale are attached hereto as Attachment
A.
The Seller hereby affirms the representations and warranties
set forth in the Sale and Servicing Agreement that relate to the Subsequent
Mortgage Loans as of the date hereof. The Seller hereby delivers notice and
confirms that each of the conditions set forth in Section 2.4(b) to the Sale and
Servicing Agreement are satisfied as of the date hereof.
All terms and conditions of the Sale and Servicing Agreement
are hereby ratified, confirmed and incorporated herein, provided that in the
event of any conflict the
G-1
86
provisions of this Subsequent Transfer Agreement shall control over the
conflicting provisions of the Sale and Servicing Agreement.
Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Sale and Servicing Agreement.
ADVANTA MORTGAGE CONDUIT
SERVICES, INC., as Seller
By:_____________________________
Name:
Title:
ADVANTA REVOLVING HOME
EQUITY LOAN TRUST 1998-A, as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee
By:_____________________________
Name:
Title:
Dated: _______________
Attachments
A. Additional Terms of the Sale.
B. Schedule of Mortgage Loans.
C. Opinion of Seller's Counsel.
D. Seller's Officer's Certificate.
E. Opinion of Seller's Bankruptcy Counsel.
F. Opinion of Seller's Tax Counsel.
G. Trustee's Certificate.
H. Wire Transfer Instructions
I. Conveyance Agreement
G-2
87
---------------------------------------
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
SUBSEQUENT TRANSFER AGREEMENT
ADVANTA MORTGAGE POOL: 1998-A
_______________ 1998
---------------------------------------
1. CUTOFF DATE 5 JUNE 1998 (DD MONTH YEAR)
1A. PRICING DATE 19 JUNE 1998 (DD MONTH YEAR)
2. CLOSING DATE 24 JUNE 1998 (DD MONTH YEAR)
2A. DAYS - CUTOFF TO CLOSING
3. POOL PRINCIPAL BALANCE
AS OF THE CUTOFF DATE
4. NET PURCHASE PRICE 100.00%
EQUALS:
PLUS:
5. ACCRUED INTEREST $
EQUALS:
6. NET PROCEEDS $
7. PASSTHROUGH RATE %
SEE FORMULA BELOW
8. FIRST DISTRIBUTION DATE
9. MAXIMUM CLTV
10. REQUIRED MINIMUM COUPON
11. MAXIMUM BALLOON PERCENTAGE
12. MAXIMUM CONCENTRATION PCT
13. MAXIMUM VACATION &
INVESTOR OWNED PCT
13A MAXIMUM THIRD LIENS
14. ADDITIONAL REPS & WARRANTIES:
15. OTHER MATTERS
G-3
88
EXHIBIT H
FORM OF ADDITION NOTICE
-----------------------
[DATE]
Bankers Trust Company of California, N.A.
Corporate Trust Department
Three Park Plaza, 16th floor
Xxxxxx, Xxxxxxxxxx 00000
Advanta Mortgage Conduit Services, Inc.
00000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Re: Advanta Heloc 1998-A: Addition Notice
--------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.4(b) of the Sale and Servicing
Agreement, dated as of June 1, 1998 among Advanta Mortgage Conduit Services,
Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Advanta
Revolving Home Equity Loan Trust 1998-A (the "Trust") and Bankers Trust Company
of California, N.A., as Indenture Trustee of the Trust, this Addition Notice is
delivered to you in connection with the conveyance of the Subsequent Mortgage
Loans listed on the Schedule of Subsequent Mortgage Loans attached to the
Subsequent Transfer Agreement dated ______________ between the Originator and
the Trustee.
ADVANTA MORTGAGE CONDUIT
SERVICES, INC.
By:_________________________________
Name:
Title:
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