Exhibit 4.1
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
Depositor
NEW CENTURY MORTGAGE CORPORATION
Master Servicer and Servicer
OPTION ONE MORTGAGE CORPORATION
Servicer
FIRSTAR BANK MILWAUKEE, N.A.
Trustee
and
U.S. BANK NATIONAL ASSOCIATION
Trust Administrator
-----------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1998
-----------------------------------------
Mortgage Pass-Through Certificates
Series 1998-NC7
TABLE OF CONTENTS
SECTION PAGE
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ARTICLE I
DEFINITIONS
1.01. Defined Terms...................................................................................5
Accepted Servicing Practices....................................................................5
Accrued Certificate Interest....................................................................5
Administration .................................................................................5
Administration .................................................................................5
Affiliate.......................................................................................6
Agreement.......................................................................................6
Annual Loss Percentage..........................................................................6
Assignment......................................................................................6
Available Distribution Amount...................................................................6
Balloon Loan....................................................................................7
Balloon Payment.................................................................................7
Bankruptcy Code.................................................................................7
Bankruptcy Loss.................................................................................7
Book-Entry Certificate..........................................................................7
Book-Entry Custodian............................................................................7
Business Day....................................................................................7
Cash-Out Refinancing............................................................................7
Certificate.....................................................................................8
Certificate Factor..............................................................................8
Certificate Insurer.............................................................................8
Certificate Insurer Default.....................................................................8
Certificate Insurer Premium.....................................................................9
Certificate Insurer Premium Rate................................................................9
Certificateholder" or "Holder...................................................................9
Certificate Owner...............................................................................9
Certificate Principal Balance...................................................................9
Certificate Register............................................................................9
Class .......................................................................................9
Certificate....................................................................................10
Class A-1 Certificate..........................................................................10
Class A-2 Certificate..........................................................................10
Class A-3 Certificate..........................................................................10
Class A-4 Certificate..........................................................................10
Class A-5 Certificate..........................................................................10
Class A-6 Certificate..........................................................................10
Class A-7 Certificate..........................................................................10
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Class CE Certificate...........................................................................10
Class P Certificate............................................................................11
Class R-I Certificate..........................................................................11
Class R-II Certificate.........................................................................11
Class R-III Certificates.......................................................................11
Closing Date...................................................................................11
Code ......................................................................................11
Collection Account.............................................................................11
Commission.....................................................................................11
Corporate Trust Office.........................................................................11
Corresponding Certificate......................................................................12
Cumulative Insurance Payments..................................................................12
Cumulative Loss Percentage.....................................................................12
Cut-off Date...................................................................................12
Debt Service Reduction.........................................................................12
Deficiency Amount..............................................................................12
Deficiency Event...............................................................................13
Deficient Valuation............................................................................13
Definitive Certificates........................................................................13
Deleted Mortgage Loan..........................................................................13
Delinquency Percentage.........................................................................13
Depositor......................................................................................13
Depository.....................................................................................13
Depository Institution.........................................................................13
Depository Participant.........................................................................14
Determination Date.............................................................................14
Directly Operate...............................................................................14
Disqualified Organization......................................................................14
Distribution Account...........................................................................14
Distribution Date..............................................................................15
Due Date ......................................................................................15
Due Period.....................................................................................15
Eligible Account...............................................................................15
ERISA ......................................................................................15
Estate in Real Property........................................................................15
Excess Overcollateralized Amount...............................................................15
Expense Account................................................................................15
Expense Adjusted Mortgage Rate.................................................................15
Xxxxxx Xxx.....................................................................................15
FDIC ......................................................................................15
Final Recovery Determination...................................................................15
Xxxxxxx Mac....................................................................................16
Guaranteed Distribution........................................................................16
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SECTION PAGE
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Independent....................................................................................16
Independent Contractor.........................................................................16
Initial Deposit................................................................................16
Insurance Agreement............................................................................16
Insurance Payment..............................................................................17
Insurance Proceeds.............................................................................17
Interest Accrual Period........................................................................17
Interest Distribution Amount...................................................................17
Late Collections...............................................................................17
Liquidation Event..............................................................................17
Liquidation Proceeds...........................................................................17
Loan-to-Value Ratio............................................................................18
Lockout Certificates...........................................................................18
Lockout Certificate Percentage.................................................................18
Lockout Distribution Percentage................................................................18
Majority Class CE Certificateholder............................................................18
Master Servicer................................................................................18
Servicing Fee..................................................................................18
Servicing Fee Rate.............................................................................18
Maximum I-LT9 Uncertificated Interest Deferral Amount..........................................19
Monthly Payment................................................................................19
Xxxxx'x ......................................................................................19
Mortgage ......................................................................................19
Mortgage File..................................................................................19
Mortgage Loan..................................................................................19
Mortgage Loan Purchase Agreements..............................................................19
Mortgage Loan Schedule.........................................................................19
Mortgage Note..................................................................................22
Mortgage Pool..................................................................................22
Mortgage Rate..................................................................................22
Mortgaged Property.............................................................................22
Mortgagor......................................................................................22
Net Monthly Excess Cashflow....................................................................22
Net Monthly Excess Spread......................................................................22
Net Mortgage Rate..............................................................................22
Net WAC Pass-Through Rate......................................................................22
New Century....................................................................................23
New Lease......................................................................................23
Nonrecoverable P&I Advance.....................................................................23
Nonrecoverable Servicing Advance...............................................................23
Non-United States Person.......................................................................23
Notional Amount................................................................................23
Officers' Certificate..........................................................................23
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SECTION PAGE
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Opinion of Counsel.............................................................................23
Option One.....................................................................................23
Mortgage Loan..................................................................................24
Overcollateralized Amount......................................................................24
Overcollateralization Deficiency Amount........................................................24
Overcollateralization Increase Amount..........................................................24
Overcollateralization Reduction Amount.........................................................24
Percentage"....................................................................................24
Ownership Interest.............................................................................24
Pass-Through Rate..............................................................................24
Percentage Interest............................................................................26
Permitted Investments..........................................................................27
Permitted Transferee...........................................................................28
Person ......................................................................................28
P&I Advance....................................................................................28
Plan ......................................................................................28
Policy ......................................................................................28
Policy Payments Account........................................................................28
Premium Supplement.............................................................................28
Prepayment Assumption..........................................................................28
Prepayment Charge..............................................................................29
Prepayment Charge Schedule.....................................................................29
Prepayment Interest Shortfall..................................................................29
Prepayment Period..............................................................................29
Principal Distribution Amount..................................................................29
Principal Prepayment...........................................................................30
Purchase Price.................................................................................31
Qualified Substitute Mortgage Loan.............................................................31
Rate/Term Refinancing..........................................................................32
Rating Agency or Rating Agencies...............................................................32
Realized Loss..................................................................................32
Record Date....................................................................................33
Refinanced Mortgage Loan.......................................................................34
Regular Certificate............................................................................34
Regular Interest...............................................................................34
Relief Act.....................................................................................34
Relief Act Interest Shortfall..................................................................34
REMIC ......................................................................................34
REMIC I ......................................................................................34
REMIC I Interest Loss Allocation Amount........................................................34
REMIC I Overcollateralized Amount..............................................................35
REMIC I Principal Loss Allocation Amount.......................................................35
REMIC I Regular Interest.......................................................................35
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REMIC I Regular Interest I-LT1.................................................................35
REMIC I Regular Interest I-LT2.................................................................35
REMIC I Regular Interest I-LT3.................................................................35
REMIC I Regular Interest I-LT4.................................................................36
REMIC I Regular Interest I-LT5.................................................................36
REMIC I Regular Interest I-LT6.................................................................36
REMIC I Regular Interest I-LT7.................................................................36
REMIC I Regular Interest I-LT8.................................................................36
REMIC I Regular Interest I-LT9.................................................................36
REMIC I Regular Interest I-LTP.................................................................37
REMIC I Remittance Rate........................................................................37
REMIC I Required Overcollateralized Amount.....................................................37
REMIC II ......................................................................................37
REMIC II Regular Interest......................................................................37
REMIC II Regular Interest II-LT1...............................................................37
REMIC II Regular Interest II-LT2...............................................................37
REMIC II Regular Interest II-LT3...............................................................37
REMIC II Regular Interest II-LT4...............................................................38
REMIC II Regular Interest II-LT5...............................................................38
REMIC II Regular Interest II-LT6...............................................................38
REMIC II Regular Interest II-LT7...............................................................38
REMIC II Regular Interest II-LT8...............................................................38
REMIC II Regular Interest II-LT9"..............................................................38
REMIC II Regular Interest II-LTP...............................................................39
REMIC II Regular Interest II-LT2S..............................................................39
REMIC II Regular Interest II-LT3S..............................................................39
REMIC II Regular Interest II-LT4S..............................................................39
REMIC II Regular Interest II-LT5S..............................................................39
REMIC II Regular Interest II-LT6S..............................................................39
REMIC II Regular Interest II-LT7S..............................................................39
REMIC II Regular Interest II-LT8S..............................................................39
REMIC II Remittance Rate.......................................................................39
REMIC III......................................................................................40
REMIC III Certificate..........................................................................40
REMIC III Certificateholder....................................................................40
Remittance Report..............................................................................40
Rents from Real Property.......................................................................40
REO Account....................................................................................40
REO Disposition................................................................................40
REO Imputed Interest...........................................................................41
REO Principal Amortization.....................................................................41
REO Property...................................................................................41
Request for Release............................................................................41
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Required Overcollateralized Amount.............................................................41
Residential Dwelling...........................................................................41
Residual Certificate...........................................................................42
Residual Interest..............................................................................42
Responsible Officer............................................................................42
Rolling Delinquency Percentage.................................................................42
Scheduled Principal Balance....................................................................42
Seller ......................................................................................43
Servicer Prepayment Charge Payment Amount......................................................43
Servicers......................................................................................43
Servicer Event of Default......................................................................43
Servicer Remittance Date.......................................................................43
Servicing Account..............................................................................43
Servicing Advances.............................................................................43
Servicing Fee..................................................................................44
Servicing Fee Rate.............................................................................44
Servicing Officer..............................................................................44
Single Certificate.............................................................................44
Spread Squeeze Condition.......................................................................44
Spread Squeeze Overcollateralization Increase Amount...........................................44
Spread Squeeze Percentage......................................................................45
S&P ......................................................................................45
Startup Day....................................................................................45
Stated Principal Balance.......................................................................45
Stayed Funds...................................................................................45
Step Down Cumulative Loss Test.................................................................46
Step Down Rolling Delinquency Test.............................................................46
Step Down Rolling Loss Test....................................................................46
Step Down Trigger".............................................................................46
Stepped Down Required Overcollateralized Percentage............................................46
Step Up Cumulative Loss Test"..................................................................46
Step Up Rolling Delinquency Test...............................................................47
Step Up Rolling Loss Test".....................................................................47
Step Up Spread Squeeze Test"...................................................................47
Step Up Trigger................................................................................47
Sub-Servicer...................................................................................47
Sub-Servicing Account..........................................................................47
Sub-Servicing Agreement........................................................................47
Substitution Shortfall Amount".................................................................47
Tax Returns....................................................................................47
Termination Price..............................................................................47
Terminator.....................................................................................47
Transfer ......................................................................................48
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Transferee.....................................................................................48
Transferor.....................................................................................48
Trust Administrator............................................................................48
Trust Fund.....................................................................................48
Trustee ......................................................................................48
Uncertificated Balance.........................................................................48
Uncertificated Corresponding Component.........................................................48
Uncertificated Interest........................................................................49
Uncertificated Notional Amount.................................................................49
Uninsured Cause................................................................................49
United States Person...........................................................................49
Value ......................................................................................50
Voting Rights..................................................................................51
1.02. Allocation of Certain Interest Shortfalls......................................................51
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
2.01. Conveyance of the Mortgage Loans...............................................................53
2.02. Acceptance of REMIC I by Trustee...............................................................55
2.03. Repurchase or Substitution of Mortgage Loans by the Originators, the
Seller or the Depositor........................................................................57
2.04. Representations and Warranties of the Depositor................................................60
2.05. Representations, Warranties and Covenants of the Servicers.....................................62
2.06. Issuance of the Class R-I Certificates.........................................................65
2.07. Conveyance of the REMIC I Regular Interests; Acceptance of REMIC II by
the Trustee....................................................................................66
2.08. Issuance of Class R-II Certificates............................................................66
2.09. Conveyance of REMIC II Regular Interests; Acceptance of REMIC III by
the Trustee....................................................................................66
2.10. Issuance of REMIC III Certificates.............................................................67
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
3.01. Servicers to Act as Servicers..................................................................68
3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers....................................70
3.03. Successor Sub-Servicers........................................................................72
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3.04. Liability of the Servicer......................................................................72
3.05. No Contractual Relationship Between Sub-Servicers and the Trust
Administrator, the Trustee or Certificateholders...............................................72
3.06. Assumption or Termination of Sub-Servicing Agreements by Trust
Administrator..................................................................................73
3.07. Collection of Certain Mortgage Loan Payments...................................................73
3.08. Sub-Servicing Accounts.........................................................................74
3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts.........................74
3.10. Collection Account and Distribution Account....................................................75
3.11. Withdrawals from the Collection Account and Distribution Account...............................78
3.12. Investment of Funds in the Collection Account, the Expense Account and
the Distribution Account.......................................................................80
3.13. [intentionally omitted]........................................................................81
3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
Coverage.......................................................................................81
3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................83
3.16. Realization Upon Defaulted Mortgage Loans......................................................84
3.17. Trustee and Trust Administrator to Cooperate; Release of Mortgage File.........................86
3.18. Servicing Compensation.........................................................................88
3.19. Reports to the Trust Administrator and the Trustee; Collection Account
Statements.....................................................................................89
3.20. Statement as to Compliance.....................................................................89
3.21. Independent Public Accountants' Servicing Report...............................................89
3.22. Access to Certain Documentation................................................................90
3.23. Title, Management and Disposition of REO Property..............................................90
3.24. Obligations of the Servicer in Respect of Prepayment Interest Shortfall........................93
3.25. Expense Account................................................................................94
3.26. Obligations of the Servicer in Respect of Mortgage Rates and Monthly
Payments.......................................................................................94
3.27. Solicitations..................................................................................94
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
4.01. Distributions..................................................................................96
4.02. Statements to Certificateholders..............................................................102
4.03. Remittance Reports; P&I Advances..............................................................105
4.04. Allocation of Realized Losses.................................................................107
4.05. Compliance with Withholding Requirements......................................................109
4.06. Exchange Commission; Additional Information...................................................109
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ARTICLE V
THE CERTIFICATES
5.01. The Certificates..............................................................................111
5.02. Registration of Transfer and Exchange of Certificates.........................................113
5.03. Mutilated, Destroyed, Lost or Stolen Certificates.............................................117
5.04. Persons Deemed Owners.........................................................................118
5.05. Certain Available Information.................................................................118
ARTICLE VI
THE DEPOSITOR AND THE SERVICERS
6.01. Liability of the Depositor and the Servicers..................................................120
6.02. Merger or Consolidation of the Depositor or the Servicers.....................................120
6.03. Limitation on Liability of the Depositor, the Servicers and Others............................120
6.04. Limitation on Resignation of the Servicers....................................................121
6.05. Rights of the Depositor in Respect of the Servicers...........................................122
ARTICLE VII
DEFAULT
7.01. Servicer Events of Default....................................................................123
7.02. Master Servicer, Trust Administrator or Trustee to Act; Appointment of
Successor.....................................................................................126
7.03. Notification to Certificateholders............................................................128
7.04. Waiver of Servicer Events of Default..........................................................128
ARTICLE VIII
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
8.01. Duties of Trustee and Trust Administrator.....................................................129
8.02. Certain Matters Affecting the Trustee and the Trust Administrator.............................130
8.03. Neither Trustee nor Trust Administrator Liable for Certificates or Mortgage
Loans.........................................................................................131
8.04. Trustee and Trust Administrator May Own Certificates..........................................132
8.05. Trustee's and Trust Administrator's Fees and Expenses.........................................132
8.06. Eligibility Requirements for Trustee and Trust Administrator..................................133
8.07. Resignation and Removal of the Trustee and the Trust Administrator............................133
8.08. Successor Trustee or Trust Administrator......................................................134
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8.09. Merger or Consolidation of Trustee or Trust Administrator.....................................135
8.10. Appointment of Co-Trustee or Separate Trustee.................................................135
8.11. Appointment of Office or Agency...............................................................136
8.12. Representations and Warranties................................................................137
ARTICLE IX
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
9.01. Rights of the Certificate Insurer To Exercise Rights of Class A
Certificateholders............................................................................138
9.02. Trustee and the Trust Administrator To Act Solely with Consent of the
Certificate Insurer...........................................................................138
9.03. Trust Fund and Accounts Held for Benefit of the Certificate Insurer...........................139
9.04. Claims Upon the Policy; Policy Payments Account...............................................139
9.05 Effect of Payments by the Certificate Insurer; Subrogation....................................141
9.06. Notices to the Certificate Insurer............................................................141
9.07. Third-Party Beneficiary.......................................................................141
9.08. Trust Administrator to Hold the Policy........................................................142
ARTICLE X
XXXXXXXXXXX
00.00 Xxxxxxxxxxx Xxxx Xxxxxxxxxx or Liquidation of All Mortgage Loans..............................143
10.02 Additional Termination Requirements...........................................................145
ARTICLE XI
REMIC PROVISIONS
11.01. REMIC Administration..........................................................................147
11.02. Prohibited Transactions and Activities........................................................150
11.03. Master Servicer, Servicers, Trustee and Trust
Administrator Indemnification.................................................................150
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. Amendment.....................................................................................152
12.02. Recordation of Agreement; Counterparts........................................................153
12.03. Limitation on Rights of Certificateholders....................................................153
12.04. Governing Law.................................................................................154
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12.05. Notices.......................................................................................154
12.06. Severability of Provisions....................................................................155
12.07. Notice to Rating Agencies and the Certificate Insurer.........................................155
12.08. Article and Section References................................................................157
12.09. Grant of Security Interest....................................................................157
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EXHIBITS
Exhibit A-1 Form of Class A-1 Certificate
Exhibit A-2 Form of Class A-2 Certificate
Exhibit A-3 Form of Class A-3 Certificate
Exhibit A-4 Form of Class A-4 Certificate
Exhibit A-5 Form of Class A-5 Certificate
Exhibit A-6 Form of Class A-6 Certificate
Exhibit A-7 Form of Class A-7 Certificate
Exhibit A-8 Form of Class CE Certificate
Exhibit A-9 Form of Class P Certificate
Exhibit A-10 Form of Class R-I Certificate
Exhibit A-11 Form of Class R-II Certificate
Exhibit A-12 Form of Class R-III Certificate
Exhibit B Form of Financial Guaranty Insurance Policy
Exhibit C-1 Form of Trust Administrator's Initial Certification
Exhibit C-2 Form of Trust Administrator's Interim Certification
Exhibit C-3 Form of Trust Administrator's Final Certification
Exhibit D Form of Mortgage Loan Purchase Agreements
Exhibit E-1 Request for Release
Exhibit E-2 Request for Release Mortgage Loans paid in full
Exhibit F-1 Form of Transferor Representation Letter and Form of
Transferee Representation Letter in Connection with Transfer
of the Class CE Certificates or Class P Certificates Pursuant
to Rule 144A Under the 1933 Act
Exhibit F-2 Form of Transfer Affidavit and Agreement and Form of
Transferor Affidavit in Connection with Transfer of Residual
Certificates
Exhibit G Form of Certification with respect to ERISA and the Code
Exhibit H Form of Report Pursuant to Section 4.06
Exhibit I Form of Lost Note Affidavit
Schedule 1 Mortgage Loan Schedule
Schedule 2 Prepayment Charge Schedule
-xii-
This Pooling and Servicing Agreement, is dated and effective
as of December 1, 1998, among SALOMON BROTHERS MORTGAGE SECURITIES VII, INC. as
Depositor, NEW CENTURY MORTGAGE CORPORATION as Master Servicer and Servicer,
OPTION ONE MORTGAGE CORPORATION as Servicer, FIRSTAR BANK MILWAUKEE, N.A. as
Trustee and U.S. BANK NATIONAL ASSOCIATION as Trust Administrator.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest in each REMIC (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool of assets comprising
of the Mortgage Loans and certain other related assets subject to this
Agreement.
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets (other than the Servicer Prepayment Charge Payment Amount)
subject to this Agreement as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC I." The Class R-I
Certificates will be the sole class of "residual interests" in REMIC I for
purposes of the REMIC Provisions (as defined herein). The following table
irrevocably sets forth the designation, the REMIC I Remittance Rate, the initial
Uncertificated Balance and, solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC I Regular Interests (as defined herein). None of the REMIC I
Regular Interests will be certificated.
REMIC I Initial Latest Possible
Designation Remittance Rate Uncertificated Balance Maturity Date(1)
----------- --------------- ---------------------- ----------------
I-LT1 Variable(2) $689,486,509.70 December 25, 0000
X-XX0 Variable(2) $1,524,470.00 December 25, 0000
X-XX0 Variable(2) $1,153,560.00 December 25, 0000
X-XX0 Variable(2) $974,630.00 December 25, 0000
X-XX0 Variable(2) $1,224,260.00 December 25, 0000
X-XX0 Variable(2) $581,120.00 December 25, 0000
X-XX0 Variable(2) $722,750.00 December 25, 0000
X-XX0 Variable(2) $700,000.00 December 25, 0000
X-XX0 Variable(2) $7,190,363.26 December 25, 0000
X-XXX (3) $100.00 December 25, 2028
-1-
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(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance Rate"
herein.
(3) The REMIC I Regular Interest I-LTP will not accrue interest.
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Certificates will evidence the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
The following table irrevocably sets forth the designation, the REMIC II
Remittance Rate, the initial Uncertificated Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC II Regular Interests. None of the REMIC II
Regular Interests will be certificated.
REMIC II Initial Latest Possible
Designation Remittance Rate Uncertificated Balance Maturity Date(1)
----------- --------------- ---------------------- ----------------
II-LT1 Variable(2) $689,486,509.70 December 25, 2028
II-LT2 6.063% per annum $1,524,470.00 December 25, 2028
II-LT3 6.061% per annum $1,153,560.00 December 25, 2028
II-LT4 6.595% per annum $974,630.00 December 25, 2028
II-LT5 6.704% per annum $1,224,260.00 December 25, 2028
II-LT6 6.838% per annum $581,120.00 December 25, 2028
II-LT7 7.491% per annum(3) $722,750.00 December 25, 2028
II-LT8 6.615% per annum $700,000.00 December 25, 2028
II-LT9 Variable(2) $7,190,363.26 December 25, 2028
II-LTP (4) $100.00 December 25, 2028
II-LT2S Variable(2) (5) December 25, 2028
II-LT3S Variable(2) (5) December 25, 2028
II-LT4S Variable(2) (5) December 25, 2028
II-LT5S Variable(2) (5) December 25, 2028
II-LT6S Variable(2) (5) December 25, 2028
II-LT7S Variable(2) (5) December 25, 2028
II-LT8S Variable(2) (5) December 25, 2028
-2-
------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each REMIC II
Regular Interest.
(2) Calculated in accordance with the definition of "REMIC II Remittance
Rate" herein.
(3) Subject to the Net WAC Pass-Through Rate.
(4) The REMIC II Regular Interest II-LTP will not accrue interest.
(5) This REMIC II Regular Interest has no Uncertificated Principal Balance
but will accrue interest at the related REMIC II Remittance Rate on the
related Uncertificated Notional Amount, which is equal to the
Uncertificated Balance of the Uncertificated Corresponding Component.
-3-
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III." The Class R-III Certificates will evidence the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions. The following table irrevocably sets forth the designation, the
Pass-Through Rate, the initial aggregate Certificate Principal Balance and,
solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for the indicated
Classes of Certificates.
Initial Aggregate Latest Possible
Designation Pass-through Rate Certificate Principal Balance Maturity Date(1)
----------- ----------------- ----------------------------- ----------------
Class A-1 6.063% per annum $152,447,000.00 December 25, 2028
Class A-2 6.061% per annum $115,356,000.00 December 25, 2028
Class A-3 6.595% per annum $97,463,000.00 December 25, 2028
Class A-4 6.704% per annum $122,426,000.00 December 25, 2028
Class A-5 6.838% per annum $58,112,000.00 December 25, 2028
Class A-6 7.491% per annum(2) $72,275,000.00 December 25, 2028
Class A-7 6.615% per annum $70,000,000.00 December 25, 2028
Class CE Variable(3) $15,478,662.96(4) December 25, 2028
Class P (5) $100.00 December 25, 2028
----------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loans with the latest maturity date has been
designated as the "latest possible maturity date" for each Class of
Certificates.
(2) Subject to the Net WAC Pass-Through Rate.
(3) Calculated in accordance with the definition of "Pass-Through Rate"
herein.
(4) The Class CE Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE Certificates
outstanding from time to time which shall equal the Uncertificated
Balance of the REMIC II Regular Interests (other than the Uncertificated
Balance of REMIC II Regular Interest II-LTP). The Class CE Certificates
will not accrue interest on their Certificate Principal Balance.
(5) The Class P Certificates will not accrue interest.
As of the Cut-off Date, the Original Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $703,557,762.96.
In consideration of the mutual agreements herein contained,
the Depositor, the Master Servicer, the Servicers, the Trustee and the Trust
Administrator agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.
"Accepted Servicing Practices": The servicing standards set
forth in Section 3.01.
"Accrued Certificate Interest": With respect to any Class A
Certificate or Class CE Certificate and each Distribution Date, interest accrued
during the related Interest Accrual Period at the Pass-Through Rate for such
Certificate for such Distribution Date on the Certificate Principal Balance, in
the case of the Class A Certificates, or on the Notional Amount, in the case of
the Class CE Certificate, of such Certificate immediately prior to such
Distribution Date. The Class P Certificates are not entitled to distributions in
respect of interest and, accordingly, will not accrue interest. All
distributions of interest on the Class A Certificates will be calculated on the
basis of a 360-day year consisting of twelve 30-day months. Accrued Certificate
Interest with respect to each Distribution Date, as to any Class A Certificate,
shall be reduced by an amount equal to the portion allocable to such Certificate
pursuant to Section 1.02 hereof of the aggregate amount of any Relief Act
Interest Shortfall, if any, for such Distribution Date. Accrued Certificate
Interest with respect to each Distribution Date, as to any Class CE Certificate,
shall be reduced by an amount equal to the portion allocable to such Certificate
pursuant to Section 1.02 hereof of the sum of (a) the aggregate Prepayment
Interest Shortfall, if any, for such Distribution Date to the extent not covered
by payments pursuant to Section 3.24 and (b) the aggregate amount of any Relief
Act Interest Shortfall, if any, for such Distribution Date. In addition, Accrued
Certificate Interest with respect to each Distribution Date, as to any Class CE
Certificate, shall be reduced by an amount equal to the portion allocable to
such Class CE Certificate of Realized Losses, if any, pursuant to Section 4.04
hereof.
"Administration Fee": The amount payable to the Trustee on
each Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one twelfth of the product of (i) the Administration Fee
Rate, multiplied by (ii) the aggregate Scheduled Principal Balance of the
Mortgage Loans and any REO Properties as of the second preceding Due Date (or,
in the case of the initial Distribution Date, as of the Cut-off Date). The fee
payable to the Trust Administrator for all services rendered by it in the
execution of the trust hereby created and in the exercise and performance of any
of the powers and duties of the Trust Administrator hereunder will be paid by
the Trustee out of the Administration Fee.
"Administration Fee Rate": 0.0045% per annum.
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"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Annual Loss Percentage": With respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate of all Realized Losses for the twelve months ending on the last day of
the preceding month and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties as of the first day
of the twelfth preceding calendar month.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Account and Distribution Account as of the
close of business on the related Determination Date, (b) the aggregate of any
amounts received in respect of an REO Property withdrawn from any REO Account
and deposited in the Distribution Account for such Distribution Date pursuant to
Section 3.23, (c) the aggregate of any amounts deposited in the Distribution
Account by the Servicers in respect of Prepayment Interest Shortfalls for such
Distribution Date pursuant to Section 3.24, (d) the aggregate of any P&I
Advances made by the Servicers for such Distribution Date pursuant to Section
4.03, (e) the aggregate of any advances made by the Master Servicer, the Trust
Administrator or the Trustee, as applicable, for such Distribution Date pursuant
to Section 7.02(b) and (f) with respect to the initial Distribution Date, the
Initial Deposit, reduced (to not less than zero), by (2) the sum of (x) the
portion of the amount described in clause (1)(a) above that represents (i)
Monthly Payments on the Mortgage Loans received from a Mortgagor on or prior to
the Determination Date but due during any Due Period subsequent to the related
Due Period, (ii) Principal Prepayments on the Mortgage Loans received after the
related Prepayment Period (together with any interest payments received with
such Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, either Servicer, the Master
Servicer, the Trustee, either Originator, the Trust Administrator, the Seller or
any Sub-Servicer pursuant to Section 3.11 or Section 3.12 or otherwise payable
in respect of extraordinary Trust Fund expenses, (v) Stayed Funds, (vi) the
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amount of the Certificate Insurer Premium payable from the Distribution Account
to the Expense Account pursuant to Section 3.25(b) for payment to the
Certificate Insurer, the Administration Fee payable from the Distribution
Account pursuant to Section 8.05 and the Master Servicing Fee payable from the
Distribution Account pursuant to Section 3.11(b)(3), (vii) amounts deposited in
the Collection Account or the Distribution Account in error and (viii) the
amount of any Prepayment Charges collected by the Servicers in connection with
the Principal Prepayment of any of the Mortgage Loans and any Servicer
Prepayment Charge Payment Amount, and (y) amounts reimbursable to the Master
Servicer, the Trustee or the Trust Administrator, as applicable, for an advance
made pursuant to Section 7.02(b) which advance the Master Servicer, the Trustee
or Trust Administrator, as applicable, has determined to be nonrecoverable from
the Stayed Funds in respect of which it was made.
"Balloon Loan": Any Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its stated maturity
date.
"Balloon Payment": With respect to any Balloon Loan, as of any
date of determination, the Monthly Payment payable on the stated maturity date
of such Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.
"Book-Entry Certificate": The Class A Certificates for so long
as the Certificates of such Class shall be registered in the name of the
Depository or its nominee.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the State of
California, the State of New York, the State of Pennsylvania or in the city in
which the Corporate Trust Office of the Trust Administrator or the Corporate
Trust Office of the Trustee is located, are authorized or obligated by law or
executive order to be closed.
"Cash-Out Refinancing": With respect to a Mortgage Loan
serviced by New Century, a Refinanced Mortgage Loan the proceeds of which are
more than a nominal amount in excess of the principal balance of any existing
first mortgage or subordinate mortgage on the related Mortgaged Property and
related closing costs. With respect to a Mortgage Loan serviced by Option One, a
Refinanced Mortgage Loan, the proceeds of which were more than the greater of
(a) $1,000 or (b) 1% of the principal balance of an existing first mortgage on
the related Mortgaged Property and the principal balance of any existing
subordinate mortgages on the related Mortgaged Property, in either case, in
excess of the principal balance of an existing first mortgage on the related
Mortgaged Property, the principal balance of any existing subordinate mortgages
on the related Mortgaged Property and related closing costs, and were used to
satisfy such existing
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first mortgage, or any such subordinate mortgages, to pay related closing costs
and to provide to the Mortgagor more than $1,000 or the amount calculated in
clause (b) above, as applicable, in addition thereto. Notwithstanding the
foregoing, with respect to Option One, any Refinanced Mortgage Loan with a
Loan-to-Value Ratio less than or equal to 80% that was used for the purpose of
debt consolidation is considered a Cash-Out Refinancing.
"Certificate": Any one of the Depositor's Mortgage
Pass-Through Certificates, Series 1998-NC7, Class A-1, Class X-0, Xxxxx X-0,
Class A-4, Class A-5, Class A-6, Class A-7, Class CE, Class P, Class R-I, Class
R-II or Class R-III, issued under this Agreement.
"Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (or the Notional Amount, in the case of the Class CE
Certificates) of such Class of Certificates on such Distribution Date (after
giving effect to any distributions of principal and allocations of Realized
Losses in reduction of the Certificate Principal Balance (or the Notional
Amount, in the case of the Class CE Certificates) of such Class of Certificates
to be made on such Distribution Date), and the denominator of which is the
initial aggregate Certificate Principal Balance (or the Notional Amount, in the
case of the Class CE Certificates) of such Class of Certificates as of the
Closing Date.
"Certificate Insurer": Financial Security Assurance Inc., a
stock insurance company organized and created under the laws of the State of New
York, and any successors thereto.
"Certificate Insurer Default": The existence and continuance
of any of the following:
(a) The Certificate Insurer fails to make a payment
required under the Policy in accordance with its terms; or
(b)(i) the Certificate Insurer (A) files any petition
or commences any case or proceeding under any provision or
chapter of the Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (B) makes a general assignment
for the benefit of its creditors, or (C) has an order for
relief entered against it under the Bankruptcy Code or any
other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization
which is final and nonappealable; or
(ii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory
authority enters a final and nonappealable order, judgment or
decree (A) appointing a custodian, trustee, agent or receiver
for the Certificate Insurer or for all or any material portion
of its property or (B) authorizing the taking of possession by
a custodian, trustee, agent or receiver of the Certificate
Insurer (or the taking of possession of all or any material
portion of the property of the Certificate Insurer).
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"Certificate Insurer Premium": The Policy premium payable
pursuant to Section 3.25(b) hereof.
"Certificate Insurer Premium Rate": 0.20% per annum.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register and the Certificate
Insurer to the extent of Cumulative Insurance Payments, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or either Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 12.01. The Trustee and the Trust Administrator may
conclusively rely upon a certificate of the Depositor or either Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Trust Administrator shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class A
Certificate or Class P Certificate as of any date of determination, the
Certificate Principal Balance of such Certificate on the Distribution Date
immediately prior to such date of determination, minus all distributions
allocable to principal made thereon and Realized Losses allocated thereto on
such immediately prior Distribution Date (or, in the case of any date of
determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC II Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates and the Class P
Certificates then outstanding.
"Certificate Register": The register maintained pursuant to
Section 5.02.
"Class": Collectively, all of the Certificates bearing the
same class designation.
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"Class A Certificate": Any Class A-1 Certificate, Class A-2
Certificate, Class A-3 Certificate, Class A-4 Certificate, Class A-5
Certificate, Class A-6 Certificate or Class A-7 Certificate.
"Class A-1 Certificate": Any one of the Class A-1 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-1 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class A-2 Certificate": Any one of the Class A-2 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class A-3 Certificate": Any one of the Class A-3 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class A-4 Certificate": Any one of the Class A-4 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-4 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class A-5 Certificate": Any one of the Class A-5 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-5 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class A-6 Certificate": Any one of the Class A-6 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-6 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class A-7 Certificate": Any one of the Class A-7 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-7 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class CE Certificate": Any one of the Class CE Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-8 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
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"Class P Certificate": Any one of the Class P Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-9 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class R-I Certificate": Any one of the Class R-I Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-10 and evidencing the
Residual Interest in REMIC I for purposes of
the REMIC Provisions.
"Class R-II Certificate": Any one of the Class R-II
Certificates executed, authenticated and delivered by the Trustee or the Trust
Administrator, substantially in the form annexed hereto as Exhibit A-11 and
evidencing the Residual Interest in REMIC II for purposes of the REMIC
Provisions.
"Class R-III Certificates": Any one of the Class R-III
Certificates executed, authenticated and delivered by the Trustee or the Trust
Administrator, substantially in the form annexed hereto as Exhibit A-12 and
evidencing the Residual Interest in REMIC III for purposes of the REMIC
Provisions.
"Closing Date": December 22, 1998.
"Code": The Internal Revenue Code of 1986.
"Collection Account": Each of the accounts created and
maintained, or caused to be created and maintained, by each Servicer pursuant to
Section 3.10(a), which shall be entitled as appropriate, "New Century Mortgage
Corporation, as Servicer for Firstar Bank Milwaukee, N.A., as Trustee, in trust
for (A) the registered holders of Salomon Brothers Mortgage Securities VII,
Inc., Mortgage Pass-Through Certificates, Series 1998-NC7 and (B) Financial
Security Assurance Inc." or "Option One Mortgage Corporation, as Servicer for
Firstar Bank Milwaukee, N.A., as Trustee, in trust for (A) the registered
holders of Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1998-NC7 and (B) Financial Security Assurance Inc." The
Collection Account must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office
of the Trust Administrator or the Trustee, as the case may be, at which at any
particular time its corporate trust business in connection with this Agreement
shall be administered, which office, with respect to the Trust Administrator, at
the date of the execution of this instrument is located at 000 Xxxx Xxxxx
Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000, or at such other address as the Trust
Administrator may designate from time to time by notice to the
Certificateholders, the Depositor, each Servicer, the Trustee and the
Certificate Insurer and, with respect to the Trustee, at the date of the
execution of this instrument is located at 0000 Xxxxx XxxxxXxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, or such other address as the Trustee may designate
from time to time by notice to the
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Certificateholders, the Depositor, each Servicer, the Trust Administrator and
the Certificate Insurer.
"Corresponding Certificate": With respect to REMIC I Regular
Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4,
REMIC I Regular Interest I- LT5, REMIC I Regular Interest I-LT6, REMIC I Regular
Interest I-LT7, REMIC I Regular Interest I-LT8 and REMIC I Regular Interest
I-LTP, the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates, Class A-6
Certificates, Class A-7 Certificates and Class P Certificates, respectively.
With respect to REMIC II Regular Interest II-LT2, REMIC II Regular Interest
II-LT3, REMIC II Regular Interest II-LT4, REMIC II Regular Interest II-LT5,
REMIC II Regular Interest II-LT6, REMIC II Regular Interest II-LT7, REMIC II
Regular Interest II-LT8 and REMIC II Regular Interest II-LTP, the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates, Class A-6 Certificates, Class A-7
Certificates and Class P Certificates, respectively.
"Cumulative Insurance Payments": As of any time of
determination, the aggregate of all Insurance Payments previously made by the
Certificate Insurer under the Policy plus interest thereon from the date such
amount became due until paid in full, at a rate of interest calculated as
provided in the Insurance Agreement minus all payments previously made to the
Certificate Insurer pursuant to Section 4.01 hereof as reimbursement for such
amounts.
"Cumulative Loss Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred from the Cut-off Date to the last
day of the preceding calendar month and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.
"Cut-off Date": With respect to each Original Mortgage Loan,
December 1, 1998. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficiency Amount": With respect to the Class A Certificates
as of any Distribution Date, the sum of (i) any shortfall in the amounts
available in the Distribution Account to pay the Interest Distribution Amount on
such Certificates for the related Interest Accrual Period, (ii) the excess, if
any, of (a) the aggregate Certificate Principal Balances of the Class A
Certificates then outstanding over (b) the aggregate Stated Principal Balances
of the Mortgage Loans and REO Properties then outstanding, and (iii) without
duplication of the amount specified in clause (ii), the aggregate Certificate
Principal Balances of the Class A Certificates to the extent
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unpaid on the final Distribution Date or earlier termination of the Trust Fund
pursuant to the terms of this Agreement.
"Deficiency Event": The inability of the Trust Administrator
to make the Guaranteed Distribution on any Distribution Date due to a shortage
of funds for such purpose then held in the Distribution Account and the failure
of the Certificate Insurer to pay in full a claim made in accordance with the
Policy with respect to such Distribution Date.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding
initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a fraction, the numerator of which is
the aggregate Stated Principal Balance of all Mortgage Loans that, as of the
last day of the previous calendar month, are 60 or more days delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties as of the last day of
the previous calendar month; provided, however, that any Mortgage Loan purchased
by the Master Servicer (or by Option One) pursuant to Section 3.16(c) shall not
be included in either the numerator or the denominator for purposes of
calculating the Delinquency Percentage.
"Depositor": Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee and the Trust Administrator, that (a) is
incorporated under the laws of the United States of America or any State
thereof, (b) is subject to supervision and examination by federal or state
banking authorities and (c) has outstanding unsecured commercial paper or other
short-term unsecured debt obligations (or, in the case of a depository
institution that is the principal subsidiary of a holding company, such holding
company has unsecured commercial paper or other
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short-term unsecured debt obligations) that are rated P-1 by Xxxxx'x and A-1 by
S&P (or comparable ratings if Xxxxx'x and S&P are not the Rating Agencies).
"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date": With respect to each Distribution Date,
the 15th day of the calendar month in which such Distribution Date occurs or, if
such 15th day is not a Business Day, the Business Day immediately preceding such
15th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; provided, however, that the Trustee (or the
related Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the related Servicer on
behalf of the Trustee) establishes rental terms, chooses tenants, enters into or
renews leases, deals with taxes and insurance, or makes decisions as to repairs
or capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for Xxxxxxx Mac, a majority of its board of directors
is not selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee or the
Trust Administrator based upon an Opinion of Counsel that the holding of an
Ownership Interest in a Residual Certificate by such Person may cause any of
REMIC I, REMIC II or REMIC III or any Person having an Ownership Interest in any
Class of Certificates (other than such Person) to incur a liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the Transfer of an Ownership Interest in a Residual Certificate to such Person.
The terms "United States," "State" and "international organization" shall have
the meanings set forth in Section 7701 of the Code or successor provisions.
"Distribution Account": The trust account or accounts created
and maintained by the Trust Administrator pursuant to Section 3.10(b), which
shall be entitled "U.S. Bank National Association, as Trust Administrator for
Firstar Bank Milwaukee, N.A., as Trustee, in trust for (A) the registered
holders of Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-
Through Certificates, Series 1998-NC7 and (B) Financial Security Assurance Inc."
The Distribution Account must be an Eligible Account.
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"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in January 1999.
"Due Date": With respect to each Distribution Date, the first
day of the calendar month in which such Distribution Date occurs, which is
generally the day of the month on which the Monthly Payment is due on a Mortgage
Loan, exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month immediately preceding the month
in which such Distribution Date occurs and ending on the related Due Date.
"Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution, (ii) an account or accounts the
deposits in which are fully insured by the FDIC or (iii) a trust account or
accounts maintained with the corporate trust department of a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Overcollateralized Amount": With respect to the Class
A Certificates and any Distribution Date, the excess, if any, of (i) the
Overcollateralized Amount for such Distribution Date over (ii) the Required
Overcollateralized Amount for such Distribution Date.
"Expense Account": The account established and maintained
pursuant to Section 3.25.
"Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan or REO Property, the then applicable Mortgage Rate thereon minus the sum of
(i) the Administration Fee Rate, (ii) the Servicing Fee Rate and (iii) the
Master Servicing Fee Rate.
"Xxxxxx Xxx": Xxxxxx Xxx, formally known as the Federal
National Mortgage Association ("FNMA"), or any successor thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the related Originator, the Seller, the Depositor, the Majority
Class CE Certificateholder, the related Servicer, the Master Servicer or the
Certificate Insurer pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 10.01), a determination made by the related Servicer that all
Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which
such Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have
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been so recovered. Each Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.
"Xxxxxxx Mac": Xxxxxxx Mac, formally known as the Federal Home
Loan Mortgage Corporation ("FHLMC"), or any successor thereto.
"Guaranteed Distribution": As defined in the Policy.
"Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Seller,
each Servicer, each Originator and their respective Affiliates, (b) does not
have any direct financial interest in or any material indirect financial
interest in the Depositor, the Seller, either Originator, either Servicer or any
Affiliate thereof, and (c) is not connected with the Depositor, the Seller,
either Originator, either Servicer or any Affiliate thereof as an officer,
employee, promoter, underwriter, trustee, trust administrator, partner, director
or Person performing similar functions; provided, however, that a Person shall
not fail to be Independent of the Depositor, the Seller, either Originator,
either Servicer or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less of any class of securities issued by the
Depositor, the Seller, either Originator, either Servicer or any Affiliate
thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than
the Servicers) that would be an "independent contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including either Servicer) if the Trustee and the Trust Administrator have
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (determined
without regard to the exception applicable for purposes of Section 860D(a) of
the Code), or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.
"Initial Deposit": $8,332.84 in cash to be deposited by the
Depositor with the Trust Administrator on or before the Closing Date, which
represents with respect to each Mortgage Loan having a first payment date due in
February 1999, interest accrued at the Net Mortgage Rate for each such Mortgage
Loan for the initial Interest Accrual Period.
"Insurance Agreement": The Insurance and Indemnity Agreement,
dated as of December 22, 1998, among the Depositor, the Seller, the Servicers
and the Certificate Insurer, as amended or supplemented in accordance with the
provisions thereof.
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"Insurance Payment": Any payment made by the Certificate
Insurer under the Policy with respect to the Class A Certificates.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that the
related Servicer would follow in servicing mortgage loans held for its own
account, subject to the terms and conditions of the related Mortgage Note and
Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date and the Class A Certificates, the Class CE Certificates, the REMIC I
Regular Interests (other than REMIC I Regular Interest I-LTP) and the REMIC II
Regular Interests (other than REMIC II Regular Interest II-LTP), the one-month
period ending on the last day of the calendar month preceding the month in which
such Distribution Date occurs.
"Interest Distribution Amount": With respect to any
Distribution Date and any Class of Class A Certificates and any Class CE
Certificates, the aggregate Accrued Certificate Interest on the Certificates of
such Class for such Distribution Date, plus with respect to each Class of Class
A Certificates any undistributed Interest Distribution Amounts from any previous
Distribution Date for which no Insurance Payment relating to such Interest
Distribution Amounts has been previously paid to Holders of each Class of Class
A Certificates.
"Late Collections": With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 10.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the applicable Servicer in connection with (i)
the taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
10.01.
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"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date (and the principal balance of
any related first-lien Mortgage Loan, with respect to any second-lien Mortgage
Loan) and the denominator of which is the Value of the related Mortgaged
Property.
"Lockout Certificates": The Class A-7 Certificates.
"Lockout Certificate Percentage": For each Distribution Date,
the percentage equal to the aggregate Certificate Principal Balance of the Class
A-7 Certificates immediately prior to such Distribution Date divided by the sum
of the aggregate Certificate Principal Balances of the Class A Certificates
immediately prior to such Distribution Date.
"Lockout Distribution Percentage": With respect to any
Distribution Date, the percentage indicated below:
Distribution Date Lockout Distribution Percentage
--------------------------------------------- -------------------------------------------------------
January 1999 through December 2001 0%
January 2002 through December 2003 45% of the Lockout Certificate Percentage
January 2004 through December 2004 80% of the Lockout Certificate Percentage
January 2005 through December 2005 100% of the Lockout Certificate Percentage
January 2006 and thereafter the lesser of (x) 300% of the Lockout
Certificate Percentage and (y) 100%
Notwithstanding the foregoing, if the Certificate Principal Balances of the
Class A Certificates (other than the Lockout Certificates) have been reduced to
zero, the Lockout Distribution Percentage will be equal to 100%.
"Majority Class CE Certificateholder": Any single Holder or
group of Holders of Class CE Certificates representing a greater than 50%
Percentage Interest in such Class.
"Master Servicer": New Century Mortgage Corporation or any
successor master servicer appointed as herein provided, in its capacity as
Master Servicer hereunder.
"Master Servicing Fee": With respect to each Mortgage Loan and
for any calendar month, an amount equal to one month's interest (or in the event
of any payment of interest which accompanies a Principal Prepayment in full or
in part made by the Mortgagor during such calendar month, interest for the
number of days covered by such payment of interest) at the applicable Master
Servicing Fee Rate on the same principal amount on which interest on such
Mortgage Loan accrues for such calendar month.
"Master Servicing Fee Rate": With respect to each Mortgage
Loan identified on Part A of Schedule 1 hereto 0.00% per annum. With respect to
each Mortgage Loan identified on Part B of Schedule 1 hereto 0.04% per annum.
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"Maximum I-LT9 Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LT9 for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LT9 minus the REMIC I Overcollateralized Amount, in each case
for such Distribution Date, over (ii) Uncertificated Interest on REMIC II
Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II Regular
Interest II-LT4, REMIC II Regular Interest II-LT5, REMIC II Regular Interest
II-LT6, REMIC II Regular Interest II-LT7 and REMIC II Regular Interest II-LT8
for such Distribution Date.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the related Servicer pursuant to Section 3.07; and (c) on the assumption that
all other amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Xxxxx'x Investors Service, Inc. or its successor in
interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien or a second lien on, or first priority or second priority
security interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee and delivered to the Trust Administrator pursuant to Section 2.01
or Section 2.03(d) of this Agreement, as held from time to time as a part of the
Trust Fund, the Mortgage Loans so held being identified in the Mortgage Loan
Schedule.
"Mortgage Loan Purchase Agreements": The agreement among the
Depositor, the Seller and New Century, in its capacity as an Originator,
regarding the transfer of certain of the Mortgage Loans by the Seller to or at
the direction of the Depositor (the "New Century Mortgage Loan Purchase
Agreement") and the agreement among the Depositor, the Seller and Option One, in
its capacity as an Originator, regarding the transfer of certain of the Mortgage
Loans by the Seller to or at the direction of the Depositor (the "Option One
Mortgage Loan Purchase Agreement"), each substantially in the form of Exhibit D
annexed hereto.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, attached hereto as Schedule 1. The
Mortgage Loan Schedule shall set forth the following information with respect to
each Mortgage Loan:
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(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including the
state and zip code;
(iv) a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property;
(vi) the original months to maturity;
(vii) the stated remaining months to maturity from the Cut-off
Date based on the original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Mortgage Rate in effect immediately following the
Cut-off Date;
(x) the date on which the first Monthly Payment was due on the
Mortgage Loan;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the amount of the Monthly Payment due on the first Due
Date after the Cut-off
Date;
(xiv) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(xv) the original principal amount of the Mortgage Loan;
(xvi) the Scheduled Principal Balance of the Mortgage Loan as of
the close of business on the Cut-off Date;
(xvii) [intentionally omitted];
(xviii) [intentionally omitted];
(xix) a code indicating the purpose of the Mortgage Loan (I.E.,
purchase financing, Rate/Term Refinancing, Cash-Out
Refinancing);
(xx) [intentionally omitted];
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(xxi) [intentionally omitted];
(xxii) the Mortgage Rate at origination;
(xxiii) [intentionally omitted];
(xxiv) a code indicating the documentation program (I.E., Full
Documentation, Limited Documentation, Stated Income
Documentation);
(xxv) [intentionally omitted];
(xxvi) [intentionally omitted];
(xxvii) the risk grade;
(xxviii) [intentionally omitted];
(xxix) [intentionally omitted];
(xxx) [intentionally omitted];
(xxxi) the Value of the Mortgaged Property;
(xxxii) the sale price of the Mortgaged Property, if applicable;
(xxxiii) the actual unpaid principal balance of the Mortgage Loan
as of the Cut-off Date;
(xxxiv) the type and term of the related Prepayment Charge;
(xxxv) [intentionally omitted];
(xxxvi) [intentionally omitted];
(xxxvii) [intentionally omitted];
(xxxviii) [intentionally omitted];
(xxxix) [intentionally omitted];
(xl) the program code;
(xli) whether the Mortgage Loan is a first or second lien
Mortgage Loan.
The Mortgage Loan Schedule shall be divided into two parts,
Part A includes the Mortgage Loans initially serviced by New Century and Part B
includes the Mortgage Loans
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initially serviced by Option One. Each part of the Mortgage Loan Schedule shall
set forth the following information with respect to the Mortgage Loans in the
aggregate as of the Cut-Off Date: (1) the number of Mortgage Loans; (2) the
current principal balance of the Mortgage Loans; (3) the weighted average
Mortgage Rate of the Mortgage Loans; and (4) the weighted average maturity of
the Mortgage Loans. The Mortgage Loan Schedule shall be amended from time to
time by the Depositor in accordance with the provisions of this Agreement. With
respect to any Qualified Substitute Mortgage Loan, the Cut-off Date shall refer
to the related Cut-off Date for such Mortgage Loan, determined in accordance
with the definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 from time to time, and any REO Properties acquired in respect
thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Overcollateralization Reduction Amount for
such Distribution Date and (ii) the excess of (x) the Available Distribution
Amount for such Distribution Date over (y) the sum for such Distribution Date of
(A) the Interest Distribution Amounts payable to the holders of the Class A
Certificates and (B) the sum of the amounts described in clauses (b)(i) through
(iii) of the definition of Principal Distribution Amount.
"Net Monthly Excess Spread": With respect to any Distribution
Date, the excess of (x) the Available Distribution Amount for such Distribution
Date over (y) the sum for such Distribution Date of (A) the Interest
Distribution Amount payable to the holders of the Class A Certificates and (B)
the sum of the amounts described in clauses (b)(i) through (iii) of the
definition of Principal Distribution Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Servicing Fee Rate.
"Net WAC Pass-Through Rate": With respect to REMIC II Regular
Interest II-LT7 and the Class A-6 Certificates and any Distribution Date, a per
annum rate equal to the fraction, expressed as a percentage, the numerator of
which is (i) an amount equal to (A) 1/12 of the
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aggregate Scheduled Principal Balance of the then outstanding Mortgage Loans and
REO Properties multiplied by the weighted average of the Expense Adjusted
Mortgage Rates on such Mortgage Loans and REO Properties minus (B) the amount of
the Certificate Insurer Premium payable to the Certificate Insurer with respect
to the Policy for such Distribution Date, and the denominator of which is (ii)
an amount equal to 1/12 of the aggregate Scheduled Principal Balance of the then
outstanding Mortgage Loans and REO Properties.
"New Century": New Century Mortgage Corporation, or its
successor in interest.
"New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the terms of such lease.
"Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the related Servicer, will not or, in the
case of a proposed P&I Advance, would not be ultimately recoverable from related
Late Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage
Loan or REO Property as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the related Servicer, will
not or, in the case of a proposed Servicing Advance, would not be ultimately
recoverable from related Late Collections, Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount": With respect to the Class CE Certificates
and any Distribution Date, the Uncertificated Balance of the REMIC II Regular
Interests (other than the Uncertificated Balance of REMIC II Regular Interest
II-LTP) for such Distribution Date.
"Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of related Servicer, the related
Originator, the Seller or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or either Servicer,
acceptable to the Trustee and the Certificate Insurer, if such opinion is
delivered to the Trustee, or acceptable to the Trust Administrator and the
Certificate Insurer, if such opinion is to be delivered to the Trust
Administrator, except that any opinion of counsel relating to (a) the
qualification of any of REMIC I, REMIC II or REMIC III as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of Independent counsel.
"Option One": Option One Mortgage Corporation, or its
successor in interest.
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"Original Mortgage Loan": Any of the Mortgage Loans included
in REMIC I as of the Closing Date.
"Originators": New Century, or its successor in interest, in
its capacity as an Originator under the New Century Mortgage Loan Purchase
Agreement, and Option One, or its successor in interest, in its capacity as an
Originator under the Option One Mortgage Loan Purchase Agreement.
"Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) the sum of the aggregate Certificate Principal Balances of the Class A
Certificates and the Class P Certificates as of such Distribution Date (after
taking into account the payment of the amounts described in clauses (b)(i)
through (iv) of the definition of Principal Distribution Amount on such
Distribution Date).
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Required Overcollateralized
Amount applicable to such Distribution Date over (b) the Overcollateralized
Amount applicable to such Distribution Date prior to taking into account the
payment of any Overcollateralization Increase Amount on such Distribution Date.
"Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency Amount
as of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount on such Distribution Date, exclusive of the
payment of any Overcollateralization Increase Amount) and (b) the amount of
Accrued Certificate Interest payable on the Class CE Certificates on such
Distribution Date as reduced by any Cumulative Insurance Payments or Realized
Losses allocated thereto with respect to such Distribution Date pursuant to
Section 4.04.
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (b)(i) through (iii) of the definition of
Principal Distribution Amount.
"Overcollateralization Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Overcollateralized Amount, and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties as
of the last day of the related Due Period.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to:
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(i) the Class A-1 Certificates, for any Distribution
Date, a fixed rate equal to 6.063% per annum;
(ii) the Class A-2 Certificates, for any Distribution
Date, a fixed rate equal to 6.061% per annum;
(iii) the Class A-3 Certificates, for any Distribution
Date, a fixed rate equal to 6.595% per annum;
(iv) the Class A-4 Certificates, for any Distribution
Date, a fixed rate equal to 6.704% per annum;
(v) the Class A-5 Certificates, for any Distribution
Date, a fixed rate equal to 6.838% per annum;
(vi) the Class A-6 Certificates, for any Distribution
Date, the lesser of (i) a fixed rate equal to 7.491%
per annum and (ii) the Net WAC Pass-Through Rate for
such Distribution Date;
(vii) the Class A-7 Certificates, for any Distribution
Date, a fixed rate equal to 6.615% per annum;
(viii) the Class CE Certificates, for any Distribution Date,
a rate per annum equal to the percentage equivalent
of a fraction, the numerator of which is the sum of
the amounts calculated pursuant to clauses (a)
through (j) below, and the denominator of which is
the Uncertificated Balance of the REMIC II Regular
Interests (other than the Uncertificated Balance of
REMIC II Regular Interest II-LTP). For purposes of
calculating the Pass-Through Rate for the Class CE
Certificates, the numerator is equal to the sum of
the following components:
(a) the REMIC II Remittance Rate for REMIC
II Regular Interest II-LT1 minus two (2) times the
weighted average of the REMIC II Remittance Rates for
REMIC II Regular Interest II-LT2, REMIC II Regular
Interest II-LT3, REMIC II Regular Interest II-LT4,
REMIC II Regular Interest II-LT5, REMIC II Regular
Interest II-LT6, REMIC II Regular Interest II-LT7,
REMIC II Regular Interest II-LT8 and REMIC II Regular
Interest II-LT9, with the rate on REMIC II Regular
Interest II-LT9 equal to zero for the purpose of this
calculation, applied to an amount equal to the
Uncertificated Balance of REMIC II Regular Interest
II-LT1;
(b) the weighted average of the REMIC II
Remittance Rates for REMIC II Regular Interest
II-LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4, REMIC II Regular Interest
II-LT5, REMIC II Regular Interest II-LT6, REMIC II
Regular Interest II-LT7 and
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REMIC II Regular Interest II-LT8 minus two (2) times
the weighted average of the REMIC II Remittance Rates
for REMIC II Regular Interest II-LT2, REMIC II
Regular Interest II-LT3, REMIC II Regular Interest
II- LT4, REMIC II Regular Interest II-LT5, REMIC II
Regular Interest II- LT6, REMIC II Regular Interest
II-LT7, REMIC II Regular Interest II-LT8 and REMIC II
Regular Interest II-LT9, with the rate on REMIC II
Regular Interest II-LT9 equal to zero for the purpose
of this calculation, applied to an amount equal to
the sum of the Uncertificated Balances of REMIC II
Regular Interest II-LT2, REMIC II Regular Interest
II-LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II-LT5, REMIC II Regular Interest
II-LT6, REMIC II Regular Interest II-LT7 and REMIC II
Regular Interest II-LT8;
(c) the REMIC II Remittance Rate for REMIC
II Regular Interest II-LT9 minus two (2) times the
weighted average of the REMIC II Remittance Rates for
REMIC II Regular Interest II-LT2, REMIC II Regular
Interest II-LT3, REMIC II Regular Interest II-LT4,
REMIC II Regular Interest II-LT5, REMIC II Regular
Interest II-LT6, REMIC II Regular Interest II-LT7,
REMIC II Regular Interest II-LT8 and REMIC II Regular
Interest II-LT9, with the rate on REMIC II Regular
Interest II-LT9 equal to zero for the purpose of this
calculation, applied to an amount equal to the
Uncertificated Balance of REMIC II Regular Interest
II-LT9; and
(d) 100% of the interest on REMIC II Regular
Interest II-LT2S;
(e) 100% of the interest on REMIC II Regular
Interest II-LT3S;
(f) 100% of the interest on REMIC II Regular
Interest II-LT4S;
(g) 100% of the interest on REMIC II Regular
Interest II-LT5S;
(h) 100% of the interest on REMIC II Regular
Interest II-LT6S;
(i) 100% of the interest on REMIC II Regular
Interest II-LT7S; and
(j) 100% of the interest on REMIC II Regular
Interest II-LT8S.
"Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
represented by such Certificate and the denominator of which is the aggregate
initial Certificate Principal Balance of all of the Certificates of such Class.
The Class A Certificates are issuable only in minimum Percentage Interests
corresponding to minimum initial Certificate Principal Balances of $10,000 and
integral multiples of $1.00 in excess thereof. The Class P
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Certificates are issuable only in Percentage Interests corresponding to initial
Certificate Principal Balances of $20 and integral multiples thereof. The Class
CE Certificates are issuable only in minimum Percentage Interests corresponding
to minimum initial Certificate Principal Balances of $10,000 and integral
multiples of $1.00 in excess thereof; provided, however, that a single
Certificate of such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Certificate
Principal Balance of such Class or to an otherwise authorized denomination for
such Class plus such remainder. With respect to any Residual Certificate, the
undivided percentage ownership in such Class evidenced by such Certificate, as
set forth on the face of such Certificate. The Residual Certificates are
issuable in minimum Percentage Interests of 20%.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, either Servicer, the Trustee, the
Trust Administrator or any of their respective Affiliates:
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United
States; provided, however, that any obligation of, or guaranteed by,
Xxxxxxx Mac or Xxxxxx Mae, other than a senior debt or a mortgage
participation or pass-through certificate guaranteed by Xxxxxxx Mac or
Xxxxxx Mae shall be a Permitted Investment only if, at the time of
investment, such investment is acceptable to the Certificate Insurer;
(ii) demand and time deposits in, certificates of
deposit of, or bankers' acceptances issued by, any Depository
Institution;
(iii) repurchase obligations with respect to any
security described in clause (i) above entered into with a Depository
Institution (acting as principal);
(iv) securities bearing interest or sold at a
discount that are issued by any corporation incorporated under the laws
of the United States of America or any state thereof and that are rated
by each Rating Agency that rates such securities in its highest
long-term unsecured rating categories at the time of such investment or
contractual commitment providing for such investment;
(v) commercial paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than 30
days after the date of acquisition thereof) that is rated by each
Rating Agency that rates such securities in its highest short-term
unsecured debt rating available at the time of such investment;
(vi) units of money market funds that have been rated
"P-1" by Moody's and "AAAm" by S&P; and
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(viii) if previously confirmed in writing to the
Trustee and the Trust Administrator, any other demand, money market or
time deposit, or any other obligation, security or investment, as may
be acceptable to the Rating Agencies and the Certificate Insurer as a
permitted investment of funds backing securities having ratings
equivalent to its highest initial rating of the Class A Certificates;
provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the related Servicer in respect of any Distribution Date
pursuant to Section 4.03.
"Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Xxxxx plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the
Code.
"Policy": The Financial Guaranty Insurance Policy (No.
50752-N) issued by the Certificate Insurer relating to the Class A Certificates,
including any endorsements thereto, attached hereto as Exhibit B.
"Policy Payments Account": The account established pursuant to
Section 9.04 hereof.
"Premium Supplement": As defined in the Insurance Agreement.
"Prepayment Assumption": A 100% Prepayment Vector. The
Prepayment Assumption is used solely for determining the accrual of original
issue discount on the Certificates for federal income tax purposes. A 100%
Prepayment Vector assumes that the outstanding balance of a pool of mortgage
loans prepays at a rate of 5.00% CPR in the first month of the life of such
pool, such rate increasing by an additional approximate 1.82% CPR (precisely
20/11, expressed as a percentage) each month thereafter through the eleventh
month of the life of such pool, and such rate thereafter remaining at 25% CPR
for the remainder of the life of such pool. A CPR (or Constant Prepayment Rate)
represents an annualized constant assumed rate of
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prepayment each month of a pool of mortgage loans relative to its outstanding
principal balance for the life of such pool.
"Prepayment Charge": With respect to any Prepayment Period,
any prepayment premium, penalty or charge payable by a Mortgagor in connection
with any Principal Prepayment on a Mortgage Loan pursuant to the terms of the
related Mortgage Note (other than any Servicer Prepayment Charge Payment
Amount).
"Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in REMIC I on such date,
attached hereto as Schedule 2 (including the Prepayment Charge Summary attached
thereto). The Prepayment Charge Schedule shall set forth the following
information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on the
related Mortgage Loan;
(v) the term of the related Mortgage Loan; and
(vi) the principal balance of the related Mortgage Loan as of the
Cut-off Date.
The Prepayment Charge Schedule shall be amended from time to
time by the Depositor in accordance with the provisions of this Agreement.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related Prepayment
Period the subject of a Principal Prepayment in full or in part that was applied
by the related Servicer to reduce the outstanding principal balance of such loan
on a date preceding the Due Date in the succeeding Prepayment Period, an amount
equal to interest at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the date on which the
prepayment is applied and ending on the last day of the related Prepayment
Period. The obligations of the Servicers in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the calendar month in which such Distribution Date
occurs.
"Principal Distribution Amount": With respect to any
Distribution Date, the lesser of:
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(a) the excess of the Available Distribution Amount over
the amount payable on the Class A Certificates
pursuant to Section 4.01(a)(2)(i); and
(b) the sum of:
(i) the principal portion of each Monthly Payment on
the Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related
Determination Date;
(ii) the Stated Principal Balance of any Mortgage
Loan that was purchased during the related Prepayment
Period pursuant to or as contemplated by Section
2.03, Section 3.16(c) or Section 10.01 and the amount
of any shortfall deposited in the Collection Account
in connection with the substitution of a Deleted
Mortgage Loan pursuant to Section 2.03 during the
related Prepayment Period;
(iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds
and REO Principal Amortization) received during the
related Prepayment Period, net of any portion thereof
that represents a recovery of principal for which an
advance was made by the related Servicer pursuant to
Section 4.03 in respect of a preceding Distribution
Date;
(iv) the principal portion of any Realized Losses
incurred or deemed to have been incurred on the
Mortgage Loans in the calendar month preceding such
Distribution Date and the principal portion of any
Realized Losses allocated to the Class A Certificates
on previous Distribution Dates but not paid under the
Policy due to a Certificate Insurer Default and not
previously paid pursuant to Section
4.01(a)(2)(iii)(b), in each case from Accrued
Certificate Interest on the Class CE Certificates for
such Distribution Date; and
(v) the amount of any Overcollateralization Increase
Amount for such Distribution Date;
minus:
(vi) the amount of any Overcollateralization
Reduction Amount for such Distribution Date.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.
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"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 10.01, and as confirmed by an Officers' Certificate from the
related Servicer or the Master Servicer to the Trustee and the Trust
Administrator, an amount equal to the sum of (i) 100% of the Stated Principal
Balance thereof as of the date of purchase (or such other price as provided in
Section 10.01), (ii) in the case of (x) a Mortgage Loan, accrued interest on
such Stated Principal Balance at the applicable Net Mortgage Rate in effect from
time to time from the Due Date as to which interest was last covered by a
payment by the Mortgagor or an advance by the related Servicer, which payment or
advance had as of the date of purchase been distributed pursuant to Section
4.01, through the end of the calendar month in which the purchase is to be
effected and (y) an REO Property, the sum of (1) accrued interest on such Stated
Principal Balance at the applicable Net Mortgage Rate in effect from time to
time from the Due Date as to which interest was last covered by a payment by the
Mortgagor or an advance by the related Servicer through the end of the calendar
month immediately preceding the calendar month in which such REO Property was
acquired, plus (2) REO Imputed Interest for such REO Property for each calendar
month commencing with the calendar month in which such REO Property was acquired
and ending with the calendar month in which such purchase is to be effected, net
of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds
and P&I Advances that as of the date of purchase had been distributed as or to
cover REO Imputed Interest pursuant to Section 4.01, (iii) any unreimbursed
Servicing Advances and P&I Advances (including Nonrecoverable P&I Advances and
Nonrecoverable Servicing Advances) and any unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from
the Collection Account in respect of such Mortgage Loan or REO Property pursuant
to Section 3.11(a)(ix) and Section 3.16(b), and (v) in the case of a Mortgage
Loan required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the related Servicer, the Trustee or the Trust
Administrator in respect of the breach or defect giving rise to the purchase
obligation.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) [reserved], (iv) [reserved], (v)
[reserved], (vi) [reserved], (vii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
(viii) have the same Due Date as the Due Date on the Deleted Mortgage Loan, (ix)
have a Loan-to- Value Ratio as of the date of substitution equal to or lower
than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (x)
have a risk grading determined by the related Originator at least equal to the
risk grading assigned on the Deleted Mortgage Loan and (xi) conform to each
representation and warranty set forth in Section 6 of the related Mortgage Loan
Purchase Agreement applicable to the Deleted Mortgage Loan. In the event that
one or more mortgage loans are substituted for one or more Deleted Mortgage
Loans, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage
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Rates described in clause (ii) hereof shall be determined on the basis of
weighted average Mortgage Rates, the terms described in clause (vii) hereof
shall be determined on the basis of weighted average remaining term to maturity,
the Loan-to-Value Ratios described in clause (ix) hereof shall be satisfied as
to each such mortgage loan, the risk gradings described in clause (x) hereof
shall be satisfied as to each such mortgage loan and, except to the extent
otherwise provided in this sentence, the representations and warranties
described in clause (xi) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
"Rate/Term Refinancing": With respect to Mortgage Loan
serviced by New Century, a Refinanced Mortgage Loan, the proceeds of which are
not more than a nominal amount in excess of the existing first mortgage loan and
any subordinate mortgage loan on the related Mortgaged Property and related
closing costs, and were used exclusively (except for such nominal amount) to
satisfy the then existing first mortgage loan and any subordinate mortgage loan
of the Mortgagor on the related Mortgaged Property and to pay related closing
costs. With respect to a Mortgage Loan serviced by Option One, a Refinanced
Mortgage Loan, the proceeds of which were not more than the greater of (a)
$1,000 or (b) 1% of the principal balance of an existing first mortgage on the
related Mortgaged Property and the principal balance of any existing subordinate
mortgages on the related Mortgaged Property, in either case, in excess of the
principal balance of an existing first mortgage on the related Mortgaged
Property, the principal balance of any existing subordinate mortgages on the
related Mortgaged Property and related closing costs, and were used to satisfy
such existing first mortgage, or any such subordinate mortgages, to pay related
closing costs and to provide to the Mortgagor not more than $1,000 or the amount
calculated in clause (b) above, as applicable, in addition thereto.
Notwithstanding the foregoing, with respect to Option One, any Refinanced
Mortgage Loan with a Loan-to-Value Ratio greater than 80% that was used for the
purpose of debt consolidation is considered a Rate/Term Refinancing.
"Rating Agency or Rating Agencies": Moody's and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor and the
Certificate Insurer, notice of which designation shall be given to the Trustee,
the Trust Administrator and each Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (iv)
the proceeds, if any, received in respect of such Mortgage Loan during the
calendar month in which such Final
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Recovery Determination was made, net of amounts that are payable therefrom to
the related Servicer with respect to such Mortgage Loan pursuant to Section
3.11(a)(iii).
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(v) the aggregate of all P&I Advances and Servicing Advances (in the case of
Servicing Advances, without duplication of amounts netted out of the rental
income, Insurance Proceeds and Liquidation Proceeds described in clause (vi)
below) made by the related Servicer in respect of such REO Property or the
related Mortgage Loan for which such Servicer has been or, in connection with
such Final Recovery Determination, will be reimbursed pursuant to Section 3.23
out of rental income, Insurance Proceeds and Liquidation Proceeds received in
respect of such REO Property, minus (vi) the total of all net rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of such REO
Property that has been, or in connection with such Final Recovery Determination,
will be transferred to the Distribution Account pursuant to Section 3.23.
With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.
"Record Date": With respect to each Distribution Date and any
Book-Entry Certificate, the Business Day immediately preceding such Distribution
Date. With respect to each Distribution Date and any other Certificates,
including any Definitive Certificates, the last Business Day of the month
immediately preceding the month in which such Distribution Date occurs.
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"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A Certificate, Class CE
Certificate or Class P Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof; (ii) any REO Property, together
with all collections thereon and proceeds thereof; (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreements (including any
security interest created thereby); (v) the Collection Account (other than any
amounts representing any Servicer Prepayment Charge Payment Amount), the
Distribution Account (other than any amounts representing any Servicer
Prepayment Charge Payment Amount), the Expense Account and any REO Account, and
such assets that are deposited therein from time to time and any investments
thereof, together with any and all income, proceeds and payments with respect
thereto. Notwithstanding the foregoing, however, REMIC I specifically excludes
the Policy and all payments and other collections of principal and interest due
on the Mortgage Loans on or before the Cut-off Date and all Prepayment Charges
payable in connection with Principal Prepayments made before the Cut-off Date.
"REMIC I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LT1 minus two (2) times the weighted average of the REMIC II Remittance Rates
for REMIC II Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4, REMIC II Regular Interest II-LT5, REMIC II Regular
Interest II-LT6, REMIC II Regular Interest II-LT7, REMIC II Regular Interest
II-LT8 and REMIC II Regular Interest II-LT9, with the rate on REMIC II Regular
Interest II-LT9 equal to zero for purposes of this calculation, divided by (b)
12.
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"REMIC I Overcollateralized Amount": With respect to any date
of determination, (i) 1% of the aggregate Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of
REMIC I Regular Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular
Interest I-LT4, REMIC I Regular Interest I-LT5, REMIC I Regular Interest I-LT6,
REMIC I Regular Interest I-LT7 and REMIC I Regular Interest I-LT8, in each case
as of such date of determination.
"REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LT2,
REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular
Interest I- LT5, REMIC I Regular Interest I-LT6, REMIC I Regular Interest I-LT7
and REMIC I Regular Interest I-LT8 and the denominator of which is the sum of
the Uncertificated Balances of REMIC I Regular Interest I-LT2, REMIC I Regular
Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular Interest I-LT5,
REMIC I Regular Interest I-LT6, REMIC I Regular Interest I- LT7, REMIC I Regular
Interest I-LT8 and REMIC I Regular Interest I-LT9.
"REMIC I Regular Interest": Any of the ten separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I Regular Interest
(other than REMIC I Regular Interest I-LTP, with respect to interest) shall
accrue interest at the related REMIC I Remittance Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms
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and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT5
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT6
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT7": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT7
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT8": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT8
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT9": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT9
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
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"REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall be entitled to any Prepayment Charges collected by the Servicers and to a
distribution of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to each REMIC I
Regular Interest, the weighted average of the Expense Adjusted Mortgage Rates on
the then outstanding Mortgage Loans and REO Properties.
"REMIC I Required Overcollateralized Amount": 1% of the
Required Overcollateralization Amount.
"REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit
of REMIC III, as holder of the REMIC II Regular Interests, and the Class R-II
Certificateholders pursuant to Section 2.07, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.
"REMIC II Regular Interest": Any of the seventeen separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
(other than REMIC II Regular Interest II-LTP) shall accrue interest at the
related REMIC II Remittance Rate in effect from time to time, and shall be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance as
set forth in the Preliminary Statement hereto. The designations for the
respective REMIC II Regular Interests are set forth in the Preliminary Statement
hereto.
"REMIC II Regular Interest II-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT1
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3
shall accrue interest at the related REMIC II Remittance
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Rate in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Balance as set forth in the Preliminary
Statement hereto.
"REMIC II Regular Interest II-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT4
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT6
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT7": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT7
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT8": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT8
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT9": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT9
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
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"REMIC II Regular Interest II-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTP
shall be entitled to any Prepayment Charges collected by the Servicers and to a
distribution of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC II Regular Interest II-LT2S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT3S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT4S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT4S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT5S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT6S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT6S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT7S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT7S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT8S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT8S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Remittance Rate": With respect to REMIC II Regular
Interest II-LT1 and REMIC II Regular Interest II-LT9, the weighted average of
the Expense Adjusted Mortgage Rates on the then outstanding Mortgage Loans and
REO Properties. With respect to each of
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REMIC II Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4, REMIC II Regular Interest II-LT5, REMIC II Regular
Interest II-LT6 and REMIC II Regular Interest II-LT8, a fixed rate per annum
equal to the related REMIC II Remittance Rate as set forth in the Preliminary
Statement hereto. With respect to REMIC II Regular Interest II- LT7, the lesser
of (i) the related fixed rate per annum equal to the related REMIC II Remittance
Rate as set forth in the Preliminary Statement hereto and (ii) the Net WAC
Pass-Through Rate. With respect to REMIC II Regular Interest II-LT2S, REMIC II
Regular Interest II-LT3S, REMIC II Regular Interest II-LT4S, REMIC II Regular
Interest II-LT5S, REMIC II Regular Interest II- LT6S, REMIC II Regular Interest
II-LT7S and REMIC II Regular Interest II-LT8S, a rate per annum equal to excess
of the REMIC I Remittance Rate for the related Uncertificated Corresponding
Component over the REMIC II Remittance Rate for REMIC II Regular Interest II-
LT2, REMIC II Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC
II Regular Interest II-LT5, REMIC II Regular Interest II-LT6, REMIC II Regular
Interest II-LT7 and REMIC II Regular Interest II-LT8, respectively.
"REMIC III": The segregated pool of assets consisting of all
of the REMIC II Regular Interests conveyed in trust to the Trustee, for the
benefit of the REMIC III Certificateholders pursuant to Section 2.09, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.
"REMIC III Certificate": Any Regular Certificate or Class
R-III Certificate.
"REMIC III Certificateholder": The Holder of any REMIC III
Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.
"Remittance Report": A report in form and substance acceptable
to the Trust Administrator on a magnetic disk or tape prepared by the related
Servicer pursuant to Section 4.03 with such additions, deletions and
modifications as agreed to by the Trust Administrator and such Servicer.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": Each of the accounts maintained, or caused to
be maintained, by the related Servicer in respect of an REO Property pursuant to
Section 3.23.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
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"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
10.01 that is allocable to such REO Property) or otherwise, net of any portion
of such amounts (i) payable pursuant to Section 3.23(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the related Servicer pursuant to Section 3.23(d) for unpaid
Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and P&I Advances in respect of such REO Property or the
related Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO
Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the related
Servicer on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E-1 or Exhibit E-2 attached hereto.
"Required Overcollateralized Amount": With respect to any
Distribution Date, an amount equal to $15,478,662.96 subject to the following:
(i) if the Step Up Trigger has occurred, the Required Overcollateralized Amount
for such Distribution Date will be an amount equal to the entire aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties as of such
Distribution Date; (ii) if the Step Up Trigger has not occurred but the Step Up
Spread Squeeze Test is met, the Required Overcollateralized Amount for such
Distribution Date will be an amount equal to the sum of (A) the Required
Overcollateralized Amount for such Distribution Date determined as though the
Step Up Spread Squeeze Test were not met plus (B) the Spread Squeeze
Overcollateralization Increase Amount; or (iii) if neither the Step Up Trigger
has occurred nor the Step Up Spread Squeeze Test is met but the Step Down
Trigger has occurred, the Required Overcollateralized Amount for such
Distribution Date will be an amount equal to the greater of (A) 0.50% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
and (B) the lesser of (x) $15,478,662.96 and (y) the Stepped Down Required
Overcollateralized Percentage of the aggregate Stated Principal Balance of the
Mortgage Loans and REO Properties as of such Distribution Date.
"Residential Dwelling": Any one of the following: (i) an
attached, detached or semi-detached one-family dwelling, (ii) an attached,
detached or semi-detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a Xxxxxx Xxx eligible condominium project, or (iv) an attached,
detached or semi-detached one-family dwelling in a planned unit development,
none
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of which is a co-operative, mobile or in the case of a Mortgage Loan serviced by
New Century, a manufactured home (as defined in 00 Xxxxxx Xxxxxx Code, Section
5402(6)).
"Residual Certificate": Any one of the Class R-I Certificates,
Class R-II Certificates or Class R-III Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee
or the Trust Administrator, the Chairman or Vice Chairman of the Board of
Directors or Trustees, the Chairman or Vice Chairman of the Executive or
Standing Committee of the Board of Directors or Trustees, the President, the
Chairman of the Committee on Trust Matters, any vice president, any assistant
vice president, the Secretary, any assistant secretary, the Treasurer, any
assistant treasurer, the Cashier, any assistant cashier, any trust officer or
assistant trust officer, the Controller and any assistant controller or any
other officer of the Trustee or the Trust Administrator, as the case may be,
customarily performing functions similar to those performed by any of the above
designated officers and, with respect to a particular matter, to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Rolling Delinquency Percentage": With respect to any
Distribution Date, the average of the Delinquency Percentages as of the last day
of each of the three (or one or two, in the case of the first and second
Distribution Dates) preceding calendar months.
"Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect
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to such REO Property, an amount (not less than zero) equal to the Scheduled
Principal Balance of the related Mortgage Loan as of the Due Date in the
calendar month in which such REO Property was acquired, minus the aggregate
amount of REO Principal Amortization, if any, in respect of such REO Property
for all previously ended calendar months; and (b) as of any Due Date subsequent
to the occurrence of a Liquidation Event with respect to such REO Property,
zero.
"Seller": Salomon Brothers Realty Corp., or its successor in
interest, in its capacity as seller under the Mortgage Loan Purchase Agreements.
"Servicer Prepayment Charge Payment Amount": The amounts
payable by the Servicers in respect of any waived Prepayment Charges pursuant to
Section 2.05 or Section 3.01.
"Servicers": New Century or any successor servicer appointed
as herein provided, in its capacity as servicer hereunder with respect to the
Mortgage Loans identified on Part A of Schedule 1 hereto and the Prepayment
Charges identified on Part A of Schedule 2 hereto and Option One or any
successor servicer appointed as herein provided, in its capacity as servicer
hereunder with respect to the Mortgage Loans identified on Part B of Schedule 1
hereto and the Prepayment Charges identified on Part B of Schedule 2 hereto.
References to "related Servicer", "applicable Servicer" and similar terms shall
mean the Servicer only with respect to the Mortgage Loans and Prepayment Charges
on the applicable part of Schedule 1 and Schedule 2 attached hereto.
"Servicer Event of Default": One or more of the events
described in Section 7.01.
"Servicer Remittance Date": With respect to any Distribution
Date, 5:00 p.m. New York time on the 18th day of the calendar month in which
such Distribution Date occurs or, if such 18th day is not a Business Day, the
Business Day immediately succeeding such 18th day.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by either Servicer in connection with a default, delinquency
or other unanticipated event by such Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, in respect of a
particular Mortgage Loan, (iii) the management (including reasonable fees in
connection therewith) and liquidation of any REO Property, and (iv) the
performance of its obligations under Section 3.01, Section 3.09, Section 3.14,
Section 3.16 and Section 3.23. Neither Servicer shall be required to make any
Servicing Advance in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of such Servicer, would not be ultimately
recoverable from related Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
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"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full or in
part made by the Mortgagor during such calendar month, interest for the number
of days covered by such payment of interest) at the applicable Servicing Fee
Rate on the same principal amount on which interest on such Mortgage Loan
accrues for such calendar month. A portion of such Servicing Fee may be retained
by any Sub- Servicer as its servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the applicable Servicer
involved in, or responsible for, the administration and servicing of Mortgage
Loans, whose name and specimen signature appear on a list of Servicing Officers
furnished by such Servicer to the Trust Administrator, the Trustee, the
Certificate Insurer and the Depositor on the Closing Date, as such list may from
time to time be amended.
"Single Certificate": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual
Certificates), a hypothetical Certificate of such Class evidencing a Percentage
Interest for such Class corresponding to an initial Certificate Principal
Balance or Notional Amount of $1,000. With respect to the Class P Certificates
and the Residual Certificates, a hypothetical Certificate of such Class
evidencing a 100% Percentage Interest in such Class.
"Spread Squeeze Condition": The Spread Squeeze Condition will
be met with respect to any Distribution Date on or after which the aggregate
Stated Principal Balance of the Mortgage Loans and each REO Property remaining
in the Trust Fund is reduced to less than 25% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date, if the Spread Squeeze
Percentage for such Distribution Date is less than 1.00%.
"Spread Squeeze Overcollateralization Increase Amount": For
any Distribution Date on which the Step Up Spread Squeeze Test is met, an amount
determined as follows:
(a) if the Spread Squeeze Condition is met for such
Distribution Date, the Spread Squeeze Overcollateralization Increase
Amount for such Distribution Date shall be equal to the product
obtained by multiplying (i) three, (ii) the excess, if any, of 1.00%
over the Spread Squeeze Percentage for such Distribution Date and (iii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date; or
(b) if the Spread Squeeze Condition is not met for such
Distribution Date, the Spread Squeeze Overcollateralization Increase
Amount for such Distribution Date shall be equal to (A) the Spread
Squeeze Overcollateralization Increase Amount for the most recent
Distribution Date for which the Spread Squeeze Condition was met minus
(B) the product obtained by multiplying (i) one sixth of the amount
determined under clause (A) above and (ii) the number of consecutive
Distribution Dates through and including the current Distribution Date
for which the Spread Squeeze Condition was not met.
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"Spread Squeeze Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
product of 12 and the Net Monthly Excess Spread for such Distribution Date, and
the denominator of which is the aggregate Stated Principal Balance of the
Mortgage Loans and REO Properties as of such Distribution Date.
"S&P": Standard & Poor's Ratings Services, a division of the
XxXxxx-Xxxx Companies, Inc., or its successor in interest.
"Startup Day": With respect to any of REMIC I, REMIC II and
REMIC III, the day designated as such pursuant to Section 11.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the extent received from the Mortgagor
or advanced by the related Servicer and distributed pursuant to Section 4.01 on
or before such date of determination, (ii) all Principal Prepayments received
after the Cut-off Date, to the extent distributed pursuant to Section 4.01 on or
before such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by the related Servicer as recoveries of principal in
accordance with the provisions of Section 3.16, to the extent distributed
pursuant to Section 4.01 on or before such date of determination, and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Prepayment Period for the most recent Distribution
Date coinciding with or preceding such date of determination; and (b) as of any
date of determination coinciding with or subsequent to the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, zero. With respect to any REO Property: (a) as of any
date of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of REMIC I, minus the sum of (i) if such REO Property was
acquired before the Distribution Date in any calendar month, the principal
portion of the Monthly Payment due on the Due Date in the calendar month of
acquisition, to the extent advanced by the related Servicer and distributed
pursuant to Section 4.01 on or before such date of determination, and (ii) the
aggregate amount of REO Principal Amortization in respect of such REO Property
for all previously ended calendar months, to the extent distributed pursuant to
Section 4.01 on or before such date of determination; and (b) as of any date of
determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such REO Property
would be distributed, zero.
"Stayed Funds": If either Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of a Remittance (as
defined in Section 7.02(b)) is prohibited by Section 362 of the federal
Bankruptcy Code, funds that are in the custody of such Servicer, a
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trustee in bankruptcy or a federal bankruptcy court and should have been the
subject of such Remittance absent such prohibition.
"Step Down Cumulative Loss Test": The Step Down Cumulative
Loss Test will be met with respect to a Distribution Date as follows: (i) for
the 36th through the 47th Distribution Dates, if the Cumulative Loss Percentage
for such Distribution Date is 1.50% or less; (ii) for the 48th through the 59th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is 2.00% or less; (iii) for the 60th through the 71st Distribution Dates, if the
Cumulative Loss Percentage for such Distribution Date is 2.40% or less; (iv) for
any Distribution Date after the 71st Distribution Date, if the Cumulative Loss
Percentage for such Distribution Date is 2.75% or less.
"Step Down Rolling Delinquency Test": The Step Down Rolling
Delinquency Test will be met with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is 10% or less.
"Step Down Rolling Loss Test": The Step Down Rolling Loss Test
will be met with respect to a Distribution Date if the Annual Loss Percentage is
less than 1.00%.
"Step Down Trigger": For any Distribution Date after the 36th
Distribution Date, the Step Down Trigger will have occurred if each of the Step
Down Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step
Down Rolling Loss Test is met. In no event will the Step Down Trigger be deemed
to have occurred for the 36th Distribution Date or any preceding Distribution
Date.
"Stepped Down Required Overcollateralized Percentage": For any
Distribution Date for which the Step Down Trigger has occurred, a percentage
equal to (i) the percentage equivalent of a fraction, the numerator of which is
$15,478,662.96 and the denominator of which is the aggregate Stated Principal
Balance of the Mortgage Loans and REO Properties as of such Distribution Date,
minus (ii) the percentage equivalent of a fraction, the numerator of which is
the product of (A) the percentage calculated under clause (i) above minus 4.40%,
multiplied by (B) the number of consecutive Distribution Dates through and
including the Distribution Date for which the Stepped Down Required
Overcollateralized Percentage is being calculated, up to a maximum of six, for
which the Step Down Trigger has occurred, and the denominator of which is six.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss
Test will be met with respect to a Distribution Date as follows: (i) for the 1st
through the 12th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is more than 1.00%; (ii) for the 13th through the 24th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is more than 1.50%; (iii) for the 25th through the 36th Distribution Dates, if
the Cumulative Loss Percentage for such Distribution Date is more than 1.90%;
(iv) for the 37th through the 48th Distribution Dates, if the Cumulative Loss
Percentage for such Distribution Date is more than 2.40%; and (v) for the 49th
Distribution Date and any Distribution Date thereafter, if the Cumulative Loss
Percentage for such Distribution Date is more than 3.00%.
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"Step Up Rolling Delinquency Test": The Step Up Rolling
Delinquency Test will be met with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is more than 12.0%; provided,
however, that the Step Up Rolling Delinquency Test shall not be considered met
if the Overcollateralization Percentage is greater than or equal to the Rolling
Delinquency Percentage.
"Step Up Rolling Loss Test": The Step Up Rolling Loss Test
will be met with respect to a Distribution Date , if the Annual Loss Percentage
is equal to or more than 1.40%.
"Step Up Spread Squeeze Test": The Step Up Spread Squeeze Test
will be met with respect to a Distribution Date if the Spread Squeeze Condition
is met for such Distribution Date or was met for any of the five preceding
Distribution Dates.
"Step Up Trigger": For any Distribution Date, the Step Up
Trigger will have occurred if any one of the Step Up Cumulative Loss Test, the
Step Up Rolling Delinquency Test or the Step Up Rolling Loss Test is met.
"Sub-Servicer": Any Person with which either Servicer has
entered into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the applicable Servicer.
"Sub-Servicing Agreement": The written contract between either
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.
"Substitution Shortfall Amount": As defined in Section
2.03(d).
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as REMICs
under the REMIC Provisions, together with any and all other information reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01.
"Terminator": As defined in Section 10.01.
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"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trust Administrator": U.S. Bank National Association, a
national banking association, or its successor in interest, or any successor
trustee appointed as herein provided.
"Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II and REMIC III.
"Trustee": Firstar Bank Milwaukee, N.A., a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.
"Uncertificated Balance": The amount of any REMIC I Regular
Interest or REMIC II Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Balance of each REMIC
I Regular Interest and each REMIC II Regular Interest shall equal the amount set
forth in the Preliminary Statement hereto as its initial uncertificated balance.
On each Distribution Date, the Uncertificated Balance of each REMIC I Regular
Interest and each REMIC II Regular Interest shall be reduced by all
distributions of principal made on such REMIC I Regular Interest or such REMIC
II Regular Interest, as applicable, on such Distribution Date pursuant to
Section 4.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 4.04 and the Uncertificated Balances of REMIC I Regular Interest I-LT9
and REMIC II Regular Interest II-LT9 shall be increased by interest deferrals as
provided in Section 4.01(a)(1)(A)(i) and Section 4.01(a)(1)(B)(i), respectively.
The Uncertificated Balance of each REMIC I Regular Interest and each REMIC II
Regular Interest shall never be less than zero.
"Uncertificated Corresponding Component": With respect to:
REMIC II Regular Interest II-LT1, REMIC I Regular Interest I-LT1; REMIC II
Regular Interest II-LT2 and REMIC II Regular Interest II-LT2S, REMIC I Regular
Interest I-LT2; REMIC II Regular Interest II-LT3 and REMIC II Regular Interest
II-LT3S, REMIC I Regular Interest I-LT3; REMIC II Regular Interest II-LT4 and
REMIC II Regular Interest II-LT4S, REMIC I Regular Interest I-LT4; REMIC II
Regular Interest II-LT5 and REMIC II Regular Interest II-LT5S, REMIC I Regular
Interest I- LT5; REMIC II Regular Interest II-LT6 and REMIC II Regular Interest
II-LT6S, REMIC I Regular Interest I-LT6; REMIC II Regular Interest II-LT7 and
REMIC II Regular Interest II- LT7S, REMIC I Regular Interest I-LT7; REMIC II
Regular Interest II-LT8 and REMIC II Regular Interest II-LT8S, REMIC I Regular
Interest I-LT8; REMIC II Regular Interest II-LT9, REMIC I Regular Interest
I-LT9; and REMIC II Regular Interest II-LTP, REMIC I Regular Interest I- LTP.
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"Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. With respect to any REMIC II Regular Interest
for any Distribution Date, one month's interest at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance thereof immediately prior to such Distribution
Date. Uncertificated Interest in respect of any REMIC I Regular Interest or any
REMIC II Regular Interest shall accrue on the basis of a 360-day year consisting
of twelve 30-day months. Uncertificated Interest with respect to each
Distribution Date, as to any REMIC I Regular Interest or REMIC II Regular
Interest, shall be reduced by an amount equal to the sum of (a) the aggregate
Prepayment Interest Shortfall, if any, for such Distribution Date to the extent
not covered by payments pursuant to Section 3.24 and (b) the aggregate amount of
any Relief Act Interest Shortfall, if any allocated, in each case, to such REMIC
I Regular Interest or REMIC II Regular Interest pursuant to Section 1.02. In
addition, Uncertificated Interest with respect to each Distribution Date, as to
any REMIC I Regular Interest or REMIC II Regular Interest, shall be reduced by
Realized Losses, if any, allocated to such REMIC I Regular Interest or REMIC II
Regular Interest pursuant to Section 1.02 and Section 4.04.
"Uncertificated Notional Amount": With respect to REMIC II
Regular Interest II-LT2S, REMIC II Regular Interest II-LT3S, REMIC II Regular
Interest II-LT4S, REMIC II Regular Interest II-LT5S, REMIC II Regular Interest
II-LT6S, REMIC II Regular Interest II-LT7S and REMIC II Regular Interest
II-LT8S, the Uncertificated Balance of REMIC I Regular Interest I-LT2, REMIC I
Regular Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular Interest
I-LT5, REMIC I Regular Interest I-LT6, REMIC I Regular Interest I-LT7 and REMIC
I Regular Interest I-LT8, respectively.
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof
(except, in the case of a partnership, to the extent provided in regulations) or
an estate whose income is subject to United States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. To the extent prescribed in regulations by the Secretary
of the Treasury, which have not yet been issued, a trust which was in existence
on August 20, 1996 (other than a trust treated as owned by the grantor under
subpart E of part I of subchapter J of chapter 1 of the Code), and which was
treated as a United States person on August 20, 1996 may elect to continue to be
treated as a United States person notwithstanding the previous sentence. The
term "United States" shall have the meaning set forth in Section 7701 of the
Code.
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"Value": With respect to any Mortgaged Property relating to a
Mortgage Loan serviced by New Century, the lesser of (i) the lesser of (a) the
value thereof as determined by an appraisal made for the originator of the
Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser
who met the minimum requirements of Xxxxxx Xxx and Xxxxxxx Mac and (b) the value
thereof as determined by a review appraisal conducted by New Century (in its
capacity as an Originator) in accordance with New Century's underwriting
guidelines, and (ii) the purchase price paid for the related Mortgaged Property
by the Mortgagor with the proceeds of the Mortgage Loan; provided, however, (A)
in the case of a Refinanced Mortgage Loan, such value of the Mortgaged Property
is based solely upon the lesser of (1) the value determined by an appraisal made
for the originator of such Refinanced Mortgage Loan at the time of origination
of such Refinanced Mortgage Loan by an appraiser who met the minimum
requirements of Xxxxxx Mae and Xxxxxxx Mac and (2) the value thereof as
determined by a review appraisal conducted by New Century (in its capacity as an
Originator) in accordance with New Century's underwriting guidelines, and (B) in
the case of a Mortgage Loan originated in connection with a "lease-option
purchase," such value of the Mortgaged Property is based on the lower of the
value determined by an appraisal made for the originator of such Mortgage Loan
at the time of origination or the sale price of such Mortgaged Property if the
"lease option purchase price" was set less than 12 months prior to origination,
and is based on the value determined by an appraisal made for the originator of
such Mortgage Loan at the time of origination if the "lease option purchase
price" was set 12 months or more prior to origination. With respect to any
Mortgaged Property relating to a Mortgage Loan serviced by Option One, the
lesser of (i) the lesser of (a) the value thereof as determined by an appraisal
made for the originator of the Mortgage Loan at the time of origination of the
Mortgage Loan by an appraiser who met the minimum requirements of Xxxxxx Mae and
Xxxxxxx Mac and (b) the value thereof as determined by a review appraisal
conducted by Option One (in its capacity as an Originator) in the event any such
review appraisal determines an appraised value more than 10% lower than the
value thereof, in the case of a Mortgage Loan with a Loan-to--Value Ratio less
than or equal to 80%, or more than 5% lower than the value thereof, in the case
of a Mortgage Loan with a Loan-to-Value Ratio greater than 80%, as determined by
the appraisal referred to in clause (i)(a) above, and (ii) the purchase price
paid for the related Mortgaged Property by the Mortgagor with the proceeds of
the Mortgage Loan; provided, however, (A) in the case of a Refinanced Mortgage
Loan, such value of the Mortgaged Property is based solely upon the lesser of
(1) the value determined by an appraisal made for the originator of such
Refinanced Mortgage Loan at the time of origination of such Refinanced Mortgage
Loan by an appraiser who met the minimum requirements of Xxxxxx Mae and Xxxxxxx
Mac and (2) the value thereof as determined by a review appraisal conducted by
Option One (in its capacity as Originator) in the event any such review
appraisal determines an appraised value more than 10% lower than the value
thereof, in the case of a Mortgage Loan with a Loan-to--Value Ratio less than or
equal to 80%, or more than 5% lower than the value thereof, in the case of a
Mortgage Loan with a Loan-to-Value Ratio greater than 80%, as determined by the
appraisal referred to in clause (ii)(A)(1) above, and (B) in the case of a
Mortgage Loan originated in connection with a "lease- option purchase," such
value of the Mortgaged Property is based on the lower of the value determined by
an appraisal made for the originator of such Mortgage Loan at the time of
origination or the sale price of such Mortgaged Property if the "lease option
purchase price" was set less than 12 months prior to origination, and is based
on the value determined by an appraisal
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made for the originator of such Mortgage Loan at the time of origination if the
"lease option purchase price" was set 12 months or more prior to origination.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, 98% of all Voting Rights will be allocated among the holders
of the Class A Certificates and the Class CE Certificates in proportion to the
then outstanding Certificate Principal Balances of their respective
Certificates, 1% of all Voting Rights will be allocated to the holders of the
Class P Certificates and 1/3 of 1% of all Voting Rights will be allocated among
the holders of each Class of Residual Certificates. The Voting Rights allocated
to each Class of Certificate shall be allocated among Holders of each such Class
in accordance with their respective Percentage Interests as of the most recent
Record Date.
SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amounts for the Class A
Certificates and the Class CE Certificates for any Distribution Date, (1) the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the related Servicer pursuant to Section 3.24) incurred
in respect of the Mortgage Loans for any Distribution Date shall be allocated
among the Class CE Certificates on a PRO RATA basis based on, and to the extent
of, one month's interest at the then applicable respective Pass-Through Rate on
the respective Notional Amount of each such Certificate, (2) the aggregate
amount of any Relief Act Interest Shortfalls incurred in respect of the Mortgage
Loans for any Distribution Date shall be allocated first, among the Class CE
Certificates on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Notional Amount of each such Certificate and, thereafter, among the Class A
Certificates on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Certificate Principal Balance of each such Certificate and (3) the aggregate
amount of any Realized Losses incurred for any Distribution Date shall be
allocated among the Class CE Certificates on a PRO RATA basis based on, and to
the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Notional Amount of each such Certificate.
For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, (1) the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the related Servicer pursuant to Section 3.24) incurred
in respect of the Mortgage Loans for any Distribution Date shall be allocated,
to Uncertificated Interest payable to REMIC I Regular Interest I-LT1 and REMIC I
Regular Interest I-LT9 up to an aggregate amount equal to the REMIC I Interest
Loss Allocation Amount, 98% and 2%, respectively and (2) the aggregate amount of
any Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for
any Distribution Date shall be allocated first, to Uncertificated Interest
payable to REMIC I Regular Interest I-LT1 and REMIC I Regular Interest I-LT9 up
to an aggregate amount equal to the REMIC I Interest Loss Allocation Amount, 98%
and 2%, respectively, and thereafter among REMIC I Regular Interest I-LT1, REMIC
I Regular Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular
Interest I-LT4, REMIC I
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Regular Interest I-LT5, REMIC I Regular Interest I-LT6, REMIC I Regular Interest
I-LT7, REMIC I Regular Interest I-LT8 and REMIC I Regular Interest I-LT9 PRO
RATA based on, and to the extent of, one month's interest at the then applicable
respective Pass-Through Rate on the respective Uncertificated Balance of each
such REMIC I Regular Interest.
All Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls on the REMIC II Regular Interests shall be allocated by the Trust
Administrator on each Distribution Date among the REMIC II Regular Interests in
the proportion that Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls are allocated to the related Uncertificated Corresponding Component.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of the Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse, for the benefit of the Certificateholders and the
Certificate Insurer, all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in and
to the Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreements, and all other assets
included or to be included in REMIC I. Such assignment includes all interest and
principal received by the Depositor or either Servicer on or with respect to the
Mortgage Loans (other than payments of principal and interest due on such
Mortgage Loans on or before the Cut-off Date).
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trust Administrator, as custodian
for the Trustee (in which capacity the Trust Administrator will, unless
otherwise specified, be acting under this Article II), the following documents
or instruments with respect to each Mortgage Loan so transferred and assigned (a
"Mortgage File"):
(i) (a) with respect to each Mortgage Loan on Part A of
the Mortgage Loan Schedule, the original Mortgage Note,
endorsed in the following form: "Pay to the order of Firstar
Bank Milwaukee, N.A., as Trustee under the applicable
agreement, without recourse," and (b) with respect to each
Mortgage Loan on Part B of the Mortgage Loan Schedule, the
original Mortgage Note, endorsed in the following form: "Pay
to the order of Norwest Bank Minnesota, N.A. as trustee," in
each case, with all prior and intervening endorsements showing
a complete chain of endorsement from the originator to the
Person so endorsing to the Trustee or Norwest Bank Minnesota,
National Association, as applicable;
(ii) the original Mortgage with evidence of recording
thereon, and the original recorded power of attorney, if the
Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;
(iii) an original Assignment of the Mortgage executed in
the following form: "Firstar Bank Milwaukee, N.A., as Trustee
under the applicable agreement";
(iv) the original recorded Assignment or Assignments of
the Mortgage showing a complete chain of assignment from the
originator to the Person assigning the Mortgage to the Trustee
as contemplated by the immediately preceding clause (iii);
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(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if
any; and
(vi) the original lender's title insurance policy,
together with all endorsements or riders that were issued with
or subsequent to the issuance of such policy, insuring the
priority of the Mortgage as a first lien or second lien on the
Mortgaged Property represented therein as a fee interest
vested in the Mortgagor, or in the event such original title
policy is unavailable, a written commitment or uniform binder
or preliminary report of title issued by the title insurance
or escrow company.
Within 30 Business Days following the Closing Date, Option One
will prepare, execute and deliver to the Trust Administrator an endorsement for
each of the Mortgage Loans on Part B of the Mortgage Loan Schedule endorsing
each related Mortgage Note in the following form: "Pay to the order of Firstar
Bank Milwaukee, N.A., as Trustee under the applicable agreement, without
recourse" and the endorsement provided for in Section 2.01(i)(b) will be voided
by the Trust Administrator.
The Trust Administrator, at the expense of the related
Servicer, shall promptly (within sixty Business Days following the later of the
Closing Date and the date of receipt by the Trust Administrator of the recording
information for a Mortgage, but in no event later than ninety days following the
Closing Date) submit or cause to be submitted for recording, at no expense to
the Trust Fund, the Trustee, the Trust Administrator, the Certificate Insurer or
the Depositor, in the appropriate public office for real property records, each
Assignment referred to in Sections 2.01(iii) and (iv) above. In the event that
any such Assignment is lost or returned unrecorded because of a defect therein,
the related Servicer shall promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded.
With respect to a maximum of approximately 1.0% of the
Original Mortgage Loans, by outstanding principal balance of the Original
Mortgage Loans as of the Cut-off Date, if any original Mortgage Note referred to
in Section 2.01(i) above cannot be located, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon delivery to the
Trust Administrator of a photocopy of such Mortgage Note, if available, with a
lost note affidavit substantially in the form of Exhibit I attached hereto. If
any of the original Mortgage Notes for which a lost note affidavit was delivered
to the Trust Administrator is subsequently located, such original Mortgage Note
shall be delivered to the Trust Administrator within three Business Days. If any
of the documents referred to in Sections 2.01(ii), (iii) or (iv) above has as of
the Closing Date been submitted for recording but either (x) has not been
returned from the applicable public recording office or (y) has been lost or
such public recording office has retained the original of such document, the
obligations of the Depositor to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trust Administrator of a copy of each such
document certified by the related Originator in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the related Originator, delivery to the
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Trust Administrator promptly upon receipt thereof of either the original or a
copy of such document certified by the applicable public recording office to be
a true and complete copy of the original. Notice shall be provided to the
Trustee, the Trust Administrator, the Certificate Insurer and the Rating
Agencies by the related Originator if delivery pursuant to clause (2) above will
be made more than 180 days after the Closing Date. If the original lender's
title insurance policy was not delivered pursuant to Section 2.01(vi) above, the
Depositor shall deliver or cause to be delivered to the Trust Administrator,
promptly after receipt thereof, the original lender's title insurance policy.
The Depositor shall deliver or cause to be delivered to the Trust Administrator
promptly upon receipt thereof any other original documents constituting a part
of a Mortgage File received with respect to any Mortgage Loan, including, but
not limited to, any original documents evidencing an assumption or modification
of any Mortgage Loan.
All original documents relating to the Mortgage Loans that are
not delivered to the Trust Administrator are and shall be held by or on behalf
of the related Originator, the Seller, the Depositor or the related Servicer, as
the case may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders and the Certificate Insurer. In the event that any such
original document is required pursuant to the terms of this Section to be a part
of a Mortgage File, such document shall be delivered promptly to the Trust
Administrator. Any such original document delivered to or held by the Depositor
that is not required pursuant to the terms of this Section to be a part of a
Mortgage File, shall be delivered promptly to the related Servicer.
The Depositor herewith delivers to the Trustee and the Trust
Administrator an executed copy of the Mortgage Loan Purchase Agreements. In
addition to the foregoing, the Depositor shall cause the Certificate Insurer to
deliver the Policy to the Trust Administrator for
the benefit of the Certificateholders.
SECTION 2.02. Acceptance of REMIC I by Trustee.
The Trust Administrator, on behalf of the Trustee,
acknowledges receipt of the Policy and, subject to the provisions of Section
2.01 and subject to any exceptions noted on the exception report described in
the next paragraph below, the documents referred to in Section 2.01 (other than
such documents described in Section 2.01(v)) above and all other assets included
in the definition of "REMIC I" under clauses (i), (iii), (iv) and (v) (to the
extent of amounts deposited into the Distribution Account) and declares that it
holds and will hold such documents and the other documents delivered to it
constituting a Mortgage File, and that it holds or will hold all such assets and
such other assets included in the definition of "REMIC I" in trust for the
exclusive use and benefit of all present and future Certificateholders and the
Certificate Insurer.
The Trust Administrator agrees, for the benefit of the
Certificateholders and the Certificate Insurer, to review each Mortgage File on
or before the Closing Date and to certify in substantially the form attached
hereto as Exhibit C-1 that, (i) as to each Mortgage Loan listed on Part A of the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in the exception report annexed thereto as
not being covered by such certification), (a) all documents constituting part of
such Mortgage File (other than such documents described in Section 2.01(v))
required to be delivered to it pursuant to this Agreement
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are in its possession, (b) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan, (c) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i) through (iii), (vi), (x),
(xi), (xii), (xv) and (xxii) of the definition of "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File and (ii) as to
each Mortgage Loan listed on Part B of the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
the exception report annexed thereto as not being covered by such
certification), (a) the documents constituting part of such Mortgage File
described in Section 2.01(i) and (iii) are in its possession. It is herein
acknowledged that, in conducting such review, the Trust Administrator was under
no duty or obligation (i) to inspect, review or examine any such documents,
instruments, certificates or other papers to determine whether they are genuine,
enforceable, or appropriate for the represented purpose or whether they have
actually been recorded or that they are other than what they purport to be on
their face, or (ii) to determine whether any Mortgage File should include any of
the documents specified in clause (v) of Section 2.01.
The Trust Administrator agrees, for the benefit of the
Certificateholders and the Certificate Insurer, to review each Mortgage File
within 60 days after the Closing Date and to certify in substantially the form
attached hereto as Exhibit C-2 that, as to each Mortgage Loan listed on Part B
of the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in the exception report annexed thereto as
not being covered by such certification), (a) all documents constituting part of
such Mortgage File (other than such documents described in Section 2.01(v))
required to be delivered to it pursuant to this Agreement are in its possession
and additionally the endorsement provided in Section 2.01(i)(b) has been voided
and replaced with an endorsement from Option One, endorsing each related
Mortgage Note in the following form: "Pay to the order of Firstar Bank
Milwaukee, N.A., as Trustee under the applicable agreement, without recourse",
(b) such documents have been reviewed by it and appear regular on their face and
relate to such Mortgage Loan, (c) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i) through (iii), (vi), (x), (xi), (xii), (xv) and (xxii)
of the definition of "Mortgage Loan Schedule" accurately reflects information
set forth in the Mortgage File. It is herein acknowledged that, in conducting
such review, the Trust Administrator was under no duty or obligation (i) to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine whether they are genuine, enforceable, or appropriate
for the represented purpose or whether they have actually been recorded or that
they are other than what they purport to be on their face, or (ii) to determine
whether any Mortgage File should include any of the documents specified in
clause (v) of Section 2.01.
Prior to the first anniversary date of this Agreement the
Trust Administrator shall deliver to the Depositor, each Servicer, the Trustee
and the Certificate Insurer a final certification in the form annexed hereto as
Exhibit C-3 evidencing the completeness of the Mortgage Files, with any
applicable exceptions noted thereon, and the related Servicer shall forward a
copy thereof to any Sub-Servicer.
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If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trust Administrator finds any document or documents constituting a part of a
Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trust Administrator shall so notify the Depositor,
the applicable Servicer, the Trustee and the Certificate Insurer. In addition,
upon the discovery by the Depositor, either Servicer, the Trust Administrator or
the Trustee of a breach of any of the representations and warranties made by
either Originator or the Seller in the Mortgage Loan Purchase Agreements in
respect of any Mortgage Loan which materially adversely affects such Mortgage
Loan or the interests of the related Certificateholders in such Mortgage Loan,
the party discovering such breach shall give prompt written notice to the other
parties and the Certificate Insurer.
The Trust Administrator shall, at the written request and
expense of any Certificateholder, provide a written report to such
Certificateholder of all Mortgage Files released
to the related Servicer for servicing purposes.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
the Originators, the Seller or the Depositor.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by either Originator or the Seller of any representation, warranty or
covenant under the Mortgage Loan Purchase Agreements in respect of any Mortgage
Loan that materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Trust Administrator shall
promptly notify the related Originator, the Seller, the related Servicer, the
Master Servicer, the Trustee and the Certificate Insurer of such defect, missing
document or breach and request that such Originator or the Seller, as the case
may be, deliver such missing document or cure such defect or breach within 60
days from the date such Originator or the Seller, as the case may be, was
notified of such missing document, defect or breach, and if the related
Originator or the Seller, as the case may be, does not deliver such missing
document or cure such defect or breach in all material respects during such
period, the Trustee, in accordance with Section 3.02(b), shall enforce the
obligations of such Originator or the Seller, as the case may be, under the
related Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from
REMIC I at the Purchase Price within 90 days after the date on which the related
Originator or the Seller, as the case may be, was notified (subject to Section
2.03(e)) of such missing document, defect or breach, if and to the extent that
such Originator or the Seller, as the case may be, is obligated to do so under
the related Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Collection Account and the
Trust Administrator, upon receipt of written certification from the related
Servicer of such deposit, shall release to the related Originator or the Seller,
as the case may be, the related Mortgage File and the Trustee shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as such Originator or the Seller, as the case may be, shall furnish to
it and as shall be necessary to vest in such Originator or the Seller, as the
case may be, any Mortgage Loan released pursuant hereto and neither the Trustee
nor the Trust Administrator shall have any further responsibility with regard to
such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided
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above, if so provided in the related Mortgage Loan Purchase Agreement, the
related Originator or the Seller, as the case may be, may cause such Mortgage
Loan to be removed from REMIC I (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(d). It is
understood and agreed that the obligation of the related Originator or the
Seller, as the case may be, to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such omission, defect or
breach available to the Trustee, the Certificateholders and the Certificate
Insurer.
(b) Subject to Section 2.03(e), within 90 days of the earlier
of discovery by the Depositor or receipt of notice by the Depositor of the
breach of any representation or warranty of the Depositor set forth in Section
2.04 with respect to any Mortgage Loan, which materially adversely affects the
value of such Mortgage Loan or the interest therein of the Certificateholders,
the Depositor shall (i) cure such breach in all material respects, (ii)
repurchase the Mortgage Loan from REMIC I at the Purchase Price or (iii) remove
such Mortgage Loan from REMIC I (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(d). If any
such breach is a breach of any of the representations and warranties included in
Section 2.04(a)(iv), and the Depositor is unable to cure such breach, the
Depositor shall repurchase or substitute the smallest number of Mortgage Loans
as shall be required to make such representation or warranty true and correct.
The Purchase Price for any repurchased Mortgage Loan shall be delivered to the
related Servicer for deposit in the Collection Account, and the Trust
Administrator, upon receipt of written certification from the related Servicer
of such deposit, shall at the Depositor's direction release to the Depositor the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment furnished by the Depositor, in each case without
recourse, as the Depositor shall furnish to it and as shall be necessary to vest
in the Depositor any Mortgage Loan released pursuant hereto.
(c) Within 90 days of the earlier of discovery by the either
Servicer or receipt of notice by either Servicer of the breach of any
representation, warranty or covenant of such Servicer set forth in Section 2.05
which materially and adversely affects the interests of the Certificateholders
in any Mortgage Loan or Prepayment Charge, such Servicer shall cure such
breach in all material respects.
(d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a), in the case of
either Originator or the Seller, or Section 2.03(b), in the case of the
Depositor, must be effected prior to the date which is two years after the
Startup Day for REMIC I.
As to any Deleted Mortgage Loan for which either Originator or
the Seller or the Depositor substitutes a Qualified Substitute Mortgage Loan or
Loans, such substitution shall be effected by such Originator, the Seller or the
Depositor, as the case may be, delivering to the Trust Administrator, on behalf
of the Trustee, for such Qualified Substitute Mortgage Loan or Loans, the
Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other
documents and
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agreements, with all necessary endorsements thereon, as are required by Section
2.01, together with an Officers' Certificate providing that each such Qualified
Substitute Mortgage Loan satisfies the definition thereof and specifying the
Substitution Shortfall Amount (as described below), if any, in connection with
such substitution. The Trust Administrator shall acknowledge receipt for such
Qualified Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, review such documents as specified in Section 2.02 and deliver to
the Depositor, the related Servicer, the Trustee and the Certificate Insurer,
with respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit C-1, with any
applicable exceptions noted thereon. Within one year of the date of
substitution, the Trust Administrator shall deliver to the Depositor, the
related Servicer, the Trustee and the Certificate Insurer a certification
substantially in the form of Exhibit C-2 hereto with respect to such Qualified
Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon.
Monthly Payments due with respect to Qualified Substitute Mortgage Loans in the
month of substitution are not part of REMIC I and will be retained by the
Depositor, the related Originator or the Seller, as the case may be. For the
month of substitution, distributions to Certificateholders will reflect the
Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date in
the month of substitution, and the Depositor, the related Originator or the
Seller, as the case may be, shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Depositor
shall give or cause to be given written notice to the Certificateholders that
such substitution has taken place, shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the
Trustee and the Trust Administrator. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool and
shall be subject in all respects to the terms of this Agreement and, in the case
of a substitution effected by either Originator or the Seller, the related
Mortgage Loan Purchase Agreement, including, in the case of a substitution
effected by either Originator or the Seller, all applicable representations and
warranties thereof included in such Mortgage Loan Purchase Agreement, and in the
case of a substitution effected by the Depositor, all applicable representations
and warranties thereof set forth in Section 2.04, in each case as of the date of
substitution.
For any month in which the Depositor, either Originator or the
Seller substitutes one or more Qualified Substitute Mortgage Loans for one or
more Deleted Mortgage Loans, the related Servicer will determine the amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate Purchase Price
of all such Deleted Mortgage Loans exceeds the aggregate of, as to each such
Qualified Substitute Mortgage Loan, the Scheduled Principal Balance thereof as
of the date of substitution, together with one month's interest on such
Scheduled Principal Balance at the applicable Net Mortgage Rate, plus all
outstanding P&I Advances and Servicing Advances (including Nonrecoverable P&I
Advances and Nonrecoverable Servicing Advances) related thereto. On the date of
such substitution, the Depositor, the related Originator or the Seller, as the
case may be, will deliver or cause to be delivered to the related Servicer for
deposit in the Collection Account an amount equal to the Substitution Shortfall
Amount, if any, and the Trust Administrator, upon receipt of the related
Qualified Substitute Mortgage Loan or Loans and certification by such Servicer
of such deposit, shall release to the Depositor, the related Originator
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or the Seller, as the case may be, the related Mortgage File or Files and the
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Depositor, the related Originator or the
Seller, as the case may be, shall deliver to it and as shall be necessary to
vest therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the Depositor, the related Originator or the
Seller, as the case may be, shall obtain at its own expense and deliver to the
Trust Administrator, the Trustee and the Certificate Insurer an Opinion of
Counsel to the effect that such substitution will not cause (a) any federal tax
to be imposed on any of REMIC I, REMIC II or REMIC III, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup date" under
Section 860G(d)(1) of the Code, or (b) any of REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC at any time that any Certificate is outstanding.
(e) Upon discovery by the Depositor, either Originator, the
Seller, either Servicer, the Trustee, the Trust Administrator or the Certificate
Insurer that any Mortgage Loan does not constitute a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code, the party discovering such fact
shall within two Business Days give written notice thereof to the Trustee, the
Trust Administrator, the Master Servicer, the related Servicer and the
Certificate Insurer. In connection therewith, the related Originator, the Seller
or the Depositor shall repurchase or, subject to the limitations set forth in
Section 2.03(d), substitute one or more Qualified Substitute Mortgage Loans for
the affected Mortgage Loan within 90 days of the earlier of discovery or receipt
of such notice with respect to such affected Mortgage Loan. Such repurchase or
substitution shall be made by (i) the related Originator or the Seller, as the
case may be, if the affected Mortgage Loan's status as a non-qualified mortgage
is or results from a breach of any representation, warranty or covenant made by
such Originator or the Seller under the related Mortgage Loan Purchase
Agreement, or (ii) the Depositor, if the affected Mortgage Loan's status as a
non-qualified mortgage is a breach of any representation or warranty of the
Depositor set forth in Section 2.04, or if its status as a non-qualified
mortgage is a breach of no representation or warranty. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a),
if made by either Originator or the Seller, or Section 2.03(b), if made by the
Depositor. The Trustee and the Trust Administrator shall reconvey to the
Depositor, the related Originator or the Seller, as the case may be, the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.
SECTION 2.04. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Trust
Administrator and the Trustee for the benefit of the Certificateholders and the
Certificate Insurer that as of the Closing Date or as of such other date
specifically provided herein:
(i) The information set forth in the Mortgage Loan
Schedule for the Original Mortgage Loans is complete, true and
correct in all material respects at the date or dates
respecting which such information is furnished;
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(ii) Except with respect to approximately 0.54% of the
Original Mortgage Loans which were 30 days or more but less
than 60 days delinquent in their Monthly Payment as of
November 30, 1998 and with respect to approximately 0.21% of
the Original Mortgage Loans which were 60 days or more but
less than 90 days delinquent in their Monthly Payments as of
November 30, 1998, in each case, by outstanding principal
balance of the Original Mortgage Loans as of the Cut-off Date,
as of November 30, 1998, the Monthly Payment due under each
Original Mortgage Loan is not 30 or more days delinquent in
payment and has not been 30 or more days delinquent in payment
more than once in the twelve month period prior to November
30, 1998 (assuming that a "rolling" 30 day delinquency is
considered to be delinquent only once);
(iii) Each Original Mortgage Loan had an original term to
maturity of not greater than 30 years; except with respect to
approximately 13.51% of the Original Mortgage Loans, by
outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date which are Balloon Loans, each Original
Mortgage Loan is a fixed-rate mortgage loan with payments
generally due on the first day of each month and each such
Mortgage Loan is fully amortizing;;
(iv) (A) No more than approximately 29.40%,
approximately 10.03%, approximately 5.32%, approximately
3.92%, approximately 3.35%, approximately 3.28%, approximately
3.24% and approximately 3.24% of the Original Mortgage Loans,
by outstanding principal balance of the Original Mortgage
Loans as of the Cut-off Date, will be secured by Mortgaged
Properties located in California, Florida, Texas, Ohio,
Illinois, Georgia, Pennsylvania and Washington, respectively,
and no more than 3.00% of the Original Mortgage Loans, by
outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date, will be secured by Mortgaged
Properties located in any other state; (B) as of the Cut-off
Date, no more than approximately 0.26% of the Original
Mortgage Loans, by outstanding principal balance of the
Original Mortgage Loans as of the Cut-off Date, are secured by
Mortgaged Properties located in any one California zip code
area, and no more than approximately 16.35% of the Original
Mortgage Loans, by outstanding principal balance of the
Original Mortgage Loans as of the Cut-off Date, are secured by
units in two- to four-family dwellings, condominiums, town
houses, planned unit developments or manufactured housing and;
(C) at least approximately 83.65% of the Original Mortgage
Loans, by outstanding principal balance of the Original
Mortgage Loans as of the Cut-off Date, are secured by real
property with a single family residence erected thereon;
(v) If the Mortgaged Property securing an Original
Mortgage Loan is identified in the Federal Register by the
Federal Emergency Management Agency ("FEMA") as having special
flood hazards, as of the Closing Date, such Mortgaged Property
is covered by a flood insurance policy that met the
requirements of FEMA at the time such policy was issued;
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(vi) With respect to each Original Mortgage Loan, the
Loan-to-Value Ratio was less than or equal to 100.45% at the
origination of such Original Mortgage Loan; and
(vii) With respect to at least approximately 89.44% of
the Original Mortgage Loans by outstanding principal balance
as of the Cut-off Date, at the time that such Mortgage Loan
was made, the Mortgagor represented that the Mortgagor would
occupy the Mortgaged Property as the Mortgagor's primary
residence. With respect to approximately 10.56% of the
Original Mortgage Loans by outstanding principal balance as of
the Cut-off Date, at the time that such Mortgage Loan was
made, the Mortgagor represented that the Mortgagor would
occupy the Mortgaged Property as the Mortgagor's secondary
residence or that the Mortgaged Property would be an investor
property.
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trust Administrator and shall inure to the benefit of the
Certificateholders and the Certificate Insurer notwithstanding any restrictive
or qualified endorsement or assignment. Upon discovery by any of the Depositor,
either Servicer, the Trustee or the Trust Administrator of a breach of any of
the foregoing representations and warranties which materially and adversely
affects the value of any Mortgage Loan, Prepayment Charge or the interests
therein of the Certificateholders and the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties,
and in no event later than two Business Days from the date of such discovery. It
is understood and agreed that the obligations of the Depositor set forth in
Section 2.03(b) to cure, substitute for or repurchase a Mortgage Loan constitute
the sole remedies available to the Certificateholders or to the Trust
Administrator or the Trustee on their behalf respecting a breach of the
representations and warranties contained in this Section 2.04.
SECTION 2.05. Representations, Warranties and Covenants of the
Servicers.
Each Servicer hereby represents, warrants and covenants to the
Trust Administrator and the Trustee, for the benefit of each of the Trustee, the
Trust Administrator, the Certificateholders, the Certificate Insurer, the Master
Servicer and to the Depositor that as of the Closing Date or as of such date
specifically provided herein:
(i) Such Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the
State of California and is duly authorized and qualified to
transact any and all business contemplated by this Agreement
to be conducted by such Servicer in any state in which a
Mortgaged Property is located or is otherwise not required
under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any
such State, to the extent necessary to ensure its ability to
enforce each Mortgage Loan and to service the Mortgage Loans
in accordance with the terms of this Agreement;
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(ii) Such Servicer has the full power and authority to
conduct its business as presently conducted by it and to
execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement.
Such Servicer has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered
this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Depositor, the
Trust Administrator, the Trustee and the other Servicer,
constitutes a legal, valid and binding obligation of such
Servicer, enforceable against it in accordance with its terms
except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and
by general principles of equity;
(iii) The execution and delivery of this Agreement by
such Servicer, the servicing of the Mortgage Loans by such
Servicer hereunder, the consummation by such Servicer of any
other of the transactions herein contemplated, and the
fulfillment of or compliance with the terms hereof are in the
ordinary course of business of such Servicer and will not (A)
result in a breach of any term or provision of the charter or
by-laws of such Servicer or (B) conflict with, result in a
breach, violation or acceleration of, or result in a default
under, the terms of any other material agreement or instrument
to which such Servicer is a party or by which it may be bound,
or any statute, order or regulation applicable to such
Servicer of any court, regulatory body, administrative agency
or governmental body having jurisdiction over such Servicer;
and such Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument,
or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to such Servicer's
knowledge, would in the future materially and adversely
affect, (x) the ability of such Servicer to perform its
obligations under this Agreement or (y) the business,
operations, financial condition, properties or assets of such
Servicer taken as a whole;
(iv) Such Servicer is a HUD approved mortgagee pursuant
to Section 203 of the National Housing Act. No event has
occurred, including but not limited to a change in insurance
coverage, that would make such Servicer unable to comply with
HUD eligibility requirements or that would require
notification to HUD;
(v) Such Servicer does not believe, nor does it have
any reason or cause to believe, that it cannot perform each
and every covenant made by it and contained in this Agreement;
(vi) With respect to each Mortgage Loan serviced by it,
such Servicer, or Sub-Servicer, if any, is in possession of a
complete Mortgage File, except for such documents as have been
delivered to the Trust Administrator;
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(vii) No litigation is pending against such Servicer that
would materially and adversely affect the execution, deliver
or enforceability of this Agreement or the ability of such
Servicer to service the Mortgage Loans or to perform any of
its other obligations hereunder in accordance with the terms
hereof;
(viii) There are no actions or proceedings against, or
investigations known to it of, such Servicer before any court,
administrative or other tribunal (A) that might prohibit its
entering into this Agreement, (B) seeking to prevent the
consummation of the transactions contemplated by this
Agreement or (C) that might prohibit or materially and
adversely affect the performance by such Servicer of its
obligations under, or validity or enforceability of, this
Agreement;
(ix) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by such Servicer of, or
compliance by such Servicer with, this Agreement or the
consummation by it of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations
or orders, if any, that have been obtained prior to the
Closing Date;
(x) With respect to New Century, the information set
forth in the applicable part of the Prepayment Charge Schedule
(including the applicable part of the prepayment charge
summary attached thereto) is complete, true and correct in all
material respects on the date or dates when such information
is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms (except to the extent
that the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally or the collectability
thereof may be limited due to acceleration in connection with
a foreclosure) under applicable state law and with respect to
Option One the information set forth in the applicable part of
the Prepayment Charge Schedule (including the applicable part
of the prepayment charge summary attached thereto) is
complete, true and correct in all material respects, and each
Prepayment Charge is permissible, enforceable and collectible
under applicable state law subject to bankruptcy and equitable
enforcement limitations;
(xi) The related Servicer will not waive any Prepayment
Charge unless it is waived in accordance with the standard set
forth in Section 3.01; and
(xii) The related Servicer's computer and other systems
used in servicing mortgage loans will be modified and
maintained to operate in a manner such that at all times,
including on and after January 1, 2000, (i) such Servicer can
service the Mortgage Loans in accordance with the terms of
this Agreement if necessary and (ii) such Servicer can operate
its business in the same manner as it is operating on the date
hereof; provided that such Servicer's ability to meet the
requirements of this representation may be limited in
circumstances where it relies (after
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reasonable due diligence in inquiring into and obtaining
reasonable compliance representations) on third party systems
which are incompatible with those of such Servicer on or after
January 1, 2000.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trust Administrator and shall inure to the benefit
of the Trust Administrator, the Trustee, the Depositor, the Certificateholders
and the Certificate Insurer. Upon discovery by any of the Depositor, either
Servicer, the Trust Administrator or the Trustee of a breach of any of the
foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan, Prepayment Charge or the
interests therein of the Certificateholders and the Certificate Insurer, the
party discovering such breach shall give prompt written notice (but in no event
later than two Business Days following such discovery) to the Trust
Administrator, the Trustee and the Certificate Insurer. Subject to Section 7.01,
unless such breach shall not be susceptible of cure within 90 days, the
obligation of each Servicer set forth in Section 2.03(c) to cure breaches shall
constitute the sole remedy against the related Servicer available to the
Certificateholders, the Depositor or the Trust Administrator and the Trustee on
behalf of the Certificateholders respecting a breach of the representations,
warranties and covenants contained in this Section 2.05. Notwithstanding the
foregoing, within 90 days of the earlier of discovery by the related Servicer or
receipt of notice by such Servicer of the breach of the representation or
covenant of such Servicer set forth in Sections 2.05(x) or 2.05(xi) above which
materially and adversely affects the interests of the Holders of the Class P
Certificates in any Prepayment Charge, such Servicer shall remedy such breach as
follows: (a) if the representation made by the related Servicer in Section
2.05(x) above is breached and a Principal Prepayment has occurred in the
applicable Prepayment Period, such Servicer must pay the amount of the scheduled
Prepayment Charge, for the benefit of the holder of the Class P Certificate, by
depositing such amount into the Collection Account, net of any amount previously
collected by such Servicer and paid by such Servicer, for the benefit of the
Holders of the Class P Certificates, in respect of such Prepayment Charge; and
(b) if any of the covenants made by the related Servicer in Section 2.05(xi)
above is breached, such Servicer must pay the amount of such waived Prepayment
Charge, for the benefit of the holders of the Class P Certificates, by
depositing such amount into the Collection Account. The foregoing shall not,
however, limit any remedies available to the Certificateholders, the Depositor,
the Trust Administrator or the Trustee on behalf of the Certificateholders,
pursuant to the related Mortgage Loan Purchase Agreement signed by the related
Servicer in its capacity as Originator, respecting a breach of the
representations, warranties and covenants of such Servicer in its capacity as
Originator contained in such Mortgage Loan Purchase Agreement.
SECTION 2.06. Issuance of the Class R-I Certificates.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it (or the Trust Administrator on its behalf) of the
Mortgage Files, subject to the provisions of Section 2.01 and Section 2.02,
together with the assignment to it of all other assets included in REMIC I, the
receipt of which is hereby acknowledged. Concurrently with such assignment and
delivery and in exchange therefor, the Trust Administrator, pursuant to the
written request of the Depositor executed by an officer of the Depositor, has
executed, authenticated and
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delivered to or upon the order of the Depositor, the Class R-I Certificates in
authorized denominations. The interests evidenced by the Class R-I Certificates,
together with the REMIC I Regular Interests, constitute the entire beneficial
ownership interest in REMIC I. The rights of the Class R-I Certificateholders
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC I in respect of the Class R-I
Certificates and the REMIC I Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-I Certificates and the REMIC I
Regular Interests, shall be as set forth in this Agreement.
SECTION 2.07. Conveyance of the REMIC I Regular Interests;
Acceptance of REMIC II by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II and REMIC
III Certificateholders. The Trustee acknowledges receipt of the REMIC I Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of all present and future Class R-II
Certificateholders and REMIC III Certificateholders. The rights of the Class
R-II Certificateholders and REMIC III (as holder of the REMIC II Regular
Interests) to receive distributions from the proceeds of REMIC II in respect of
the Class R-II Certificates and REMIC II Regular Interests, respectively, and
all ownership interests evidenced or constituted by the Class R-II Certificates
and the REMIC II Regular Interests, shall be as set forth in this Agreement.
SECTION 2.08. Issuance of Class R-II Certificates.
The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the Class R-II Certificates in authorized denominations.
The interests evidenced by the Class R-II Certificates, together with the REMIC
II Regular Interests, constitute the entire beneficial ownership interest in
REMIC II.
SECTION 2.09. Conveyance of REMIC II Regular Interests;
Acceptance of REMIC III by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the REMIC III
Certificateholders and the Certificate Insurer. The Trustee acknowledges receipt
of the REMIC II Regular Interests and declares that it holds and will hold the
same in trust for the exclusive use and benefit of all present and future REMIC
III Certificateholders and the Certificate Insurer. The rights of the REMIC III
Certificateholders to receive distributions from the proceeds of REMIC III in
respect of the REMIC III Certificates, and all ownership interests evidenced or
constituted by the REMIC III Certificates, shall be as set forth in this
Agreement.
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SECTION 2.10. Issuance of REMIC III Certificates.
The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the REMIC III Certificates in authorized denominations
evidencing the entire beneficial ownership interest in REMIC III.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicers to Act as Servicers.
(a) Unless otherwise specified, all references to actions to
be taken or previously taken by "the Servicer" under this Article III or any
other provision of this Agreement with respect to a Mortgage Loan or Mortgage
Loans or with respect to an REO Property or REO Properties shall be only to
actions to be taken or previously taken by each Servicer with respect to a
Mortgage Loan or Mortgage Loans serviced by such Servicer or with respect to an
REO Property or REO Properties administered by such Servicer. Furthermore,
unless otherwise specified, all references to actions to be taken or previously
taken by "the Servicer" under this Article III or any other provision of this
Agreement with respect to "the Collection Account" or "the Servicing Account"
shall be only to actions to be taken or previously taken by each Servicer with
respect to the Collection Account or the Servicing Account to be established and
maintained by such Servicer. Consistent with the foregoing, but only insofar as
the context so permits, this Article III is to be read with respect to each
Servicer as if such Servicer alone was servicing and administering its
respective Mortgage Loans hereunder.
(b) The Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and in the best interests of and for the benefit
of the Certificateholders and the Certificate Insurer (as determined by the
Servicer in its reasonable judgment) in accordance with the terms of this
Agreement and the respective Mortgage Loans and, to the extent consistent with
such terms, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary and
usual standards of practice of mortgage lenders and loan servicers administering
similar mortgage loans but without regard to:
(i) any relationship that the Servicer, any
Sub-Servicer or any Affiliate of the Servicer or any
Sub-Servicer may have with the related Mortgagor;
(ii) the ownership or non-ownership of any Certificate
by the Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or
Servicing Advances; or
(iv) the Servicer's or any Sub-Servicer's right to
receive compensation for its services hereunder or with
respect to any particular transaction.
To the extent consistent with the foregoing, New Century, as Servicer (a) shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes and (b) shall waive (or permit a subservicer to waive) a
Prepayment Charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans and
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(ii) either (A) such waiver would, in the reasonable judgement of the New
Century, as Servicer, maximize recovery of total proceeds taking into account
the value of such Prepayment Charge and the related Mortgage Loan and, if such
waiver is made in connection with a refinancing of the related Mortgage Loan,
such refinancing is related to a default or a reasonably foreseeable default or
(B) such waiver is made in connection with a refinancing of the related Mortgage
Loan unrelated to a default or a reasonably foreseeable default where (x) the
related mortgagor has stated to New Century, as Servicer or an applicable
subservicer an intention to refinance the related Mortgage Loan and (y) New
Century, as Servicer has concluded in its reasonable judgement that the waiver
of such Prepayment Charge would induce such mortgagor to refinance with New
Century. If a Prepayment Charge is waived as permitted by meeting the standards
described in clauses (i) and (ii)(B) above, then New Century, in its capacity as
Servicer is required to pay the amount of such waived Prepayment Charge, for the
benefit of the Holders of the Class P Certificates, by depositing such amount
into the Collection Account together with and at the time that the amount
prepaid on the related Mortgage Loan is required to be deposited into the
Collection Account. To the extent consistent with the foregoing, Option One, as
Servicer (a) shall seek to maximize the timely and complete recovery of
principal and interest on the Mortgage Notes and (b) shall only waive (or permit
a subservicer to waive) a Prepayment Charge or part of a Prepayment Charge if
such waiver would maximize recovery of total proceeds taking into account the
value of such Prepayment Charge and the related Mortgage Loan, and doing so is
standard and customary in servicing similar Mortgage Loans. Option One, as
Servicer, may waive a Prepayment Charge on any Mortgage Loan if the related
Mortgagor has chosen to refinance such Mortgage Loan through the same lender;
provided, however, Option One, as Servicer, must pay the amount of the waived
Prepayment Charge, for the benefit of the Holders of the Class P Certificates,
by depositing such amount into the Collection Account together with and at the
time that the amount prepaid on the related Mortgage Loan is required to be
deposited into the Collection Account. Notwithstanding any other provisions of
this Agreement, any payments made by New Century in respect of any waived
Prepayment Charges pursuant to clauses (i) and (ii)(B) above or any payments
made by Option One in respect of any waived Prepayment Charges pursuant to the
preceding sentence shall be deemed to be paid outside of the Trust Fund. Subject
only to the above-described servicing standards and the terms of this Agreement
and of the respective Mortgage Loans, the Servicer shall have full power and
authority, acting alone or through Sub-Servicers as provided in Section 3.02, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer in its own name or in the name of a
Sub-Servicer is hereby authorized and empowered by the Trustee when the Servicer
believes it appropriate in its best judgment in accordance with the servicing
standards set forth above, to execute and deliver, on behalf of the
Certificateholders and the Trustee, and upon notice to the Trustee and the Trust
Administrator, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Mortgage Loans and the Mortgaged Properties and to institute
foreclosure proceedings or obtain a deed-in-lieu of foreclosure so as to convert
the ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and Certificateholders. The Servicer shall
service and administer the Mortgage Loans in accordance with applicable state
and federal law and shall provide to the Mortgagors any reports required to be
provided to them thereby. The Servicer shall also comply in the performance of
this Agreement with all reasonable
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rules and requirements of each insurer under any standard hazard insurance
policy. Subject to Section 3.17, the Trustee shall execute, at the written
request of the Servicer, and furnish to the Servicer and any Sub-Servicer any
special or limited powers of attorney and other documents necessary or
appropriate to enable the Servicer or any Sub-Servicer to carry out their
servicing and administrative duties hereunder and the Trustee shall not be
liable for the actions of the Servicer or any Sub-Servicers under such powers of
attorney.
Subject to Section 3.09 hereof, in accordance with the
standards of the preceding paragraph, the Servicer shall advance or cause to be
advanced funds as necessary for the purpose of effecting the timely payment of
taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in Section
3.11. Any cost incurred by the Servicer or by Sub-Servicers in effecting the
timely payment of taxes and assessments on a Mortgaged Property shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.03) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such
Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in default
with respect to the Mortgage Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) or (ii) permit any modification, waiver or
amendment of any term of any Mortgage Loan that would both (A) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
Treasury regulations promulgated thereunder) and (B) cause any of REMIC I, REMIC
II or REMIC III to fail to qualify as a REMIC under the Code or the imposition
of any tax on "prohibited transactions" or "contributions after the startup
date" under the REMIC Provisions.
The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities
arising under this Agreement.
SECTION 3.02. Sub-Servicing Agreements Between Servicer and
Sub- Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that any Sub- Servicer shall be acceptable to the Certificate
Insurer and provided such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating or any shadow rating on any Class
of Certificates. The Trust Administrator and the Trustee are hereby authorized
to acknowledge, at the request of the Servicer, any Sub-Servicing Agreement that
meets the requirements applicable to Sub-Servicing Agreements set forth in this
Agreement and that is otherwise permitted under this Agreement.
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Each Sub-Servicer shall be (i) authorized to transact business
in the state or states where the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement and (ii) a Xxxxxxx Mac or Xxxxxx Mae approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Servicer will
examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Servicer and the Sub-Servicers may
enter into and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Agreement, and that no such amendment or different form shall
be made or entered into which could be reasonably expected to be materially
adverse to the interests of the Certificateholders without the consent of the
Certificate Insurer and the Holders of Certificates entitled to at least 66% of
the Voting Rights; provided, further, that the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights shall not be required
(i) to cure any ambiguity or defect in a Sub-Servicing Agreement, (ii) to
correct, modify or supplement any provisions of a Sub-Servicing Agreement, or
(iii) to make any other provisions with respect to matters or questions arising
under a Sub- Servicing Agreement, which, in each case, shall not be inconsistent
with the provisions of this Agreement. Any variation without the consent of the
Certificate Insurer and the Holders of Certificates entitled to at least 66% of
the Voting Rights from the provisions set forth in Section 3.08 relating to
insurance or priority requirements of Sub-Servicing Accounts, or credits and
charges to the Sub-Servicing Accounts or the timing and amount of remittances by
the Sub- Servicers to the Servicer, are conclusively deemed to be inconsistent
with this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee, the Trust Administrator and the Certificate Insurer copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof, promptly
upon the Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee, the Certificateholders and the
Certificate Insurer, shall enforce the obligations of each Sub-Servicer under
the related Sub-Servicing Agreement and of the related Originator and the Seller
under the related Mortgage Loan Purchase Agreement, including, without
limitation, any obligation to make advances in respect of delinquent payments as
required by a Sub-Servicing Agreement, or to purchase a Mortgage Loan on account
of missing or defective documentation or on account of a breach of a
representation, warranty or covenant, as described in Section 2.03(a). Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements, and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Servicer, in its good faith business judgment, would require were it
the owner of the related Mortgage Loans. The Servicer shall pay the costs of
such enforcement at its own expense, and shall be reimbursed therefor only (i)
from a general recovery resulting from such enforcement, to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Mortgage
Loans, or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed. Enforcement of the
related Mortgage Loan Purchase Agreement against the related
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Originator shall be effected by the Servicer to the extent it is not the related
Originator, and otherwise by the Trustee in accordance with the foregoing
provisions of this paragraph.
SECTION 3.03. Successor Sub-Servicers.
The Servicer or the Certificate Insurer shall be entitled to
terminate any Sub- Servicing Agreement and the rights and obligations of any
Sub-Servicer pursuant to any Sub- Servicing Agreement in accordance with the
terms and conditions of such Sub-Servicing Agreement. In the event of
termination of any Sub-Servicer, all servicing obligations of such Sub- Servicer
shall be assumed simultaneously by the Servicer without any act or deed on the
part of such Sub-Servicer or the Servicer, and the Servicer either shall service
directly the related Mortgage Loans or shall enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Master Servicer, the Trust
Administrator (if the Master Servicer is the Servicer), the Trustee (if the
Trust Administrator is acting as Servicer) or the Certificate Insurer without
fee, in accordance with the terms of this Agreement, in the event that the
Servicer (or the Master Servicer or Trust Administrator, if such party is then
acting as Servicer) shall, for any reason, no longer be the Servicer (including
termination due to a Servicer Event of Default).
SECTION 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement or the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Certificateholders and the Certificate Insurer for the servicing
and administering of the Mortgage Loans in accordance with the provisions of
Section 3.01 without diminution of such obligation or liability by virtue of
such Sub-Servicing Agreements or arrangements or by virtue of indemnification
from the Sub-Servicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Mortgage Loans. The Servicer shall be entitled to enter into any agreement with
a Sub-Servicer for indemnification of the Servicer by such Sub-Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. No Contractual Relationship Between
Sub-Servicers and the Trust Administrator, the
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Servicer alone, and the Trust Administrator, the Trustee, Certificateholders or
the Certificate Insurer shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Sub-Servicer except as set forth in Section 3.06. The Servicer shall be solely
liable for all fees owed by it to any Sub-
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Servicer, irrespective of whether the Servicer's compensation pursuant to this
Agreement is sufficient to pay such fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trust Administrator.
In the event the Servicer shall for any reason no longer be
the servicer (including by reason of the occurrence of a Servicer Event of
Default), the Master Servicer (or if the Master Servicer is the departing
Servicer, the Trust Administrator or its designee) shall thereupon assume all of
the rights and obligations of the Servicer under each Sub-Servicing Agreement
that the Servicer may have entered into, unless the Master Servicer (or if the
Master Servicer is the departing Servicer, the Trust Administrator or the
Trustee) or the Certificate Insurer elects to terminate any Sub-Servicing
Agreement in accordance with its terms as provided in Section 3.03. Upon such
assumption, the Master Servicer (or the Trust Administrator, its designee or the
successor servicer for the Trust Administrator appointed pursuant to Section
7.02) shall be deemed, subject to Section 3.03, to have assumed all of the
departing Servicer's interest therein and to have replaced the departing
Servicer as a party to each Sub-Servicing Agreement to the same extent as if
each Sub-Servicing Agreement had been assigned to the assuming party, except
that (i) the departing Servicer shall not thereby be relieved of any liability
or obligations under any Sub-Servicing Agreement that arose before it ceased to
be the Servicer and (ii) none of the Master Servicer, the Trust Administrator,
its designee or any successor Servicer shall be deemed to have assumed any
liability or obligation of the Servicer that arose before it ceased to be the
Servicer.
The Servicer at its expense shall, upon request of the Master
Servicer (or if the Master Servicer is the departing Servicer, the Trust
Administrator), deliver to the assuming party all documents and records relating
to each Sub-Servicing Agreement and the Mortgage Loans then being serviced and
an accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates for
the Monthly Payments due on a Mortgage Note for a period of not greater than 180
days; provided, however, that any extension pursuant to clause (ii) above shall
not affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.03
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in
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the event that any Mortgage Loan is in default or, in the judgment of the
Servicer, such default is reasonably foreseeable, the Servicer, consistent with
the standards set forth in Section 3.01, may also waive, modify or vary any term
of such Mortgage Loan (including modifications that would change the Mortgage
Rate, forgive the payment of principal or interest or extend the final maturity
date of such Mortgage Loan), accept payment from the related Mortgagor of an
amount less than the Stated Principal Balance in final satisfaction of such
Mortgage Loan (such payment, a "Short Pay-off"), or consent to the postponement
of strict compliance with any such term or otherwise grant indulgence to any
Mortgagor (any and all such waivers, modifications, variances, forgiveness of
principal or interest, postponements, or indulgences collectively referred to
herein as "forbearance"), provided, however, that in no event shall the Servicer
grant any such forbearance (other than as permitted by the second sentence of
this Section) with respect to any one Mortgage Loan more than once in any 12
month period or more than three times over the life of such Mortgage Loan. The
Servicer's analysis supporting any forbearance and the conclusion that any
forbearance meets the standards of Section 3.01 (including the standard that
such forbearance will maximize the timely and complete recovery of principal and
interest on the Mortgage Notes) shall be reflected in writing in the Mortgage
File and shall be provided to the Certificate Insurer upon request.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub- Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.
SECTION 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
The Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts"),
into which all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments") shall
be deposited and retained. Servicing Accounts shall be Eligible Accounts. The
Servicer shall deposit in the clearing account in which it customarily deposits
payments and collections on mortgage
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loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Servicer's receipt
thereof, all Escrow Payments collected on account of the Mortgage Loans and
shall thereafter deposit such Escrow Payments in the Servicing Accounts, in no
event more than two Business Days after the receipt of such Escrow Payments, all
Escrow Payments collected on account of the Mortgage Loans for the purpose of
effecting the timely payment of any such items as required under the terms of
this Agreement. Withdrawals of amounts from a Servicing Account may be made only
to (i) effect payment of taxes, assessments, hazard insurance premiums, and
comparable items in a manner and at a time that assures that the lien priority
of the Mortgage is not jeopardized (or, with respect to the payment of taxes, in
a manner and at a time that avoids the loss of the Mortgaged Property due to a
tax sale or the foreclosure as a result of a tax lien); (ii) reimburse the
Servicer (or a Sub- Servicer to the extent provided in the related Sub-Servicing
Agreement) out of related collections for any advances made pursuant to Section
3.01 (with respect to taxes and assessments) and Section 3.14 (with respect to
hazard insurance); (iii) refund to Mortgagors any sums as may be determined to
be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; or (v) clear and terminate the
Servicing Account at the termination of the Servicer's obligations and
responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article X. The Servicer will be responsible for the
administration of the Servicing Accounts and will be obligated to make advances
to such accounts when and as necessary to avoid the lapse of insurance coverage
on the Mortgaged Property, or which the Servicer knows, or in the exercise of
the required standard of care of the Servicer hereunder should know, is
necessary to avoid the loss of the Mortgaged Property due to a tax sale or the
foreclosure as a result of a tax lien. If any such payment has not been made and
the Servicer receives notice of a tax lien with respect to the Mortgage being
imposed, the Servicer will, within 10 business days of such notice, advance or
cause to be advanced funds necessary to discharge such lien on the Mortgaged
Property. As part of its servicing duties, the Servicer or Sub-Servicers shall
pay to the Mortgagors interest on funds in the Servicing Accounts, to the extent
required by law and, to the extent that interest earned on funds in the
Servicing Accounts is insufficient, to pay such interest from its or their own
funds, without any reimbursement therefor.
SECTION 3.10. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Servicer shall establish
and maintain, or cause to be established and maintained, one or more accounts
(such account or accounts, the "Collection Account"), held in trust for the
benefit of the Trustee, the Certificateholders and the Certificate Insurer. On
behalf of the Trust Fund, the Servicer shall deposit or cause to be deposited in
the clearing account in which it customarily deposits payments and collections
on mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Servicer's
receipt thereof, and shall thereafter deposit in the Collection Account, in no
event more than two Business Days after the Servicer's receipt thereof, as and
when received or as otherwise required hereunder, the following payments and
collections received or made by it subsequent to the Cut-off Date (other than in
respect of principal or interest on the related Mortgage Loans due on or before
the Cut-off Date), or
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payments (other than Principal Prepayments) received by it on or prior to the
Cut-off Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the
related Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds
(other than proceeds collected in respect of any particular
REO Property and amounts paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 10.01);
(iv) any amounts required to be deposited pursuant to
Section 3.12 in connection with any losses realized on
Permitted Investments with respect to funds held in the
Collection Account;
(v) any amounts required to be deposited by the
Servicer pursuant to the second paragraph of Section 3.14(a)
in respect of any blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or
purchased in accordance with Section 2.03 or Section 10.01;
(vii) all amounts required to be deposited in
connection with shortfalls in principal amount of Qualified
Substitute Mortgage Loans pursuant to Section 2.03; and
(viii) all Prepayment Charges collected by the Servicer
in connection with the Principal Prepayment of any of the
Mortgage Loans.
The foregoing requirements for deposit in the Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, ancillary income and assumption fees, or insufficient funds charges
need not be deposited by the Servicer in the Collection Account and may be
retained by the Servicer as additional compensation. In the event the Servicer
shall deposit in the Collection Account any amount not required to be deposited
therein, it may at any time withdraw such amount from the Collection Account,
any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trust Administrator, as
agent for the Trustee, shall establish and maintain one or more accounts (such
account or accounts, the "Distribution Account"), held in trust for the benefit
of the Trustee, the Certificateholders and the Certificate Insurer. On behalf of
the Trust Fund, the Servicer shall deliver to the Trust Administrator in
immediately available funds for deposit in the Distribution Account on or before
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5:00 p.m. New York time (i) on the Servicer Remittance Date, that portion of the
Available Distribution Amount (calculated without regard to the references in
clause (2) of the definition thereof to amounts that may be withdrawn from the
Distribution Account) for the related Distribution Date then on deposit in the
Collection Account and the amount of all Prepayment Charges collected by the
Servicer in connection with the Principal Prepayment of any of the Mortgage
Loans then on deposit in the Collection Account, and (ii) on each Business Day
as of the commencement of which the balance on deposit in the Collection Account
exceeds $75,000 following any withdrawals pursuant to the next succeeding
sentence, the amount of such excess, but only if the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account." If the balance on deposit in the Collection Account
exceeds $75,000 as of the commencement of business on any Business Day and the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account," the Servicer shall, on or before
5:00 p.m. New York time on such Business Day, withdraw from the Collection
Account any and all amounts payable or reimbursable to the Depositor, the
Servicer, the Trustee, the Trust Administrator, either Originator, the Seller or
any Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the
Persons entitled thereto.
(c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.12. The Servicer shall give notice to the
Trustee, the Trust Administrator and the Certificate Insurer of the location of
the Collection Account maintained by it when established and prior to any change
thereof. The Trust Administrator shall give notice to the Servicer, the
Depositor, the Trustee and the Certificate Insurer of the location of the
Distribution Account when established and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be
delivered by the Servicer to the Trust Administrator for deposit in an account
(which may be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account; provided, however, that the Trustee and the Trust Administrator shall
have the sole authority to withdraw any funds held pursuant to this subsection
(d). In the event the Servicer shall deliver to the Trust Administrator for
deposit in the Distribution Account any amount not required to be deposited
therein, it may at any time request that the Trust Administrator withdraw such
amount from the Distribution Account and remit to it any such amount, any
provision herein to the contrary notwithstanding. In addition, the Servicer,
with respect to items (i) through (v) below, shall deliver to the Trust
Administrator from time to time for deposit, and the Trust Administrator, with
respect to items (i) through (vi) below, shall so deposit, in the Distribution
Account:
(i) any P&I Advances, as required pursuant to Section
4.03;
(ii) any amounts required to be deposited pursuant to
Section 3.23(d) or (f) in connection with any REO Property;
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(iii) any amounts to be paid in connection with a
purchase of Mortgage Loans and REO Properties pursuant to
Section 10.01;
(iv) any amounts required to be deposited pursuant to
Section 3.24 in connection with any Prepayment Interest
Shortfall;
(v) any Stayed Funds, as soon as permitted by the
federal bankruptcy court having jurisdiction in such matters;
and
(vi) any amounts required to be transferred from the
Policy Payments Account pursuant to Section 9.04(b) on any
Distribution Date.
(e) Promptly upon receipt of any Stayed Funds, whether from
the Servicer, a trustee in bankruptcy, federal bankruptcy court or other source,
the Trust Administrator shall deposit such funds in the Distribution Account,
subject to withdrawal thereof pursuant to Section
7.02(b) or as otherwise permitted hereunder.
(f) The Servicer shall deposit in the Collection Account any
amounts required to be deposited pursuant to Section 3.12(b) in connection with
losses realized on Permitted Investments with respect to funds held in the
Collection Account.
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account.
(a) The Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 4.03:
(i) to remit to the Trust Administrator for deposit in
the Distribution Account the amounts required to be so
remitted pursuant to Section 3.10(b) or permitted to be so
remitted pursuant to the first sentence of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the
Servicer for P&I Advances, but only to the extent of amounts
received which represent Late Collections (net of the related
Servicing Fees) of Monthly Payments, Liquidation Proceeds and
Insurance Proceeds on Mortgage Loans with respect to which
such P&I Advances were made in accordance with the provisions
of Section 4.03;
(iii) subject to Section 3.16(d), to pay the Servicer or
any Sub-Servicer (a) any unpaid Servicing Fees, (b) any
unreimbursed Servicing Advances with respect to each Mortgage
Loan, but only to the extent of any Late Collections,
Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan, and (c) any Nonrecoverable
Servicing Advances with respect to the final liquidation of a
Mortgage Loan, but only to the extent that Late Collections,
Liquidation Proceeds and Insurance Proceeds received with
respect to
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such Mortgage Loan are insufficient to reimburse the Servicer
or any Sub-Servicer for Servicing Advances;
(iv) to pay to the Servicer as servicing compensation
(in addition to the Servicing Fee) on the Servicer Remittance
Date any interest or investment income earned on funds
deposited in the Collection Account;
(v) to pay to the Servicer, the Master Servicer, the
Depositor, each Originator or the Seller, as the case may be,
with respect to each Mortgage Loan that has previously been
purchased or replaced pursuant to Section 2.03 or Section
3.16(c) all amounts received thereon subsequent to the date of
purchase or substitution, as the case may be;
(vi) to reimburse the Servicer for any P&I Advance
previously made which the Servicer has determined to be a
Nonrecoverable P&I Advance in accordance with the provisions
of Section 4.03;
(vii) to reimburse the Servicer or the Depositor for
expenses incurred by or reimbursable to the Servicer or the
Depositor, as the case may be, pursuant to Section 6.03;
(viii) to reimburse the Servicer, the Trustee or the
Trust Administrator, as the case may be, for expenses
reasonably incurred in connection with any breach or defect
giving rise to the purchase obligation under Section 2.03 or
Section 2.04 of this Agreement, including any expenses arising
out of the enforcement of the purchase obligation;
(ix) to pay, or to reimburse the Servicer for Servicing
Advances in respect of, expenses incurred in connection with
any Mortgage Loan pursuant to Section 3.16(b); and
(x) to clear and terminate the Collection Account
pursuant to Section 10.01.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account, to the extent held by or on behalf of it, pursuant to
subclauses (ii), (iii), (iv), (v), (vi), (viii) and (ix) above. The Servicer
shall provide written notification to the Trust Administrator, on or prior to
the next succeeding Servicer Remittance Date, upon making any withdrawals from
the Collection Account pursuant to subclauses (vi) and (vii) above; provided
that an Officer's Certificate in the form described under Section 4.03(d) shall
suffice for such written notification to the Trust Administrator in respect
hereof.
(b) The Trust Administrator shall, from time to time, make
withdrawals from the Distribution Account, for any of the following purposes,
without priority:
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(i) to make distributions to Certificateholders and the
Certificate Insurer in accordance with Section 4.01;
(ii) to pay to itself and the Trustee amounts to which
each is entitled pursuant to Section 8.05;
(iii) to pay to the Master Servicer on each
Distribution Date the Master Servicing Fee and as servicing
compensation any interest or investment income earned on funds
deposited in the Distribution Account pursuant to Section
3.12(c);
(iv) to reimburse itself pursuant to Section 7.02;
(v) to pay any amounts in respect of taxes pursuant to
Section 11.01(g)(iii); and
(vi) to clear and terminate the Distribution Account
pursuant to Section 10.01.
Notwithstanding the foregoing, the Trust Administrator shall be
entitled to withdraw amounts from the Distribution Account to transfer funds to
the Expense Account on the Business Day immediately preceding each Distribution
Date pursuant to Section 3.25(b) prior to any payments to Certificateholders and
the Certificate Insurer pursuant to Section 4.01.
SECTION 3.12. Investment of Funds in the Collection Account,
the Expense Account and the Distribution
Account.
(a) The Servicer may direct any depository institution
maintaining the Collection Account (for purposes of this Section 3.12, an
"Investment Account"), and the Master Servicer may direct any depository
institution maintaining the Distribution Account and the Expense Account (each,
for purposes of this Section 3.12, an "Investment Account"), to invest the funds
(other than the Initial Deposit) in such Investment Account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trust
Administrator is the obligor thereon, and (ii) no later than the date on which
such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trust Administrator is the obligor thereon. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in an Investment Account shall be made in the name of the Trust
Administrator (in its capacity as such), as agent for the Trustee, or in the
name of a nominee of the Trust Administrator. The Trust Administrator shall be
entitled to sole possession (except with respect to investment direction of
funds held in the Collection Account, the Distribution Account and the Expense
Account and any income and gain realized thereon) over each such investment, and
any certificate or other instrument evidencing any such investment shall be
delivered directly to the Trust Administrator or its agent, together with any
document of transfer necessary to transfer title to such investment to the Trust
Administrator or its nominee.
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In the event amounts on deposit in an Investment Account are at any time
invested in a Permitted Investment payable on demand, the Trust Administrator
shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on
the last day such Permitted Investment may otherwise
mature hereunder in an amount equal to the lesser of
(1) all amounts then payable thereunder and (2) the
amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly
upon determination by a Responsible Officer of the
Trust Administrator that such Permitted Investment
would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the
Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account and any REO Account held by or on behalf of
the Servicer shall be for the benefit of the Servicer and shall be subject to
its withdrawal in accordance with Section 3.11 or Section 3.23, as applicable.
The Servicer shall deposit in the Collection Account or any REO Account, as
applicable, the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
(c) All income and gain realized from the investment of funds
deposited in the Distribution Account and the Expense Account held by or on
behalf of the Master Servicer shall be for the benefit of the Master Servicer
and shall be subject to its withdrawal by the Trustee or the Trust Administrator
for distribution in accordance with Section 3.11 or Section 3.25, as applicable.
The Master Servicer shall deposit in the Distribution Account and the Expense
Account, as applicable, the amount of any loss of principal incurred in respect
of any such Permitted Investment made with funds in such accounts immediately
upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01 and Section
8.02(v), upon the request of the Certificate Insurer or the Holders of
Certificates representing more than 50% of the Voting Rights allocated to any
Class of Certificates, shall take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings.
SECTION 3.13. [intentionally omitted]
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount
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necessary to fully compensate for any damage or loss to the improvements that
are a part of such property on a replacement cost basis, in each case in an
amount not less than such amount as is necessary to avoid the application of any
coinsurance clause contained in the related hazard insurance policy. The
Servicer shall also cause to be maintained fire insurance with extended coverage
on each REO Property in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the related Mortgage Loan
at the time it became an REO Property. The Servicer will comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any such hazard policies. Any amounts to be collected by the
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts
to be released to the Mortgagor in accordance with the procedures that the
Servicer would follow in servicing loans held for its own account, subject to
the terms and conditions of the related Mortgage and Mortgage Note) shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.11, if received in respect of a Mortgage Loan, or in the REO Account, subject
to withdrawal pursuant to Section 3.23, if received in respect of an REO
Property. Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to Certificateholders
and the Certificate Insurer, be added to the unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so
permit. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property or REO Property is
at any time in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards and flood insurance
has been made available, the Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.14, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Collection Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee, Certificateholders and the Certificate Insurer, claims under any
such blanket policy in a timely fashion in accordance with the terms of such
policy.
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(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Xxxxxx Xxx or Xxxxxxx Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer has obtained a waiver of such requirements
from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall also maintain a fidelity bond
in the form and amount that would meet the requirements of Xxxxxx Mae or Xxxxxxx
Mac, unless the Servicer has obtained a waiver of such requirements from Xxxxxx
Mae or Xxxxxxx Mac. The Servicer shall be deemed to have complied with this
provision if an Affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. Any such errors
and omissions policy and fidelity bond shall by its terms not be cancelable
without thirty days' prior written notice to the Trustee and the Trust
Administrator. The Servicer shall also cause each Sub-Servicer to maintain a
policy of insurance covering errors and omissions and a fidelity bond which
would meet such requirements.
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Servicer shall not be required to take such action if in its sole
business judgment the Servicer believes it is not in the best interests of the
Trust Fund and shall not exercise any such rights if prohibited by law from
doing so. If the Servicer reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause, or if any of the other conditions set
forth in the proviso to the preceding sentence apply, the Servicer will enter
into an assumption and modification agreement from or with the person to whom
such property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, to the extent permitted
by applicable state law, the Mortgagor remains liable thereon. The Servicer is
also authorized to enter into a substitution of liability agreement with such
person, pursuant to which the original Mortgagor is released from liability and
such person is substituted as the Mortgagor and becomes liable under the
Mortgage Note, provided that no such substitution shall be effective unless such
person satisfies the underwriting criteria of the Servicer and has a credit risk
rating at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual in its
general mortgage servicing activities and as it applies to other mortgage loans
owned solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Servicer in respect of an assumption, modification or substitution of
liability agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term
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of the Mortgage Note (including but not limited to the related Mortgage Rate and
the amount of the Monthly Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof. The Servicer shall notify the
Trustee and the Trust Administrator that any such substitution, modification or
assumption agreement has been completed by forwarding to the Trust Administrator
(with a copy to the Trustee) the executed original of such substitution,
modification or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.15, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
SECTION 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with
Accepted Servicing Practices, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans (including
selling any such Mortgage Loans other than converting the ownership of the
related properties) as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. The Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will be recoverable as Servicing Advances by the Servicer as
contemplated in Section 3.11 and Section 3.23. The foregoing is subject to the
provision that, in any case in which Mortgaged Property shall have suffered
damage from an Uninsured Cause, the Servicer shall not be required to expend its
own funds toward the restoration of such property unless it shall determine in
its discretion that such restoration will increase the proceeds of liquidation
of the related Mortgage Loan after reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trustee, either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Administrator, the Trust Fund, the Certificateholders or
the Certificate Insurer would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Servicer
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has also previously determined, based on its reasonable judgment and a report
prepared by a Person who regularly conducts environmental audits using customary
industry standards, that:
(1) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it would be in
the best economic interest of the Trust Fund to take such
actions as are necessary to bring the Mortgaged Property into
compliance therewith; and
(2) there are no circumstances present at such
Mortgaged Property relating to the use, management or disposal
of any hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials for which investigation,
testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or
regulation, or that if any such materials are present for
which such action could be required, that it would be in the
best economic interest of the Trust Fund to take such actions
with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by
this Section 3.16 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
If the Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Trust Fund; provided that any amounts disbursed by the Servicer
pursuant to this Section 3.16(b) shall constitute Servicing Advances, subject to
Section 4.03(d). The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.11(a)(iii) and (a)(ix), such right of reimbursement being prior to the rights
of Certificateholders to receive any amount in the Collection Account received
in respect of the affected Mortgage Loan or other Mortgage Loans.
(c) The Master Servicer may at its option purchase from REMIC
I any Mortgage Loan or related REO Property that is 90 days or more delinquent,
which the Master Servicer determines in good faith will otherwise become subject
to foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trust Administrator, the Trustee and the Certificate Insurer
prior to purchase), at a price equal to the Purchase Price; provided, however,
that (i) the Master Servicer shall purchase any such Mortgage Loans or related
REO Properties on the basis of delinquency, purchasing the most delinquent
Mortgage Loans or related REO Properties first and (ii) after it has purchased
5% of the Mortgage Loans and related REO
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Properties (including any Mortgage Loans or related REO Properties purchased by
Option One as provided below), by aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date, pursuant to clause (i) above, the Master
Servicer must also obtain the consent of the Certificate Insurer prior to any
further purchases, provided that failure of the Certificate Insurer to respond
within five Business Days following actual receipt of any such request for
consent by the Master Servicer shall be deemed to constitute consent to the
additional purchases identified in such request for consent. The Purchase Price
for any Mortgage Loan or related REO Property purchased hereunder shall be
deposited in the Distribution Account, and the Trust Administrator, upon receipt
of such deposit, shall release or cause to be released to the Master Servicer
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Master Servicer shall furnish and as shall be necessary to vest in the Master
Servicer title to any Mortgage Loan or related REO Property released pursuant
hereto. Notwithstanding the foregoing, prior to purchasing any Mortgage Loan or
related REO Property on Part B of Schedule 1 attached hereto pursuant to this
Section 3.16(c), the Master Servicer must give Option One the right of first
refusal to purchase such Mortgage Loan or related REO Property by written
notice; and if Option One does not exercise such right within 10 Business Days
after receipt of such written notice, the Master Servicer may purchase such
Mortgage Loan or related REO Property. If Option One purchases such Mortgage
Loan or related REO Property, the Purchase Price shall be deposited in the
Distribution Account by Option One, and the Trust Administrator, upon receipt of
such deposit, shall release or cause to be released to Option One the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as Option One shall furnish and as
shall be necessary to vest in Option One title to any Mortgage Loan or related
REO Property released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: FIRST, to reimburse the
Servicer or any Sub-Servicer for any related unreimbursed Servicing Advances and
P&I Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); SECOND, to accrued
and unpaid interest on the Mortgage Loan, to the date of the Final Recovery
Determination, or to the Due Date prior to the Distribution Date on which such
amounts are to be distributed if not in connection with a Final Recovery
Determination; and THIRD, as a recovery of principal of the Mortgage Loan. If
the amount of the recovery so allocated to interest is less than the full amount
of accrued and unpaid interest due on such Mortgage Loan, the amount of such
recovery will be allocated by the Servicer as follows: FIRST, to unpaid
Servicing Fees; and SECOND, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).
SECTION 3.17. Trustee and Trust Administrator to Cooperate;
Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Servicer will notify or cause to be
notified the Trust Administrator by a certification
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in the form of Exhibit E-2 (which certification shall include a statement to the
effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 3.10 have been or will be so deposited) of a Servicing Officer and shall
request delivery to it of the Mortgage File. Upon receipt of such certification
and request, the Trust Administrator shall, within five Business Days, release
and send by overnight mail, at the expense of the Servicer, the related Mortgage
File to the Servicer. The Trust Administrator agrees to indemnify the Servicer,
out of its own funds, for any loss, liability or expense (other than special,
indirect, punitive or consequential damages which will not be paid by the Trust
Administrator) incurred by the Servicer as a proximate result of the Trust
Administrator's breach of its obligations pursuant to this Section 3.17. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account. The Trust Administrator will provide to the Certificate Insurer and the
Trustee an updated listing of any Mortgage Files released pursuant to this
Section 3.17(a) on March 30, June 30, September 30 and December 30 of each year,
beginning in March 1999 and as otherwise requested by the Certificate Insurer or
the Trustee.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trust Administrator
shall, upon any request made by or on behalf of the Servicer and delivery to the
Trust Administrator of a Request for Release in the form of Exhibit E-l, release
the related Mortgage File to the Servicer, and the Trustee shall, at the
direction of the Servicer, execute such documents as shall be necessary to the
prosecution of any such proceedings. Such Request for Release shall obligate the
Servicer to return each and every document previously requested from the
Mortgage File to the Trust Administrator when the need therefor by the Servicer
no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Mortgage File or such document has been delivered to
an attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered, or caused to be delivered, to the Trust
Administrator an additional Request for Release certifying as to such
liquidation or action or proceedings. Upon the request of the Trust
Administrator, the Trustee or the Certificate Insurer, the Servicer shall
provide notice to the Trust Administrator, the Trustee and the Certificate
Insurer of the name and address of the Person to which such Mortgage File or
such document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage Loan
was liquidated and that all amounts received or to be received in connection
with such liquidation that are required to be deposited into the Collection
Account have been so deposited, or that such Mortgage Loan has become an REO
Property, any outstanding Requests for Release with respect to such Mortgage
Loan shall be released by the Trust Administrator to the Servicer or its
designee.
(c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Servicer or the Sub-Servicer, as the
case may be, and upon the request of the Certificate Insurer the Servicer shall
deliver or cause to be delivered to the Certificate Insurer copies of, any court
pleadings, requests for trustee's sale or other documents necessary to the
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foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Each such certification shall include a request that such
pleadings or documents be executed by the Trustee and a statement as to the
reason such documents or pleadings are required and that the execution and
delivery thereof by the Trustee will not invalidate or otherwise affect the lien
of the Mortgage, except for the termination of such a lien upon completion of
the foreclosure or trustee's sale.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Master Servicing Fee
with respect to each Mortgage Loan payable solely from payments of interest in
respect of such Mortgage Loan. As compensation for the activities of the
Servicer hereunder, the Servicer shall be entitled to the Servicing Fee with
respect to each Mortgage Loan payable solely from payments of interest in
respect of such Mortgage Loan, subject to Section 3.24. In addition, the
Servicer shall be entitled to recover unpaid Servicing Fees out of Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Servicer's responsibilities and obligations under this Agreement;
provided, however, that the Servicer may pay from the Servicing Fee any amounts
due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into under
Section 3.02.
Additional servicing compensation in the form of assumption
fees, ancillary income and late payment charges, insufficient funds charges or
otherwise (subject to Section 3.24 and other than Prepayment Charges) shall be
retained by the Servicer only to the extent such fees or charges are received by
the Servicer. The Servicer shall also be entitled pursuant to Section
3.11(a)(iv) to withdraw from the Collection Account and pursuant to Section
3.23(b) to withdraw from any REO Account, as additional servicing compensation,
interest or other income earned on deposits therein, subject to Section 3.12 and
Section 3.24. The Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including premiums for
the insurance required by Section 3.14, to the extent such premiums are not paid
by the related Mortgagors or by a Sub-Servicer and servicing compensation of
each Sub-Servicer) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
The Master Servicer shall be entitled pursuant to Section 3.11
to be paid by the Trust Administrator from the Distribution Account, pursuant to
Section 3.25 to be paid by the Trust Administrator from the Expense Account, as
additional servicing compensation, interest or other income earned on deposits
therein, subject to Section 3.12. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including to the extent provided herein in Section 8.05, the fees and expenses
of the Trustee and the Trust Administrator) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
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SECTION 3.19. Reports to the Trust Administrator and the
Trustee; Collection Account Statements.
Not later than twenty days after each Distribution Date, the
Servicer shall forward, upon request, to the Trust Administrator, the Trustee,
the Certificate Insurer and the Depositor the most current available bank
statement for the Collection Account. Copies of such statement shall be provided
by the Trust Administrator to any Certificateholder and to any Person identified
to the Trust Administrator as a prospective transferee of a Certificate, upon
request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Trust Administrator.
SECTION 3.20. Statement as to Compliance.
The Servicer will deliver to the Trust Administrator, the
Trustee, the Certificate Insurer and the Depositor not later than 90 days
following the end of the fiscal year of the Servicer, commencing in 1999, which
as of the Closing Date ends on the last day in December with respect to New
Century and ends on the last day of April with respect to Option One, an
Officers' Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Servicer during the preceding year and of performance
under this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. Copies of any such statement shall be provided by the Trust
Administrator to any Certificateholder and to any Person identified to the Trust
Administrator as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Trust Administrator.
SECTION 3.21. Independent Public Accountants' Servicing
Report.
Not later than 90 days following the end of each fiscal year
of the Servicer, commencing in 1999, the Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Servicer a report stating that (i) it has obtained a letter of
representation regarding certain matters from the management of the Servicer
which includes an assertion that the Servicer has complied with certain minimum
residential mortgage loan servicing standards, identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America, with respect to the servicing of residential mortgage
loans during the most recently completed fiscal year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. In rendering its report such firm may
rely, as to matters relating to the direct servicing of residential mortgage
loans by Sub-Servicers, upon comparable reports of firms of independent
certified public accountants rendered on the basis of examinations conducted in
accordance with the same standards (rendered within one year of such report)
with respect to those Sub-Servicers.
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Immediately upon receipt of such report, the Servicer shall furnish a copy of
such report to the Trust Administrator, the Trustee, the Certificate Insurer and
each Rating Agency. Copies of such statement shall be provided by the Trust
Administrator to any Certificateholder upon request at the Servicer's expense,
provided that such statement is delivered by the Servicer to the Trust
Administrator.
SECTION 3.22. Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Servicer designated by it. In addition, access to the documentation regarding
the Mortgage Loans will be provided to any Certificateholder, the Certificate
Insurer, the Trustee, the Trust Administrator and to any Person identified to
the Servicer as a prospective transferee of a Certificate, upon reasonable
request during normal business hours at the offices of the Servicer designated
by it at the expense of the Person requesting such access.
SECTION 3.23. Title, Management and Disposition of REO
Property.
(a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders and the Certificate Insurer. The Servicer, on behalf of
REMIC I, shall either sell any REO Property within three years after REMIC I
acquires ownership of such REO Property for purposes of Section 860G(a)(8) of
the Code or request from the Internal Revenue Service, no later than 60 days
before the day on which the three-year grace period would otherwise expire, an
extension of the three-year grace period, unless the Servicer shall have
delivered to the Trust Administrator and the Trustee an Opinion of Counsel,
addressed to the Trust Administrator, the Trustee, the Certificate Insurer and
the Depositor, to the effect that the holding by REMIC I of such REO Property
subsequent to three years after its acquisition will not result in the
imposition on REMIC I, REMIC II or REMIC III of taxes on "prohibited
transactions" thereof, as defined in Section 860F of the Code, or cause any of
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under Federal law
at any time that any Certificates are outstanding. The Servicer shall manage,
conserve, protect and operate each REO Property for the Certificateholders
solely for the purpose of its prompt disposition and sale in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by REMIC
I, REMIC II or REMIC III of any "income from non- permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code, or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
(b) The Servicer shall separately account for all funds
collected and received in connection with the operation of any REO Property and
shall establish and maintain, or cause to be established and maintained, with
respect to REO Properties an account held in trust for the Trustee for the
benefit of the Certificateholders and the Certificate Insurer (the "REO
Account"),
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which shall be an Eligible Account. The Servicer shall be permitted to allow the
Collection Account to serve as the REO Account, subject to separate ledgers for
each REO Property. The Servicer shall be entitled to retain or withdraw any
interest income paid on funds deposited in the REO Account.
(c) The Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Servicer manages and operates similar property owned by the
Servicer or any of its Affiliates, all on such terms and for such period as the
Servicer deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Servicer's receipt
thereof, and shall thereafter deposit in the REO Account, in no event more than
two Business Days after the Servicer's receipt thereof, all revenues received by
it with respect to an REO Property and shall withdraw therefrom funds necessary
for the proper operation, management and maintenance of such REO Property
including, without limitation:
(i) all insurance premiums due and payable in respect
of such REO Property;
(ii) all real estate taxes and assessments in respect
of such REO Property that may result in the imposition of a
lien thereon; and
(iii) all costs and expenses necessary to maintain such
REO Property.
To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Servicer shall advance from
its own funds such amount as is necessary for such purposes if, but only if, the
Servicer would make such advances if the Servicer owned the REO Property and if
in the Servicer's judgment, the payment of such amounts will be recoverable from
the rental or sale of the REO Property.
Notwithstanding the foregoing, none of the Servicer, the Trust
Administrator or the Trustee shall:
(i) authorize the Trust Fund to enter into, renew or
extend any New Lease with respect to any REO Property, if the
New Lease by its terms will give rise to any income that does
not constitute Rents from Real Property;
(ii) authorize any amount to be received or accrued
under any New Lease other than amounts that will constitute
Rents from Real Property;
(iii) authorize any construction on any REO Property,
other than the completion of a building or other improvement
thereon, and then only if more than
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ten percent of the construction of such building or other
improvement was completed before default on the related
Mortgage Loan became imminent, all within the meaning of
Section 856(e)(4)(B) of the Code; or
(iv) authorize any Person to Directly Operate any REO
Property on any date more than 90 days after its date of
acquisition by the Trust Fund;
unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trust Administrator, the Trustee and the Certificate Insurer, to
the effect that such action will not cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code
at any time that it is held by REMIC I, in which case the Servicer may take such
actions as are specified in such Opinion of Counsel.
The Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall
not be inconsistent herewith;
(ii) any such contract shall require, or shall be
administered to require, that the Independent Contractor pay
all costs and expenses incurred in connection with the
operation and management of such REO Property, including those
listed above and remit all related revenues (net of such costs
and expenses) to the Servicer as soon as practicable, but in
no event later than thirty days following the receipt thereof
by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c)
relating to any such contract or to actions taken through any
such Independent Contractor shall be deemed to relieve the
Servicer of any of its duties and obligations to the Trustee
on behalf of the Certificateholders and the Certificate
Insurer with respect to the operation and management of any
such REO Property; and
(iv) the Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all
duties and obligations in connection with the operation and
management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any Independent
Contractor performing services for it related to its duties and obligations
hereunder for indemnification of the Servicer by such Independent Contractor,
and nothing in this Agreement shall be deemed to limit or modify such
indemnification. The Servicer shall be solely liable for all fees owed by it to
any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.18 is sufficient to pay such fees; provided,
however, that to the extent that any payments made by such Independent
Contractor would constitute Servicing Advances if made by the Servicer, such
amounts shall be reimbursable as Servicing Advances made by the Servicer.
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(d) In addition to the withdrawals permitted under Section
3.23(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances
made in respect of such REO Property or the related Mortgage Loan. On the
Servicer Remittance Date, the Servicer shall withdraw from each REO Account
maintained by it and deposit into the Distribution Account in accordance with
Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section
3.23(a), each REO Disposition shall be carried out by the Servicer at such price
and upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in its Accepted
Servicing Practices.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Servicer Remittance Date in the month following
the receipt thereof for distribution on the related Distribution Date in
accordance with Section 4.01. Any REO Disposition shall be for cash only (unless
changes in the REMIC Provisions made subsequent to the Startup Day allow a sale
for other consideration).
(g) The Servicer shall file information returns with respect
to the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
SECTION 3.24. Obligations of the Servicer in Respect of
Prepayment Interest Shortfalls.
The Servicer shall deliver to the Trust Administrator for
deposit into the Distribution Account on or before 5:00 p.m. New York time on
the Servicer Remittance Date from its own funds an amount equal to the lesser of
(i) the aggregate of the Prepayment Interest Shortfalls for the related
Distribution Date resulting from full or partial Principal Prepayments during
the related Prepayment Period and (ii) the aggregate Servicing Fee for the
related Prepayment Period. Any amounts paid by the Servicer pursuant to this
Section 3.24 shall not be reimbursed by REMIC I.
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SECTION 3.25. Expense Account.
(a) On behalf of the Trust Fund, the Trust Administrator, as
agent for the Trustee, shall establish and maintain in its name, for the benefit
of the Trustee, the Certificateholders and the Certificate Insurer, the Expense
Account. The Expense Account shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled with,
any other moneys, including, without limitation, other moneys of the Trust
Administrator held pursuant to this Agreement.
(b) On the Business Day immediately preceding each
Distribution Date, the Trust Administrator shall withdraw from the Distribution
Account and deposit into the Expense Account an amount equal to 1/12 of the
Certificate Insurer Premium Rate on the Certificate Principal Balance of the
Class A Certificates for such Distribution Date.
(c) The Trust Administrator shall make withdrawals from the
Expense Account to pay the Certificate Insurer Premium on each Distribution
Date.
(d) Funds in the Expense Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. Any
earnings on such amounts shall be payable to the Master Servicer on each
Distribution Date as additional servicing compensation. The Trust Administrator
shall give notice to the Depositor, the Trustee and the Certificate Insurer of
the location of the Expense Account on the Closing Date and prior to any change
thereof.
(e) Upon termination of the Trust Fund in accordance with
Section 10.01, any amounts remaining in the Expense Account following the
payment of all unpaid Certificate Insurer Premiums shall be released to the
Master Servicer as additional servicing compensation.
SECTION 3.26. Obligations of the Servicer in Respect of
Mortgage Rates and Monthly Payments.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Servicer in a manner not consistent with the terms of the
related Mortgage Note and this Agreement, the Servicer, upon discovery or
receipt of notice thereof, immediately shall deliver to the Trust Administrator
for deposit in the Distribution Account from its own funds the amount of any
such shortfall and shall indemnify and hold harmless the Trust Fund, the Trust
Administrator, the Trustee, the Certificate Insurer, the Depositor and any
successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement. Notwithstanding the
foregoing, this Section 3.26 shall not limit the ability of the Servicer to seek
recovery of any such amounts from the related Mortgagor under the terms of the
related Mortgage Note, as permitted by law.
SECTION 3.27. Solicitations.
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From and after the Closing Date, the Option One agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents and Affiliates, or by any independent contractors or independent mortgage
brokerage companies on Option One's behalf, to personally, by telephone or mail,
solicit the Mortgagor under any Mortgage Loan for the purpose of refinancing
such Mortgage Loan, nor will Option One purchase any loan to a Mortgagor secured
by a Mortgaged Property, in whole or in part; provided, that Option One may
solicit any Mortgagor for whom Option One has received a request for
verification of mortgage from an originator of mortgage loan products similar to
the Mortgage Loans that indicates that such Mortgagor intends to refinance his
or her Mortgage Loan, a request for demand for pay-off or a Mortgagor initiated
a written or verbal communication with Option One indicating a desire to prepay
the related Mortgage Loan; provided further, it is understood and agreed that
promotions undertaken by Option One or any of its Affiliates which (i) concern
optional insurance products or other additional products or (ii) are directed to
the general public at large, including, without limitation, mass mailings based
on commercially acquired mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation under this Section 3.27.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a)(1)(A) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests:
(i) to the Holders of REMIC I Regular Interests (other
than REMIC I Regular Interest I-LTP), in an amount equal to
(A) the Uncertificated Interest for such Distribution Date,
plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates. Amounts payable as Uncertificated
Interest in respect of REMIC I Regular Interest I-LT9 shall be
reduced when the REMIC I Overcollateralized Amount is less
than the REMIC I Required Overcollateralized Amount, by the
lesser of (x) the amount of such difference and (y) the
Maximum I-LT9 Uncertificated Interest Deferral Amount; and
(ii) on each Distribution Date, to the Holders of REMIC
I Regular Interests, in an amount equal to the remainder of
the Available Distribution Amount for such Distribution Date
after the distributions made pursuant to clause (i) above,
allocated as follows (except as provided below):
(a) to the Holders of the REMIC I Regular
Interest I-LTP, on the Distribution Date immediately
following the expiration of the latest Prepayment
Charge term as identified on the Mortgage Loan
Schedule and each Distribution Date thereafter until
$100 has been distributed pursuant to this clause;
(b) to the Holders of the REMIC I Regular
Interest I-LT1, 98.00% of the amount remaining after
application of clause (a), until the Uncertificated
Balance of such REMIC I Regular Interest is reduced
to zero and any remaining amounts to the Holders of
the Class R-I Certificates;
(c) to the Holders of the REMIC I Regular
Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC
I Regular Interest I-LT4, REMIC I Regular Interest
I-LT5, REMIC I Regular Interest I-LT6, REMIC I
Regular Interest I-LT7 and REMIC I Regular Interest
I-LT8, 1.00% of the amount remaining after
application of clause (a), in the same proportion as
principal payments are allocated to the related
Corresponding Certificate, until the Uncertificated
Balances of such REMIC I Regular Interests are
reduced to zero, and any remaining amounts to the
Holders of the Class R-I Certificates;
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(d) to the Holders of the REMIC I Regular
Interest I-LT9, 1.00% of the amount remaining after
application of clause (a), until the Uncertificated
Balance of such REMIC I Regular Interest is reduced
to zero and any remaining amounts to the Holders of
the Class R-I Certificates;
provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to a Overcollateralization Reduction Amount shall be allocated to
Holders of the REMIC I Regular Interest I-LT1 and REMIC I Regular Interest
I-LT9, respectively.
(B) On each Distribution Date, the following amounts shall be
distributed by REMIC II to REMIC III on account of the REMIC II Regular
Interests:
(i) any amounts paid as either Uncertificated Interest
paid or accrued to the REMIC I Regular Interests (other than
REMIC I Regular Interest I-LTP) shall be deemed to have been
paid to the related Uncertificated Corresponding Component in
REMIC II in accordance with the REMIC II Remittance Rates and
any amounts deferred on REMIC I Regular Interest I-LT9
pursuant to Section 4.01(A)(1)(A) shall be deemed to have been
deferred with respect to REMIC II Regular Interest II-LT9; and
(ii) any amounts paid as principal on the REMIC I
Regular Interests shall be deemed to have been paid to the
related Uncertificated Corresponding Component in REMIC II in
accordance with the same priorities and conditions.
(2) On each Distribution Date, the Trust Administrator shall
withdraw from the Distribution Account an amount equal to the Available
Distribution Amount (other than any amount in the Distribution Account that was
transferred from the Policy Payments Account to the Distribution Account
pursuant to Section 9.04) and distribute to the Certificateholders the following
amounts, in the following order of priority:
(i) (a) to the Holders of the Class A Certificates, in
an amount (allocable among such Certificates PRO RATA in
accordance with the respective amounts payable as to each
pursuant to this clause (i)) equal to the aggregate of the
Interest Distribution Amounts for such Distribution Date for
such Certificates;
(ii) to the Holders of the Class A Certificates, in an
amount equal to the Principal Distribution Amount (except for
any portion thereof consisting of any Overcollateralization
Increase Amount and any amount payable pursuant to clause
(iii) below), in the priorities and amounts set forth in
Section 4.01(a)(3) below, until the Certificate Principal
Balances of such Certificates have been reduced to zero;
(iii) to the Holders of the Class A Certificates in the
priorities and amounts set forth in Section 4.01(a)(3) below,
payable from Net Monthly Excess Cashflow (exclusive of any
Overcollateralization Reduction Amount), in an amount
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equal to (a) the principal portion of any Realized Losses
incurred or deemed to have been incurred on the Mortgage
Loans, applied to reduce the Certificate Principal Balances of
such Certificates until the aggregate Certificate Principal
Balance of such Certificates is reduced to zero, plus (b) the
principal portion of any Realized Losses allocated to such
Certificates on previous Distribution Dates but not paid under
the Policy due to a Certificate Insurer Default and not
previously paid pursuant to this clause (iii)(b);
(iv) to the Certificate Insurer, payable from Net
Monthly Excess Cashflow, to reimburse the Certificate Insurer
for claims under the Policy, to the extent of Cumulative
Insurance Payments;
(v) to the Holders of the Class A Certificates in the
priorities and amounts set forth in Section 4.01(a)(3) below,
payable from Net Monthly Excess Cashflow, in an amount equal
to the portion of the Principal Distribution Amount consisting
of any Overcollateralization Increase Amount, applied to
reduce the Certificate Principal Balances of such
Certificates, until the aggregate Certificate Principal
Balances of such Certificates is reduced to zero;
(vi) to the Holders of the Class A Certificates, payable
from Net Monthly Excess Cashflow, in an amount equal to any
Relief Act Shortfalls that were allocated pursuant to Section
1.02;
(vii) to the Certificate Insurer, payable from Net
Monthly Excess Cashflow, any amounts remaining due to the
Insurer under the terms of the Insurance Agreement (including
any Premium Supplement);
(viii) to the Holders of the Class CE Certificates,
payable from Net Monthly Excess Cashflow, the Interest
Distribution Amount and any Overcollateralization Reduction
Amount for such Distribution Date; and
(ix) to the Holders of the Class R-III Certificates, any
remaining amounts; provided that if such Distribution Date is
the Distribution Date immediately following the expiration of
the latest Prepayment Charge term as identified on the
Mortgage Loan Schedule or any Distribution Date thereafter,
then any such remaining amounts will be distributed FIRST, to
the Holders of the Class P Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and
SECOND, to the Holders of the Class R-III Certificates.
(3) On each Distribution Date, the aggregate distributions
made on such date in respect of the Class A Certificates pursuant to Section
4.01(a)(2)(ii), (a)(2)(iii) or (a)(2)(v) above shall be applied among the
various Classes thereof in the following order of priority:
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FIRST, to the holders of the Lockout Certificates, the Lockout
Distribution Percentage of the Principal Distribution Amount,
until the Certificate Balance of such Class has been reduced
to zero;
SECOND, to the holders of the Class A-1 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero;
THIRD, to the holders of the Class A-2 Certificates, until the
Certificate Principal Balance of such Class has been reduced
to zero;
FOURTH, to the holders of the Class A-3 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero;
FIFTH, to the holders of the Class A-4 Certificates, until the
Certificate Principal Balance of such Class has been reduced
to zero;
SIXTH, to the holders of the Class A-5 Certificates, until the
Certificate Principal Balance of such Class has been reduced
to zero;
SEVENTH, to the holders of the Class A-6 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero; and
EIGHTH, to the holders of the Lockout Certificates until the
Certificate Principal Balance of such Class has been reduced
to zero.
Notwithstanding the foregoing priorities, if a Certificate Insurer
Default exists, the sequential nature of distributions of principal
among the Class A Certificates will be disregarded and distributions
allocable to principal will be paid on each succeeding Distribution
Date to holders of the Class A Certificates on a PRO RATA basis, based
on the Certificate Principal Balances thereof.
(b) On each Distribution Date, the Trust Administrator shall
withdraw any amounts then on deposit in the Distribution Account that represent
Prepayment Charges collected by either Servicer in connection with the Principal
Prepayment of any of the Mortgage Loans or any Servicer Prepayment Charge
Payment Amount, and shall distribute such amounts to the Holders of the Class P
Certificates. Such distributions shall not be applied to reduce the Certificate
Principal Balance of the Class P Certificates.
(c) In addition to making the distributions required pursuant
to Section 4.01(a)(2), on each Distribution Date for which there exists a
Deficiency Amount, the Trust Administrator shall withdraw from the Distribution
Account any amount therein that was transferred from the Policy Payments Account
to the Distribution Account pursuant to Section 9.04 and distribute to the
Holders of the Class A Certificates (i) an amount equal to any amount required
to be paid to such Class pursuant to Section 4.01(a)(2)(i) for such Distribution
Date remaining unpaid after giving effect to all distributions made pursuant to
Section 4.01(a)(2) for
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such Distribution Date, (ii) an amount equal to the principal portion of any
Realized Losses allocated to such Class on such Distribution Date after giving
effect to all distributions made pursuant to Section 4.01(a)(2) for such
Distribution Date and (iii) without duplication, any other
amount constituting a Deficiency Amount.
(c) Each Holder of a Class A Certificate, by its acceptance of
such Certificate, hereby agrees that, in the event any distribution is made to
any Holder of a Class A Certificate from amounts paid under the Policy, (i) the
Certificate Insurer shall be subrogated in the manner herein provided to the
rights of the Holder of such Class A Certificate to receive from amounts on
deposit in the Distribution Account the distributions allocable to principal and
interest that would have been distributable to such Holder if no such
distribution to such Holder had been made from amounts paid under the Policy;
and (ii) in addition to the rights of the Holders of the Class A Certificates
that the Certificate Insurer may exercise in accordance with the provisions of
Section 9.01, the Certificate Insurer may exercise any option, vote, right,
power or the like with respect to each Class A Certificate for which Cumulative
Insurance Payments are outstanding.
(d) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(f) or
Section 10.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trust Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Certificates having an
initial aggregate Certificate Principal Balance that is in excess of the lesser
of (i) $5,000,000 or (ii) two-thirds of the initial Certificate Principal
Balance of such Class of Certificates, or otherwise by check mailed by first
class mail to the address of such Holder appearing in the Certificate Register.
The final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the Corporate Trust Office
or such other location specified in the notice to Certificateholders of such
final distribution. Payments to the Certificate Insurer on any Distribution Date
will be made by wire transfer of immediately available funds to the account
designated by the Certificate Insurer under the Premium Letter (as defined in
the Insurance Agreement).
Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trust Administrator,
the Trustee, the Depositor or the Servicers shall have any responsibility
therefor except as otherwise provided by this Agreement or applicable law.
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(e) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trust
Administrator, the Trustee or the Servicers shall in any way be responsible or
liable to the Holders of any other Class of Certificates in respect of amounts
properly previously distributed on the Certificates.
(f) Except as otherwise provided in Section 10.01, whenever
the Trust Administrator expects that the final distribution with respect to any
Class of Certificates will be made on the next Distribution Date, the Trust
Administrator shall, no later than three (3) days before the related
Distribution Date, mail to each Holder on such date of such Class of
Certificates and the Certificate Insurer a notice to the effect that:
(i) the Trust Administrator expects that the final distribution
with respect to such Class of Certificates will be made on such
Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trust Administrator therein
specified, and
(ii) no interest shall accrue on such Certificates from and after
the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Trust Administrator and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(f) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trust Administrator shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trust Administrator shall, directly or through an agent, (i)
mail a final notice to the remaining non- tendering Certificateholders
concerning surrender of their Certificates and (ii) pay to the Certificate
Insurer any amount of such funds which were paid by the Certificate Insurer
under the Policy but shall continue to hold any remaining funds for the benefit
of non-tendering Certificateholders, and all liability of the Certificate
Insurer with respect to such funds shall thereupon cease. The costs and expenses
of maintaining the funds in trust and of contacting such Certificateholders
shall be paid out of the assets remaining in such trust fund. If within one year
after the final notice any such Certificates shall not have been surrendered for
cancellation, the Trust Administrator shall pay to Xxxxxxx Xxxxx Xxxxxx Inc. all
such amounts, and all rights of non-tendering Certificateholders in or to such
amounts shall thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the Trust Administrator as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 4.01(f). Any such amounts
held in trust by the Trust Administrator shall be held in an Eligible Account
and the Trust Administrator may direct any depository institution maintaining
such account to invest the funds in one or more Permitted Investments. All
income and gain realized from the investment of funds deposited in such
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accounts held in trust by the Trust Administrator shall be for the benefit of
the Trust Administrator; provided, however, that the Trust Administrator shall
deposit in such account the amount of any loss of principal incurred in respect
of any such Permitted Investment made with funds in such accounts immediately
upon the realization of such loss.
(g) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate be
reduced more than once in respect of any particular amount both (a) allocated to
such Certificate in respect of Realized Losses pursuant to Section 4.04 and (b)
distributed to the Holder of such Certificate in reduction of the Certificate
Principal Balance thereof pursuant to this Section 4.01 from Net Monthly Excess
Cashflow or from amounts paid under the Policy and (ii) in no event shall the
Uncertificated Balance of a REMIC I Regular Interest be reduced more than once
in respect of any particular amount both (a) allocated to such REMIC I Regular
Interest in respect of Realized Losses pursuant to Section 4.04 and (b)
distributed on such REMIC I Regular Interest in reduction of the Uncertificated
Balance thereof pursuant to this Section 4.01.
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date, the Trust Administrator shall
prepare and forward by mail to each Holder of the Regular Certificates, a
statement as to the distributions made on such
Distribution Date setting forth:
(i) the amount of the distribution made on such
Distribution Date to the Holders of the Certificates of each
Class allocable to principal, and the amount of the
distribution made on such Distribution Date to the Holders of
the Class P Certificates allocable to Prepayment Charges;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of the Certificates of each
Class allocable to interest;
(iii) the aggregate Servicing Fee received by each
Servicer and the aggregate Master Servicing Fee received by
the Master Servicer during the related Due Period and such
other customary information as the Trust Administrator deems
necessary or desirable, or which a Certificateholder
reasonably requests, to enable Certificateholders to prepare
their tax returns;
(iv) the Guaranteed Distribution for such Distribution
Date and the respective portions thereof allocable to
principal and interest;
(v) the amount of any Insurance Payment made to the
Class A Certificates on such Distribution Date, the amount of
any reimbursement payment made to the Certificate Insurer on
such Distribution Date pursuant to Section 4.01(a)(2)(iv) and
the amount of Cumulative Insurance Payments after giving
effect to any such Insurance Payment to the Class A
Certificateholders or any such reimbursement payment to the
Certificate Insurer;
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(vi) the aggregate amount of P&I Advances for such
Distribution Date;
(vii) the aggregate Stated Principal Balance of the
Mortgage Loans and any REO Properties as of the close of
business on such Distribution Date;
(viii) the number, aggregate principal balance,
weighted average remaining term to maturity and weighted
average Mortgage Rate of the Mortgage Loans as of the related
Due Date;
(ix) the number and aggregate unpaid principal balance
of Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent
60 to 89 days, (c) delinquent 90 or more days, in each case,
as of the last day of the preceding calendar month, (d) as to
which foreclosure proceedings have been commenced and (e) with
respect to which the related Mortgagor has filed for
protection under applicable bankruptcy laws, with respect to
whom bankruptcy proceedings are pending or with respect to
whom bankruptcy protection is in force;
(x) with respect to any Mortgage Loan that became an
REO Property during the preceding calendar month, the loan
number of such Mortgage Loan, the unpaid principal balance and
the Stated Principal Balance of such Mortgage Loan as of the
date it became an REO Property;
(xi) the book value of any REO Property as of the close
of business on the last Business Day of the calendar month
preceding the Distribution Date;
(xii) the aggregate amount of Principal Prepayments
made during the related Prepayment Period;
(xiii) the aggregate amount of Realized Losses incurred
during the related Prepayment Period (or, in the case of
Bankruptcy Losses allocable to interest, during the related
Due Period), separately identifying whether such Realized
Losses constituted Bankruptcy Losses and the aggregate amount
of Realized Losses incurred since the Closing Date;
(xiv) the aggregate amount of extraordinary Trust Fund
expenses withdrawn from the Collection Account or the
Distribution Account for such Distribution Date;
(xv) the aggregate Certificate Principal Balance of
each Class of Certificates, after giving effect to the
distributions, and allocations of Realized Losses, made on
such Distribution Date, separately identifying any reduction
thereof due to allocations of Realized Losses;
(xvi) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
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(xvii) the Interest Distribution Amounts in respect of
each Class of Class A Certificates and the Class CE
Certificates for such Distribution Date and, in the case of
each Class of Class A Certificates, the portion thereof, if
any, paid under the Policy or (in the event of a Deficiency
Event) remaining unpaid following the distributions made in
respect of the Class A Certificates on such Distribution Date
and, in the case of the Class A Certificates or the Class CE
Certificates, separately identifying any reduction thereof due
to allocations of Realized Losses, Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls;
(xviii) the aggregate amount of any Prepayment Interest
Shortfall for such Distribution Date, to the extent not
covered by payments by the Servicers pursuant to Section 3.24;
(xix) the aggregate amount of Relief Act Interest
Shortfalls for such Distribution Date;
(xx) the Required Overcollateralized Amount for such
Distribution Date;
(xxi) the Overcollateralization Increase Amount, if
any, for such Distribution Date;
(xxii) the Overcollateralization Reduction Amount, if
any, for such Distribution Date; and
(xxiii) the Pass-Through Rate applicable to the Class
CE Certificates for such Distribution Date.
In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.
Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to each Person who at any
time during the calendar year was a Holder of a Regular Certificate a statement
containing the information set forth in subclauses (i) through (iii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Trust Administrator
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trust Administrator pursuant to
any requirements of the Code as from time to time are in force.
On each Distribution Date, the Trust Administrator shall
forward to the Depositor, the Trustee, to each Holder of a Residual Certificate,
the Certificate Insurer and to the Servicers, a copy of the reports forwarded to
the Regular Certificateholders on such Distribution Date and a statement setting
forth the amounts, if any, actually distributed with respect to the Residual
Certificates, respectively, on such Distribution Date.
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Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to each Person who at any
time during the calendar year was a Holder of a Residual Certificate a statement
setting forth the amount, if any, actually distributed with respect to the
Residual Certificates, as appropriate, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
The Trust Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trust Administrator's duties are limited to
the extent that the Trust Administrator receives timely reports as required from
the Servicers.
On each Distribution Date the Trust Administrator shall
provide Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for
each class of Certificates as of such Distribution Date, using a format and
media mutually acceptable to the Trust Administrator
and Bloomberg.
SECTION 4.03. Remittance Reports; P&I Advances.
(a) On the Business Day following each Determination Date,
each Servicer shall deliver to the Trust Administrator, the Trustee and the
Certificate Insurer by telecopy (or by such other means as such Servicer, the
Trust Administrator, the Trustee or the Certificate Insurer, as the case may be,
may agree from time to time) a Remittance Report with respect to the related
Distribution Date. On the same date, the related Servicer shall forward to the
Trust Administrator by overnight mail or internet mail an electronic file
containing the information set forth in such Remittance Report with respect to
the related Distribution Date. The Trust Administrator hereby agrees to forward
a copy of the Remittance Report received from Option One in electronic format to
the Master Servicer by the Business Day following its receipt thereof. Such
Remittance Reports will include (i) the amount of P&I Advances to be made by the
related Servicer in respect of the related Distribution Date, the aggregate
amount of P&I Advances outstanding after giving effect to such P&I Advances, and
the aggregate amount of Nonrecoverable P&I Advances in respect of such
Distribution Date and (ii) such other information with respect to the Mortgage
Loans as the Trust Administrator may reasonably require to perform the
calculations necessary to make the distributions contemplated by Section 4.01
and to prepare the statements to Certificateholders contemplated by Section
4.02. Not later than the close of business on the third Business Day prior to
the Distribution Date, the Trust Administrator shall deliver or cause to be
delivered to the Certificate Insurer, in addition to the information provided on
the Remittance Report, a report setting forth (i) the Guaranteed Distribution
for such Distribution Date, separately identifying the portions thereof
allocable to principal and interest; (ii) the Available Distribution Amount for
such Distribution Date; (iii) whether the Available Distribution Amount expected
to be on deposit in the Distribution Account on such Distribution Date will be
sufficient to cover the Guaranteed Distribution and, if not, the amount of the
shortfall; (iv) with respect to any reimbursement to be
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made to the Certificate Insurer on such Distribution Date pursuant to Section
4.01(a)(2)(iv), the amount, if any, allocable to principal and the amount
allocable to interest; and (v) Cumulative Insurance Payments after giving effect
to the distributions to be made on such Distribution Date. The Trust
Administrator shall not be responsible (except with regard to any information
regarding the Prepayment Charges to the extent set forth below) to recompute,
recalculate or verify any information provided to it by the Servicers.
Notwithstanding the foregoing, in connection with any Principal Prepayment on
any Mortgage Loan listed on Schedule 2 hereto, the Trust Administrator shall
verify that the related Prepayment Charge was delivered to the Trust
Administrator for deposit in the Distribution Account in the amount set forth on
such Schedule 2 or that such Prepayment Charge was waived in accordance with the
terms hereof.
(b) The amount of P&I Advances to be made by each Servicer for
any Distribution Date shall equal, subject to Section 4.03(d), the sum of (i)
the aggregate amount of Monthly Payments (with each interest portion thereof net
of the related Servicing Fee), due on the related Due Date in respect of the
Mortgage Loans (other than with respect to any Balloon Loan with a delinquent
Balloon Payment as described in clause (iii) below), which Monthly Payments were
delinquent as of the close of business on the related Determination Date, plus
(ii) with respect to each REO Property (other than with respect to any REO
Property relating to a Balloon Loan with a Delinquent Balloon Payment as
described in clause (iv) below), which REO Property was acquired during or prior
to the related Prepayment Period and as to which REO Property an REO Disposition
did not occur during the related Prepayment Period, an amount equal to the
excess, if any, of the REO Imputed Interest on such REO Property for the most
recently ended calendar month, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date, plus (iii) with respect to each Balloon
Loan with a delinquent Balloon Payment, an amount equal to the assumed monthly
principal and interest payment (with each interest portion thereof net of the
related Servicing Fee) that would have been due on the related Due Date based on
the original principal amortization schedule for such Balloon Loan assuming such
Mortgage Loan was not a Balloon Loan, plus (iv) with respect to each REO
Property relating to a Balloon Loan with a delinquent Balloon Payment, which REO
Property was acquired during or prior to the related Prepayment Period and as to
which REO Property an REO Disposition did not occur during the related
Prepayment Period, an amount equal to the excess, if any, of the assumed monthly
principal and interest payment (with each interest portion thereof net of the
related Servicing Fee) that would have been due on the related Due Date based on
the original principal amortization schedule for the related Balloon Loan
assuming such Mortgage Loan was not a Balloon Loan, over the net income from
such REO Property transferred to the Distribution Account pursuant to Section
3.23 for distribution on such Distribution Date.
On or before 5:00 p.m. New York time on the Servicer
Remittance Date, each Servicer shall remit in immediately available funds to the
Trust Administrator for deposit in the Distribution Account an amount equal to
the aggregate amount of P&I Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds or (ii) from the Collection Account, to the extent of funds
held therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this
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Section 4.03, used by such Servicer in discharge of any such P&I Advance) or
(iii) in the form of any combination of (i) and (ii) aggregating the total
amount of P&I Advances to be made by such Servicer with respect to the Mortgage
Loans and REO Properties. Any amounts held for future distribution and so used
shall be appropriately reflected in the related Servicer's records and replaced
by the such Servicer by deposit in the Collection Account on or before any
future Servicer Remittance Date to the extent that the Available Distribution
Amount for the related Distribution Date (determined without regard to P&I
Advances to be made on the Servicer Remittance Date) shall be less than the
total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make P&I Advances. The Trust
Administrator will provide notice to the Trustee, the applicable Servicer and
the Certificate Insurer by telecopy by the close of business on the Business Day
immediately following the Servicer Remittance Date in the event that the amount
remitted by such Servicer to the Trust Administrator on such date is less than
the P&I Advances required to be made by such Servicer for the related
Distribution Date.
(c) The obligation of each Servicer to make such P&I Advances
is mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by either
Servicer if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively.
The determination by either Servicer that it has made a Nonrecoverable P&I
Advance or a Nonrecoverable Servicing Advance or that any proposed P&I Advance
or Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officers' Certificate of such Servicer delivered to the Depositor, the Trust
Administrator, the Trustee and the Certificate Insurer.
(e) If, at the close of business on the third Business Day
prior to any Distribution Date, the funds on deposit in the Distribution Account
are less than the Guaranteed Distribution for such Distribution Date, the Trust
Administrator shall give notice by telephone or telecopy of the amount of such
deficiency, confirmed in writing in the form set forth as Exhibit A to the
Endorsement of the Policy, to the Certificate Insurer and the Fiscal Agent (as
defined in the Policy), if any, at or before 10:00 a.m., New York time, on the
second Business Day prior to such Distribution Date.
SECTION 4.04. Allocation of Realized Losses.
(a) Prior to each Determination Date, each Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses; and (iii)
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the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, each Servicer shall
also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (ii) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Servicers shall be evidenced
by an Officers' Certificate delivered to the Trust Administrator, the Trustee
and the Certificate Insurer by the related Servicer prior to the Determination
Date immediately following the end of (i) in the case of Bankruptcy Losses
allocable to interest, the Due Period during which any such Realized Loss was
incurred, and (ii) in the case of all other Realized Losses, the Prepayment
Period during which any such Realized Loss was incurred.
(b) All Realized Losses on the Mortgage Loans allocated to any
REMIC II Regular Interest pursuant to Section 4.04(c) on the Mortgage Loans
shall be allocated by the Trust Administrator on each Distribution Date as
follows: first, to Net Monthly Excess Cashflow; second, to the Class CE
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; and third, among the Class A Certificates on a PRO RATA basis. All
Realized Losses to be allocated to the Certificate Principal Balances of all
Classes on any Distribution Date shall be so allocated after the actual
distributions to be made on such date as provided above. All references above to
the Certificate Principal Balance of any Class of Certificates shall be to the
Certificate Principal Balance of such Class immediately prior to the relevant
Distribution Date, before reduction thereof by any Realized Losses, in each case
to be allocated to such Class of Certificates, on such Distribution Date. No
allocations of Realized Losses pursuant to this Section 4.04 shall affect any
liability of the Certificate Insurer with respect to such amounts under the
Policy.
Any allocation of Realized Losses to a Class A Certificate on
any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated; any allocation of Realized Losses to
a Class CE Certificate shall be made by reducing the amount otherwise payable in
respect thereof pursuant to Section 4.01(a)(2)(viii). No allocations of any
Realized Losses shall be made to the Certificate Principal Balance of the Class
P Certificates.
As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among two or more specified Classes of Certificates means an
allocation on a PRO RATA basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.
(c) All Realized Losses on the Mortgage Loans shall be
allocated by the Trust Administrator on each Distribution Date to the following
REMIC I Regular Interests in the specified percentages, as follows: first, to
Uncertificated Interest payable to the REMIC I Regular Interest I-LT1 and REMIC
I Regular Interest I-LT9 up to an aggregate amount equal to the
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REMIC I Interest Loss Allocation Amount, 98% and 2%, respectively; second, to
the Uncertificated Balances of the REMIC I Regular Interest I-LT1 and REMIC I
Regular Interest I- LT9 up to an aggregate amount equal to the REMIC I Principal
Loss Allocation Amount, 98% and 2%, respectively; third, 98% to the
Uncertificated Balance of REMIC I Regular Interest I-LT1, 1% to the
Uncertificated Balances of REMIC I Regular Interest I-LT2, REMIC I Regular
Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular Interest I-LT5,
REMIC I Regular Interest I-LT6, REMIC I Regular Interest I-LT7 and REMIC I
Regular Interest I-LT8 on a PRO RATA basis and 1% to REMIC I Regular Interest
I-LT9.
(d) All Realized Losses on the REMIC II Regular Interests
shall be allocated by the Trust Administrator on each Distribution Date among
the REMIC II Regular Interests in the proportion that Realized Losses are
allocated to the related Uncertificated Corresponding Component; Realized Losses
allocated to principal on REMIC I Regular Interest I-LT2, REMIC I Regular
Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular Interest I-LT5,
REMIC I Regular Interest I-LT6, REMIC I Regular Interest I-LT7 and REMIC I
Regular Interest I-LT8 shall be allocated to REMIC II Regular Interest II-LT2,
REMIC II Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II-LT5, REMIC II Regular Interest II-LT6, REMIC II Regular
Interest II-LT7 and REMIC II Regular Interest II-LT8, respectively.
As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among the REMIC I Regular Interests (other than REMIC I Regular
Interest I-LTP) means an allocation on a PRO RATA basis among the REMIC I
Regular Interests (other than REMIC I Regular Interest I- LTP) on the basis of
their then outstanding Uncertificated Balances, in each case prior to giving
effect to distributions to be made on such Distribution Date.
SECTION 4.05. Compliance with Withholding Requirements .
Notwithstanding any other provision of this Agreement, the
Trust Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue discount
that the Trust Administrator reasonably believes are applicable under the Code.
The consent of Certificateholders shall not be required for such withholding. In
the event the Trust Administrator does withhold any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trust Administrator shall
indicate the amount withheld to such Certificateholders.
SECTION 4.06. Exchange Commission; Additional Information.
Within 15 days after each Distribution Date, the Trust
Administrator shall file with the Commission via the Electronic Data Gathering
and Retrieval System, a Form 8-K with a copy of the statement to
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 1999, the Trust Administrator shall file a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable. Prior to March 30,
1999, the Trust Administrator shall file a Form 10-K, substantially in the form
attached hereto as Exhibit H, with respect to the Trust Fund. The Depositor
hereby grants to the Trust Administrator a limited power of attorney to
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execute and file each such document on behalf of the Depositor. Such power of
attorney shall continue until the earlier of (i) receipt by the Trust
Administrator from the Depositor of written termination of such power of
attorney and (ii) the termination of the Trust Fund. Upon request, the Trust
Administrator shall deliver to the Depositor a copy of any Form 8-K or Form 10-K
filed pursuant to this Section 4.06.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.
The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-12. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed by the
Trustee, and authenticated and delivered by the Trustee or the Trust
Administrator to or upon the order of the Depositor. The Certificates shall be
executed by manual or facsimile signature on behalf of the Trustee or the Trust
Administrator by an authorized signatory. Certificates bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Trustee or the Trust Administrator shall bind the Trustee or the Trust
Administrator, as applicable, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificates. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided herein
executed by the Trustee or the Trust Administrator by manual signature, and such
certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
(b) The Class A Certificates shall initially be issued as one
or more Certificates held by the Book-Entry Custodian or, if appointed to hold
such Certificates as provided below, the Depository and registered in the name
of the Depository or its nominee and, except as provided below, registration of
such Certificates may not be transferred by the Trust Administrator except to
another Depository that agrees to hold such Certificates for the respective
Certificate Owners with Ownership Interests therein. The Certificate Owners
shall hold their respective Ownership Interests in and to such Certificates
through the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to definitive, fully registered Certificates
("Definitive Certificates") in respect of such Ownership Interests. All
transfers by Certificate Owners of their respective Ownership Interests in the
Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer the Ownership
Interests in the Book-Entry Certificates of Certificate Owners it represents or
of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures. The Trust Administrator is hereby initially
appointed as the Book-Entry Custodian and hereby
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agrees to act as such in accordance herewith and in accordance with the
agreement that it has with the Depository authorizing it to act as such. The
Book-Entry Custodian may, and, if it is no longer qualified to act as such, the
Book-Entry Custodian shall, appoint, by a written instrument delivered to the
Depositor, each Servicer, the Certificate Insurer, the Trustee and, if the Trust
Administrator is not the Book-Entry Custodian, the Trust Administrator, any
other transfer agent (including the Depository or any successor Depository) to
act as Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trust Administrator resigns or is removed in accordance with
the terms hereof, the Trustee, the successor trust administrator or, if it so
elects, the Depository shall immediately succeed to its predecessor's duties as
Book-Entry Custodian. The Depositor shall have the right to inspect, and to
obtain copies of, any Certificates held as Book-Entry Certificates by the Book-
Entry Custodian.
The Trust Administrator, the Trustee, each Servicer, the
Certificate Insurer and the Depositor may for all purposes (including the making
of payments due on the Book-Entry Certificates) deal with the Depository as the
authorized representative of the Certificate Owners with respect to the
Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the Book-Entry Certificates shall be limited to those established by law and
agreements between such Certificate Owners and the Depository Participants and
brokerage firms representing such Certificate Owners. Multiple requests and
directions from, and votes of, the Depository as Holder of the Book-Entry
Certificates with respect to any particular matter shall not be deemed
inconsistent if they are made with respect to different Certificate Owners. The
Trust Administrator may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trust Administrator in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trust
Administrator in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Default, Certificate Owners representing in the aggregate not less than 51% of
the Ownership Interests of the Book-Entry Certificates advise the Trust
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trust Administrator shall notify all Certificate
Owners, through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trust Administrator of the Book-Entry Certificates
by the Book-Entry Custodian or the Depository, as applicable, accompanied by
registration instructions from the Depository for registration of transfer, the
Trust Administrator shall issue the Definitive Certificates. Such Definitive
Certificates will be issued in minimum denominations of $10,000, except that any
beneficial ownership that was represented by a Book-Entry Certificate in an
amount less than $10,000 immediately prior to the issuance of a Definitive
Certificate shall be issued in a minimum denomination equal to the amount
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represented by such Book-Entry Certificate. None of the Depositor, the
Servicers, the Trust Administrator or the Trustee shall be liable for any delay
in the delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trust Administrator, to the extent applicable with respect to such
Definitive Certificates, and the Trust Administrator shall recognize the Holders
of the Definitive Certificates as Certificateholders hereunder.
SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trust Administrator shall cause to be kept at one of
the offices or agencies to be appointed by the Trust Administrator in accordance
with the provisions of Section 8.11 a Certificate Register for the Certificates
in which, subject to such reasonable regulations as it may prescribe, the Trust
Administrator shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.
(b) No transfer of any Class CE Certificate, Class P
Certificate or Residual Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and effective registration or qualification
under applicable state securities laws, or is made in a transaction that does
not require such registration or qualification. In the event that such a
transfer of a Class CE Certificate, Class P Certificate or Residual Certificate
is to be made without registration or qualification (other than in connection
with the initial transfer of any such Certificate by the Depositor to an
affiliate of the Depositor), the Trust Administrator shall require receipt of:
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Certificateholder desiring to
effect the transfer and from such Certificateholder's prospective transferee,
substantially in the forms attached hereto as Exhibit F-1; and (ii) in all other
cases, an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Trust Fund or of the Depositor, the Trust Administrator,
the Trustee, each Servicer in its capacity as such, any Sub- Servicer or the
Certificate Insurer), together with copies of the written certification(s) of
the Certificateholder desiring to effect the transfer and/or such
Certificateholder's prospective transferee upon which such Opinion of Counsel is
based, if any. None of the Depositor, the Trust Administrator or the Trustee is
obligated to register or qualify any such Certificates under the 1933 Act or any
other securities laws or to take any action not otherwise required under this
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Certificateholder desiring to effect the transfer of any such
Certificate shall, and does hereby agree to, indemnify the Trust Administrator,
the Trustee, the Depositor, the Servicers and the Certificate Insurer against
any liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
(c) No transfer of a Class CE Certificate, Class P Certificate
or Residual Certificate or any interest therein shall be made to any Plan
subject to ERISA or Section 4975 of the Code, any Person acting, directly or
indirectly, on behalf of any such Plan or any Person
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acquiring such Certificates with "Plan Assets" of a Plan within the meaning of
the Department of Labor regulation promulgated at 29 C.F.R. ss. 2510.3-101
("Plan Assets") unless the Depositor, the Trust Administrator, the Trustee, the
Certificate Insurer and the Servicers are provided with an Opinion of Counsel
which establishes to the satisfaction of the Depositor, the Trust Administrator,
the Trustee, the Certificate Insurer and the Servicers that the purchase of such
Certificates is permissible under applicable law, will not constitute or result
in any prohibited transaction under ERISA or Section 4975 of the Code and will
not subject the Depositor, either Servicer, the Trust Administrator, the
Trustee, the Certificate Insurer or the Trust Fund to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Depositor, the Servicers, the Trust
Administrator, the Trustee, the Certificate Insurer or the Trust Fund. In lieu
of such Opinion of Counsel, any prospective Transferee of such Certificates may
provide a certification in the form of Exhibit G to this Agreement (or other
form acceptable to the Depositor, the Trust Administrator, the Trustee, the
Certificate Insurer and the Servicers), which the Trust Administrator may rely
upon without further inquiry or investigation. Neither an Opinion of Counsel nor
any certification will be required in connection with the initial transfer of
any such Certificate by the Depositor to an affiliate of the Depositor (in which
case, the Depositor or any affiliate thereof shall have deemed to have
represented that such affiliate is not a Plan or a Person investing Plan Assets)
and the Trust Administrator shall be entitled to conclusively rely upon a
representation (which, upon the request of the Trust Administrator, shall be a
written representation) from the Depositor of the status of such transferee as
an affiliate of the Depositor.
(d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trust Administrator
or its designee under clause (iii)(A) below to deliver payments to a Person
other than such Person and to negotiate the terms of any mandatory sale under
clause (iii)(B) below and to execute all instruments of Transfer and to do all
other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(A) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall be
a Permitted Transferee and shall promptly notify the
Trust Administrator of any change or impending change
in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer
of any Ownership Interest in a Residual Certificate,
the Trust Administrator shall require delivery to it,
and shall not register the Transfer of any Residual
Certificate until its receipt of, an affidavit and
agreement (a "Transfer Affidavit and Agreement," in
the form attached hereto as Exhibit F-2) from the
proposed Transferee, in form and substance
satisfactory to the Trust Administrator, representing
and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not
acquiring its Ownership Interest in the
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Residual Certificate that is the subject of the
proposed Transfer as a nominee, trustee or agent for
any Person that is not a Permitted Transferee, that
for so long as it retains its Ownership Interest in a
Residual Certificate, it will endeavor to remain a
Permitted Transferee, and that it has reviewed the
provisions of this Section 5.02(d) and agrees to be
bound by them.
(C) Notwithstanding the delivery of a
Transfer Affidavit and Agreement by a proposed
Transferee under clause (B) above, if a Responsible
Officer of the Trust Administrator who is assigned to
this transaction has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no
Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be
effected.
(D) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall
agree (x) to require a transferor affidavit (a
"Transferor Affidavit," in the form attached hereto
as Exhibit F-2) from any other Person to whom such
Person attempts to transfer its Ownership Interest in
a Residual Certificate and (y) not to transfer its
Ownership Interest unless it provides a Transferor
Affidavit (in the form attached hereto as Exhibit
F-2) to the Trust Administrator stating that, among
other things, it has no actual knowledge that such
other Person is not a Permitted Transferee.
(E) Each Person holding or acquiring an
Ownership Interest in a Residual Certificate, by
purchasing an Ownership Interest in such Certificate,
agrees to give the Trust Administrator written notice
that it is a "pass-through interest holder" within
the meaning of temporary Treasury regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Residual Certificate, if it
is, or is holding an Ownership Interest in a Residual
Certificate on behalf of, a "pass-through interest
holder."
(ii) The Trust Administrator will register the Transfer
of any Residual Certificate only if it shall have received the
Transfer Affidavit and Agreement and all of such other
documents as shall have been reasonably required by the Trust
Administrator as a condition to such registration. In
addition, no Transfer of a Residual Certificate shall be made
unless the Trust Administrator shall have received a
representation letter from the Transferee of such Certificate
to the effect that such Transferee is a Permitted Transferee.
(iii) (A) If any purported Transferee shall become a
Holder of a Residual Certificate in violation of the
provisions of this Section 5.02(d), then the last preceding
Permitted Transferee shall be restored, to the extent
permitted by law, to all rights as holder thereof retroactive
to the date of registration of such Transfer of such Residual
Certificate. The Trust Administrator shall be under no
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liability to any Person for any registration of Transfer of a
Residual Certificate that is in fact not permitted by this
Section 5.02(d) or for making any payments due on such
Certificate to the holder thereof or for taking any other
action with respect to such holder under the provisions of
this Agreement.
(B) If any purported Transferee shall become
a holder of a Residual Certificate in violation of the
restrictions in this Section 5.02(d) and to the extent that
the retroactive restoration of the rights of the holder of
such Residual Certificate as described in clause (iii)(A)
above shall be invalid, illegal or unenforceable, then the
Trust Administrator shall have the right, without notice to
the holder or any prior holder of such Residual Certificate,
to sell such Residual Certificate to a purchaser selected by
the Trust Administrator on such terms as the Trust
Administrator may choose. Such purported Transferee shall
promptly endorse and deliver each Residual Certificate in
accordance with the instructions of the Trust Administrator.
Such purchaser may be the Trust Administrator itself or any
Affiliate of the Trust Administrator. The proceeds of such
sale, net of the commissions (which may include commissions
payable to the Trust Administrator or its Affiliates),
expenses and taxes due, if any, will be remitted by the Trust
Administrator to such purported Transferee. The terms and
conditions of any sale under this clause (iii)(B) shall be
determined in the sole discretion of the Trust Administrator,
and the Trust Administrator shall not be liable to any Person
having an Ownership Interest in a Residual Certificate as a
result of its exercise of such discretion.
(iv) The Trust Administrator shall make available to the
Internal Revenue Service and those Persons specified by the
REMIC Provisions all information necessary to compute any tax
imposed (A) as a result of the Transfer of an Ownership
Interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information described
in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5) with respect to the "excess inclusions" of such
Residual Certificate and (B) as a result of any regulated
investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a
Residual Certificate having as among its record holders at any
time any Person which is a Disqualified Organization.
Reasonable compensation for providing such information may be
accepted by the Trust Administrator.
(v) The provisions of this Section 5.02(d) set forth
prior to this subsection (v) may be modified, added to or
eliminated, provided that there shall have been delivered to
the Trust Administrator at the expense of the party seeking to
modify, add to or eliminate any such provision the following:
(A) written notification from each Rating
Agency to the effect that the modification, addition
to or elimination of such provisions will not
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cause such Rating Agency to downgrade its
then-current ratings of any Class of Certificates;
and
(B) an Opinion of Counsel, in form and
substance satisfactory to the Trust Administrator, to
the effect that such modification of, addition to or
elimination of such provisions will not cause any of
REMIC I, REMIC II or REMIC III to cease to qualify as
a REMIC and will not cause any of REMIC I, REMIC II
or REMIC III, as the case may be, to be subject to an
entity-level tax caused by the Transfer of any
Residual Certificate to a Person that is not a
Permitted Transferee or a Person other than the
prospective transferee to be subject to a REMIC-tax
caused by the Transfer of a Residual Certificate to a
Person that is not a Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the Trust
Administrator maintained for such purpose pursuant to Section 8.11, the Trust
Administrator shall execute, authenticate and deliver, in the name of the
designated Transferee or Transferees, one or more new Certificates of the same
Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trust Administrator
maintained for such purpose pursuant to Section 8.11. Whenever any Certificates
are so surrendered for exchange the Trust Administrator shall execute,
authenticate and deliver the Certificates which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
transfer or exchange shall (if so required by the Trust Administrator) be duly
endorsed by, or be accompanied by a written instrument of transfer in the form
satisfactory to the Trust Administrator duly executed by, the Holder thereof or
his attorney duly authorized in writing.
(g) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trust Administrator may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trust Administrator in accordance with
its customary procedures.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the Trust
Administrator, or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to each of the Trustee and the Trust Administrator such security or
indemnity as may be required by it to save it harmless, then, in the absence of
actual knowledge by the Trust Administrator or the Trustee that such Certificate
has been acquired by
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a bona fide purchaser, the Trustee, or the Trust Administrator on behalf of the
Trustee shall execute, and the Trustee or the Trust Administrator shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and
of like denomination and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trust Administrator may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee and the Trust Administrator) connected therewith. Any
replacement Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the applicable REMIC created
hereunder, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Depositor, each Servicer, the Trust Administrator, the
Trustee, the Certificate Insurer and any agent of any of them may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and for all other purposes whatsoever, and none of the Depositor, the Servicers,
the Trust Administrator, the Trustee or any agent of any of them shall be
affected by notice to the contrary.
SECTION 5.05. Certain Available Information.
On or prior to the date of the first sale of any Class CE
Certificate, Class P Certificate or Residual Certificate to an Independent third
party, the Depositor shall provide to the Trust Administrator ten copies of any
private placement memorandum or other disclosure document used by the Depositor
in connection with the offer and sale of such Certificate. In addition, if any
such private placement memorandum or disclosure document is revised, amended or
supplemented at any time following the delivery thereof to the Trust
Administrator, the Depositor promptly shall inform the Trust Administrator of
such event and shall deliver to the Trust Administrator ten copies of the
private placement memorandum or disclosure document, as revised, amended or
supplemented. The Trust Administrator shall maintain at its Corporate Trust
Office and shall make available free of charge during normal business hours for
review by any Holder of a Certificate or any Person identified to the Trust
Administrator as a prospective transferee of a Certificate, originals or copies
of the following items: (i) in the case of a Holder or prospective transferee of
a Class CE Certificate, Class P Certificate or Residual Certificate, the related
private placement memorandum or other disclosure document relating to such Class
of Certificates, in the form most recently provided to the Trust Administrator;
and (ii) in all cases, (A) this Agreement and any amendments hereof entered into
pursuant to Section 12.01, (B) all monthly statements required to be delivered
to Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trust Administrator since the Closing
Date pursuant to Section 11.01(h), (D) any and all Officers' Certificates
delivered to the Trust Administrator by either Servicer since the Closing Date
to
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evidence such Servicer's determination that any P&I Advance or Servicing Advance
was, or if made, would be a Nonrecoverable P&I Advance or Nonrecoverable
Servicing Advance, respectively, and (E) any and all Officers' Certificates
delivered to the Trust Administrator by the Servicers since the Closing Date
pursuant to Section 4.04(a). Copies and mailing of any and all of the foregoing
items will be available from the Trust Administrator upon request at the expense
of the Person requesting the same.
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ARTICLE VI
THE DEPOSITOR AND THE SERVICERS
SECTION 6.01. Liability of the Depositor and the Servicers.
The Depositor and each Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed by this
Agreement and undertaken hereunder by the
Depositor and each Servicer herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicers.
Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
each Servicer will keep in full effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its incorporation. The
Depositor and each Servicer will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
The Depositor or either Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets to
any Person, in which case any Person resulting from any merger or consolidation
to which the Depositor or such Servicer shall be a party, or any Person
succeeding to the business of the Depositor or such Servicer, shall be the
successor of the Depositor or such Servicer, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to such Servicer shall
be qualified to service mortgage loans on behalf of Xxxxxx Xxx or Xxxxxxx Mac;
and provided further that the Rating Agencies' ratings and shadow ratings of the
Class A Certificates in effect immediately prior to such merger or consolidation
will not be qualified, reduced or withdrawn as a result thereof (as evidenced by
a letter to such effect from the Rating Agencies).
SECTION 6.03. Limitation on Liability of the Depositor, the
Servicers and Others.
None of the Depositor, either Servicer or any of the
directors, officers, employees or agents of the Depositor or either Servicer
shall be under any liability to the Trust Fund or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, either Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Depositor or such
Servicer pursuant hereto, or against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, each
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Servicer and any director, officer, employee or agent of the Depositor or such
Servicer may rely in good faith on any document of any kind which, PRIMA FACIE,
is properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, each Servicer and any director, officer, employee or
agent of the Depositor or such Servicer shall be indemnified and held harmless
by the Trust Fund against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense relating to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) or any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor either Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement and,
in its opinion, does not involve it in any expense or liability; provided,
however, that each of the Depositor and each Servicer may in its discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, unless the
Depositor or either Servicer acts without the consent of the Certificate Insurer
prior to a Certificate Insurer Default or without the consent of Holders of
Certificates entitled to at least 51% of the Voting Rights after a Certificate
Insurer Default, the legal expenses and costs of such action and any liability
resulting therefrom (except any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder) shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor and each Servicer shall be entitled to be reimbursed therefor from the
Collection Account as and to the extent provided in Section 3.11, any such right
of reimbursement being prior to the rights of the Certificateholders to receive
any amount in the Collection Account.
SECTION 6.04. Limitation on Resignation of the Servicers.
Neither Servicer nor the Master Servicer shall resign from the
obligations and duties hereby imposed on it except upon determination that its
duties hereunder are no longer permissible under applicable law. Any such
determination pursuant to the preceding sentence permitting the resignation of
the Master Servicer or either Servicer shall be evidenced by an Opinion of
Counsel to such effect obtained at the expense of such Master Servicer or
Servicer and delivered to the Trustee and the Trust Administrator. No
resignation of the Master Servicer or either Servicer shall become effective
until the Master Servicer (if the Master Servicer is not the resigning
Servicer), the Trustee, the Trust Administrator or a successor servicer shall
have assumed such Master Servicer's or Servicer's responsibilities, duties,
liabilities (other than those liabilities arising prior to the appointment of
such successor) and obligations under this Agreement.
Except as expressly provided herein, neither Servicer nor the
Master Servicer shall assign or transfer any of its rights, benefits or
privileges hereunder to any other Person, or delegate to or subcontract with, or
authorize or appoint any other Person to perform any of the duties, covenants or
obligations to be performed by such Master Servicer or Servicer hereunder. The
foregoing prohibition on assignment shall not prohibit either Servicer from
designating a
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Subservicer as payee of any indemnification amount payable to the related
Servicer hereunder; provided, however, that as provided in Section 3.06 hereof,
no Subservicer shall be a third-party beneficiary hereunder and the parties
hereto shall not be required to recognize any Subservicer as an indemnitee under
this Agreement. If, pursuant to any provision hereof, the duties of the Master
Servicer or either Servicer are transferred to a successor servicer, the entire
amount of the Master Servicing Fee or Servicing Fee and other compensation
payable to such Master Servicer or Servicer pursuant hereto shall thereafter be
payable to such successor servicer.
SECTION 6.05. Rights of the Depositor in Respect of the
Servicers.
The Master Servicer and each Servicer shall afford (and any
Sub-Servicing Agreement shall provide that each Sub-Servicer shall afford) the
Depositor, the Trustee, the Trust Administrator and the Certificate Insurer,
upon reasonable notice, during normal business hours, access to all records
maintained by the such Master Servicer or Servicer (and any such Sub- Servicer)
in respect of such Master Servicer's or Servicer's rights and obligations
hereunder and access to officers of such Master Servicer or Servicer (and those
of any such Sub-Servicer) responsible for such obligations. Upon request, the
Master Servicer and each Servicer shall furnish to the Depositor, the Trustee,
the Trust Administrator and the Certificate Insurer its (and any such
Sub-Servicer's) most recent financial statements and such other information
relating to such Master Servicer's or Servicer's capacity to perform its
obligations under this Agreement as it possesses (and that any such Sub-Servicer
possesses). To the extent such information is not otherwise available to the
public, the Depositor, the Trustee, the Trust Administrator and the Certificate
Insurer shall not disseminate any information obtained pursuant to the preceding
two sentences without the Master Servicer's or the related Servicer's written
consent, except as required pursuant to this Agreement or to the extent that it
is appropriate to do so (i) in working with legal counsel, auditors, taxing
authorities or other governmental agencies or (ii) pursuant to any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Depositor, the Trustee, the
Trust Administrator, the Certificate Insurer or the Trust Fund, and in any case,
the Depositor, the Trustee, the Trust Administrator or the Certificate Insurer,
as the case may be, shall use its best efforts to assure the confidentiality of
any such disseminated non-public information. The Depositor may, but is not
obligated to, enforce the obligations of the Master Servicer and each Servicer
under this Agreement and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer or either
Servicer under this Agreement or exercise the rights of the Master Servicer or
either Servicer under this Agreement; provided that neither Servicer nor the
Master Servicer shall be relieved of any of its obligations under this Agreement
by virtue of such performance by the Depositor or its designee. The Depositor
shall not have any responsibility or liability for any action or failure to act
by the Master Servicer or either Servicer and is not obligated to supervise the
performance of the Master Servicer or either Servicer under this Agreement or
otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Default.
(a) "Servicer Event of Default," wherever used herein, means
any one of the following events; provided, however, that neither Servicer shall
be obligated or liable for any
default by the other Servicer:
(i) any failure by the related Servicer to remit to the
Trust Administrator for distribution to the Certificateholders
any payment (other than a P&I Advance required to be made from
its own funds on any Servicer Remittance Date pursuant to
Section 4.03) required to be made under the terms of the
Certificates and this Agreement which continues unremedied for
a period of one Business Day after the date upon which written
notice of such failure, requiring the same to be remedied,
shall have been given to such Servicer by the Depositor, the
Certificate Insurer, the Trustee or the Trust Administrator
(in which case notice shall be provided by telecopy), or to
such Servicer, the Depositor, the Certificate Insurer, the
Trustee and the Trust Administrator by the Holders of
Certificates entitled to at least 25% of the Voting Rights; or
(ii) any failure on the part of the related Servicer
duly to observe or perform in any material respect any other
of the covenants or agreements on the part of such Servicer
contained in this Agreement, or the breach by the related
Servicer of any representation and warranty contained in
Section 2.05, which continues unremedied for a period of 30
days after the earlier of (i) the date on which written notice
of such failure, requiring the same to be remedied, shall have
been given to the related Servicer by the Depositor, the
Certificate Insurer, the Trustee, the Trust Administrator or
to the related Servicer, the Depositor, the Certificate
Insurer, the Trustee and the Trust Administrator by the
Holders of Certificates entitled to at least 25% of the Voting
Rights and (ii) actual knowledge of such failure by a
Servicing Officer of the related Servicer; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in
an involuntary case under any present or future federal or
state bankruptcy, insolvency or similar law or the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of
its affairs, shall have been entered against the related
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 90 days; or
(iv) the related Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of
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assets and liabilities or similar proceedings of or relating
to it or of or relating to all or substantially all of its
property; or
(v) the related Servicer shall admit in writing its
inability to pay its debts generally as they become due, file
a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its
obligations; or
(vi) there shall have occurred, and the Certificate
Insurer shall have notified the related Servicer, the Trustee
and the Trust Administrator of, an event of default by such
Servicer under the Insurance Agreement, provided (except in
the case of a default by such Servicer under Section 5.01(f)
of the Insurance Agreement) that no Certificate Insurer
Default exists; or
(vii) any failure of the related Servicer to make any P&I
Advance on any Servicer Remittance Date required to be made
from its own funds pursuant to Section 4.03 which continues
unremedied until 5:00 p.m. New York time on the second
Business Day immediately following the Servicer Remittance
Date.
Subject to Article IX, if a Servicer Event of Default described in clauses (i)
through (vi) of this Section shall occur, then, and in each and every such case,
so long as such Servicer Event of Default shall not have been remedied, the
Depositor, the Certificate Insurer or the Trustee may (with the consent of the
Certificate Insurer), and at the written direction of the Holders of
Certificates entitled to at least 51% of Voting Rights (with the consent of the
Certificate Insurer), the Trustee shall, by notice in writing to the defaulting
Servicer (and to the Depositor, the Trust Administrator, the Master Servicer and
the Certificate Insurer if given by the Trustee or to the Trustee, the Master
Servicer and the Trust Administrator if given by the Depositor or the
Certificate Insurer), terminate all of the rights and obligations of such
Servicer in its capacity as a Servicer under this Agreement, to the extent
permitted by law, and in and to the Mortgage Loans and the proceeds thereof. In
connection with the foregoing, in the event a Servicer Event of Default has
occurred with respect to Option One, the Master Servicer has the right to
request the Certificate Insurer to terminate all of the rights and obligations
of Option One as Servicer under this Agreement; provided, however such decision
to terminate shall be solely at the discretion of the Certificate Insurer.
Subject to Article IX, if a Servicer Event of Default described in clause (vii)
hereof shall occur, the Trustee shall, by notice in writing to the defaulting
Servicer, the Certificate Insurer, the Master Servicer, the Trust Administrator
and the Depositor, terminate all of the rights and obligations of such Servicer
in its capacity as a Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof. On or after the receipt by the defaulting
Servicer of such written notice, all authority and power of such Servicer under
this Agreement, whether with respect to the Certificates (other than as a Holder
of any Certificate) or the Mortgage Loans or the Policy or otherwise, shall pass
to and be vested in the Master Servicer (or if the Master Servicer is the
defaulting Servicer, the Trust Administrator, on behalf of the Trustee) pursuant
to and under this Section, and, without limitation, the Master Servicer (or if
the Master Servicer is the defaulting Servicer, the Trust Administrator, on
behalf of the Trustee) is hereby authorized and empowered, as attorney-in-fact
or otherwise, to execute and deliver, on
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behalf of and at the expense of such Servicer, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The defaulting Servicer agrees promptly (and in
any event no later than ten Business Days subsequent to such notice) to provide
the Master Servicer (or if the Master Servicer is the defaulting Servicer, the
Trust Administrator) with all documents and records requested by it to enable it
to assume such Servicer's functions under this Agreement, and to cooperate with
the Master Servicer or the Trust Administrator and the Trustee, as the case may
be, in effecting the termination of such Servicer's responsibilities and rights
under this Agreement, including, without limitation, the transfer within one
Business Day to the Master Servicer (or if the Master Servicer is the defaulting
Servicer, the Trust Administrator) for administration by it of all cash amounts
which at the time shall be or should have been credited by such Servicer to the
Collection Account held by or on behalf of such Servicer, the Distribution
Account, the Expense Account, the Policy Payments Account or any REO Account or
Servicing Account held by or on behalf of such Servicer or thereafter be
received with respect to the Mortgage Loans or any REO Property serviced by such
Servicer (provided, however, that the related Servicer shall continue to be
entitled to receive all amounts accrued or owing to it under this Agreement on
or prior to the date of such termination, whether in respect of P&I Advances or
otherwise, and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 7.01, each of the Trustee and
the Trust Administrator shall not be deemed to have knowledge of a Servicer
Event of Default unless a Responsible Officer of the Trustee or the Trust
Administrator, as applicable, assigned to and working in the Trustee's or the
Trust Administrator's, as the case may be, Corporate Trust Office has actual
knowledge thereof or unless written notice of any event which is in fact such a
Servicer Event of Default is received by the Trustee or the Trust Administrator,
as applicable, and such notice references the Certificates, the Trust Fund or
this Agreement. Notwithstanding the foregoing, in the event the Master Servicer
is terminated as Servicer hereunder, it shall also be terminated as Master
Servicer.
Each Servicer hereby covenants and agrees to act as a Servicer
under this Agreement for an initial term, commencing on the Closing Date and
ending on March 31, 1999, which term shall be extendable by the Certificate
Insurer for successive terms of three calendar months thereafter, until the
termination of the Trust Fund pursuant to Article X. Each such notice of
extension (a "Servicer Extension Notice") shall be delivered by the Certificate
Insurer to the Trustee, the Trust Administrator and the related Servicer. Each
Servicer hereby agrees that, upon its receipt of any such Servicer Extension
Notice, such Servicer shall become bound for the duration of the term covered by
such Servicer Extension Notice to continue as a Servicer subject to and in
accordance with the other provisions of this Agreement. The Trust Administrator
agrees that if as of the fifteenth (15th) day prior to the last day of any term
of a Servicer the Trust Administrator shall not have received any Servicer
Extension Notice in respect of that Servicer from the Certificate Insurer, the
Trust Administrator will within five (5) days thereafter, give written notice of
such non-receipt to the Certificate Insurer, the Trustee and the related
Servicer. The failure of the Certificate Insurer to deliver a Servicer Extension
Notice by the end of a calendar term shall result in the termination of the
related Servicer (in its capacity as Servicer and Master Servicer, in the case
of the Master Servicer). If the term of the related Servicer shall
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expire without the Certificate Insurer having delivered to such Servicer a
Servicer Extension Notice, but the related Servicer shall continue without
objection from the Trust Administrator, the Trustee or the Certificate Insurer
to perform the functions of servicer hereunder (and in the absence of ground for
termination under any agreement referred to in Section 7.04), the related
Servicer shall be entitled to receive a prorated portion of the Servicing Fee
specified hereunder for the time during which it shall so act; PROVIDED, that it
is understood and agreed that the foregoing provision for payment of the
prorated Servicing Fee is intended solely to avoid unjust enrichment of the
Trust Fund and does not contemplate or give rise to any implicit renewal of such
Servicer's term. The foregoing provisions of this paragraph shall not apply to
the Trust Administrator or the Trustee in the event the Trust Administrator or
the Trustee, as applicable, succeeds to the rights and obligations of the
related Servicer and the Trust Administrator or the Trustee, as applicable,
shall continue in such capacity until the earlier of the termination of this
Agreement pursuant to Article X or the appointment of a successor servicer, but
shall apply to the Master Servicer if the Master Servicer succeeds to the rights
and obligations of Option One as Servicer.
SECTION 7.02. Master Servicer, Trust Administrator or Trustee
to Act; Appointment of Successor.
(a) (1) On and after the time a defaulting Servicer receives a
notice of termination, the Master Servicer (or if the Master Servicer is the
defaulting Servicer, the Trust Administrator and in the event the Trust
Administrator fails in its obligation, the Trustee) shall be the successor in
all respects to such Servicer in its capacity as a Servicer under this Agreement
and the transactions set forth or provided for herein, and all the
responsibilities, duties and liabilities relating thereto and arising thereafter
shall be assumed by the Master Servicer, the Trust Administrator or the Trustee,
as applicable, (except for any representations or warranties of the such
Servicer under this Agreement, the responsibilities, duties and liabilities
contained in Section 2.03(c) and the obligation to deposit amounts in respect of
losses pursuant to Section 3.12) by the terms and provisions hereof including,
without limitation, the such Servicer's obligations to make P&I Advances
pursuant to Section 4.03; provided, however, that if the Trust Administrator or
the Trustee, as applicable, is prohibited by law or regulation from obligating
itself to make advances regarding delinquent mortgage loans, then the Trust
Administrator or the Trustee, as applicable, shall not be obligated to make P&I
Advances pursuant to Section 4.03; and provided further, that any failure to
perform such duties or responsibilities caused by such Servicer's failure to
provide information required by Section 7.01 shall not be considered a default
by the Master Servicer, the Trust Administrator or the Trustee, as applicable,
as successor to such Servicer hereunder. As compensation therefor, the Master
Servicer, the Trust Administrator or the Trustee, as applicable, shall be
entitled to the Servicing Fee and all funds relating to the Mortgage Loans to
which such defaulting Servicer would have been entitled if it had continued to
act hereunder. Notwithstanding the above and subject to Section 7.02(a)(2)
below, the Trust Administrator or the Trustee, as applicable, may, if it shall
be unwilling to so act, or shall, if it is unable to so act or if it is
prohibited by law from making advances regarding delinquent mortgage loans or if
the Certificate Insurer or if the Holders of Certificates entitled to at least
51% of the Voting Rights so request in writing to the Trust Administrator or the
Trustee, as applicable, promptly appoint or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution
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selected by the Certificate Insurer and acceptable to each Rating Agency and
having a net worth of not less than $15,000,000, as the successor to such
defaulting Servicer under this Agreement in the assumption of all or any part of
the responsibilities, duties or liabilities of such Servicer under this
Agreement.
(2) No appointment of a successor to a defaulting
Servicer under this Agreement shall be effective until the assumption by the
successor of all of such Servicer's responsibilities, duties and liabilities
hereunder. In connection with such appointment and assumption described herein,
the Trust Administrator or the Trustee, as applicable, may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the applicable Servicer as
such hereunder. The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Pending
appointment of a successor to a defaulting Servicer under this Agreement, the
Trust Administrator or the Trustee, as applicable, shall act in such capacity as
hereinabove provided.
(b) If either Servicer fails to remit to the Trust
Administrator for distribution to the Certificateholders any payment required to
be made under the terms of this Agreement (for purposes of this Section 7.02(b),
a "Remittance") because such Servicer is the subject of a proceeding under the
federal Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the federal Bankruptcy Code, the Trust Administrator shall (and
in the event the Trust Administrator fails in its obligation, the Trustee) upon
notice of such prohibition, regardless of whether it has received a notice of
termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trust Administrator or the Trustee, as applicable, shall be obligated
to make such advance only if (i) such advance, in the good faith judgment of the
Trust Administrator or the Trustee, as applicable, can reasonably be expected to
be ultimately recoverable from Stayed Funds and (ii) the Trust Administrator or
the Trustee, as applicable, is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trust
Administrator or the deposit thereof in the Distribution Account by such
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trust
Administrator or the Trustee, as applicable, may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trust
Administrator's or Trustee's, as applicable, rights to recover from such
Servicer's own funds interest on the amount of any such advance. If the Trust
Administrator or the Trustee, as the case may be, at any time makes an advance
under this Subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trust Administrator or the Trustee, as applicable, shall
be entitled to reimburse itself for such advance, without interest, by
withdrawing from the Distribution Account, out of amounts on deposit therein, an
amount equal to the portion of such advance attributable to the Stayed Funds.
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SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of either Servicer pursuant to
Section 7.01 above or any appointment of a successor to such Servicer pursuant
to Section 7.02 above, the Trust Administrator shall give prompt written notice
thereof to Certificateholders at their respective
addresses appearing in the Certificate Register.
(b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Servicer Event of Default or five days after a Responsible
Officer of the Trustee or the Trust Administrator becomes aware of the
occurrence of such an event, the Trustee or the Trust Administrator shall
transmit (or, in the case of the Trustee, the Trustee shall cause the Trust
Administrator to transmit) by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Servicer Event of Default shall have
been cured or waived.
SECTION 7.04. Waiver of Servicer Events of Default.
Subject to Article IX, the Holders representing at least 66%
of the Voting Rights evidenced by all Classes of Certificates affected by any
default or Servicer Event of Default hereunder, with the written consent of the
Certificate Insurer, may waive such default or Servicer Event of Default;
PROVIDED, HOWEVER, that a default or Servicer Event of Default under clause (i)
or (vi) of Section 7.01 may be waived only by all of the Holders of the Regular
Certificates with the written consent of the Certificate Insurer. Upon any such
waiver of a default or Servicer Event of Default, such default or Servicer Event
of Default shall cease to exist and shall be deemed to have been remedied for
every purpose hereunder. No such waiver shall extend to any subsequent or other
default or Servicer Event of Default or impair any right consequent thereon
except to the extent expressly so waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
SECTION 8.01. Duties of Trustee and Trust Administrator.
Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Servicer Event of Default and after the curing of all Servicer
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. During a
Servicer Event of Default, each of the Trustee and the Trust Administrator shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs. Any permissive right of the Trustee or the Trust Administrator
enumerated in this Agreement shall not be construed as a duty.
Each of the Trustee and the Trust Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to it, which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, it shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, it will provide notice thereof to the Certificateholders and the
Certificate Insurer.
No provision of this Agreement shall be construed to relieve
the Trustee or the Trust Administrator from liability for its own negligent
action, its own negligent failure to act or its own misconduct; provided,
however, that:
(i) Prior to the occurrence of a Servicer Event of
Default, and after the curing of all such Servicer Events of
Default which may have occurred, the duties and obligations of
each of the Trustee and the Trust Administrator shall be
determined solely by the express provisions of this Agreement,
neither the Trustee nor the Trust Administrator shall be
liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement,
no implied covenants or obligations shall be read into this
Agreement against the Trustee or the Trust Administrator and,
in the absence of bad faith on the part of the Trustee or the
Trust Administrator, as applicable, the Trustee or the Trust
Administrator, as the case may be, may conclusively rely, as
to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Trustee or the Trust Administrator, as the
case may be, that conform to the requirements of this
Agreement;
(ii) Neither the Trustee nor the Trust Administrator
shall be personally liable for an error of judgment made in
good faith by a Responsible Officer or
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Responsible Officers of it unless it shall be proved that it
was negligent in ascertaining the pertinent facts; and
(iii) Neither the Trustee nor the Trust Administrator
shall be personally liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or
Holders of Certificates entitled to at least 25% of the Voting
Rights relating to the time, method and place of conducting
any proceeding for any remedy available to it or exercising
any trust or power conferred upon it under this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee and the
Trust Administrator.
(a) Except as otherwise provided in Section 8.01:
(i) Each of the Trustee and the Trust Administrator may
request and rely upon and shall be protected in acting or
refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document
reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) Each of the Trustee and the Trust Administrator may
consult with counsel and any Opinion of Counsel shall be full
and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good
faith and in accordance with such Opinion of Counsel;
(iii) Neither the Trustee nor the Trust Administrator
shall be under any obligation to exercise any of the trusts or
powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered
to the Trustee or the Trust Administrator, as applicable,
reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee
or the Trust Administrator of the obligation, upon the
occurrence of a Servicer Event of Default (which has not been
cured or waived), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such
person's own affairs;
(iv) Neither the Trustee nor the Trust Administrator
shall be personally liable for any action taken, suffered or
omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
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(v) Prior to the occurrence of a Servicer Event of
Default hereunder and after the curing of all Servicer Events
of Default which may have occurred, neither the Trustee nor
the Trust Administrator shall be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so
by the Certificate Insurer or by Holders of Certificates
entitled to at least 25% of the Voting Rights; provided,
however, that if the payment within a reasonable time to the
Trustee or the Trust Administrator, as applicable, of the
costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the
Trustee or the Trust Administrator, as applicable, not
reasonably assured to the Trustee or the Trust Administrator,
as applicable, by such Certificateholders or the Certificate
Insurer, the Trustee or the Trust Administrator, as
applicable, may require reasonable indemnity against such
expense, or liability from such Certificateholders or the
Certificate Insurer as a condition to taking any such action;
(vi) Each of the Trustee and the Trust Administrator may
execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or
attorneys; and
(vii) Neither the Trustee nor the Trust Administrator
shall be personally liable for any loss resulting from the
investment of funds held in the Collection Account or the
Expense Account at the direction of the related Servicer
pursuant to Section 3.12.
(b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee or the Trust Administrator, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Trustee or the Trust
Administrator shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.
SECTION 8.03. Neither Trustee nor Trust Administrator Liable
for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other
than the signature of the Trustee or the Trust Administrator, on behalf of the
Trustee, the authentication of the Trustee or the Trust Administrator on the
Certificates, the acknowledgments of the Trustee and the Trust Administrator
contained in Article II and the representations and warranties of the Trustee
and the Trust Administrator in Section 8.12) shall be taken as the statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes any
responsibility for their correctness. Neither the Trustee nor the Trust
Administrator makes any representations or warranties as to the validity or
sufficiency of this Agreement (other than as specifically set forth in Section
8.12) or of the Certificates (other than the signature of the Trustee, or the
Trust Administrator on behalf of the Trustee, and authentication of the Trustee
or the Trust Administrator on the Certificates) or of any
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Mortgage Loan or related document. Neither the Trustee nor the Trust
Administrator shall be accountable for the use or application by the Depositor
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Depositor or either Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Collection
Account by either Servicer, other than any funds held by or on behalf of the
Trustee or the Trust Administrator in accordance with Section 3.10.
SECTION 8.04. Trustee and Trust Administrator May Own
Certificates.
Each of the Trustee and the Trust Administrator in its
individual capacity or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have
if it were not Trustee or Trust Administrator, as applicable.
SECTION 8.05. Trustee's and Trust Administrator's Fees and
Expenses.
The Trust Administrator shall withdraw from the Distribution
Account on each Distribution Date and pay to itself the related portion of the
Administration Fee and pay to the Trustee the related portion of the
Administration Fee and, to the extent that the funds therein are at anytime
insufficient for such purpose, the Master Servicer shall pay such fees. Each of
the Trustee and the Trust Administrator and any director, officer, employee or
agent of the Trustee or the Trust Administrator, as applicable, shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense (not including expenses, disbursements and advances incurred or made by
the Trustee or the Trust Administrator, as applicable, including the
compensation and the expenses and disbursements of its agents and counsel, in
the ordinary course of the Trustee's or Trust Administrator's, as the case may
be, performance in accordance with the provisions of this Agreement) incurred by
the Trustee or the Trust Administrator, as applicable, in connection with any
claim or legal action or any pending or threatened claim or legal action arising
out of or in connection with the acceptance or administration of its obligations
and duties under this Agreement, other than any loss, liability or expense (i)
resulting from any breach of either Servicer's (and in the case of the Trustee,
the Trust Administrator's or in the case of the Trust Administrator, the
Trustee's) obligations in connection with this Agreement, (ii) that constitutes
a specific liability of the Trustee or the Trust Administrator, as applicable,
pursuant to Section 11.01(g) or (iii) any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder or in the case of the Trust Administrator, as a result of a breach of
the Trust Administrator's obligations under Article XI hereof. Each Servicer
agrees to indemnify the Trustee and the Trust Administrator, from, and hold each
harmless against, any loss, liability or expense arising in respect of any
breach by such Servicer of its obligations in connection with this Agreement.
Such indemnity shall survive the termination or discharge of this Agreement and
the resignation or removal of the Trustee or the Trust Administrator, as the
case may be. Any payment hereunder made by either Servicer to the Trustee or the
Trust Administrator shall be from such Servicer's own funds, without
reimbursement from REMIC I therefor.
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SECTION 8.06. Eligibility Requirements for Trustee and Trust
Administrator.
Each of the Trustee and the Trust Administrator hereunder
shall at all times be a corporation or an association (other than the Depositor,
either Originator, the Seller, either Servicer or any Affiliate of the
foregoing) organized and doing business under the laws of any state or the
United States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000 (or a
member of a bank holding company whose capital and surplus is at least
$50,000,000) and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
conditions so published. In case at any time the Trustee or the Trust
Administrator shall cease to be eligible in accordance with the provisions of
this Section, the Trustee or the Trust Administrator, as the case may be, shall
resign immediately in the manner and with the effect specified in Section 8.07.
SECTION 8.07. Resignation and Removal of the Trustee and the
Trust Administrator.
Either of the Trustee or the Trust Administrator may at any
time resign and be discharged from the trust hereby created by giving written
notice thereof to the Depositor, the Certificate Insurer, each Servicer and to
the Certificateholders and, if the Trustee is resigning, to the Trust
Administrator, or, if the Trust Administrator is resigning, to the Trustee. Upon
receiving such notice of resignation, the Depositor shall, with the written
consent of the Certificate Insurer, promptly appoint a successor trustee or
trust administrator (which may be the same Person in the event both the Trustee
and the Trust Administrator resign or are removed) by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee or Trust
Administrator and to the successor trustee or trust administrator, as
applicable. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer, the Trustee or Trust Administrator,
as applicable, and each Servicer by the Depositor. If no successor trustee or
trust administrator shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee or Trust Administrator, as applicable, may petition any court of
competent jurisdiction for the appointment of a successor trustee or trust
administrator, as applicable.
If at any time the Trustee or the Trust Administrator shall
cease to be eligible in accordance with the provisions of Section 8.06 and shall
fail to resign after written request therefor by the Depositor or the
Certificate Insurer (or in the case of the Trust Administrator, the Trustee), or
if at any time the Trustee or the Trust Administrator shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or the Trust Administrator or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or the Trust Administrator
or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor (or in the case of the Trust Administrator, the
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Trustee) may remove the Trustee or the Trust Administrator, as applicable, and
appoint a successor trustee or trust administrator (which may be the same Person
in the event both the Trustee and the Trust Administrator resign or are removed)
by written instrument, in duplicate, which instrument shall be delivered to the
Trustee or Trust Administrator, as the case may be, so removed and to the
successor trustee or trust administrator. A copy of such instrument shall be
delivered to the Certificateholders, the Certificate Insurer, the Trustee or the
Trust Administrator, as applicable, and each Servicer by the Depositor.
The Certificate Insurer or the Holders of Certificates
entitled to at least 51% of the Voting Rights, with the written consent of the
Certificate Insurer, may at any time remove the Trustee or the Trust
Administrator and appoint a successor trustee or trust administrator by written
instrument or instruments, in triplicate, signed by the Certificate Insurer or
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered to the Depositor, one complete set to the
Trustee or the Trust Administrator, as the case may be, so removed and one
complete set to the successor so appointed. A copy of such instrument shall be
delivered to the Certificateholders, the Certificate Insurer and each Servicer
by the Depositor. In addition, if the Trustee has knowledge that the Trust
Administrator has breached any of its duties under this Agreement, the Trustee,
with the consent of the Certificate Insurer, may remove the Trust Administrator
in the same manner as provided in the prior sentence. For purposes of this
Section, the Trustee shall not be deemed to have knowledge of a breach by the
Trust Administrator of any of its duties hereunder, unless a Responsible Officer
of the Trustee, assigned to and working in the Trustee's Corporate Trust Office
has actual knowledge thereof or unless written notice of any event which is in
fact such a breach is received by the Trustee, and such notice references the
Certificates, the Trust Fund or this Agreement.
Any resignation or removal of the Trustee or the Trust
Administrator and appointment of a successor trustee or trust administrator, as
the case may be, pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee or
trust administrator as provided in Section 8.08. Notwithstanding the foregoing,
in the event the Trust Administrator advises the Trustee that it is unable to
continue to perform its obligations pursuant to the terms of this Agreement
prior to the appointment of a successor, the Trustee shall be obligated to
perform such obligations until a new trust administrator is appointed. Such
performance shall be without prejudice to any claim by a party hereto or
beneficiary hereof resulting from the Trust Administrator's breach of its
obligations hereunder.
SECTION 8.08. Successor Trustee or Trust Administrator.
Any successor trustee or trust administrator appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the
Depositor, the Certificate Insurer, the Trustee or the Trust Administrator, as
applicable, and its predecessor trustee or trust administrator an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee or trust administrator shall become effective and
such successor trustee or trust administrator, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if
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originally named as trustee or trust administrator herein. The predecessor
trustee or trust administrator shall deliver to the successor trustee or trust
administrator all Mortgage Files and related documents and statements to the
extent held by it hereunder, as well as all moneys, held by it hereunder, and
the Depositor and the predecessor trustee or trust administrator shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
trustee or trust administrator all such rights, powers, duties and obligations.
No successor trustee or trust administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee or trust administrator shall be eligible under the
provisions of Section 8.06 and the appointment of such successor trustee or
trust administrator shall not result in a downgrading of any Class of
Certificates by either Rating Agency, as evidenced by a letter from each Rating
Agency.
Upon acceptance of appointment by a successor trustee or trust
administrator as provided in this Section, the Depositor shall mail notice of
the succession of such trustee or trust administrator hereunder to the
Certificate Insurer and to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee or trust
administrator, the successor trustee or trust administrator shall cause such
notice to be mailed at the expense of the Depositor.
Notwithstanding anything to the contrary contained herein, so
long as no Certificate Insurer Default has occurred and is continuing, the
appointment of any successor trustee or trust administrator pursuant to any
provision of this Agreement will be subject to the prior written
consent of the Certificate Insurer.
SECTION 8.09. Merger or Consolidation of Trustee or Trust
Administrator.
Any corporation or association into which either the Trustee
or the Trust Administrator may be merged or converted or with which it may be
consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee or the Trust Administrator, as
the case may be, shall be a party, or any corporation or association succeeding
to the business of the Trustee or the Trust Administrator, as applicable, shall
be the successor of the Trustee or the Trust Administrator, as the case may be,
hereunder, provided such corporation or association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the same may at the time be located, the
Trustee shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-
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trustee or co-trustees, jointly with the Trustee or separate trustee or separate
trustees, of all or any part of REMIC I, and to vest in such Person or Persons,
in such capacity, such title to REMIC I, or any part thereof, and, subject to
the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trust conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee, or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee to the extent permitted by law, without the appointment
of a new or successor trustee or co-trustee.
SECTION 8.11. Appointment of Office or Agency.
The Trust Administrator will appoint an office or agency in
the City of St. Xxxx, Minnesota where the Certificates may be surrendered for
registration of transfer or exchange, and presented for final distribution, and
where notices and demands to or upon the Trust Administrator in respect of the
Certificates and this Agreement may be served.
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SECTION 8.12. Representations and Warranties.
Each of the Trustee and the Trust Administrator hereby
represents and warrants to each Servicer, the Depositor, the Trustee or the
Trust Administrator, as applicable, and the Certificate Insurer, as of the
Closing Date, that:
(i) it is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States of America.
(ii) The execution and delivery of this Agreement by it, and
the performance and compliance with the terms of this Agreement by it,
will not violate its articles of association 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 agreement or other instrument to which it is a party or which
is applicable to it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of it, enforceable against it in accordance with the
terms hereof, subject to (A) applicable bankruptcy, insolvency,
receivership, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, and (B) general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(v) It is not in violation of, and its execution and delivery
of this Agreement and its performance and compliance with the terms of
this Agreement will not constitute a violation of, any law, any order
or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority,
which violation, in its good faith and reasonable judgment, is likely
to affect materially and adversely either the ability of it to perform
its obligations under this Agreement or its financial condition.
(vi) No litigation is pending or, to the best of its
knowledge, threatened against it, which would prohibit it from entering
into this Agreement or, in its good faith reasonable judgment, is
likely to materially and adversely affect either the ability of it to
perform its obligations under this Agreement or its financial
condition.
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ARTICLE IX
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
SECTION 9.01. Rights of the Certificate Insurer To Exercise
Rights of Class A Certificateholders.
Each of the Depositor, the Servicers, the Trust Administrator
and the Trustee, and, by accepting its Certificate, each Class A
Certificateholder, agrees that unless a Certificate Insurer Default has occurred
and is continuing, the Certificate Insurer shall have the right to exercise all
rights of the Class A Certificateholders under this Agreement (except as
provided in clause (i) of the second paragraph of Section 12.01) without any
further consent of the Class A Certificateholders, including, without
limitation:
(a) the right to direct foreclosures upon Mortgage Loans upon
failure of the related Servicer to do so;
(b) the right to require the Seller or the Depositor to
repurchase or substitute for Mortgage Loans pursuant to Section 2.03;
(c) the right to give notices of breach or to terminate the
rights and obligations of either Servicer as Servicer pursuant to
Section 7.01;
(d) the right to direct the actions of the Trustee and the
Trust Administrator during the continuance of a Servicer Event of
Default pursuant to Sections 7.01 and 7.02;
(e) the right to consent to or direct any waivers of Servicer
Events of Default pursuant to Section 7.04;
(f) the right to direct the Trustee and the Trust
Administrator to investigate certain matters pursuant to Section
8.02(a)(v); and
(g) the right to remove the Trustee or the Trust Administrator
pursuant to Section 8.07 hereof.
In addition, each Class A Certificateholder agrees that,
unless a Certificate Insurer Default has occurred and is continuing, the rights
specifically set forth above may be exercised by the Class A Certificateholders
only with the prior written consent of the Certificate Insurer.
SECTION 9.02. Trustee and the Trust Administrator To Act
Solely with Consent of the Certificate Insurer.
Unless a Certificate Insurer Default has occurred and is
continuing, neither the Trustee nor the Trust Administrator shall:
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(a) agree to any amendment pursuant to Section 12.01; or
(b) undertake any litigation pursuant to Section
8.02(a)(iii);
without the prior written consent of the Certificate Insurer which consent shall
not be unreasonably withheld.
SECTION 9.03. Trust Fund and Accounts Held for Benefit of the
Certificate Insurer.
The Trustee and the Trust Administrator shall hold the Trust
Fund and the Mortgage Files for the benefit of the Certificateholders and the
Certificate Insurer and all references in this Agreement (including, without
limitation, in Sections 2.01 and 2.02) and in the Certificates to the benefit of
Holders of the Certificates shall be deemed to include the Certificate Insurer.
Each of the Trustee and the Trust Administrator shall cooperate in all
reasonable respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement and the Certificates.
Each Servicer hereby acknowledges and agrees that it shall
service and administer the related Mortgage Loans and any REO Properties, and
shall maintain the Collection Account and any REO Account, for the benefit of
the Certificateholders and for the benefit of the Certificate Insurer, and all
references in this Agreement (including, without limitation, in Sections 3.01
and 3.10) to the benefit of or actions on behalf of the Certificateholders shall
be deemed to include the Certificate Insurer. Unless a Certificate Insurer
Default has occurred and is continuing, neither Servicer shall terminate any
Sub-Servicing Agreements without cause without the prior consent of the
Certificate Insurer. Unless a Certificate Insurer Default has occurred and is
continuing, neither Servicer nor the Depositor shall undertake any litigation
pursuant to Section 6.03 (other than litigation to enforce their respective
rights hereunder) without the prior consent of the Certificate Insurer.
SECTION 9.04. Claims Upon the Policy; Policy Payments Account.
(a) If, by the close of business on the third Business Day
prior to a Distribution Date, the Trust Administrator determines that a
Deficiency Amount for any Distribution Date is greater than zero, then the Trust
Administrator shall give notice to the Certificate Insurer by telephone or
telecopy of the amount of such Deficiency Amount. Such notice of such Deficiency
Amount shall be confirmed in writing in the form set forth as Exhibit A to the
Endorsement of the Policy, to the Certificate Insurer and the Fiscal Agent (as
defined in the Policy), if any, at or before 10:00 a.m. New York time on the
second Business Day prior to such Distribution Date. Following Receipt (as
defined in the Policy) by the Certificate Insurer of such notice in such form,
the Certificate Insurer or the Fiscal Agent will pay any amount payable under
the Policy on the later to occur of (i) 12:00 noon New York time on the second
Business Day following such receipt and (ii) 12:00 noon New York time on the
Distribution Date to which such deficiency relates, as provided in the
Endorsement to the Policy.
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(b) The Trust Administrator shall establish a separate special
purpose trust account for the benefit of Holders of the Class A Certificates and
the Certificate Insurer referred to herein as the "Policy Payments Account" over
which the Trust Administrator shall have exclusive control and sole right of
withdrawal. The Trust Administrator shall deposit any amount paid under the
Policy in the Policy Payments Account and distribute such amount only for
purposes of payment to Holders of Class A Certificates of the Guaranteed
Distribution for which a claim was made, and such amount may not be applied to
satisfy any costs, expenses or liabilities of either Servicer, the Master
Servicer, the Trustee, the Trust Administrator or the Trust Fund. Amounts paid
under the Policy shall be transferred to the Distribution Account in accordance
with the next succeeding paragraph and disbursed by the Trust Administrator to
Holders of Class A Certificates in accordance with Section 4.01(c) or Section
10.01, as applicable. It shall not be necessary for such payments to be made by
checks or wire transfers separate from the checks or wire transfers used to pay
the Guaranteed Distribution with other funds available to make such payment.
However, the amount of any payment of principal of or interest on the Class A
Certificates to be paid from funds transferred from the Policy Payments Account
shall be noted as provided in paragraph (c) below in the Certificate Register
and in the statement to be furnished to Holders of the Class A Certificates
pursuant to Section 4.02. Funds held in the Policy Payments Account shall not be
invested.
On any Distribution Date with respect to which a claim has
been made under the Policy, the amount of any funds received by the Trust
Administrator as a result of any claim under the Policy, to the extent required
to make the Guaranteed Distribution on such Distribution Date, shall be
withdrawn from the Policy Payments Account and deposited in the Distribution
Account and applied by the Trust Administrator, together with the other funds to
be withdrawn from the Distribution Account pursuant to Section 4.01(c) or
Section 10.01, as applicable, directly to the payment in full of the Guaranteed
Distribution due on the Class A Certificates. Funds received by the Trust
Administrator as a result of any claim under the Policy shall be deposited by
the Trust Administrator in the Policy Payments Account and used solely for
payment to the Holders of the Class A Certificates and may not be applied to
satisfy any costs, expenses or liabilities of the Servicers, the Trustee, the
Trust Administrator or the Trust Fund. Any funds remaining in the Policy
Payments Account on the first Business Day following a Distribution Date shall
be remitted to the Certificate Insurer, pursuant to the instructions of the
Certificate Insurer, by the end of such Business Day.
(c) The Trust Administrator shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any Class A
Certificate from moneys received under the Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trust Administrator.
(d) The Trustee and the Trust Administrator shall promptly
notify the Certificate Insurer and Fiscal Agent of any proceeding or the
institution of any action, of which a Responsible Officer of the Trustee or the
Trust Administrator, as applicable, has actual knowledge, seeking the avoidance
as a preferential transfer under applicable bankruptcy, insolvency, receivership
or similar law (a "Preference Claim") of any Guaranteed Distribution made with
respect to the Class
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A Certificates. Each Holder of the Class A Certificates, by its purchase of such
Certificates, the Servicers, the Trust Administrator and the Trustee hereby
agree that the Certificate Insurer (so long as no Certificate Insurer Default
has occurred and is continuing) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including, without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Certificate Insurer shall be subrogated
to the rights of the Master Servicer, the Servicers, the Trustee, the Trust
Administrator and each Holder of the Class A Certificates in the conduct of any
such Preference Claim, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
SECTION 9.05 Effect of Payments by the Certificate Insurer;
Subrogation.
Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on any of the Class A Certificates
which is made with moneys received pursuant to the terms of the Policy shall not
be considered payment of such Class A Certificates from the Trust Fund and shall
not result in the payment of or the provision for the payment of the principal
of or interest on such Certificates within the meaning of Section 4.01. The
Depositor, the Master Servicer, each Servicer, the Trustee and the Trust
Administrator acknowledge, and each Holder by its acceptance of a Class A
Certificate agrees, that without the need for any further action on the part of
the Certificate Insurer, the Depositor, the Servicers, the Master Servicer, the
Trustee or the Trust Administrator (a) to the extent the Certificate Insurer
makes payments, directly or indirectly, on account of principal of or interest
on any Class A Certificates to the Holders of such Certificates, the Certificate
Insurer will be fully subrogated to the rights of such Holders to receive such
principal and interest from the Trust Fund and (b) the Certificate Insurer shall
be paid such principal and interest but only from the sources and in the manner
provided herein for the payment of such principal and interest.
The Trustee, the Trust Administrator, the Master Servicer and
the Servicers shall cooperate in all respects with any reasonable request by the
Certificate Insurer for action to preserve or enforce the Certificate Insurer's
rights or interests under this Agreement without limiting the rights or
affecting the interests of the Holders as otherwise set forth herein.
SECTION 9.06. Notices to the Certificate Insurer.
All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to any other party hereto or to any of the
Certificateholders shall also be sent to the Certificate Insurer.
SECTION 9.07. Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of
this Agreement, entitled to enforce the provisions hereof as if a party hereto.
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SECTION 9.08. Trust Administrator to Hold the Policy.
The Trust Administrator, on behalf of the Trustee, will hold
the Policy in trust as agent for the Holders of the Class A Certificates for the
purpose of making claims thereon and distributing the proceeds thereof. Upon the
later of (i) the date upon which the Certificate Principal Balances of the Class
A Certificates have been reduced to zero and all Guaranteed Distributions have
been made and (ii) the date the Term of the Policy (as defined in the Policy)
ends, the Trust Administrator, on behalf of the Trustee, shall surrender the
Policy to the Certificate Insurer for cancellation. Neither the Policy nor the
amounts paid on the Policy will constitute part of the Trust Fund or assets of
any REMIC created by this Agreement. Each Holder of Class A Certificates, by
accepting its Certificates, appoints the Trustee and the Trust Administrator as
attorneys-in-fact for the purpose of making claims on the Policy.
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ARTICLE X
TERMINATION
XXXXXXX 00.00 Xxxxxxxxxxx Xxxx Xxxxxxxxxx or Liquidation of
All Mortgage Loans.
(a) Subject to Section 10.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Servicers, the
Master Servicer, the Trustee and the Trust Administrator (other than the
obligations of the Servicers to the Trustee and the Trust Administrator pursuant
to Section 8.05 and of the Servicers to provide for and the Trust Administrator
to make payments in respect of the REMIC I Regular Interests, the REMIC II
Regular Interests or the Classes of Certificates as hereinafter set forth) shall
terminate upon payment to the Certificateholders and the deposit of all amounts
held by or on behalf of the Trustee and required hereunder to be so paid or
deposited on the Distribution Date coinciding with or following the earlier to
occur of (i) the purchase by the Terminator (as defined below) of all Mortgage
Loans and each REO Property remaining in REMIC I and (ii) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in REMIC I; provided, however, that in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. Xxxxx, living on the date
hereof. Subject to Section 3.11 hereof, the purchase by the Terminator of all
Mortgage Loans and each REO Property remaining in REMIC I shall be at a price
(the "Termination Price") equal to the greater of (A) the aggregate Purchase
Price of all the Mortgage Loans included in REMIC I, plus the appraised value of
each REO Property, if any, included in REMIC I, such appraisal to be conducted
by an appraiser mutually agreed upon by the Terminator and the Trustee in their
reasonable discretion (and approved by the Certificate Insurer in its reasonable
discretion) and (B) the aggregate fair market value of all of the assets of
REMIC I (as determined by the Terminator, the Certificate Insurer (to the extent
the Certificate Insurer is not the Terminator) and the Trustee, as of the close
of business on the third Business Day next preceding the date upon which notice
of any such termination is furnished to Certificateholders pursuant to the third
paragraph of this Section 10.01); provided, however, that in the event the
Majority Class CE Certificateholder is the Terminator, and subject to Section
3.11 hereof, the purchase by the Majority Class CE Certificateholder of all
Mortgage Loans and each REO Property remaining in REMIC I shall be at a price
equal to the greater of: (i) the amount designated in clause (A) above or (ii)
the lesser of (x) the sum of the amount designated in clause (A) above and any
amounts due under the Insurance Agreement and (y) the amount designated in
clause (B) above.
(b) The Majority Class CE Certificateholder shall have the
right and, to the extent the Majority Class CE Certificateholder fails to
exercise such right, the Certificate Insurer shall have the right and, to the
extent neither the Majority Class CE Certificateholder nor the Certificate
Insurer exercises such right, the Master Servicer shall have the right (the
party exercising such right, the "Terminator"), to purchase all of the Mortgage
Loans and each REO Property remaining in REMIC I pursuant to clause (i) of the
preceding paragraph no later than the
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Determination Date in the month immediately preceding the Distribution Date on
which the Certificates will be retired; provided, however, that the Terminator
may elect to purchase all of the Mortgage Loans and each REO Property remaining
in REMIC I pursuant to clause (i) above only if the aggregate Stated Principal
Balance of the Mortgage Loans and each REO Property remaining in the Trust Fund
at the time of such election is reduced to less than 10%, in the event the
Majority Class CE Certificateholder is the Terminator, or 5%, in the event the
Master Servicer or the Certificate Insurer is the Terminator, in each case of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date. By acceptance of the Class R-I Certificates, the Holder of the Class R-I
Certificates agrees, in connection with any termination hereunder, to assign and
transfer any amounts in excess of par, and to the extent received in respect of
such termination, to pay any such amounts to the Holders of the Class CE
Certificates.
(c) Notice of the liquidation of the REMIC I Regular Interests
shall be given promptly by the Trust Administrator by letter to
Certificateholders and the Certificate Insurer mailed (a) in the event such
notice is given in connection with the purchase of the Mortgage Loans and each
REO Property by the Terminator, not earlier than the 15th day and not later than
the 25th day of the month next preceding the month of the final distribution on
the Certificates or (b) otherwise during the month of such final distribution on
or before the Determination Date in such month, in each case specifying (i) the
Distribution Date upon which the Trust Fund will terminate and the final payment
in respect of the REMIC I Regular Interests, the REMIC II Regular Interests and
the Certificates will be made upon presentation and surrender of the related
Certificates at the office of the Trust Administrator therein designated, (ii)
the amount of any such final payment, (iii) that no interest shall accrue in
respect of the REMIC I Regular Interests, the REMIC II Regular Interests or the
Certificates from and after the Interest Accrual Period relating to the final
Distribution Date therefor and (iv) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trust
Administrator. In the event such notice is given in connection with the purchase
of all of the Mortgage Loans and each REO Property remaining in REMIC I by the
Terminator, the Terminator shall deliver to the Trust Administrator for deposit
in the Distribution Account not later than the last Business Day of the month
next preceding the month of the final distribution on the Certificates an amount
in immediately available funds equal to the above-described purchase price. The
Trust Administrator shall remit to each Servicer from such funds deposited in
the Distribution Account (i) any amounts which the related Servicer would be
permitted to withdraw and retain from the Collection Account pursuant to Section
3.11 and (ii) any other amounts otherwise payable by the Trust Administrator to
the related Servicer from amounts on deposit in the Distribution Account
pursuant to the terms of this Agreement, in each case prior to making any final
distributions pursuant to Section 10.01(d) below. Upon certification to the
Trust Administrator by a Servicing Officer (a copy of which certification shall
be delivered to the Certificate Insurer) of the making of such final deposit,
the Trust Administrator shall promptly release to the Terminator the Mortgage
Files for the remaining Mortgage Loans, and the Trustee shall execute all
assignments, endorsements and other instruments necessary to effectuate such
transfer.
(d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trust Administrator shall
distribute to each Certificateholder so presenting
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and surrendering its Certificates the amount otherwise distributable on such
Distribution Date in accordance with Section 4.01 in respect of the Certificates
so presented and surrendered. Any funds not distributed to any Holder or Holders
of Certificates being retired on such Distribution Date because of the failure
of such Holder or Holders to tender their Certificates shall, on such date, be
set aside and held in trust and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 10.01 shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trust Administrator shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trust Administrator shall, directly or through an agent, (i)
mail a final notice to the remaining non-tendering Certificateholders concerning
surrender of their Certificates and (ii) pay to the Certificate Insurer any
amount of such funds which were paid by the Certificate Insurer under the Policy
but shall continue to hold any remaining funds for the benefit of non-tendering
Certificateholders, and all liability of the Certificate Insurer with respect to
such funds shall thereupon cease. The costs and expenses of maintaining the
funds in trust and of contacting such Certificateholders shall be paid out of
the assets remaining in the trust funds. If within one year after the final
notice any such Certificates shall not have been surrendered for cancellation,
the Trust Administrator shall pay to Xxxxxxx Xxxxx Xxxxxx Inc. all such amounts,
and all rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust by the Trust Administrator as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 10.01. Any such amounts held in trust by
the Trust Administrator shall be held in an Eligible Account and the Trust
Administrator may direct any depository institution maintaining such account to
invest the funds in one or more Permitted Investments. All income and gain
realized from the investment of funds deposited in such accounts held in trust
by the Trust Administrator shall be for the benefit of the Trust Administrator;
provided, however, that the Trust Administrator shall deposit in such account
the amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such accounts immediately upon the realization of
such loss.
Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.
SECTION 10.02 Additional Termination Requirements.
(a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 10.01 or Section 10.02, the Trust Fund shall be terminated
in accordance with the following additional requirements:
(i) The Trustee shall specify the first day in the
90-day liquidation period in a statement attached to REMIC
I's, REMIC II's and REMIC III's final Tax Return pursuant to
Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of
the Code and any
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regulations thereunder, as evidenced by an Opinion of Counsel
obtained at the expense of the Terminator;
(ii) During such 90-day liquidation period and, at or
prior to the time of making of the final payment on the
Certificates, the Trustee shall sell all of the assets of
REMIC I to the Terminator for cash; and
(iii) At the time of the making of the final payment on
the Certificates, the Trust Administrator shall distribute or
credit, or cause to be distributed or credited, to the Holders
of the Residual Certificates all cash on hand in the Trust
Fund (other than cash retained to meet claims), and the Trust
Fund shall terminate at that time.
(b) At the expense of the requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the event
described in clause (ii) of the first paragraph of Section 10.01, at the expense
of the Trust Administrator without the right of reimbursement from the Trust
Fund), the Trust Administrator shall prepare or cause to be prepared the
documentation required in connection with the adoption of a plan of liquidation
of each of REMIC I , REMIC II and REMIC III pursuant to this Section 10.02.
(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each of REMIC I, REMIC II and REMIC III, which authorization shall be
binding upon all successor Certificateholders.
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ARTICLE XI
REMIC PROVISIONS
SECTION 11.01. REMIC Administration.
(a) The Trustee shall elect to treat each of REMIC I, REMIC II
and REMIC III as a REMIC under the Code and, if necessary, under applicable
state law. Each such election will be made by the Master Servicer on behalf of
the Trustee on Form 1066 or other appropriate federal tax or information return
or any appropriate state return for the taxable year ending on the last day of
the calendar year in which the Certificates are issued. For the purposes of the
REMIC election in respect of REMIC I, the REMIC I Regular Interests shall be
designated as the Regular Interests in REMIC I and the Class R-I Certificates
shall be designated as the Residual Interests in REMIC I. The REMIC II Regular
Interests shall be designated as the Regular Interests in REMIC II and the Class
R-II Certificates shall be designated as the Residual Interests in REMIC II. The
Class A Certificates, the Class CE Certificates and the Class P Certificates
shall be designated as the Regular Interests in REMIC III and the Class R-III
Certificates shall be designated as the Residual Interests in REMIC III. Neither
the Trustee nor the Trust Administrator shall permit the creation of any
"interests" in REMIC I, REMIC II or REMIC III (within the meaning of Section
860G of the Code) other than the REMIC I Regular Interests, the REMIC II Regular
Interests and the interests represented by the Certificates.
(b) The Closing Date is hereby designated as the "Startup Day"
of REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of
the Code.
(c) The Master Servicer shall pay out of its own funds,
without any right of reimbursement, any and all expenses relating to any tax
audit of the Trust Fund (including, but not limited to, any professional fees or
any administrative or judicial proceedings with respect to any REMIC I, REMIC II
or REMIC III that involve the Internal Revenue Service or state tax
authorities), other than the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Master Servicer, as agent for all of
REMIC I's, REMIC II's and REMIC III's tax matters person shall (i) act on behalf
of the Trust Fund in relation to any tax matter or controversy involving any of
REMIC I, REMIC II or REMIC III and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. The holder of the largest
Percentage Interest of each Class of Residual Certificates shall be designated,
in the manner provided under Treasury regulations section 1.860F-4(d) and
Treasury regulations section 301.6231(a)(7)-1, as the tax matters person of the
related REMIC created hereunder. By their acceptance thereof, the holder of the
largest Percentage Interest of each Class of Residual Certificates hereby agrees
to irrevocably appoint the Master Servicer or an Affiliate as its agent to
perform all of the duties of the tax matters person for the Trust Fund.
(d) The Master Servicer shall prepare and the Trustee shall
sign and the Trust Administrator shall file all of the Tax Returns in respect of
each REMIC created hereunder. The
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expenses of preparing and filing such returns shall be borne by the Master
Servicer without any right of reimbursement therefor.
(e) The Master Servicer shall perform on behalf of each of
REMIC I, REMIC II and REMIC III all reporting and other tax compliance duties
that are the responsibility of such REMIC under the Code, the REMIC Provisions
or other compliance guidance issued by the Internal Revenue Service or any state
or local taxing authority. Among its other duties, as required by the Code, the
REMIC Provisions or other such compliance guidance, the Master Servicer shall
provide (i) to any Transferor of a Residual Certificate such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of REMIC I,
REMIC II and REMIC III. The Depositor shall provide or cause to be provided to
the Master Servicer, within ten (10) days after the Closing Date, all
information or data that the Master Servicer reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Master Servicer, each Servicer, the Trustee and the
Trust Administrator shall take such action and shall cause each REMIC created
hereunder to take such action as shall be necessary to create or maintain the
status thereof as a REMIC under the REMIC Provisions. The Master Servicer, the
Servicers, the Trustee and the Trust Administrator shall not take any action,
cause the Trust Fund to take any action or fail to take (or fail to cause to be
taken) any action that, under the REMIC Provisions, if taken or not taken, as
the case may be, could (i) endanger the status of REMIC I, REMIC II or REMIC III
as a REMIC or (ii) result in the imposition of a tax upon the Trust Fund
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth
in Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event")
unless the Trustee and the Trust Administrator have received an Opinion of
Counsel, addressed to the Trustee, the Trust Administrator and the Certificate
Insurer (at the expense of the party seeking to take such action but in no event
at the expense of the Trust Administrator or the Trustee) to the effect that the
contemplated action will not, with respect to any of REMIC I, REMIC II or REMIC
III, endanger such status or result in the imposition of such a tax, nor shall
the Master Servicer or the Servicers take or fail to take any action (whether or
not authorized hereunder) as to which the Trustee or the Trust Administrator has
advised it in writing that it has received an Opinion of Counsel to the effect
that an Adverse REMIC Event could occur with respect to such action; provided
that the Master Servicer and the Servicers may conclusively rely on such Opinion
of Counsel and shall incur no liability for its action or failure to act in
accordance with such Opinion of Counsel. In addition, prior to taking any action
with respect to any of REMIC I, REMIC II or REMIC III or the respective assets
of each, or causing REMIC I, REMIC II or REMIC III to take any action, which is
not contemplated under the terms of this Agreement, the Master Servicer and the
Servicers will consult with the Trustee and the Trust Administrator or its
designee, in
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writing, with respect to whether such action could cause an Adverse REMIC Event
to occur with respect to REMIC I, REMIC II or REMIC III, and neither the Master
Servicer nor the Servicers shall take any such action or cause REMIC I, REMIC II
or REMIC III to take any such action as to which the Trustee or the Trust
Administrator has advised it in writing that an Adverse REMIC Event could occur;
provided that the Master Servicer and the Servicers may conclusively rely on
such writing and shall incur no liability for its action or failure to act in
accordance with such writing. The Trust Administrator and the Trustee may
consult with counsel to make such written advice, and the cost of same shall be
borne by the party seeking to take the action not permitted by this Agreement,
but in no event shall such cost be an expense of the Trustee or the Trust
Administrator, as applicable. At all times as may be required by the Code, the
Trust Administrator, the Trustee, the Master Servicer, or each Servicer will
ensure that substantially all of the assets of both REMIC I and REMIC II will
consist of "qualified mortgages" as defined in Section 860G(a)(3) of the Code
and "permitted investments" as defined in Section 860G(a)(5) of the Code, to the
extent such obligations are within such party's control and not otherwise
inconsistent with the terms of this Agreement.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trust Administrator pursuant to Section
11.03 hereof, if such tax arises out of or results from a breach by the Trust
Administrator of any of its obligations under this Article XI, (ii) to the
Trustee pursuant to Section 11.03 hereof, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Article XI,
(iii) to the Master Servicer or the related Servicer pursuant to Section 11.03
hereof, if such tax arises out of or results from a breach by the Master
Servicer or such Servicer of any of its obligations under Article III or this
Article XI, or (iv) against amounts on deposit in the Distribution Account and
shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing
April 15, 1999, the Master Servicer and each Servicer shall deliver to each
Rating Agency an Officer's Certificate of the Master Servicer and each Servicer
stating the Master Servicer's or such Servicer's compliance with this Article
XI.
(i) The Master Servicer shall, for federal income tax
purposes, maintain books and records with respect to each of REMIC I, REMIC II
and REMIC III on a calendar year and on an accrual basis.
(j) Following the Startup Day, the Master Servicer, the
Servicers, the Trustee and the Trust Administrator shall not accept any
contributions of assets to any of REMIC I, REMIC II or REMIC III other than in
connection with any Qualified Substitute Mortgage Loan delivered in accordance
with Section 2.03 unless it shall have received an Opinion of Counsel to the
effect that the inclusion of such assets in the Trust Fund will not cause the
related REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding or subject such REMIC
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to any tax under the REMIC Provisions or other applicable provisions of federal,
state and local law or ordinances.
(k) None of the Trustee, the Trust Administrator, the Master
Servicer or the Servicers shall enter into any arrangement by which REMIC I,
REMIC II or REMIC III will receive a fee or other compensation for services nor
permit either REMIC to receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code.
SECTION 11.02. Prohibited Transactions and Activities.
None of the Depositor, the Master Servicer, the Servicers, the
Trust Administrator or the Trustee shall sell, dispose of or substitute for any
of the Mortgage Loans (except in connection with (i) the foreclosure of a
Mortgage Loan, including but not limited to, the acquisition or sale of a
Mortgaged Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy
of REMIC I, (iii) the termination of REMIC I pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement), nor
acquire any assets for any of REMIC I, REMIC II or REMIC III (other than REO
Property acquired in respect of a defaulted Mortgage Loan), nor sell or dispose
of any investments in the Collection Account or the Distribution Account for
gain, nor accept any contributions to any of REMIC I, REMIC II or REMIC III
after the Closing Date (other than a Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03), unless it has received an Opinion of
Counsel, addressed to the Trustee, the Trust Administrator and the Certificate
Insurer (at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event at the expense of the
Trustee or the Trust Administrator) that such sale, disposition, substitution,
acquisition or contribution will not (a) affect adversely the status of any of
REMIC I, REMIC II or REMIC III as a REMIC or (b) cause any of REMIC I, REMIC II
or REMIC III to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions.
SECTION 11.03. Master Servicer, Servicers, Trustee and Trust
Administrator Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the Certificate Insurer, the Servicers and the Trust Administrator
for any taxes and costs including, without limitation, any reasonable attorneys
fees imposed on or incurred by the Trust Fund, the Depositor, the Certificate
Insurer, the Servicers or the Trust Administrator, as a result of a breach of
the Trustee's covenants set forth in this Article XI.
(b) The Trust Administrator agrees to indemnify the Trust
Fund, the Depositor, the Certificate Insurer, the Servicers and the Trustee for
any taxes and costs including, without limitation, any reasonable attorneys fees
imposed on or incurred by the Trust Fund, the Depositor, the Certificate
Insurer, the Servicers or the Trustee, as a result of a breach of the Trust
Administrator's covenants set forth in this Article XI.
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(b) The Master Servicer and each Servicer, severally, agree to
indemnify the Trust Fund, the Depositor, the Certificate Insurer, the Trustee,
the Master Servicer, the other Servicer and the Trust Administrator for any
taxes and costs including, without limitation, any reasonable attorneys' fees
imposed on or incurred by the Trust Fund, the Depositor, the Certificate
Insurer, the Trustee, the Master Servicer, the other Servicer or the Trust
Administrator, as a result of a breach of the Master Servicer's or such
Servicer's covenants set forth in Article III or this Article XI.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment.
This Agreement may be amended with the consent of the
Certificate Insurer from time to time by the Depositor, the Servicers, the
Master Servicer, the Trustee and the Trust Administrator without the consent of
any of the Certificateholders, (i) to cure any ambiguity or defect, (ii) to
correct, modify or supplement any provisions herein (including to give effect to
the expectations of Certificateholders), or (iii) to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement, provided that such
action shall not, as evidenced by an Opinion of Counsel delivered to the
Trustee, the Trust Administrator and the Certificate Insurer, adversely affect
in any material respect the interests of any Certificateholder or the
Certificate Insurer, and provided further that such Opinion of Counsel shall not
be necessary if the party seeking such amendment delivers to the Trustee and the
Trust Administrator a letter from each Rating Agency stating that such amendment
would not cause a downgrade or withdrawal of the then current ratings of the
Certificates without regard to the Policy. No amendment shall be deemed to
adversely affect in any material respect the interests of any Certificateholder
who shall have consented thereto, and no Opinion of Counsel shall be required to
address the effect of any such amendment on any such consenting
Certificateholder.
This Agreement may also be amended from time to time by the
Depositor, the Servicers, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Certificate Insurer and the Holders of
Certificates entitled to at least 66% of the Voting Rights for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner, other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least 66% of the Voting Rights
allocated to such Class, or (iii) modify the consents required by the
immediately preceding clauses (i) and (ii) without the consent of the
Certificate Insurer and the Holders of all Certificates then outstanding.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 12.01, Certificates
registered in the name of the Depositor, the Master Servicer or either Servicer
or any Affiliate thereof shall be entitled to Voting Rights with respect to
matters affecting such Certificates.
Notwithstanding any contrary provision of this Agreement,
neither the Trustee nor the Trust Administrator shall consent to any amendment
to this Agreement unless it shall have first received an Opinion of Counsel to
the effect that such amendment will not result in the imposition of any tax on
any of REMIC I, REMIC II or REMIC III pursuant to the REMIC Provisions or
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cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any
time that any Certificates are outstanding. Any such amendment pursuant to the
first paragraph of this Section 12.01 shall not be deemed to adversely affect in
any material respect the interests of any Certificateholder if such change is
required by the Certificate Insurer, so long as no Certificate Insurer Default
has occurred and is continuing, and the Trustee and the Trust Administrator
receive written confirmation from each Rating Agency that such amendment will
not cause such Rating Agency to reduce the then current rating or any shadow
rating of the affected Certificates.
Promptly after the execution of any such amendment the Trust
Administrator shall furnish a copy of such amendment to each Certificateholder
and the Certificate Insurer.
It shall not be necessary for the consent of
Certificateholders under this Section 12.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee or the Trust Administrator
may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to
this Section 12.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee or
Trust Administrator.
Each of the Trustee and the Trust Administrator may, but shall
not be obligated to enter into any amendment pursuant to this Section that
affects its rights, duties and immunities under this Agreement or otherwise.
SECTION 12.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Certificateholders, but
only upon direction of the Trustee or the Trust Administrator accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts
shall constitute but one and the same instrument.
SECTION 12.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding
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up of the Trust Fund, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 12.04. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in
accordance with such laws.
SECTION 12.05. Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to (a) in
the case of the Depositor, Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Mortgage Finance Group (telecopy number (000) 000-0000), or such
other address or telecopy number as may hereafter be furnished to the Master
Servicer, the Servicers, the Trustee, the Trust Administrator and the
Certificate Insurer in writing by the Depositor, (b)
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in the case of the Master Servicer, 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxxxx 00000 (telecopy number: (000) 000-0000), or such other address or
telecopy number as may hereafter be furnished to the Trustee, the Trust
Administrator, the Certificate Insurer, the Servicers and the Depositor in
writing by the Master Servicer, (c) in the case of Option One Mortgage
Corporation, 0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx 00000,
Attention: Xx. Xxxxxxx Xxxxxxx (telecopy number: (000) 000-0000), or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
Trust Administrator, the Certificate Insurer, the Master Servicer and the
Depositor in writing by Option One Mortgage Corporation, (d) in the case of the
Trust Administrator, 000 Xxxx Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx, 00000,
Attention: Structured Finance/New Century 1998-NC7 (telecopy number (612)
244-0089), or such other address or telecopy number as may hereafter be
furnished to the Servicers, the Master Servicer, the Certificate Insurer, the
Depositor and the Trustee in writing by the Trust Administrator, (d) in the case
of the Trustee, 0000 Xxxxx XxxxxXxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx
00000, Attention: Xxxxxxx Xxxxxxxx (telecopy number (000) 000-0000), or such
other address or telecopy number as may hereafter be furnished to the Servicers,
the Master Servicer, the Certificate Insurer, the Trust Administrator and the
Depositor in writing by the Trustee and (e) in the case of the Certificate
Insurer, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Surveillance
Department (telecopy number (000) 000-0000 or (000) 000-0000) or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
Trust Administrator, the Depositor, the Master Servicer and the Servicers in
writing by the Certificate Insurer. In each case in which a notice or other
communication to the Certificate Insurer refers to a Servicer Event of Default
or a claim under the Policy or with respect to which failure on the part of the
Certificate Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head- Financial Guaranty
Group and shall be marked to indicate "URGENT MATERIAL ENCLOSED." Any notice
required or permitted to be given to a Certificateholder shall be given by first
class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder also shall be mailed to the appropriate
party in the manner set forth above.
SECTION 12.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 12.07. Notice to Rating Agencies and the Certificate
Insurer.
The Trust Administrator shall use its best efforts promptly to
provide notice to the Rating Agencies and the Certificate Insurer with respect
to each of the following of which it has actual knowledge:
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1. Any material change or amendment to this Agreement;
2. The occurrence of any Servicer Event of Default that
has not been cured or waived;
3. The resignation or termination of either Servicer,
the Trustee or the Trust Administrator;
4. The repurchase or substitution of Mortgage Loans
pursuant to or as contemplated by Section 2.03;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of the Collection Account
or the Distribution Account;
7. Any event that would result in the inability of the
Trust Administrator or the Trustee, as applicable, to
make advances regarding delinquent Mortgage Loans;
8. Any Certificate Insurer Default that has not been
cured; and
9. The filing of any claim under either Servicer's
blanket bond and errors and omissions insurance
policy required by Section 3.14 or the cancellation
or material modification of coverage under any such
instrument.
In addition, the Trust Administrator shall promptly furnish to
each Rating Agency and the Certificate Insurer copies of each report to
Certificateholders described in Section 4.02 and the related Servicer shall
promptly furnish to each Rating Agency copies of the following:
1. Each annual statement as to compliance described in
Section 3.20; and
2. Each annual independent public accountants' servicing
report described in Section 3.21.
Any such notice pursuant to this Section 12.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
and to Standard & Poor's Ratings Services, 00 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or such other addresses as the Rating Agencies may designate in writing
to the parties hereto.
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SECTION 12.08. Article and Section References.
All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.
SECTION 12.09. Grant of Security Interest.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans to the Trust Administrator, on behalf of the
Trustee, be, and be construed as, a sale of the Mortgage Loans and not a pledge
of the Mortgage Loans by the Depositor to secure a debt or other obligation of
the Depositor. However, in the event that, notwithstanding the aforementioned
intent of the parties, the Mortgage Loans are held to be property of the
Depositor, then, (a) it is the express intent of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor and (b)(1) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code as in effect from time to time
in the State of New York; (2) the conveyance provided for in Section 2.01 hereof
shall be deemed to be a grant by the Depositor to the Trustee of a security
interest in all of the Depositor's right, title and interest in and to the
Mortgage Loans and all amounts payable to the holders of the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Collection Account and the
Distribution Account, whether in the form of cash, instruments, securities or
other property; (3) the obligations secured by such security agreement shall be
deemed to be all of the Depositor's obligations under this Agreement, including
the obligation to provide to the Certificateholders the benefits of this
Agreement relating to the Mortgage Loans and the Trust Fund; and (4)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interest under applicable law. Accordingly, the
Depositor hereby grants to the Trustee a security interest in the Mortgage Loans
and all other property described in clause (2) of the preceding sentence, for
the purpose of securing to the Trustee the performance by the Depositor of the
obligations described in clause (3) of the preceding sentence. Notwithstanding
the foregoing, the parties hereto intend the conveyance pursuant to Section 2.01
to be a true, absolute and unconditional sale of the Mortgage Loans and assets
constituting the Trust Fund by the Depositor to the Trustee.
-157-
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the
Servicers, the Trust Administrator and the Trustee have caused their names to be
signed hereto by their respective officers thereunto duly authorized, in each
case as of the day and year first above written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.,
as Depositor
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President
NEW CENTURY MORTGAGE CORPORATION
as Master Servicer and Servicer
By: /s/ Xxxx Xxxxxxxxx
----------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
OPTION ONE MORTGAGE CORPORATION
as Servicer
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By: /s/ Xxx X. Xxxxxx
----------------------------
Name: Xxx X. Xxxxxx
Title: Vice President
FIRSTAR BANK MILWAUKEE, N.A.
as Trustee
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Assistant Vice President
-158-
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 22nd day of December 1998, before me, a notary public
in and for said State, personally appeared Xxxxxxx X. Xxxxx, known to me to be
an Assistant Vice President of Salomon Brothers Mortgage Securities VII, Inc.,
one of the corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 22nd day of December 1998, before me, a notary public
in and for said State, personally appeared Xxxx Xxxxxxxxx, known to me to be
Vice President of New Century Mortgage Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF _________ )
On the 22nd day of December 1998, before me, a notary public
in and for said State, personally appeared ________________, known to me to be
_________________ of Option One Mortgage Corporation, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
STATE OF MINNESOTA )
) ss.:
COUNTY OF XXXXXX )
On the 22nd day of December 1998, before me, a notary public
in and for said State, personally appeared Xxx X. Xxxxxx, known to me to be a
Vice President of U.S. Bank National Association, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
STATE OF MINNESOTA )
) ss.:
COUNTY OF XXXXXX )
On the 22nd day of December 1998, before me, a notary public
in and for said State, personally appeared Xxx X. Xxxxxx, known to me to be Vice
President of U.S. Bank National Association, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
STATE OF WISCONSIN )
) ss.:
COUNTY OF __________ )
On the 22nd day of December 1998, before me, a notary public
in and for said State, personally appeared ____________, known to me to be a
________________ of Firstar Bank Milwaukee, N.A., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
EXHIBIT A-1
-----------
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1998-NC7, Class A-1 Aggregate Certificate Principal Balance of
the Class A-1 Certificates as of the Issue
Pass-Through Rate: 6.063% Date: $__________________
Date of Pooling and Servicing Agreement Denomination: $_____________
and Cut-off Date: December 1, 1998
Master Servicer and servicer: New Century
First Distribution Date: Mortgage Corporation
January 25, 1999
Servicer: Option One Mortgage Corporation
No. ___
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
CUSIP: 79548K ____
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-1 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-1 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-1 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-1 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A Certificates, or otherwise
by check mailed by first class mail to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register.
Notwithstanding the
-3-
above, the final distribution on this Certificate will be made after due notice
by the Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates
-4-
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:____________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-2
-----------
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1998-NC7, Class A-2 Aggregate Certificate Principal Balance of
the Class A-2 Certificates as of the Issue
Pass-Through Rate: 6.061% Date: $__________________
Date of Pooling and Servicing Agreement Denomination: $_____________
and Cut-off Date: December 1, 1998
Master Servicer and servicer: New Century
First Distribution Date: Mortgage Corporation
January 25, 1999
Servicer: Option One Mortgage Corporation
No. ___
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
CUSIP: 79548K ____
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-2 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-2 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-2 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-2 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A Certificates, or otherwise
by check mailed by first class mail
-3-
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-4-
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-3
-----------
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1998-NC7, Class A-3 Aggregate Certificate Principal Balance of
the Class A-3 Certificates as of the Issue
Pass-Through Rate: 6.595% Date: $__________________
Date of Pooling and Servicing Agreement Denomination: $_____________
and Cut-off Date: December 1, 1998
Master Servicer and servicer: New Century
First Distribution Date: Mortgage Corporation
January 25, 1999
Servicer: Option One Mortgage Corporation
No. ___
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
CUSIP: 79548K ____
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-3 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-3 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-3 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-3 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A Certificates, or otherwise
by check mailed by first class mail
-3-
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-4-
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-3 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-4
-----------
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1998-NC7, Class A-4 Aggregate Certificate Principal Balance of the
Class A-4 Certificates as of the Issue Date:
Pass-Through Rate: 6.704% $________________
Date of Pooling and Servicing Agreement Denomination: $_____________
and Cut-off Date: December 1, 1998
Master Servicer and servicer: New Century
First Distribution Date: Mortgage Corporation
January 25, 1999
Servicer: Option One Mortgage Corporation
No. ___
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
CUSIP: 79548K ____
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-4 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-4 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-4 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-4 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A Certificates, or otherwise
by check mailed by first class mail
-3-
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-4-
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-4 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-5
-----------
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1998-NC7, Class A-5 Aggregate Certificate Principal Balance of
the Class A-5 Certificates as of the Issue
Pass-Through Rate: 6.838% Date: $__________________
Date of Pooling and Servicing Agreement Denomination: $_____________
and Cut-off Date: December 1, 1998
Master Servicer and servicer: New Century
First Distribution Date: Mortgage Corporation
January 25, 1999
Servicer: Option One Mortgage Corporation
No. ___
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
CUSIP: 79548K ____
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-5 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-5 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-5 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-5 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A Certificates, or otherwise
by check mailed by first class mail
-3-
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-4-
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-5 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-6
-----------
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1998-NC7, Class A-6 Aggregate Certificate Principal Balance of
the Class A-6 Certificates as of the Issue
Initial Pass-Through Rate: 7.491% Date: $__________________
Date of Pooling and Servicing Agreement Denomination: $_____________
and Cut-off Date: December 1, 1998
Master Servicer and servicer: New
First Distribution Date: Century Mortgage Corporation
January 25, 1999
Servicer: Option One Mortgage
No. ___ Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
CUSIP: 79548K ____
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-6 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-6 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-6 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-6 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A Certificates, or otherwise
by check mailed by first class mail
-3-
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-4-
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-6 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-7
-----------
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1998-NC7, Class A-7 Aggregate Certificate Principal Balance of
the Class A-7 Certificates as of the Issue
Pass-Through Rate: 6.615% Date: $__________________
Date of Pooling and Servicing Agreement Denomination: $_____________
and Cut-off Date: December 1, 1998
Master Servicer and servicer: New Century
First Distribution Date: Mortgage Corporation
January 25, 1999
Servicer: Option One Mortgage Corporation
No. ___
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
CUSIP: 79548K ____
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-7 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-7 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-7 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-7 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A Certificates, or otherwise
by check mailed by first class mail
-3-
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-4-
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-7 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-8
-----------
FORM OF CLASS CE CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT", AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT
("OID") RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS
CERTIFICATE IS DECEMBER 22, 1998. BASED ON THE OID REGULATIONS
AND ASSUMING THAT THE MORTGAGE LOANS PREPAY AT __% CONSTANT
PREPAYMENT RATE, USED SOLELY FOR THE PURPOSES OF APPLYING THE OID
RULES TO THE CERTIFICATES (THE "PREPAYMENT ASSUMPTION"), THIS
CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $_______ OF OID PER
$100,000 OF INITIAL NOTIONAL AMOUNT, THE YIELD TO MATURITY IS
____% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL
PERIOD IS NO MORE THAN $____ PER $100,000 OF INITIAL NOTIONAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS
MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE
PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND
THE RESIDUAL CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS
AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH
THE PROCEDURES DESCRIBED HEREIN.
Series 1998-NC7, Class CE Aggregate Notional Amount of the Class
CE Certificates as of the Issue Date:
Variable Pass-Through Rate $__________________
Date of Pooling and Servicing Agreement Notional Amount: $_________________
and Cut-off Date: December 1, 1998
Aggregate Certificate Principal Balance of
First Distribution Date: the Class CE Certificates as of the Issue
January 25, 1999 Date: $__________________
No. ___ Denomination: $_____________
Master Servicer and servicer: New Century
Mortgage Corporation
Servicer: Option One Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class CE Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class CE Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class CE Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
CE Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class CE Certificates, or otherwise
by check mailed by first class mail
-4-
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the Trust
Administrator for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trust
Administrator duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-5-
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator, the Master Servicer, the Servicer in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor, the Trustee or the Trust Administrator is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Trust Administrator,
the Depositor, the Master Servicer and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee or the
Trust Administrator and any agent of the Depositor, the Master Servicer, the
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator nor any such agent shall be affected by notice to the contrary.
-6-
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-9
-----------
FORM OF CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT", AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT
("OID") RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS
CERTIFICATE IS DECEMBER 22, 1998. BASED ON THE OID REGULATIONS
AND ASSUMING THAT THE MORTGAGE LOANS PREPAY AT __% OF THE
CONSTANT PREPAYMENT RATE, USED SOLELY FOR THE PURPOSES OF
APPLYING THE OID RULES TO THE CERTIFICATES (THE "PREPAYMENT
ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN
$______ OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL
BALANCE, THE YIELD TO MATURITY IS _____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED
UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT
ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE
WITH THE PROCEDURES DESCRIBED HEREIN.
Series 1998-NC7, Class P Aggregate Certificate Principal Balance of the
Class P Certificates as of the Issue Date:
Date of Pooling and Servicing Agreement $100.00
and Cut-off Date: December 1, 1998
Denomination: $100.00
First Distribution Date:
January 25, 1998 Master Servicer and servicer: New Century
Mortgage Corporation
No. ___
Servicer: Option One Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National
Association
Issue Date: December 22, 1998
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family
adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ___________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class P Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class P Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class P Certificates on such
Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
P Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate
-4-
Principal Balance of the Class P Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trust
Administrator for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
-5-
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Master Servicer in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Trust Administrator is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor, the Master Servicer and the Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator or the Certificate Insurer and any agent of the Depositor,
the Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and
-6-
none of the Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator, the Certificate Insurer nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-10
------------
FORM OF CLASS R-I CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE
"CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED
STATES OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE
DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX
IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3)
SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND
(B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OF ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL
FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE
DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND
THE PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
THIS CERTIFICATE.
Series 1998-NC7, Class R-I Aggregate Percentage Interest of the Class R-I
Certificates as of the Issue Date: 100.00%
Variable Pass-Through Rate
Master Servicer and servicer: New Century
Date of Pooling and Servicing Agreement Mortgage Corporation
and Cut-off Date: December 1, 1998
Servicer: Option One Mortgage Corporation
First Distribution Date:
January 25, 1999 Trustee: Firstar Bank Milwaukee, N.A.
No. ___ Trust Administrator: U.S. Bank Milwaukee,
N.A.
Issue Date: December 22, 1998
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R-I Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R-I Certificates in REMIC I created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class R-I Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R-I Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class R-I Certificates, or
otherwise by check mailed by first class mail
-4-
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the Trust
Administrator for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-5-
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator, the Master Servicer or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor, the Trustee or the Trust Administrator is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Trust Administrator,
the Depositor, the Master Servicer and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-I Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-I Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified
-6-
Organization, such registration shall be deemed to be of no legal force or
effect whatsoever and such Person shall not be deemed to be a Certificateholder
for any purpose, including, but not limited to, the receipt of distributions in
respect of this Certificate.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
-7-
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-I Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-11
------------
FORM OF CLASS R-II CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE
"CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED
STATES OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE
DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX
IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3)
SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND
(B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OF ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL
FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE
DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND
THE PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
THIS CERTIFICATE.
Series 1998-NC7, Class R-II Aggregate Percentage Interest of the Class R-
II Certificates as of the Issue Date: 100.00%
Variable Pass-Through Rate
Master Servicer and servicer: New Century
Date of Pooling and Servicing Agreement Mortgage Corporation
and Cut-off Date: December 1, 1998
Servicer: Option One Mortgage Corporation
First Distribution Date:
January 25, 1999 Trustee: Firstar Bank Milwaukee, N.A.
No. ___ Trust Administrator: U.S. Bank Milwaukee,
N.A.
Issue Date: December 22, 1998
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R-II Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R-II Certificates in REMIC I created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class R-II Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R-II Certificates the aggregate initial Certificate Principal Balance of which
is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class R-II Certificates, or
otherwise by check mailed by first class
-4-
mail to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the Trust
Administrator for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-5-
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator, the Master Servicer or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor, the Trustee or the Trust Administrator is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Trust Administrator,
the Depositor, the Master Servicer and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-II Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-II Certificates. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified
-6-
Organization, such registration shall be deemed to be of no legal force or
effect whatsoever and such Person shall not be deemed to be a Certificateholder
for any purpose, including, but not limited to, the receipt of distributions in
respect of this Certificate.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer or the Certificate Insurer
is the Terminator. Furthermore, the holder of the Call Class can effect early
retirement of the Certificates in accordance with the terms set forth in the
Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
-7-
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-II Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT A-12
------------
FORM OF CLASS R-III CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON- UNITED STATES
PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE
"CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED
STATES OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE
DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX
IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3)
SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND
(B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION
OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF
A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO
BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL
NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS
OF SECTION 5.02(D) OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
THIS CERTIFICATE.
Series 1998-NC7, Class R-III Aggregate Percentage Interest of the Class R-
III Certificates as of the Issue Date: 100.00%
Variable Pass-Through Rate
Master Servicer and servicer: New Century
Date of Pooling and Servicing Agreement Mortgage Corporation
and Cut-off Date: December 1, 1998
Servicer: Option One Mortgage Corporation
First Distribution Date:
January 25, 1999 Trustee: Firstar Bank Milwaukee, N.A.
No. ___ Trust Administrator: U.S. Bank Milwaukee,
N.A.
Issue Date: December 22, 1998
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER
SERVICER, THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R-III Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R-III Certificates in REMIC I created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Servicer, the Trustee and the Trust Administrator, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class R-III Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R-III Certificates the aggregate initial Certificate Principal Balance of which
is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class R-III Certificates, or
otherwise by check mailed by first class
-4-
mail to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trust
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the Trust
Administrator for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates but with the consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As
-5-
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator, the Master Servicer or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor, the Trustee or the Trust Administrator is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Trust Administrator,
the Depositor, the Master Servicer and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-III Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-III Certificates. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified
-6-
Organization, such registration shall be deemed to be of no legal force or
effect whatsoever and such Person shall not be deemed to be a Certificateholder
for any purpose, including, but not limited to, the receipt of distributions in
respect of this Certificate.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer and any agent of the Depositor,
any Master Servicer, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Trustee, the Trust Administrator, the
Certificate Insurer nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trust Administrator on behalf of the Trustee and required to be paid
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
principal balance of the Mortgage Loans at the time of purchase is reduced to
less than 10%,in the event the Majority Class CE Certificateholder is the
Terminator, or 5%, in the event the Master Servicer, the Servicer or the
Certificate Insurer is the Terminator. Furthermore, the holder of the Call Class
can effect early retirement of the Certificates in accordance with the terms set
forth in the Agreement.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
-7-
Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: December 22, 1998
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-III Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_______________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: ________________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _________________________, account number ________________ ,
or, if mailed by check, to ____________________________________________________
______________________________________________________________________________ .
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________ .
This information is provided by _______________________________________________,
the assignee named above, or __________________________________, as its agent.
EXHIBIT B
---------
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCEsm
Trust: As described in Endorsement No. 1 Policy No.: 50752-N
Certificates: $688,079,000 Salomon Brothers Date of Issuance: 12/22/98
Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates,
Series 1998-NC7, Class A-1, Class
X-0, Xxxxx X-0, Class A-4, Class
A-5, Class A-6 and Class A-7
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to the
Trustee for the benefit of each Holder, subject only to the terms of this Policy
(which includes each endorsement hereto), the full and complete payment of
Guaranteed Distributions with respect to the Certificates of the Trust referred
to above.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided in
whole or in part as a preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be
made following receipt by Financial Security of notice as described in
Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto,
the following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the Certificate.
"Trustee", "Guaranteed Distributions" and "Term of this Policy" shall have the
meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in respect
of this Policy are nonrefundable for any reason whatsoever. This Policy may not
be canceled or revoked during the Term of this Policy. An acceleration payment
shall not be due under this Policy unless such acceleration is at the sole
option of Financial Security. THIS POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By________________________________
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000 (000) 000-0000
Form 101NY (5/89)
ENDORSEMENT NO. 1 TO FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing Agreement
dated as of December 1, 1998 among Salomon Brothers
Mortgage Securities VII, Inc., as Depositor, New Century
Mortgage Corporation, as Master Servicer and Servicer, Option
One Mortgage Corporation as Servicer, Firstar Bank Milwaukee,
National Association as Trustee and U.S. Bank National
Association as Trust Administrator
POLICY NO.: 50752-N
CERTIFICATES: $688,079,000 Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1998-NC7, Class X-
0, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and
Class A-7
DATE OF ISSUANCE: December 22, 1998
1. DEFINITIONS. For all purposes of this Policy, the terms specified
below shall have the meanings or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided in
the Pooling and Servicing Agreement unless the context shall otherwise require.
"BUSINESS DAY" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in the State of California, the State
of New York or in the city in which the Corporate Trust Office of the Trustee or
the Trust Administrator is located, are authorized or obligated by law or
executive order to be closed.
"FINAL DISTRIBUTION DATE" means the Distribution Date coinciding with
or following a purchase by the Terminator in accordance with the terms of clause
(i) of the first paragraph of Section 10.01 of the Pooling and Servicing
Agreement.
"GUARANTEED DISTRIBUTIONS" means, with respect to each Distribution
Date, the distribution to be made to the Class A Certificates on such
Distribution Date, in an aggregate amount equal to the sum of (i) the Accrued
Certificate Interest on the Certificates, less the amount of any shortfalls
resulting from the application of the Relief Act, (ii) the excess, if any, of
(a) the aggregate Certificate Principal Balance of all of the Class A
Certificates then outstanding over (b) the aggregate principal balances of the
Mortgage Loans then outstanding and (iii) if (but only if) such Distribution
Date is the final Distribution Date or Maturity Date for the Class A
Certificates, the outstanding Certificate Principal Balance of the Class A
Certificates (without duplication of amounts included pursuant to clause (ii)),
in each case in accordance with the original terms of the Class A Certificates
when issued and without regard to any amendment or modification of the Class A
Certificates or the Pooling and Servicing
Agreement which has not been consented to by Financial Security. Guaranteed
Distributions shall not include, nor shall coverage be provided under this
Policy in respect of any taxes, withholding or other charge imposed by any
governmental authority.
"MATURITY DATE" means the Distribution Date coinciding with or
following the final payment or other liquidation of the last Mortgage Loan or
REO Property as described in clause (ii) of the first paragraph of Section 10.01
of the Pooling and Servicing Agreement, subject to the proviso set forth
therein.
"POLICY" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
"POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing
Agreement dated as of December 1, 1998 among Salomon Brothers Mortgage
Securities VII, Inc., New Century Mortgage Corporation, Option One Mortgage
Corporation, Firstar Bank Milwaukee National Association and U.S. Bank National
Association with respect to Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1998-NC7, as amended from time to
time with the consent of Financial Security.
"RECEIPT" and "RECEIVED" mean actual delivery to Financial Security
and to the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon,
New York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
Received on succeeding Business Day. If any notice or certificate given
hereunder by the Trust Administrator is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received,
and Financial Security or its Fiscal Agent shall promptly so advise the Trust
Administrator and the Trust Administrator may submit an amended notice.
"TERM OF THIS POLICY" means the period from and including the Date of
Issuance to and including the date on which (i) the Certificate Principal
Balance of all of the Class A Certificates is zero, (ii) any period during which
any payment on the Class A Certificates could have been avoided in whole or in
part as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law has expired, and (iii) if any proceedings requisite
to avoidance as a preference payment have been commenced prior to the occurrence
of (i) and (ii), a final and nonappealable order in resolution of each such
proceeding has been entered.
"TRUSTEE" means Firstar Bank Milwaukee National Association, in its
capacity as Trustee under the Pooling and Servicing Agreement and any successor
in such capacity.
"TRUST ADMINISTRATOR" means U.S. Bank National Association, in its
capacity as Trust Administrator under the Pooling and Servicing Agreement and
any successor in such capacity.
2. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS. Following Receipt by Financial Security of a notice and
certificate from the Trust Administrator in the form attached as Exhibit A to
this Endorsement, Financial Security will pay any amount payable hereunder in
respect of Guaranteed Distributions out of the funds of
Financial Security on the later to occur of (a) 12:00 noon, New York City time,
on the second Business Day following such Receipt; and (b) 12:00 noon, New York
City time, on the Distribution Date to which such claim relates. Payments due
hereunder in respect of Guaranteed Distributions will be disbursed by wire
transfer of immediately available funds to the Policy Payments Account
established pursuant to the Pooling and Servicing Agreement or, if no such
Policy Payments Account has been established, to the Trust Administrator.
Financial Security shall be entitled to pay any amount hereunder in
respect of Guaranteed Distributions whether or not any notice and certificate
shall have been Received by Financial Security as provided above, provided
however, that by acceptance of this Policy the Trustee, and the Trust
Administrator on behalf of the Trustee, agree to provide upon request to
Financial Security a notice and certificate in respect of any such payments made
by Financial Security. Financial Security's obligations hereunder in respect of
Guaranteed Distributions shall be discharged to the extent funds are disbursed
by Financial Security as provided herein whether or not such funds are properly
applied by the Trust Administrator.
3. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS AVOIDED AS PREFERENCE PAYMENTS. If any Guaranteed Distribution is
avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of the
funds of Financial Security on the later of (a) the date when due to be paid
pursuant to the Order referred to below or (b) the first to occur of (i) the
fourth Business Day following Receipt by Financial Security from the Trustee of
(A) a certified copy of the order to the court or other governmental body which
exercised jurisdiction to the effect that the Holder is required to return
principal or interest distributed with respect to the Class A Certificates
during the Term of this Policy because such distributions were avoidable as
preference payments under applicable bankruptcy law (the "Order"), (B) a
certificate of the Holder that the Order has been entered and is not subject to
any stay and (C) an assignment duly executed and delivered by the Holder, in
such form as is reasonably required by Financial Security, and provided to the
Holder by Financial Security, irrevocably assigning to Financial Security all
rights and claims of the Holder relating to or arising under the Certificates
against the debtor which made such preference payment or otherwise with respect
to such preference payment or (ii) the date of Receipt by Financial Security
from the Trust Administrator of the items referred to in clauses (A), (B) and
(C) above if, at least four Business Days prior to such date of Receipt,
Financial Security shall have Received written notice from the Trust
Administrator that such items were to be delivered on such date and such date
was specified in such notice. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
and not to the Trustee, the Trust Administrator or any Holder directly (unless a
Holder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trust Administrator for distribution to
such Holder upon proof of such payment reasonably satisfactory to Financial
Security). In connection with the foregoing, Financial Security shall have the
rights provided pursuant to Section 9.04(d) of the Pooling and Servicing
Agreement.
4. GOVERNING LAW. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
5. FISCAL AGENT. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trust Administrator at the notice address
specified in the Pooling and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of such notice
by the Trust Administrator, (i) copies of all notices and documents required to
be delivered to Financial Security pursuant to this Policy shall be
simultaneously delivered to the Fiscal Agent and to Financial Security and shall
not be deemed Received until Received by both and (ii) all payments required to
be made by Financial Security under this Policy may be made directly by
Financial Security or by the Fiscal Agent on behalf of Financial Security. The
Fiscal Agent is the agent of Financial Security only and the Fiscal Agent shall
in no event be liable to any Holder for any acts of the Fiscal Agent or any
failure of Financial Security to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.
6. WAIVER OF DEFENSES. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the benefit
of each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.
7. NOTICES. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Senior Vice President - Surveillance
Re: Salomon Brothers Mortgage Securities VII, Inc.,
Callable Floating Rate Mortgage Pass-Through
Certificates, Series 1998-NC5
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trust Administrator.
8. PRIORITIES. In the event any term or provisions of the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.
9. EXCLUSIONS FROM INSURANCE GUARANTY FUNDS. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article 76
of the New York Insurance
Law. This Policy is not covered by the Florida Insurance Guaranty Association
created under Part II of Chapter 631 of the Florida Insurance Code. In the event
Financial Security were to become insolvent, any claims arising under this
Policy are excluded from coverage by the California Insurance Guaranty
Association, established pursuant to Article 14.2 of Chapter 1 of Part 2 of
Division 1 of the California Insurance Code.
10. SURRENDER OF POLICY. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:_______________________________
Authorized Officer
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
The undersigned, a duly authorized officer of U.S. Bank National
Association (the "Trust Administrator"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. 50752-N dated December 22, 1998 (the "Policy") issued by
Financial Security in respect of the Salomon Brothers Mortgage Securities VII,
Inc., Mortgage Pass-Through Certificates, Series 1998-NC7, Class A-1, Class X-0,
Xxxxx X-0, Class A-4, Class A-5, Class A-6 and Class A-7 (the "Certificates),
that:
(i) The Trust Administrator is the Trust Administrator under the
Pooling and Servicing Agreement for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Distribution Account and available for distribution to
the Holders of the Guaranteed Distributions pursuant to the Pooling
and Servicing Agreement will be $____________ (the "Shortfall") less
than the Guaranteed Distributions with respect to the Distribution
Date occurring on ________________.
(iii) The Trust Administrator is making a claim under the Policy
for the Shortfall to be applied to distributions of principal or
interest or both with respect to the Certificates.
(iv) The Trust Administrator agrees that, following receipt of
funds from Financial Security, it shall (a) hold such amounts in trust
and apply the same directly to the payment of Guaranteed Distributions
on the Certificates when due; (b) not apply such funds for any other
purpose; (c) not commingle such funds with other funds held by the
Trust Administrator and (d) maintain an accurate record of such
payments with respect to each Certificate and the corresponding claim
on the Policy and proceeds thereof and, if the Certificate is required
to be surrendered for such payment, shall stamp on each such
Certificate the legend "$[INSERT APPLICABLE AMOUNT] paid by Financial
Security and the balance hereof has been canceled and reissued" and
then shall deliver such Certificate to Financial Security.
(v) The Trust Administrator, on behalf of the Holders, hereby
assigns to Financial Security the rights of the Holders with respect
to the Certificates to the extent of any payments under the Policy,
including, without limitation, any amounts due to the
Holders in respect of securities law violations arising from the offer
and sale of the Certificates. The foregoing assignment is in addition
to, and not in limitation of, rights of subrogation otherwise
available to Financial Security in respect of such payments. The Trust
Administrator shall take such action and deliver such instruments as
may be reasonably requested or required by Financial Security to
effectuate the purpose or provisions of this clause (v).
(vi) The Trust Administrator, on its behalf and on behalf of the
Holders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trust Administrator, the Trustee and each
such Holder in any legal proceeding with respect to the Certificates.
The Trust Administrator hereby agrees that, so long as a Certificate
Insurer Default (as defined in the Pooling and Servicing Agreement)
shall not exist, Financial Security may at any time during the
continuation of any proceeding by or against the Seller, the Master
Servicer, either Servicer or the Depositor under the United States
Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency
Proceeding") direct all matters relating to such Insolvency
Proceeding. In addition, the Trust Administrator, for itself and on
behalf of the Trustee, hereby agrees that Financial Security shall be
subrogated to, and the Trust Administrator on its behalf and on behalf
of the Trustee and each Holder, hereby delegates and assigns, to the
fullest extent permitted by law, the rights of the Trustee, the Trust
Administrator and each Holder in the conduct of any Insolvency
Proceeding, including, without limitation, all rights of any party to
an adversary proceeding or action with respect to any court order
issued in connection with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to Policy
Payments Account.
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
of Claim and Certificate as of the ______ day of _________________, _______.
___________________________________
By:________________________________
Title:_____________________________
_______________________________________________
For Financial Security or Fiscal Agent Use Only
Wire transfer sent on ___________________ by __________________________
Confirmation Number _________________________________
EXHIBIT C-1
-----------
FORM OF TRUST ADMINISTRATOR'S INITIAL CERTIFICATION
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
[Master Servicer]
__________________________
__________________________
Re: Pooling and Servicing Agreement, dated as of December 1, 1998,
among Salomon Brothers Mortgage Securities VII, Inc.,
New Century Mortgage Corporation, Option One Mortgage
Corporation,
Firstar Bank Milwaukee, N.A. and U.S. Bank National Association,
Mortgage Pass-through Certificates, Series 1998-NC7
----------------------------------------------------------------
Ladies and Gentlemen:
Attached is the Trust Administrator's preliminary exceptions in
accordance with Section 2.02 of the referenced Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the Pooling
and Servicing Agreement.
The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trust Administrator makes
no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in the Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, (ii)
the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan, or (iii) whether any Mortgage File included any of the documents
specified in clause (v) of Section 2.01 of the Pooling and Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION
By:________________________________
Name:
Title:
EXHIBIT C-2
-----------
FORM OF TRUST ADMINISTRATOR'S INTERIM CERTIFICATION
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
[Master Servicer]
___________________________
___________________________
Re: Pooling and Servicing Agreement, dated as of December 1, 1998,
among Salomon Brothers Mortgage Securities VII, Inc.,
New Century Mortgage Corporation, Option One Mortgage
Corporation,
Firstar Bank Milwaukee, N.A. and U.S. Bank National Association,
Mortgage Pass-through Certificates, Series 1998-NC7
----------------------------------------------------------------
Ladies and Gentlemen:
Attached is the Trust Administrator's preliminary exceptions in
accordance with Section 2.02 of the referenced Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the Pooling
and Servicing Agreement.
The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trust Administrator makes
no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in the Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, (ii)
the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan, or (iii) whether any Mortgage File included any of the documents
specified in clause (v) of Section 2.01 of the Pooling and Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION
By:________________________________
Name:
Title:
EXHIBIT C-3
-----------
FORM OF TRUST ADMINISTRATOR'S FINAL CERTIFICATION
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
[Master Servicer]
___________________________
___________________________
Re: Pooling and Servicing Agreement, dated as of December 1, 1998,
among Salomon Brothers Mortgage Securities VII, Inc.,
New Century Mortgage Corporation, Option One Mortgage
Corporation,
Firstar Bank Milwaukee, N.A. and U.S. Bank National Association,
Mortgage Pass-through Certificates, Series 1998-NC7
----------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trust Administrator, hereby certifies
that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or listed on the attachment hereto), it or a
Custodian on its behalf has received:
(i) the original recorded Mortgage, and the original recorded
power of attorney, if the Mortgage was executed pursuant to a power of
attorney, or a certified copy thereof in those instances where the
public recording office retains the original or where the original has
been lost; and
(ii) an original recorded Assignment of the Mortgage to the Trust
Administrator together with the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of assignment
from the originator, or a certified copy of such Assignments in those
instances where the public recording retains the original or where
original has been lost;
(iii) the original lender's title insurance policy; and
(iv) the original Primary Insurance Policy for each Mortgage Loan
indicated on the Mortgage Loan Schedule as having a Loan-to-Value
Ratio at origination in excess of 80%.
The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trust
Administrator makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any of the documents contained in
the Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
U.S. BANK NATIONAL ASSOCIATION
By:________________________________
Name:
Title:
EXHIBIT D
---------
FORM OF MORTGAGE LOAN PURCHASE AGREEMENTS
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (this "Agreement"), dated
December 18, 1998, among Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation (the "Purchaser"), New Century Mortgage Corporation, a
California corporation (the "Originator") and Salomon Brothers Realty Corp., a
New York corporation (the "Seller").
Preliminary Statement
---------------------
The Seller intends to sell the Mortgage Loans (as hereinafter
identified) to the Purchaser on the terms and subject to the conditions set
forth in this Agreement. The Mortgage Loans were purchased by the Seller from NC
Capital Corporation ("NCCC") pursuant to a certain Mortgage Loan Purchase and
Servicing Agreement, dated as of December 1, 1998 (the "Purchase and Servicing
Agreement"), among the Seller as initial purchaser and NCCC as seller and the
Originator as servicer. The Purchaser intends to deposit the Mortgage Loans into
a mortgage pool comprising of the Trust Fund. The Trust Fund will be evidenced
by a single series of mortgage pass-through certificates designated as Series
1998-NC7 (the "Certificates"). The Certificates will consist of six classes of
certificates. The Certificates will be issued pursuant to a Pooling and
Servicing Agreement, dated as of December 1, 1998 (the "Pooling and Servicing
Agreement"), among the Purchaser as depositor, the Originator as master servicer
(in such capacity, the "Master Servicer") and a servicer, Option One Mortgage
Corporation as a servicer, Firstar Bank Milwaukee, N.A. as trustee (the
"Trustee") and U.S. Bank National Association as trust administrator (the "Trust
Administrator"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Pooling and Servicing Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell, and the
Purchaser agrees to purchase, on or before December 22, 1998 (the "Closing
Date"), certain conventional, one- to four-family, fixed-rate residential
mortgage loans (the "Mortgage Loans"), having an aggregate principal balance as
of the close of business on December 1, 1998 (the "Cut-off Date") of
approximately $703,557,763 (the "Closing Balance"), after giving effect to all
payments due on the Mortgage Loans on or before the Cut-off Date, whether or not
received, including the right to any Prepayment Charges payable by the related
Mortgagors in connection with any Principal Prepayments on the Mortgage Loans.
SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the Seller have
agreed upon which of the mortgage loans owned by the Seller are to be purchased
by the Purchaser pursuant to this Agreement and the Seller will prepare or cause
to be prepared on or prior to the Closing Date a final schedule (the "Closing
Schedule") that shall describe such Mortgage Loans and set forth all of the
Mortgage Loans to be purchased under this Agreement, including the related
Prepayment Charges. The Closing Schedule will conform to the requirements set
forth in this Agreement and to the definition of "Mortgage Loan Schedule" under
the Pooling and Servicing Agreement. The Closing Schedule shall be used as the
Mortgage Loan Schedule under the Pooling and Servicing Agreement.
-2-
SECTION 3. Consideration.
-------------
(a) In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall, as described in Section 8, pay to or upon the
order of the Seller in immediately available funds an amount (the "Purchase
Price") equal to approximately ___% times the Closing Balance, plus accrued
interest thereon from the Cut-off Date up to but not including the Closing Date.
(b) The Purchaser or any assignee, transferee or designee of the
Purchaser shall be entitled to all scheduled payments of principal due after the
Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, the Purchaser
will assign all of its right, title and interest in and to the Mortgage Loans,
together with its rights under this Agreement, to the Trustee for the benefit of
the Certificateholders.
SECTION 4. Transfer of the Mortgage Loans.
------------------------------
(a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Mortgage Loans, including the related Prepayment Charges. The
contents of each Mortgage File not delivered to the Purchaser or to any
assignee, transferee or designee of the Purchaser on or prior to the Closing
Date are and shall be held in trust by the Seller for the benefit of the
Purchaser or any assignee, transferee or designee of the Purchaser. Upon the
sale of the Mortgage Loans, the ownership of each Mortgage Note, the related
Mortgage and the other contents of the related Mortgage File is vested in the
Purchaser and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or that come into the possession of the Seller
on or after the Closing Date shall immediately vest in the Purchaser and shall
be delivered immediately to the Purchaser or as otherwise directed by the
Purchaser.
(b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on or
prior to the Closing Date, deliver or cause to be delivered to the Purchaser or
any assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:
(i) the original Mortgage Note, endorsed in the following form:
"Pay to the order of Firstar Bank Milwaukee, N.A., as Trustee under the
applicable pooling and servicing agreement, without recourse," with all
prior and intervening endorsements showing a complete chain of endorsement
from the originator to the Person so endorsing to the Trustee;
-3-
(ii) the original Mortgage with evidence of recording thereon;
(iii) an original Assignment of Mortgage executed in the
following form: "Firstar Bank Milwaukee, N.A., as Trustee under the
applicable pooling and servicing agreement";
(iv) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator to the
Person assigning the Mortgage to the Trustee as contemplated by the
immediately preceding clause (iii);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy, together with
all endorsements or riders that were issued with or subsequent to the
issuance of such policy, insuring the priority of the Mortgage as a first
or second lien on the Mortgaged Property represented therein as a fee
interest vested in the Mortgagor.
The Seller, at the expense of the Originator, promptly shall (within
sixty Business Days following the later of the Closing Date and the date of
receipt by the Seller of the recording information for a Mortgage, but in no
event later than ninety days following the Closing Date) submit or cause to be
submitted for recording, at no expense to the Seller or the Purchaser (or the
Trust Fund, the Certificate Insurer, the Trustee or the Trust Administrator
under the Pooling and Servicing Agreement), in the appropriate public office for
real property records, each Assignment referred to in clauses (b)(iii) and
(b)(iv) of this Section 4. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Originator on behalf of the
Seller, at the expense of the Originator, promptly shall prepare a substitute
Assignment or cure such defect, as the case may be, and thereafter cause each
such Assignment to be duly recorded.
Notwithstanding anything to the contrary contained in this Section
4, with respect to a maximum of approximately 1.0% of the Mortgage Loans, by
aggregate principal balance of the Mortgage Loans as of the Cut-off Date, if any
original Mortgage Note referred to in Section 4(b)(i) above cannot be located,
the obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon delivery to the Purchaser or any assignee, transferee or designee
of the Purchaser of a photocopy of such Mortgage Note, if available, with a lost
note affidavit substantially in the form of Exhibit 6 hereto. If any of the
original Mortgage Notes for which a lost note affidavit was delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser within three
Business Days; and if any document referred to in Section 4(b)(ii) or 4(b)(iv)
above has been submitted for recording but either (x) has not been returned from
the applicable public recording office or (y) has been lost or such public
recording office has retained the original of such document, the obligations of
the Seller hereunder shall be deemed to have been satisfied upon delivery to the
Purchaser or any assignee, transferee or designee of the Purchaser promptly upon
receipt thereof by or on behalf
-4-
of the Seller of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original.
In the event that the original lender's title insurance policy has
not yet been issued, the Seller shall deliver to the Purchaser or any assignee,
transferee or designee of the Purchaser a written commitment or interim binder
or preliminary report of title issued by the title insurance or escrow company.
The Seller shall deliver to the Purchaser or any assignee, transferee or
designee of the Purchaser promptly upon receipt by the Seller of any such
original title insurance policy or original Primary Mortgage Insurance Policy.
Each original document relating to a Mortgage Loan which is not
delivered to the Purchaser or its assignee, transferee or designee, if held by
the Seller or the Originator, shall be so held for the benefit of the Purchaser
or its assignee, transferee or designee.
(c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered pursuant
to Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before or after the Closing
Date (and with respect to each document permitted to be delivered after the
Closing Date, within seven days of its delivery) to ascertain that all required
documents have been executed and received and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule.
(d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the right
to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller or the Originator, and the assignee
shall succeed to the rights and obligations hereunder of the Purchaser. Any
expense reasonably incurred by or on behalf of the Purchaser or the Trustee in
connection with enforcing any obligations of the Seller or the Originator under
this Agreement will be promptly reimbursed by the Seller or the Originator, as
applicable.
(e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller shall either (i) deliver in escrow to the Purchaser or to any assignee,
transferee or designee of the Purchaser for examination the Mortgage File
pertaining to each Mortgage Loan, or (ii) make such Mortgage Files available to
the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser, the Trustee or the
Trust Administrator, and their respective designees, upon reasonable notice to
the Seller during normal business hours before the Closing Date and within 60
days after the Closing Date. If any such person makes such examination prior to
the Closing Date and identifies any Mortgage Loans that do not conform to the
requirements of the Purchaser as described in this Agreement, such Mortgage
Loans shall be deleted from the Closing Schedule. The Purchaser may, at its
option and without notice to the Seller, purchase all or part of the Mortgage
Loans without conducting any partial or complete examination. The fact that the
Purchaser or any person has conducted or has failed to conduct any partial or
complete examination of the Mortgage Files shall not affect the rights of the
Purchaser or any assignee, transferee or designee of the Purchaser to demand
repurchase or other relief as provided herein or under the Pooling and Servicing
Agreement.
-5-
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
AND THE ORIGINATOR.
-------------------------------------------------------
(a) The Originator hereby represents and warrants to the Seller and
the Purchaser, as of the date hereof and as of the Closing Date, and covenants,
that:
(i) The Originator is duly organized, validly existing and in
good standing as a corporation under the laws of the State of California with
full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. NCCC had the full corporate power and authority to own the
Mortgage Loans and to transfer and convey the Mortgage Loans to the Seller
pursuant to the Purchase and Servicing Agreement, and the Originator has the
full corporate power and authority to execute and deliver, engage in the
transactions contemplated by, and perform and observe the terms and conditions
of this Agreement.
(ii) The Originator has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser and the Seller, constitutes a legal, valid and binding
obligation of the Originator, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization or by general principles of equity.
(iii) The execution, delivery and performance of this
Agreement by the Originator (x) does not conflict and will not conflict with,
does not breach and will not result in a breach of and does not constitute and
will not constitute a default (or an event, which with notice or lapse of time
or both, would constitute a default) under (A) any terms or provisions of the
articles of incorporation or by-laws of the Originator, (B) any term or
provision of any material agreement, contract, instrument or indenture, to which
the Originator is a party or by which the Originator or any of its property is
bound, or (C) any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Originator or any of its property and (y) does not create or impose and will not
result in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans.
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Originator to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Originator of, or compliance by the Originator with, this Agreement or the
consummation by the Originator of any other transaction contemplated hereby and
by the Pooling and Servicing Agreement; provided, however, that the Originator
makes no representation or warranty regarding federal or state securities laws
in connection with the sale or distribution of the Certificates.
-6-
(v) In this Agreement, the Originator has not made any untrue
statement of material fact or omit to state a material fact necessary to make
the statements contained herein not misleading. The written statements, reports
and other documents prepared and furnished or to be prepared and furnished by
the Originator pursuant to this Agreement or in connection with the transactions
contemplated hereby taken in the aggregate do not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements contained therein not misleading.
(vi) The Originator is not in violation of, and the execution
and delivery of this Agreement by the Originator and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over the
Originator or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Originator or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder.
(vii) The Originator is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act. No event has occurred, including but
not limited to a change in insurance coverage, that would make the Originator
unable to comply with HUD eligibility requirements or that would require
notification to HUD.
(viii) The Originator does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement.
(ix) Immediately prior to the payment to NCCC of the purchase
price for each Mortgage Loan pursuant to the Purchase and Servicing Agreement,
NCCC was the owner of the related Mortgage and the indebtedness evidenced by the
related Mortgage Note, and, upon the payment to NCCC of such purchase price, in
the event that NCCC retains or has retained record title, NCCC shall retain such
record title to each Mortgage, each related Mortgage Note and the related
Mortgage Files with respect thereto in trust for the Purchaser as the owner
thereof from and after the date hereof.
(x) There are no actions or proceedings against, or
investigations known to it of, the Originator before any court, administrative
or other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by NCCC which occurred
pursuant to the Purchase and Servicing Agreement or the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit or
materially and adversely affect the performance by the Originator of its
obligations under, or validity or enforceability of, this Agreement.
(xi) The consummation of the transactions contemplated by this
Agreement and the Purchase and Servicing Agreement are in the ordinary course of
business of the Originator and NCCC, and the transfer, assignment and conveyance
of the Mortgage Notes
-7-
and the Mortgages by NCCC pursuant to the Purchase and Servicing Agreement were
not subject to the bulk transfer or any similar statutory provisions.
(xii) The information delivered by the Originator to the
Seller with respect to the Originator's loan loss, foreclosure and delinquency
experience, is true and correct in all material respects.
(xiii) NCCC has not dealt with any broker, investment banker,
agent or other person, except for the Purchaser or any of its affiliates, that
may be entitled to any commission or compensation in connection with the sale of
the Mortgage Loans pursuant to the Purchase and Servicing Agreement (except that
an entity that previously financed the NCCC's ownership of the Mortgage Loans
may be entitled to a fee to release its security interest in the Mortgage Loans,
which fee shall have been paid and which security interest shall have been
released on or prior to the Closing Date).
(xiv) There is no litigation currently pending or, to the best
of the Originator's knowledge without independent investigation, threatened
against the Originator that would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the issuance of the Certificates or the
execution, delivery, performance or enforceability of this Agreement, or that
would result in a material adverse change in the financial condition of the
Originator.
(b) The Seller hereby represents and warrants, as of the date hereof
and as of the Closing Date, and covenants, that:
(i) The Seller is a corporation, duly organized and validly
existing and in good standing under the laws of the State of New York with full
corporate power and authority to conduct its business as presently conducted by
it to the extent material to the consummation of the transactions contemplated
herein. The Seller had the full corporate power and authority to acquire the
Mortgage Loans. The Seller has the full corporate power and authority to own the
Mortgage Loans and to transfer and convey the Mortgage Loans to the Purchaser
and has the full corporate power and authority to execute and deliver, engage in
the transactions contemplated by, and perform and observe the terms and
conditions of this Agreement;
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller, all requisite corporate action having been
taken, and (assuming the due authorization, execution and delivery hereof by the
Purchaser and the Originator) constitutes the valid, legal and binding
obligation of the Seller, enforceable in accordance with its terms, except as
such enforcement may be limited by (A) bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, (B) general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law) or
(C) public policy considerations underlying the securities laws, to the extent
that such public policy considerations limit the enforceability of the
provisions of this Agreement which purport to provide indemnification from
securities laws liabilities;
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(iii) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required, under federal laws or the laws of the State of New York, for the
execution, delivery and performance by the Seller of, or compli ance by the
Seller with, this Agreement or the consummation by the Seller of any other
transaction contemplated hereby and by the Pooling and Servicing Agreement;
provided, however, that the Seller makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates;
(iv) No certificate of an officer, statement or other
information furnished in writing or report delivered by the Seller to the
Purchaser, any affiliate of the Purchaser or the Trustee for use in connection
with the purchase of the Mortgage Loans and the transactions contemplated
hereunder and under the Pooling and Servicing Agreement will contain any untrue
statement of a material fact, or omit a material fact necessary to make the
information, certificate, statement or report not misleading in any material
respect;
(v) Neither the sale of the Mortgage Loans to the Purchaser,
nor the execution, delivery or performance of this Agreement by the Seller,
conflicts or will conflict with or results or will result in a breach of or
constitutes or will constitute a default (or an event, which with notice or
lapse of time or both, would constitute a default) under (A) any terms or
provisions of the certificate of incorporation or by-laws of the Seller, (B) any
term or provision of any material agreement, contract, instrument or indenture,
to which the Seller is a party or by which the Seller or any of its property is
bound, or (C) any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Seller or any of its property, or results or will result in the creation or
imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any docu ments or instruments
evidencing or securing the Mortgage Loans;
(vi) The Seller has not dealt with any broker, investment
banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans;
(vii) There is no litigation currently pending or, to the best
of the Seller's knowledge, threatened against the Seller that would reasonably
be expected to adversely affect the transfer of the Mortgage Loans, the issuance
of the Certificates, the execution, delivery, performance or enforceability of
this Agreement or that would result in a material adverse change in the
financial condition of the Seller;
(viii) Each Mortgage Note, each Mortgage, each Assignment and
any other document required to be delivered by or on behalf of the Seller under
this Agreement or the Pooling and Servicing Agreement to the Purchaser or any
assignee, transferee or designee of the Purchaser for each Mortgage Loan has
been or will be, in accordance with Section 4(b) hereof, delivered to the
Purchaser or any such assignee, transferee or designee. With respect to each
Mortgage Loan, the Seller is in possession of a complete Mortgage File in
compliance with the Pooling and Servicing Agreement, except for such documents
that (A) have been delivered (1) to
-9-
the Purchaser or any assignee, transferee or designee of the Purchaser or (2)
for recording to the appropriate public recording office and have not yet been
returned or (B) are not required to be delivered to the Purchaser or any
assignee, transferee or designee of the Purchaser until 90 days following the
Closing Date or such later date as provided in Section 4;
(ix) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Seller or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder.
(x) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Seller pursuant to this Agreement are not subject
to the bulk transfer or any similar statutory provisions in effect in any
relevant jurisdiction, except any as may have been complied with;
(xi) The Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement.
(xii) The Seller (A) is a solvent entity and is paying its
debts as they become due and (B) after giving effect to the transfer of the
Mortgage Loans, will be a solvent entity and will have sufficient resources to
pay its debts as they become due;
(xiii) The form of endorsement of each Mortgage Note satisfied
the requirement, if any, of endorsement in order to transfer all right, title
and interest of the party so endorsing, as noteholder or assignee thereof, in
and to that Mortgage Note; and each Assignment to be delivered hereunder is in
recordable form and is sufficient to effect the assignment of and to transfer to
the assignee thereunder the benefits of the assignor, as mortgagee or assignee
thereof, under each Mortgage to which that Assignment relates;
(xiv) The transfer of the Mortgage Loans to the Purchaser at
the Closing Date will be treated by the Seller for financial accounting and
reporting purposes as a sale of assets;
(xv) Immediately prior to the sale of the Mortgage Loans to
the Purchaser as herein contemplated, the Seller had good title to, and was the
sole owner of, the Mortgage Loans, and such sale validly transfers the Mortgage
Loans to the Purchaser free and clear of any pledge, lien, encumbrance or
security interest; and
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(xvi) With respect to the Mortgage Loans, the Seller hereby
represents and warrants, as of the date hereof and as of the Closing Date, that
each Mortgage Loan constitutes a "qualified mortgage" within the meaning of
Section 860(G)(a)(3) of the Code.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR RELATING
TO THE MORTGAGE LOANS.
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REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE LOANS. The
Originator hereby represents and warrants to the Seller and the Purchaser that
as to each Mortgage Loan as of the Closing Date:
(i) The information set forth in the Mortgage Loan Schedule,
including the field concerning any related Prepayment Charge, is complete, true
and correct as of the Cut-off Date;
(ii) The Mortgage Loan is in compliance with all requirements set
forth on Exhibit 7, and the characteristics of the Mortgage Loans as set forth
on Exhibit 7 are true and correct;
(iii) (a) All payments required to be made on or before the first
day of the month prior to the month of the Closing Date, with respect to such
Mortgage Loan under the terms of the Mortgage Note have been made; (b) the
Originator has not advanced funds, or induced, solicited or knowingly received
any advance of funds from a party other than the owner of the related Mortgaged
Property, directly or indirectly, for the payment of any amount required by the
Mortgage Note or Mortgage; and (c) no payment required under any Mortgage Loan
has been 30 days delinquent more than once during the last twelve months and no
Mortgage Loan has ever been 60 or more days delinquent;
(iv) There are no delinquent taxes, ground rents, water charges,
sewer rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments or other outstanding charges
affecting the related Mortgaged Property;
(v) To the best knowledge of the Originator, the terms of the
Mortgage Note and the Mortgage have not been impaired, waived, altered or
modified in any respect, except by written instruments, recorded in the
applicable public recording office if necessary to maintain the lien priority of
the Mortgage, and which have been delivered to the Trustee; the substance of any
such waiver, alteration or modification has been approved by the title insurer,
to the extent required by the related policy, and is reflected on the Mortgage
Loan Schedule. No instrument of waiver, alteration or modification has been
executed by the Originator, and no Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement approved by the title
insurer, to the extent required by the policy, and the terms of which are
reflected in the Mortgage Loan Schedule;
-11-
(vi) Prior to their transfer to the Seller, the Mortgage Note and
the Mortgage are not subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, nor will the operation of any of the
terms of the Mortgage Note and the Mortgage, or the exercise of any right
thereunder, render the Mortgage unenforceable, in whole or in part, or subject
to any right of rescission, set-off, counterclaim or defense, including the
defense of usury and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto;
(vii) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located, pursuant to insurance policies conforming to the requirements of the
Pooling and Servicing Agreement. All such insurance policies contain a standard
mortgagee clause naming the Originator, its successors and assigns as mortgagee
and all premiums thereon have been paid. If upon origination of the Mortgage
Loan, the Mortgaged Property was in an area identified on a Flood Hazard Map or
Flood Insurance Rate Map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect which policy conforms to the
requirements of Xxxxxx Xxx and Xxxxxxx Mac. The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and expense,
and on the Mortgagor's failure to do so, authorizes the holder of the Mortgage
to maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(viii) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the origination and servicing of the Mortgage Loan have been
complied with. Any and all statements or acknowledgments required to be made by
the Mortgagor relating to such requirements are and will remain in the Mortgage
File;
(ix) The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, cancellation, subordination,
rescission or release;
(x) The Mortgage is a valid, existing and enforceable first or
second lien on the Mortgaged Property, including all improvements on the
Mortgaged Property subject only to (a) the lien of current real property taxes
and assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording being acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and which do not adversely
affect the appraised value of the Mortgaged Property, (c) other matters to which
like properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or
-12-
marketability of the related Mortgaged Property and (d) the first lien on the
Mortgaged Property, in the case of Mortgages that are second liens. Any security
agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, existing and
enforceable first or second lien and first or second priority security interest
on the property described therein and, as of the time it sold the Mortgage Loans
to Seller, NCCC had full right to sell and assign the same to the Seller. The
Mortgaged Property was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secured debt or other security
instrument creating a lien subordinate to the lien of the Mortgage;
(xi) The Mortgage Note and the related Mortgage are genuine and each
is the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties. The Mortgagor is a natural person who is a
party to the Mortgage Note and the Mortgage is in an individual capacity or
family trust that is guaranteed by a natural person;
(xiii) The proceeds of the Mortgage Loan have been fully disbursed
to or for the account of the Mortgagor and there is no obligation for the
Mortgagee to advance additional funds thereunder and any and all requirements as
to completion of any on-site or off-site improvement and as to disbursements of
any escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage have been paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage;
(xiv) Prior to the sale of the Mortgage Loan to the Seller, NCCC was
the sole legal, beneficial and equitable owner of the Mortgage Note and the
Mortgage and had full right to transfer and sell the Mortgage Loan to the Seller
free and clear of any encumbrance, equity, lien, pledge, charge, claim or
security interest;
(xv) As of the time of the sale of the Mortgage Loans from NCCC to
the Seller, all parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable "doing business" and licensing requirements of the laws of
the state wherein the Mortgaged Property is located;
(xvi) The Mortgage Loan is covered by an ALTA lender's title
insurance policy acceptable to Xxxxxx Xxx or Xxxxxxx Mac, issued by a title
insurer acceptable to Xxxxxx Mae and Xxxxxxx Mac and qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring (subject to
the exceptions contained in (x)(a) and (b) above) the Originator, its successors
and assigns as to the first or second priority lien of the Mortgage in the
original principal amount of the Mortgage Loan. Additionally, such lender's
title insurance policy
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affirmatively insures ingress and egress to and from the Mortgaged Property, and
against encroachments by or upon the Mortgaged Property or any interest therein.
The Originator is the sole insured of such lender's title insurance policy, and
such lender's title insurance policy is in full force and effect and will be in
full force and effect upon the consummation of the transactions contemplated by
this Agreement. No claims have been made under such lender's title insurance
policy, and no holder of the related Mortgage prior to the Seller, including the
Originator, has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy;
(xvii) Other than as specified in paragraph (iii) above, there is no
default, breach, violation or event of acceleration existing under the Mortgage
or the Mortgage Note and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and the Originator has not waived
any default, breach, violation or event of acceleration;
(xviii) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(xix) All improvements which were considered in determining the
appraised value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property. Each
appraisal has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;
(xx) The Mortgage Loan was (i) originated by the Originator or by a
savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD or (ii)
acquired by the Originator directly through loan brokers or correspondents such
that (a) the Mortgage Loan was originated in conformity with the Originator's
underwriting guidelines, (b) the Originator approved the Mortgage Loan prior to
funding and (c) the Originator provided the funds used to originate the Mortgage
Loan and acquired the Mortgage Loan on the date of origination thereof;
(xxi) Principal payments on the Mortgage Loan commenced no more than
two months after the proceeds of the Mortgage Loan were disbursed. The Mortgage
Loan bears interest at the Mortgage Rate. The Mortgage Note is payable on the
first day of each month. Interest on the Mortgage Loan is calculated on the
basis of a 360-day year consisting of twelve 30- day months. The Mortgage Note
does not permit negative amortization;
(xxii) The origination and collection practices used by the
Originator with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been
-14-
serviced by the Originator (directly or through a subservicer) and any
predecessor servicer in accordance with the terms of the Mortgage Note. With
respect to escrow deposits and Escrow Payments, if any, all such payments are in
the possession of, or under the control of, the Originator and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or Escrow Payments or
other charges or payments due the Originator have been capitalized under any
Mortgage or the related Mortgage Note;
(xxiii) The Mortgaged Property is free of damage and waste and there
is no proceeding pending for the total or partial condemnation thereof;
(xxiv) The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) otherwise by
judicial foreclosure. Since the date of origination of the Mortgage Loan, the
Mortgaged Property has not been subject to any bankruptcy proceeding or
foreclosure proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage. The
Mortgagor has not notified the Originator and the Originator has no knowledge of
any relief requested or allowed to the Mortgagor under the Soldiers and Sailors
Civil Relief Act of 1940;
(xxv) The related Mortgaged Property is not a leasehold estate or,
if such Mortgaged Property is a leasehold estate, the remaining term of such
lease is at least ten (10) years greater than the remaining term of the related
Mortgage Note;
(xxvi) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;
(xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Mortgage Loan
application, by a qualified appraiser, approved by the Originator, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, whose compensation is not affected by the approval or
disapproval of the Mortgage Loan and who met the minimum qualifications of
Xxxxxx Xxx and Xxxxxxx Mac;
(xxviii) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;
-15-
(xxix) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Originator, the Mortgagor, or anyone on
behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature;
(xxx) The Mortgagor has executed a statement to the effect that the
Mortgagor has received all disclosure materials required by applicable law; and
if the Mortgage Loan is a Refinanced Mortgage Loan, the Mortgagor has received
all disclosure and rescission materials required by applicable law with respect
to the making of a Refinanced Mortgage Loan, and evidence of such receipt is and
will remain in the Mortgage File;
(xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;
(xxxii) The Mortgage Note, the Mortgage, the Assignment of Mortgage
and any other documents required to be delivered with respect to each Mortgage
Loan pursuant to the Pooling and Servicing Agreement, have been delivered to the
Trustee all in compliance with the specific requirements of the Pooling and
Servicing Agreement;
(xxxiii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the appropriate
authorities;
(xxxiv) No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any person, including, without limitation, the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;
(xxxv) The Assignment of Mortgage, is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxvi) Any principal advances made to the Mortgagor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
or second lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title evidence
acceptable to Xxxxxx Mae
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and Xxxxxxx Mac The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(xxxvii) Except with respect to approximately five Mortgage Loans,
no Mortgage Loan has a balloon payment feature;
(xxxviii) If the Residential Dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project meets the Xxxxxx Mae's eligibility requirements;
(xxxix) Neither the Originator nor any affiliate of the Originator
has made a mortgage on any Mortgaged Property other than the Mortgage Loan;
(xl) Any Mortgage Loan subject to the provisions of the
Homeownership and Equity Protection Act of 1994, P.L. 103-325, 108 Stat 2160 was
originated in compliance therewith;
(xli) The Mortgage Loan was not intentionally selected by the
Originator in a manner intended to adversely affect the interest of the Seller;
(xlii) The Originator has not dealt with any broker or agent or
other Person who might be entitled to a fee, commission or compensation in
connection with the transaction contemplated by this Agreement other than the
Purchaser except as set forth in the parenthetical in Section 5(xiii) hereof;
(xliii) The Mortgaged Property consists of a parcel of real property
of not more than ten acres with a single family residence erected thereon, or a
two to four-family dwelling, or an individual condominium unit in a low-rise or
high-rise condominium project, or an individual unit in a planned unit
development. The Mortgaged Property is improved with a Residential Dwelling.
Without limiting the foregoing, the Mortgaged Property does NOT consist of any
of the following property types: (a) co-operative units, (b) log homes, (c)
earthen homes, (d) underground homes, (e) mobile homes and (f) manufactured
homes (as defined in the Xxxxxx Xxx Seller-Servicer's Guide), except when the
appraisal indicates that the home is of comparable construction to a stick or
beam construction home, is readily marketable, has been permanently affixed to
the site and is not in a mobile home "park." The Mortgaged Property is either a
fee simple estate or a long-term residential lease. If the Mortgage Loan is
secured by a long-term residential lease, unless otherwise specifically
disclosed in the Mortgage Loan Schedule, (A) the terms of such lease expressly
permit the mortgaging of the leasehold estate, the assignment of the lease
without the lessor's consent (or the lessor's consent has been obtained and such
consent is the Mortgage File) and the acquisition by the holder of the Mortgage
of the rights of the lessee upon foreclosure or assignment in lieu of
foreclosure or provide the holder of the Mortgage with substantially similar
protection; (B) the terms of such lease do not (x) allow the termination thereof
upon the lessee's default without the holder of the Mortgage being entitled to
receive written notice
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of, and opportunity to cure, such default or (y) prohibit the holder of the
Mortgage from being insured under the hazard insurance policy relating to the
Mortgaged Property; (C) the original term of such lease is not less than 15
years; (D) the term of such lease does not terminate earlier than ten years
after the maturity date of the Mortgage Note; and (E) the Mortgaged Property is
located in a jurisdiction in which the use of leasehold estates for residential
properties is an accepted practice;
(xliv) At the time of origination, the Loan-to-Value ratio (or the
combined loan-to-value ratio in the case of second lien Mortgage Loans) of the
Mortgage Loan was not greater than 80%;
(xlv) The Mortgage, and if required by applicable law the related
Mortgage Note, contains a provision for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event that the Mortgaged
Property is sold or transferred without the prior written consent of the
Mortgagee, at the option of the Mortgagee; and
(xlvi) The Mortgage Loan either contains a customary due-on-sale
clause or may be assumed by a creditworthy purchaser of the related Mortgaged
Property.
SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION AND FOR
BREACH OF REPRESENTATION AND WARRANTY.
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(a) The representations and warranties contained in Section 6 shall
not be impaired by any review and examination of loan files or other documents
evidencing or relating to the Mortgage Loans or any failure on the part of the
Seller or the Purchaser to review or examine such documents and shall inure to
the benefit of any assignee, transferee or designee of the Purchaser, including
the Trustee for the benefit of holders of the Certificates. With respect to the
representations and warranties contained herein as to which the Originator or
Seller has no knowledge, if it is discovered that the substance of any such
representation and warranty was inaccurate as of the date such representation
and warranty was made or deemed to be made, and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan or the interest therein
of the Purchaser or the Purchaser's assignee, transferee or designee, then
notwithstanding the lack of knowledge by the Originator or the Seller, as the
case may be, with respect to the substance of such representation and warranty
being inaccurate at the time the representation and warranty was made, the
Originator or the Seller, as the case may be, shall take such action described
in the following paragraph in respect of such Mortgage Loan.
Upon discovery by the Originator, the Seller, the Purchaser or any
assignee, transferee or designee of the Purchaser of any materially defective
document in, or that any material document was not transferred by the Seller, or
not transferred by the Originator to the Seller (as listed on the Trustee's
Preliminary Exception Report), as part of any Mortgage File, or of a breach of
any of the representations and warranties contained in Section 6 that materially
and adversely affects the value of any Mortgage Loan or the interest therein of
the Purchaser or the Purchaser's assignee, transferee or designee, the party
discovering such breach shall give prompt
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written notice to the other parties hereto. Within sixty (60) days of its
discovery or its receipt of notice of any such missing documentation that was
not transferred to the Seller as described above, or of materially defective
documentation, or of any such breach of a representation and warranty, the
Originator, promptly shall deliver such missing document or cure such defect or
breach in all material respects or, in the event the Originator or the Seller,
as the case may be, cannot deliver such missing document or cannot cure such
defect or breach, the Originator, shall, within ninety (90) days of its
discovery or receipt of notice, repurchase the affected Mortgage Loan at the
Purchase Price (as such term is defined in the Pooling and Servicing Agreement).
The Originator shall amend the Closing Schedule to reflect the withdrawal of
such Mortgage Loan from the terms of this Agreement and the Pooling and
Servicing Agreement. The Originator shall deliver to the Seller and the
Purchaser such amended Closing Schedule and shall deliver such other documents
as are required by this Agreement or the Pooling and Servicing Agreement within
five (5) days of any such amendment. Any repurchase pursuant to this Section
7(a) shall be accomplished by transfer to an account designated by the Purchaser
of the amount of the Purchase Price in accordance with Section 2.03 of the
Pooling and Servicing Agreement. Any repurchase required by this Section shall
be made in a manner consistent with Section 2.03 of the Pooling and Servicing
Agreement.
(b) It is understood and agreed that the obligations of the
Originator or the Seller, as the case may be, set forth in this Section 7 to
cure or repurchase a defective Mortgage Loan constitute the sole remedies of the
Seller and the Purchaser against the Originator respecting a missing document or
a breach of the representations and warranties contained in Section 6.
SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The closing of
the purchase and sale of the Mortgage Loans shall be held at the New York City
office of Xxxxxxx Xxxxxxxx & Wood at 10:00 a.m. New York City time on the
Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under
this Agreement shall be true and correct in all material
respects as of the date as of which they are made and no event
shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement;
(b) All of the representations and warranties of the Originator
under this Agreement shall be true and correct in all material
respects as of the date as of which they are made and no event
shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement;
(c) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from
escrow at the time of closing), all Closing Documents as
specified in Section 9 of this Agreement, in such forms as are
agreed upon and acceptable to the Purchaser, duly executed by
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all signatories other than the Purchaser as required pursuant
to the respective terms thereof;
(d) The Seller shall have delivered or caused to be delivered and
released to the Purchaser or to its designee, all documents
(including without limitation, the Mortgage Loans) required to
be so delivered by the Purchaser pursuant to Section 2.01 of
the Pooling and Servicing Agreement; and
(e) All other terms and conditions of this Agreement and the
Pooling and Servicing Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall deliver or
cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Mortgage Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds.
SECTION 9. CLOSING DOCUMENTS. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
(a) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Originator, the Purchaser, the
Certificate Insurer and Xxxxxxx Xxxxx Xxxxxx Inc. (the
"Underwriter") may rely, in the form of Exhibit 1 hereto, and
attached thereto copies of the certificate of incorporation,
by-laws and certificate of good standing of the Seller under
the laws of New York;
(b) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Purchaser, the Certificate Insurer and
the Underwriter may rely, in the form of Exhibit 2 hereto,
with respect to certain facts regarding the sale of the
Mortgage Loans by the Seller to the Purchaser;
(c) An Opinion of Counsel of the Seller, dated the Closing Date
and addressed to the Originator, the Purchaser, the
Certificate Insurer and the Underwriter, substantially in the
form attached hereto as Exhibit 3;
(d) An Officer's Certificate of the Originator, dated the Closing
Date, upon which the Seller, the Purchaser, the Certificate
Insurer and the Underwriter may rely, in the form of Exhibit 4
hereto, and attached thereto copies of the certificate of
incorporation, by-laws and certificate of good standing of the
Originator under the laws of its state of incorporation;
(e) An opinion of Counsel of the Originator, dated the Closing
Date and addressed to the Seller, the Purchaser, the
Certificate Insurer and the Underwriter substantially in the
form attached hereto as Exhibit 5;
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(f) Such opinions of counsel as the Rating Agencies or the Trustee
may request in connection with the sale of the Mortgage Loans
by the Seller to the Purchaser or the Seller's execution and
delivery of, or performance under, this Agreement;
(g) A letter from KPMG Peat Marwick, L.L.P., certified public
accountants, dated the date hereof, to the effect that they
have performed certain specified procedures as a result of
which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Purchaser's Prospectus Supplement, dated December 18, 1998,
under the captions "Summary--The Mortgage Loans," "Risk
Factors," "The Mortgage Pool" (except with respect to the
information contained under the caption "The Mortgage
Pool--Option One Underwriting Programs") and "Pooling and
Servicing Agreement--New Century Mortgage Corporation" agrees
with the records of the Originator;
(h) The Originator shall deliver to the Seller for inclusion in
the Prospectus Supplement for Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates,
Series 1998-NC7, under the captions "The Mortgage Pool"
(except with respect to the information contained under the
caption "The Mortgage Pool--Option One Underwriting Programs")
and "Pooling and Servicing Agreement--New Century Mortgage
Corporation", or for inclusion in other offering material such
publicly available information regarding the Originator, its
financial condition and its mortgage loan delinquency,
foreclosure and loss experience, underwriting standards,
lending activities and loan sales, production, and servicing
and collection practices, and any similar nonpublic, unaudited
financial information;
(i) A letter from KPMG Peat Marwick, L.L.P., certified public
accountants, dated the date hereof and to the effect that they
have performed certain specified procedures as a result of
which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Purchaser's Prospectus Supplement, dated December 18, 1998
under the captions "Summary of Prospectus Supplement", "Yield
on the Certificates" and "Description of the Certificates"
agrees with the records of the Seller; and
(j) Such further information, certificates, opinions and documents
as the Purchaser or the Underwriter may reasonably request.
SECTION 10. COSTS. The Originator shall pay (or shall reimburse the
Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans,
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including without limitation, recording fees, fees for title policy endorsements
and continuations and the fees for recording Assignments of Mortgage, the fees
and expenses of the Originator's accountants and attorneys, the costs and
expenses incurred in connection with producing the Originator's or any
subservicer's loan loss, foreclosure and delinquency experience, and the costs
and expenses incurred in connection with obtaining the documents referred to in
Sections 9(d), 9(e) and 9(g). The Seller shall pay (or shall reimburse the
Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) the costs and expenses of printing (or otherwise reproducing)
and delivering this Agreement, the Pooling and Servicing Agreement, the
Certificates, the prospectus and prospectus supplement, and any private
placement memorandum relating to the Certificates, the Insurance Agreement and
other related documents, the initial fees, costs and expenses of the Trustee and
the Trust Administrator, the initial fees, costs and expenses of FSA, the fees
and expenses of the Seller's counsel in connection with the preparation of all
documents relating to the securitization of the Mortgage Loans, the filing fee
charged by the Securities and Exchange Commission for registration of the
Certificates and the fees charged by any rating agency to rate the Certificates.
All other costs and expenses in connection with the transactions contemplated
hereunder shall be borne by the party incurring such expense.
SECTION 11. SERVICING. The Originator has represented to the
Purchaser that the Mortgage Loans are being serviced by the Originator, in its
capacity as servicer under the Purchase and Servicing Agreement, and that such
Mortgage Loans are not subject to any other servicing agreements with third
parties. It is understood and agreed between the Originator and the Purchaser
that the Mortgage Loans are to be delivered free and clear of any servicing
agreements. The Originator, without reimbursement from the Purchaser, shall pay
any fees or penalties required by any servicer for releasing the Mortgage Loans
from any such servicing agreement (it being understood that neither the
Purchaser nor any affiliate of the Purchaser is servicing the Mortgage Loans
under any such servicing agreement and, accordingly, that neither the Purchaser
nor any affiliate of the Purchaser is entitled to receive any fee for releasing
the Mortgage Loans from any such servicing agreement) and shall arrange for the
orderly transfer, as of the Cut-off Date, of such servicing from any such
servicer to the Originator. The Mortgage Loans shall be serviced by the
Originator, in its capacity as servicer, in accordance with the terms of the
Pooling and Servicing Agreement. For so long as the Originator services the
Mortgage Loans, the Originator shall be entitled to the Servicing Fee and such
other payments as provided for under the terms of the Pooling and Servicing
Agreement.
SECTION 12. INDEMNIFICATION. (a) The Originator shall indemnify and
hold harmless each of (i) the Purchaser, (ii) the Seller, (iii) the Underwriter,
(iv) FSA, (v) the Person, if any, to which the Purchaser assigns its rights in
and to a Mortgage Loan and each of their respective successors and assigns and
(vi) each person, if any, who controls the Purchaser within the meaning of
Section 15 of the Securities Act of 1933, as amended (the "1933 Act") ((i)
through (vi) collectively, the "Indemnified Party") against any and all losses,
claims, expenses, damages or liabilities to which the Indemnified Party may
become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement dated December 18, 1998
(the "Prospectus Supplement")
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or any private placement memorandum (the "Private Placement Memorandum")
relating to the offering by the Purchaser or an affiliate thereof, of the Class
CE Certificates and Class P Certificates, or the omission or the alleged
omission to state therein the material fact necessary in order to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon (i) information furnished in writing
to the Purchaser or any of its affiliates by the Originator including, but not
limited to, information contained in the data file, specifically for use in the
preparation of the Prospectus Supplement and more specifically, for use in the
preparation of information in the Prospectus Supplement set forth under the
captions, "Summary-- The Mortgage Loans," "Risk Factors," "The Mortgage Pool,"
(except with respect to information contained under the caption "The Mortgage
Pool--Option One Underwriting Programs), "Pooling and Servicing Agreement--New
Century Mortgage Corporation" and, with respect to any private placement
memorandum, any information of a comparable nature, or (ii) the data files
containing information with respect to the Mortgage Loans as transmitted by
modem to the Purchaser by the Originator on or about December 22, 1998 (as such
transmitted information may have been amended in writing by the Originator with
the written consent of the Purchaser subsequent to such transmission), (b) any
representation, warranty or covenant made by the Originator herein or in the
Pooling and Servicing Agreement, on which the Purchaser has relied, being, or
alleged to be, untrue or incorrect or (c) any updated collateral information
provided by the Underwriter to a purchaser of the Certificates derived from the
data contained in clause (ii) and the Remittance Report or a current collateral
tape obtained from the Originator or an affiliate of the Originator, including
the current loan balances of the Mortgage Loans; provided, however, that to the
extent that any such losses, claims, expenses, damages or liabilities to which
the Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the
Originator described in clause (a), (b) or (c) above and (2) any other factual
basis, the Originator shall indemnify and hold harmless the Indemnified Party
only to the extent that the losses, claims, expenses, damages, or liabilities of
the person or persons asserting the claim are determined to rise from or be
based upon matters set forth in clause (1) above and do not result from the
gross negligence or willful misconduct of such Indemnified Party. This indemnity
shall be in addition to any liability that the Originator may otherwise have.
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale
and delivery on the Closing Date of the Mortgage Loans described on the Mortgage
Loan Schedule in accordance with the terms and conditions of this Agreement is
mandatory. It is specifically understood and agreed that each Mortgage Loan is
unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser in the event of the Seller's failure to deliver the
Mortgage Loans on or before the Closing Date. The Seller hereby grants to the
Purchaser a lien on and a continuing security interest in the Seller's interest
in each Mortgage Loan and each document and instrument evidencing each such
Mortgage Loan to secure the performance by the Seller of its obligation
hereunder, and the Seller agrees that it holds such Mortgage Loans in custody
for the Purchaser, subject to the Purchaser's (i) right, prior to the Closing
Date, to reject any Mortgage Loan to the extent permitted by this Agreement, and
(ii) obligation to deliver or cause to be delivered the consideration for the
Mortgage Loans pursuant to Section 8 hereof. Any Mortgage
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Loans rejected by the Purchaser shall concurrently therewith be released from
the security interest created hereby. The Purchaser agrees that, upon acceptance
of the Mortgage Loans by the Purchaser or its designee and delivery of payment
to the Seller, that its security interest in the Mortgage Loans shall be
released. All rights and remedies of the Purchaser under this Agreement are
distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.
Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Mortgage Loans, if delivery to
the Purchaser has occurred, and the security interest created by this Section 12
shall be deemed to have been released.
SECTION 14. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by fax and, receipt of which is confirmed by telephone, if to the
Purchaser, addressed to the Purchaser at Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Mortgage Finance Group, fax (000) 000-0000, or such other
address as may hereafter be furnished to the Seller and the Originator in
writing by the Purchaser; if to the Seller, addressed to the Seller at Xxxxx
Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage Finance Group,
fax (000) 000-0000, or to such other address as the Seller may designate in
writing to the Purchaser and the Originator; if to the Originator, addressed to
the Originator at 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000, fax
(000) 000-0000, or to such other address as the Seller may designate in writing
to the Purchaser and the Seller.
SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 16. AGREEMENT OF PARTIES. The Originator, the Seller and the
Purchaser each agree to execute and deliver such instruments and take such
actions as either of the
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others may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement and the Pooling and
Servicing Agreement.
SECTION 17. SURVIVAL. (a) The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
(b) The Originator agrees that the representations, warranties and
agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller and
the Purchaser notwithstanding any investigation heretofore or hereafter made by
the Seller or the Purchaser or on the behalf of either of them, and that the
representations, warranties and agreements made by the Originator herein or in
any such certificate shall continue in full force and effect, notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND THAT THE
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.
SECTION 19. MISCELLANEOUS. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans by the Seller to the Purchaser as provided in Section 4
hereof be, and be construed as, a sale of the Mortgage Loans by the Seller to
the Purchaser and not as a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
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event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans and
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account whether in the form of cash,
instruments, securities or other property; (3) the possession by the Purchaser
or its agent of Mortgage Notes, the related Mortgages and such other items of
property that constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the New York
Uniform Commercial Code; and (4) notifications to persons holding such property
and acknowledgments, receipts or confirmations from persons holding such
property shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Purchaser for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Purchaser pursuant to
Section 4(d) hereof shall also be deemed to be an assignment of any security
interest created hereby. The Seller and the Purchaser shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of this Agreement and the Pooling and Servicing
Agreement.
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IN WITNESS WHEREOF, the Purchaser, the Seller and the Originator
have caused their names to be signed by their respective officers thereunto duly
authorized as of the date first above written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By:________________________________
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President
SALOMON BROTHERS REALTY CORP.
By:________________________________
Name: Xxxxxxx X. Xxxxx
Title: Authorized Agent
NEW CENTURY MORTGAGE CORPORATION
By:________________________________
Name: Xxxx Xxxxxxxxx
Title: Vice President
EXHIBIT 1
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER]
I, ________________, hereby certify that I am a duly Authorized
Agent of Salomon Brothers Realty Corp., a New York corporation (the "Seller"),
and further certify as follows:
1. Attached hereto is a true and correct copy of the Certificate of
Incorporation and By-laws of the Seller, all of which are in full force
and effect on the date hereof. There has been no amendment or other
document filed affecting the Certificate of Incorporation of the Seller
since December 20, 1982, and no such amendment has been authorized. There
has been no amendment or other document filed affecting the By-laws of the
Seller since October 7, 1986, and no such amendment has been authorized.
Attached hereto is a good standing certificate issued by the Secretary of
State of the State of New York with respect to the Seller. No event has
occurred since the date thereof that, to the best knowledge of the
undersigned, has affected the good standing of the Seller under the laws
of New York.
2. There are no actions, suits or proceedings pending or, to the
best of my knowledge, threatened against or affecting the Seller which, if
adversely determined, individually or in the aggregate, would materially
and adversely affect the Seller's ability to perform its obligations under
the Mortgage Loan Purchase Agreement (the "Mortgage Loan Purchase
Agreement"), dated December 18, 1998, among the Seller, New Century
Mortgage Corporation and Salomon Brothers Mortgage Securities VII, Inc
(the "Depositor"). No proceedings looking toward merger, consolidation or
liquidation, dissolution or bankruptcy of the Seller are pending or
contemplated.
3. Each person who, as an officer or representative of the Seller,
signed the Mortgage Loan Purchase Agreement and any other document
delivered prior hereto or on the date hereof in connection with the
purchase described in the Mortgage Loan Purchase Agreement was, at the
respective times of such signing and delivery, and is now, duly elected or
appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their genuine
signatures.
4. All of the representations and warranties of the Seller under the
Mortgage Loan Purchase Agreement are true and correct in all material
respects as of the Closing Date subject, in the case of the Closing
Schedule delivered pursuant to the Mortgage Loan Purchase Agreement, to
such amendments thereto as were duly made on or before the date hereof and
no event has occurred with respect to the Seller which, with notice or the
passage of time or both, would constitute a default under the Mortgage
Loan Purchase Agreement.
5. The information set forth in the Mortgage Loan Schedule attached
as an exhibit to the Pooling and Servicing Agreement is true and correct
in all material respects.
6. The transactions contemplated in the Mortgage Loan Purchase
Agreement will be reported as a sale in the Seller's financial reports.
7. With respect to its sale of the Mortgage Loans and the
transactions and undertakings contemplated by the Mortgage Loan Purchase
Agreement, the Seller has complied in all material respects with all the
obligations by which it is bound and has satisfied in all material
respects all the conditions on its part to be performed or satisfied prior
to the Closing Date.
8. Capitalized terms used but not defined herein shall have the
meanings assigned in the Mortgage Loan Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
By:________________________________
Name:
Title: Authorized Agent
I, , an ________________ of Salomon Brothers Realty Corp., hereby
certify that ________________ is a duly appointed, qualified and acting
Authorized Agent of the Seller and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
By:________________________________
Name:
Title:
EXHIBIT 2
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER WITH RESPECT TO CERTAIN
FACTS REGARDING THE SALE OF THE MORTGAGE LOANS]
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates
Series 1998-NC7
CERTIFICATE OF
SALOMON BROTHERS REALTY CORP.
Reference is made to the sale of mortgage loans (the "Mortgage
Loans") by Salomon Brothers Realty Corp. ("SBRC") to Salomon Brothers Mortgage
Securities VII, Inc. (the "Depositor") pursuant to a Mortgage Loan Purchase
Agreement, dated December 18, 1998, among SBRC, New Century Mortgage Corporation
and the Depositor (the "New Century Purchase Agreement") and a Mortgage Loan
Purchase Agreement, dated December 18, 1998, among SBRC, Option One Mortgage
Corporation and the Depositor (the "Option One Purchase Agreement"; together
with the New Century Purchase Agreement, the "Purchase Agreements"), and the
simultaneous issuance of Mortgage Pass-Through Certificates, Series 1998-NC7,
Class A, Class CE, Class P, Class R-I, Class R-II and Class R-III (the
"Certificates"), pursuant to a Pooling and Servicing Agreement, dated as of
December 1, 1998 (the "Pooling and Servicing Agreement") among the Depositor as
depositor, New Century Mortgage Corporation as master servicer (in such
capacity, the "Master Servicer") and servicer, Option One Mortgage Corporation
as servicer, Firstar Bank Milwaukee, N.A. as trustee (the "Trustee") and U.S.
Bank National Association as trust administrator (the "Trust Administrator"). In
consideration for its purchase of the Mortgage Loans, the Depositor will deliver
to SBRC immediately available funds. The Depositor will sell the Certificates to
Xxxxxxx Xxxxx Xxxxxx Inc. (the "Underwriter") for offer and sale pursuant to the
terms of an Underwriting Agreement, dated December 18, 1998 (the "Underwriting
Agreement"), between the Depositor and the Underwriter. The Purchase Agreement,
the Pooling and Servicing Agreement and the Underwriting Agreement together, are
hereinafter collectively referred to as the "Agreements". Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Agreements.
The undersigned is a duly appointed Authorized Agent of Salomon
Brothers Realty Corp. and hereby certifies after reasonable investigation that:
1. The price to be paid to SBRC for the Mortgage Loans will have
been paid in full at the closing of the sale pursuant to the Purchase
Agreements, and no agreement or arrangement exists or will exist that permits
the modification of the consideration for the Mortgage Loans subsequent to that
sale. SBRC will not have any right or obligation to repurchase any Mortgage
Loan, except as provided in the Purchase Agreements.
2 Each Mortgage Note and each related Mortgage has been
appropriately prepared and duly executed and delivered by the related Mortgagor,
and each Mortgage has been appropriately recorded in the applicable jurisdiction
and any intervening endorsement of any Mortgage Note, and any intervening
assignment of any Mortgage, which was required in order to transfer to SBRC
ownership of the Mortgage Loans, was obtained and completed.
3. Each Mortgage Note has been endorsed or assigned in a manner that
satisfies any requirement necessary to transfer to the Trustee all right, title
and interest of the party so endorsing or assigning, as noteholder or transferee
thereof, in and to that Mortgage Note, as provided in the Purchase Agreements
and the Pooling and Servicing Agreement. Each Assignment to the Trustee is in
recordable form and is sufficient to effect the assignment and transfer to the
Depositor of the benefits of the assignor, as original mortgagee or assignee
thereof, under each Mortgage to which that Assignment relates, as provided in
the Purchase Agreements and the Pooling and Servicing Agreement. Each Assignment
to the Trustee has been or will be appropriately recorded to the extent required
under applicable law, as provided in the Pooling and Servicing Agreement.
4. Each original Mortgage Note, each original recorded Mortgage,
each original recorded intervening Assignment and each Assignment to the Trustee
has been delivered to the Trustee at the direction of the Depositor, and the
Trustee will maintain continuous actual possession of each of the foregoing in
the State of New York. Neither the Trustee nor any agent of the Trustee that has
or will have possession of any Mortgage Note, Mortgage or Assignment is, or will
be, at any time during the term of the Pooling and Servicing Agreement, an
affiliate of SBRC or otherwise under the direct or indirect control of SBRC.
5. Immediately prior to the transfer of the Mortgage Loans by SBRC
to the Depositor, SBRC was the sole owner of each Mortgage Loan, free and clear
of any and all prior liens, mortgages, security interests, pledges,
participation interests, adverse claims, charges or other equities or
encumbrances of any nature, and had full right and authority to sell, assign and
transfer the Mortgage Loans.
6. No Mortgage Note, Mortgage or other document constituting part of
the Mortgage File reflects or will reflect on its face any interest that is
inconsistent with the ownership interest of SBRC in and to the Mortgage Loans or
the transfer of the Mortgage Loans by SBRC to the Depositor.
7. The transfer of the Mortgage Loans by SBRC to the Depositor as
provided in the Purchase Agreements is intended by SBRC to be, and is in fact, a
contemporaneous exchange in which SBRC receives new value.
8. SBRC was solvent at all relevant times prior to, and will not be
rendered insolvent by, the transfer of the Mortgage Loans to the Depositor.
9. SBRC did not transfer the Mortgage Loans to the Depositor with
any intent to hinder, delay or defraud any of SBRC's creditors.
10. None of SBRC, the Depositor, the Master Servicer, the Servicer,
the Trustee or the Trust Administrator, or any agent acting on behalf of any of
them, has been or will become a party to any fraud or illegality affecting any
Mortgage Loan or Certificate.
11. No breach of the Agreements by any party, misrepresentation or
failure by any party to perform all acts required to be performed prior to the
Closing Date, or fraud or mistake on the part of any party to the Agreements in
connection with the transactions contemplated by the Agreements, has occurred or
will occur.
12. No party to the Agreements has taken or will take any action
that is unreasonable, arbitrary or capricious, or that is not taken in good
faith or in a commercially reasonable manner, affecting the Mortgage Loans in
connection with the transactions contemplated by the Agreements.
13. There is not and will not be any other agreement among the
parties to the Agreements that modifies or otherwise supplements the agreement
of the parties as expressed in the Agreements.
14. SBRC does not have and will not have any right to modify or
alter the terms of the transfer of the Mortgage Loans by SBRC to the Depositor,
or to substitute or add any mortgage loan thereafter, except as provided in the
Agreements.
15. SBRC will not take any action that is inconsistent with the
ownership interest in the Mortgage Loans evidenced by the Certificates. SBRC
will promptly indicate to other persons or entities, when a response is
appropriate, that the Mortgage Loans were transferred by SBRC to the Depositor.
SBRC will not claim any ownership interest directly in the Mortgage Loans other
than that represented by Certificates in which it may have an ownership interest
from time to time.
16. Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, SBRC will report the transfer of the Mortgage Loans
to the Depositor, as provided in the respective Purchase Agreements as a sale of
all of its interest in the Mortgage Loans. SBRC has been advised by or has
confirmed with its independent public accountants for similar transactions that
the sale will be so classified under GAAP in accordance with Statement No. 125
of the Financial Accounting Standards Board.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of December __, 1998.
SALOMON BROTHERS REALTY CORP.
By:________________________________
Name:
Title: Authorized Agent
EXHIBIT 3
[FORM OF OPINION OF COUNSEL FOR THE SELLER]
December __, 1998
Salomon Brothers Mortgage Financial Security Assurance Inc.
Securities VII, Inc. 000 Xxxx Xxxxxx
Seven World Trade Center New York, New York 10022
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx Xxxxxx Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1998-NC7
---------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Salomon Brothers Realty Corp. (the
"Seller") in connection with the sale of mortgage loans (the "Mortgage Loans")
by the Seller to Salomon Brothers Mortgage Securities VII, Inc. (the
"Depositor") pursuant to a Mortgage Loan Purchase Agreement, dated December 18,
1998, among the Seller, Option One Mortgage Corporation and the Depositor (the
"Option One Purchase Agreement") and a Mortgage Loan Purchase Agreement, dated
December 18, 1998, among the Seller, New Century Mortgage Corporation and the
Depositor (the "New Century Purchase Agreement"; together with the Option One
Purchase Agreement, the "Agreements"). This opinion is being delivered to you
pursuant to Section 9(c) of each of the Agreements. Capitalized terms used but
not defined herein have the meanings set forth in the Agreements or in
agreements referred to therein.
In rendering this opinion letter, we do not express any opinion
concerning any law other than the law of the State of New York and the federal
law of the United States, and we do not express any opinion concerning the
application of the "doing business" laws or the securities laws of any
jurisdiction other than the federal securities laws of the United States. In
addition, we do not express any opinion on any issue not expressly addressed
below.
In rendering this opinion letter, we have examined the Agreements,
the certificate of incorporation and by-laws of the Seller and such records and
other documents as we have deemed necessary. As to matters of fact, we have
examined and relied upon representations of the Seller contained in the
Agreements, and where we have deemed appropriate, representations or
certifications of officers of the Seller, the Depositor or public officials. We
have assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents submitted to us as copies. We have assumed, except as to the Seller,
that all parties had the corporate power and authority to enter into and perform
all obligations thereunder and, as to such parties, we also have assumed the due
authorization by all requisite corporate action, the due execution and delivery
and the validity and binding effect and enforceability of such documents. We
have further assumed that there is not and will not be any other agreement that
materially supplements or otherwise modifies the agreements expressed in the
Agreements. We have further assumed the conformity of the Mortgage Loans and
related documents to the requirements of the Agreements.
Based upon the foregoing, we are of the opinion that:
1. The Seller is a corporation duly organized and validly
existing and in good standing under the laws of the State of
New York and has the requisite corporate power to own its
properties, to conduct its business as presently conducted by
it, to own the Mortgage Loans to which each Agreement relates,
to transfer and convey such Mortgage Loans to the Depositor
and to enter into and perform its obligations under each of
the Agreements.
2. Each of the Agreements have been duly authorized, executed and
delivered by the Seller and, upon due authorization, execution
and delivery by the other parties thereto, will constitute the
valid, legal and binding agreement of the Seller, enforceable
against the Seller in accordance with its terms, except as
enforceability may be limited by (a) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other
similar laws affecting the rights of creditors and (b) general
principles of equity, whether enforcement is sought in a
proceeding in equity or at law.
3. No consent, approval, authorization or order of any State of
New York or federal court or governmental agency or body is
required for the consummation by the Seller of the
transactions contemplated by the Agreements except for those
consents, approvals, authorizations or orders that previously
have been obtained.
4. Neither the transfer of the Mortgage Loans as provided in the
Agreements, nor the fulfillment of the terms of or the
consummation of any other of the transactions contemplated by
the Agreements, will result in a breach of any term or
provision of the certificate of incorporation or by-laws of
the Seller or, to the best of our knowledge, will conflict
with, result in a breach, violation or acceleration of or
constitute a default under, the terms of any indenture or
other agreement or instrument to which the Seller is a party
or by which it is bound, or any State of New York or federal
statute applicable to the Seller, or any order or regulation
of any State of New York or federal court, regulatory body,
administrative agency or governmental body having jurisdiction
over the Seller.
5. To the best of our knowledge, there are no actions,
proceedings or investigations pending or threatened against
the Seller before any court, administrative agency or other
tribunal (a) asserting the invalidity of either of the
Agreements, (b) seeking
to prevent the consummation of any of the transactions
contemplated in either of the Agreements or (c) that might
materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability
of, the Agreements.
This opinion letter is rendered for the sole benefit of each
addressee hereof, and no other person is entitled to rely hereon. Copies of this
letter may not be furnished to any other person, nor may any portion of this
letter be quoted, circulated or referred to in any other document, without our
prior written consent.
Very truly yours,
XXXXXXX XXXXXXXX & XXXX
By
EXHIBIT 4
[FORM OF OFFICER'S CERTIFICATE OF ORIGINATOR]
New Century Mortgage Corporation
Officer's Certificate
I, ____________________________, hereby certify that I am the duly
elected _____________________________________, of New Century Mortgage
Corporation, a California corporation (the "Company"), and further certify, on
behalf of the Company as follows:
1. Attached hereto as Attachment I is a true and correct copy of the
Certificate of Incorporation and By-laws of the Company as in full force and
effect on the date hereof. No event has occurred since ________________ which
has affected the good standing of the Company under the laws of the State of
California.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Company are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the
Company, signed (a) the Mortgage Loan Purchase Agreement (the "Purchase
Agreement") dated December 18, 1998 among the Company, Salomon Brothers Realty
Corp. and Salomon Brothers Mortgage Securities VII, Inc. ("SBMSVII"), or (b) any
other document delivered prior hereto or on the date hereof in connection with
the transactions contemplated by the Purchase Agreement and the Pooling and
Servicing Agreement dated as of December 1, 1998 among SBMSVII, the Company,
Option One Mortgage Corporation, Firstar Bank Milwaukee, N.A. and U.S. Bank
National Association (the "Pooling and Servicing Agreement") was, at the
respective times of such signing and delivery, and is as of the date hereof,
duly elected or appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on such documents
are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of
the resolutions duly adopted by the board of directors of the Company on , 199_
(the "Resolutions") with respect to the transactions contemplated by the
Purchase Agreement and the Pooling and Servicing Agreement; said Resolutions
have not been amended or modified, annulled or revoked and are in full force and
effect on the date hereof.
5. All of the representations and warranties of the Company
contained in the Purchase Agreement are true and correct in all material
respects as of the Closing Date, and no event has occurred which, with notice or
the passage of time or both, would constitute a default under the Purchase
Agreement.
6. The Company has performed all of its duties and has satisfied all
of the material conditions on its part to be performed or satisfied prior to the
Closing Date.
All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated: December __, 1998
(Seal) NEW CENTURY MORTGAGE CORPORATION
By:________________________________
Name:
Title:
I, ___________________________, [Assistant] Secretary of __________
____________________, hereby certify that _____________________________________
is the duly elected, qualified and acting _____________________________________
of _______________________________ and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: December __, 1998
NEW CENTURY MORTGAGE CORPORATION
By:________________________________
Name:
Title:
EXHIBIT 5
[FORM OF OPINION OF COUNSEL FOR ORIGINATOR]
December __, 1998
Salomon Brothers Mortgage Securities VII, Inc. Financial Security Assurance Inc.
Seven World Trade Center 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx Xxxxxx Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1998-NC7
---------------------------------------------------
Ladies and Gentlemen:
I have acted as counsel to New Century Mortgage Corporation, a
California corporation (the "Company"), in connection with the sale of certain
mortgage loans, previously sold by the Company to Salomon Brothers Realty Corp.
("Realty"), to Salomon Brothers Securities VII, Inc. ("SBMSVII") pursuant to a
Mortgage Loan Purchase Agreement, dated December 18, 1998 (the "Purchase
Agreement"), among the Company, Realty and SBMSVII. Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates, Series 1998-NC7 have
or will be issued pursuant to the Pooling and Servicing Agreement, dated as of
December 1, 1998 (the "Pooling and Servicing Agreement"), among SBMSVII, the
Company, New Century Mortgage Corporation, Firstar Bank Milwaukee, N.A. and U.S.
Bank National Association. Capitalized terms not otherwise defined herein have
the meanings set forth in the Pooling and Servicing Agreement.
In connection with rendering this opinion letter, I, or attorneys
working under my direction, have examined, among other things, originals,
certified copies or copies otherwise identified to my satisfaction as being true
copies of the following:
A. The Purchase Agreement;
B. The Pooling and Servicing Agreement;
C. The Company's Certificate of Incorporation and Bylaws, as amended to
date; and
D. Resolutions adopted by the Board of Directors of the Company with
specific reference to actions relating to the transactions covered
by this opinion.
For the purpose of rendering this opinion, I have made such documentary, factual
and legal examinations as I deemed necessary under the circumstances. As to
factual matters, I have relied
- 2 -
upon statements, certificates and other assurances of public officials and of
officers and other representatives of the Company, and upon such other
certificates as I deemed appropriate, which factual matters have not been
independently established or verified by me. I have also assumed, among other
things, the genuineness of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to me as originals, and the
conformity to original documents of all documents submitted to me as copies and
the authenticity of the originals of such copied documents.
On the basis of and subject to the foregoing examination, and in
reliance thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of California with corporate power and
authority to own its properties and conduct its business as presently conducted
by it. The Company has the corporate power and authority to execute, deliver,
and perform its obligations under the Purchase Agreement.
2. The Purchase Agreement has been duly and validly authorized, executed
and delivered by the Company.
3. The Purchase Agreement constitutes valid, legal and binding
obligations of the Company, enforceable against the Company in accordance with
its terms.
4. No consent, approval, authorization or order of any state or federal
court or government agency or body is required for the execution, delivery and
performance by the Company of the Purchase Agreement or the consummation of the
transactions contemplated by the Purchase Agreement, except for those consents,
approvals, authorizations or orders which previously have been obtained.
5. The fulfillment of the terms of or the consummation of the
transactions contemplated in the Purchase Agreement will not result in a breach
of any term or provision of the Certificate of Incorporation or By-laws of the
Company, or, to the best of my knowledge, will conflict with, result in a breach
or violation of, or constitute a default under, (i) the terms of any indenture
or other agreement or instrument known to me to which the Company is a party or
by which it is bound, (ii) any State of California or federal statute or
regulation applicable to the Company, or (iii) any order of any State of
California or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company, except in any such case
where the default, breach or violation would not have a material adverse effect
on the Company or its ability to perform its obligations under the Purchase
Agreement.
6. There is no action, suit, proceeding or investigation pending or, to
the best of my knowledge, threatened against the Company which, in my judgment,
either in any one instance or in the aggregate, would draw into question the
validity of the Purchase Agreement, which seeks
- 3 -
to prevent the consummation of any of the transactions contemplated in the
Purchase Agreement or which would be likely to impair materially the ability of
the Company to perform under the terms of the Purchase Agreement.
7. No information has come to my attention that causes me to believe
that the information contained in SBMSVII's Prospectus Supplement, dated
December 18, 1998, relating to the Company, its financial condition, its
underwriting standards and its loan portfolio, specifically the information in
the "Summary--The Mortgage Loans," "Risk Factors," "The Mortgage Pool" (except
with respect to the information contained under the caption "The Mortgage
Pool--Option One Underwriting Programs") and "Pooling and Servicing
Agreement--New Century Mortgage Corporation" contained an untrue statement of
material fact or omitted to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
The opinions above are subject to the following additional assumptions,
exceptions, qualifications and limitations:
A. I have assumed that all parties to the Purchase Agreement other than
the Seller have all requisite power and authority to execute,
deliver and perform their respective obligations under the Purchase
Agreement, and that the Purchase Agreement has been duly authorized
by all necessary corporate actions on the part of such parties, has
been executed and delivered by such parties and constitutes the
legal, valid and binding obligations of such parties.
B. My opinion expressed paragraphs 3 above is subject to the
qualifications that (i) the enforceability of the Purchase Agreement
may be limited by the effect of laws relating to (1) bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally,
including, without limitation, the effect of statutory or other laws
regarding fraudulent conveyances or preferential transfers, and (2)
general principles of equity upon the specific enforceability of any
of the remedies, covenants or other provisions of the Purchase
Agreement and upon the availability of injunctive relief or other
equitable remedies and the application of principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) as such principles relate to limit
or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such
enforcement may be brought; and (ii) I express no opinion herein
with respect to the validity, legality, binding effect or
enforceability of provisions for indemnification in the Purchase
Agreement to the extent such provisions may be held to be
unenforceable as contrary to public policy.
C. I have assumed, without independent check or certification, that
there are no agreements or understandings among the Company, Realty
and any other party
- 4 -
which would expand, modify or otherwise affect the terms of the
documents described herein or the respective rights or obligations
of the parties thereunder.
I express no opinion as to whether the courts of the United States
located in California or state courts of California would respect or enforce any
contractual provision regarding choice of law, selection of forum or waiver of a
jury trial.
This opinion is given to you for your sole benefit, and no other person
or entity is entitled to rely hereon.
I am admitted to practice in the State of California, and I render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of California and the Federal laws of the United States of America.
Very truly yours,
________________________________
- 5 -
EXHIBIT 6
Loan #: ____________
Borrower: _____________
LOST NOTE AFFIDAVIT
-------------------
I, as ___________________ of ________________, a __________________
corporation am authorized to make this Affidavit on behalf of _________________
(the "Seller"). In connection with the administration of the Mortgage Loans held
by ____________________, a _________________ corporation as Seller on behalf of
Salomon Brothers Mortgage Securities VII, Inc. (the "Purchaser"),
_____________________ (the "Deponent"), being duly sworn, deposes and says that:
1. The Seller's address is : _____________________
_____________________
_____________________
2. The Seller previously delivered to the Purchaser a signed Initial
Certification with respect to such Mortgage and/or Assignment of
Mortgage;
3. Such Mortgage Note and/or Assignment of Mortgage was assigned or
sold to the Purchaser by ________________________, a ____________
corporation pursuant to the terms and provisions of a Mortgage Loan
Purchase Agreement dated as of December 18, 1998;
4. Such Mortgage Note and/or Assignment of Mortgage is not
outstanding pursuant to a request for release of Documents;
5. Aforesaid Mortgage Note and/or Assignment of Mortgage (the
"Original") has been lost;
6. Deponent has made or caused to be made a diligent search for the
Original and has been unable to find or recover same;
7. The Seller was the Seller of the Original at the time of the
loss; and
8. Deponent agrees that, if said Original should ever come into
Seller's possession, custody or power, Seller will immediately and
without consideration surrender the Original to the Purchaser.
9. Attached hereto is a true and correct copy of (i) the Note,
endorsed in blank by the Mortgagee and (ii) the Mortgage or Deed of
Trust (strike one) which secures the Note, which Mortgage or Deed of
Trust is recorded in the county where the property is located.
10. Deponent hereby agrees that the Seller (a) shall indemnify and
hold harmless the Purchaser, its successors and assigns, against any
loss, liability or damage, including reasonable attorney's fees,
resulting from the unavailability of any Notes, including but not
limited to any loss, liability or damage arising from (i) any false
statement contained in this Affidavit, (ii) any claim of any party
that has already purchased a mortgage loan evidenced by the Lost
Note or any interest in such mortgage loan, (iii) any claim of any
borrower with respect to the existence of terms of a mortgage loan
evidenced by the Lost Note on the related property to the fact that
the mortgage loan is not evidenced by an original note and (iv) the
issuance of a new instrument in lieu thereof (items (i) through (iv)
above hereinafter referred to as the "Losses") and (b) if required
by any Rating Agency in connection with placing such Lost Note into
a Pass-Through Transfer, shall obtain a surety from an insurer
acceptable to the applicable Rating Agency to cover any Losses with
respect to such Lost Note.
11. This Affidavit is intended to be relied upon by the Purchaser,
its successors and assigns. _____________________, a ______________
corporation represents and warrants that is has the authority to
perform its obligations under this Affidavit of Lost Note.
Executed this ____ day, of ___________ 199_.
SELLER
By:_____________________________
Name:
Title:
On this ___ day of ______, 199_, before me appeared ________________
to me personally known, who being duly sworn did say that he is the
_____________________ of ____________________ a ______________ corporation and
that said Affidavit of Lost Note was signed and sealed on behalf of such
corporation and said acknowledged this instrument to be the free act and deed of
said corporation.
Signature:
[Seal]
EXHIBIT 7
On the Cut-off Date, the Mortgage Loans shall comply with the
following conditions:
(i) no less than _____% of the Mortgage Loans shall have a risk
grade of A+, A+MO, A- or A-MO, no more than _____% of such loans shall have a
risk grade of B and no more than 15.20% of such loans shall have a risk grade of
C, C- or C- HS;;
(ii) any Mortgage Loan with a loan-to-value ratio (or combined
loan-to-value ratio, in the case of second lien Mortgage Loans) between _____%
and _____% shall have a risk grade of A+, A+MO, A-, A-MO or B;
(iii) the weighted average loan-to-value (or combined loan-to-value
ratio, in the case of second lien Mortgage Loans) for each of the Mortgage Loans
at origination shall be approximately ______%;
(iv) the maximum percentage concentration of Mortgage Loans secured
by mortgaged properties in any one zip code shall be approximately ____%;
(v) approximately _____% of the Mortgage Loans provide for payment
by the mortgagor of a prepayment charge within a specified period as provided in
the related Mortgage Note not in excess of 5 years;
(vi) the Mortgage Loans shall have a weighted average Mortgage Rate
equal to approximately ______% per annum. The Mortgage Loans will be fixed-rate
mortgage loans, payable on the first day of each month. The Mortgage Loans will
not be subject to negative amortization and will not provide for graduated
payments. None of the Mortgage Loans shall be subject to temporary buydown
agreements. Each of the Mortgage Loans shall be fully-amortizing and none of the
Mortgage Loans shall provide for the payment of a balloon payment; and
(vii) no more than approximately ____% of the Mortgage Loans are
secured by second liens on the related mortgaged property.
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (this "Agreement"), dated
December 18, 1998, among Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation (the "Purchaser"), Option One Mortgage Corporation, a
California corporation (the "Originator") and Salomon Brothers Realty Corp., a
New York corporation (the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell the Mortgage Loans (as hereinafter
identified) to the Purchaser on the terms and subject to the conditions set
forth in this Agreement. The Mortgage Loans were purchased by the Seller from
the Originator pursuant to a certain Mortgage Loan Purchase and Servicing
Agreement, dated as of March 1, 1998 (the "Purchase and Servicing Agreement"),
between the Seller as initial purchaser and the Originator as seller and
servicer. The Purchaser intends to deposit the Mortgage Loans into a mortgage
pool comprising of the Trust Fund. The Trust Fund will be evidenced by a single
series of mortgage pass-through certificates designated as Series 1998-NC7 (the
"Certificates"). The Certificates will consist of six classes of certificates.
The Certificates will be issued pursuant to a Pooling and Servicing Agreement,
dated as of December 1, 1998 (the "Pooling and Servicing Agreement"), among the
Purchaser as depositor, New Century Mortgage Corporation as master servicer (in
such capacity, the "Master Servicer") and a servicer, the Company as a servicer,
Firstar Bank Milwaukee, N.A. as trustee (the "Trustee") and U.S. Bank National
Association as trust administrator (the "Trust Administrator"). Capitalized
terms used but not defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell, and the
Purchaser agrees to purchase, on or before December 22, 1998 (the "Closing
Date"), certain conventional, one- to four-family, fixed-rate residential
mortgage loans (the "Mortgage Loans"), having an aggregate principal balance as
of the close of business on December 1, 1998 (the "Cut-off Date") of
approximately $703,557,762.96 (the "Closing Balance"), after giving effect to
all payments due on the Mortgage Loans on or before the Cut-off Date, whether or
not received, including the right to any Prepayment Charges payable by the
related Mortgagors in connection with any Principal Prepayments on the Mortgage
Loans.
SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the Seller have
agreed upon which of the mortgage loans owned by the Seller are to be purchased
by the Purchaser pursuant to this Agreement and the Seller will prepare or cause
to be prepared on or prior to the Closing Date a final schedule (the "Closing
Schedule") that shall describe such Mortgage Loans and set forth all of the
Mortgage Loans to be purchased under this Agreement, including the related
Prepayment Charges. The Closing Schedule will conform to the requirements set
forth in this Agreement and to the definition of "Mortgage Loan Schedule" under
the Pooling and Servicing Agreement. The Closing Schedule shall be used as the
Mortgage Loan Schedule under the Pooling and Servicing Agreement.
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SECTION 3. CONSIDERATION.
(a) In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall, as described in Section 8, pay to or upon the
order of the Seller in immediately available funds an amount (the "Purchase
Price") equal to approximately _____% times the Closing Balance, plus accrued
interest thereon from the Cut-off Date up to but not including the Closing Date.
(b) The Purchaser or any assignee, transferee or designee of the
Purchaser shall be entitled to all scheduled payments of principal due after the
Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, the Purchaser
will assign all of its right, title and interest in and to the Mortgage Loans,
together with its rights under this Agreement, to the Trustee for the benefit of
the Certificateholders.
SECTION 4. TRANSFER OF THE MORTGAGE LOANS.
(a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Mortgage Loans, including the related Prepayment Charges. The
contents of each Mortgage File not delivered to the Purchaser or to any
assignee, transferee or designee of the Purchaser on or prior to the Closing
Date are and shall be held in trust by the Seller for the benefit of the
Purchaser or any assignee, transferee or designee of the Purchaser. Upon the
sale of the Mortgage Loans, the ownership of each Mortgage Note, the related
Mortgage and the other contents of the related Mortgage File is vested in the
Purchaser and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or that come into the possession of the Seller
on or after the Closing Date shall immediately vest in the Purchaser and shall
be delivered immediately to the Purchaser or as otherwise directed by the
Purchaser.
(b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on or
prior to the Closing Date, deliver or cause to be delivered to the Purchaser or
any assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:
(i) the original Mortgage Note, endorsed in the following form:
"Pay to the order of Norwest Bank Minnesota, N.A., as Trustee," with all
prior and intervening endorsements showing a complete chain of endorsement
from the originator to the Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of recording thereon;
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(iii) an original Assignment of Mortgage executed in the
following form: "Firstar Bank Milwaukee, N.A. as Trustee under the
applicable pooling and servicing agreement";
(iv) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator to the
Person assigning the Mortgage to the Trustee as contemplated by the
immediately preceding clause (iii);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy, together with
all endorsements or riders that were issued with or subsequent to the
issuance of such policy, insuring the priority of the Mortgage as a first
or second lien on the Mortgaged Property represented therein as a fee
interest vested in the Mortgagor.
Within thirty (30) Business Days following the Closing Date, Option
One will prepare, execute and deliver to the Trust Administrator an endorsement
for each of the Mortgage Loans endorsing each Mortgage Note in the following
form: "Pay to the order of Firstar Bank Milwaukee, N.A., as Trustee under the
applicable agreement, without recourse" and the endorsement provided for in
Section 4(b)(i) hereof will be voided by the Trust Administrator.
The Seller, at the expense of the Originator, promptly shall (within
sixty Business Days following the later of the Closing Date and the date of
receipt by the Seller of the recording information for a Mortgage, but in no
event later than ninety days following the Closing Date) submit or cause to be
submitted for recording, at no expense to the Seller or the Purchaser (or the
Trust Fund, the Certificate Insurer, the Trustee or the Trust Administrator
under the Pooling and Servicing Agreement), in the appropriate public office for
real property records, each Assignment referred to in clauses (b)(iii) and
(b)(iv) of this Section 4. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Originator on behalf of the
Seller, at the expense of the Originator, promptly shall prepare a substitute
Assignment or cure such defect, as the case may be, and thereafter cause each
such Assignment to be duly recorded.
Notwithstanding anything to the contrary contained in this Section
4, with respect to a maximum of approximately 1.0% of the Mortgage Loans, by
aggregate principal balance of the Mortgage Loans as of the Cut-off Date, if any
original Mortgage Note referred to in Section 4(b)(i) above cannot be located,
the obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon delivery to the Purchaser or any assignee, transferee or designee
of the Purchaser of a photocopy of such Mortgage Note, if available, with a lost
note affidavit substantially in the form of Exhibit 6 hereto. If any of the
original Mortgage Notes for which a lost note affidavit was delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser within three
Business Days; and if any document referred to in Section 4(b)(ii) or 4(b)(iv)
above has been submitted for recording but
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either (x) has not been returned from the applicable public recording office or
(y) has been lost or such public recording office has retained the original of
such document, the obligations of the Seller hereunder shall be deemed to have
been satisfied upon delivery to the Purchaser or any assignee, transferee or
designee of the Purchaser promptly upon receipt thereof by or on behalf of the
Seller of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original.
In the event that the original lender's title insurance policy has
not yet been issued, the Seller shall deliver to the Purchaser or any assignee,
transferee or designee of the Purchaser a written commitment or interim binder
or preliminary report of title issued by the title insurance or escrow company.
The Seller shall deliver to the Purchaser or any assignee, transferee or
designee of the Purchaser promptly upon receipt by the Seller of any such
original title insurance policy or original Primary Mortgage Insurance Policy.
Each original document relating to a Mortgage Loan which is not
delivered to the Purchaser or its assignee, transferee or designee, if held by
the Seller or the Originator, shall be so held for the benefit of the Purchaser
or its assignee, transferee or designee.
(c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered pursuant
to Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before or after the Closing
Date (and with respect to each document permitted to be delivered after the
Closing Date, within seven days of its delivery) to ascertain that all required
documents have been executed and received and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule.
(d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the right
to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller or the Originator, and the assignee
shall succeed to the rights and obligations hereunder of the Purchaser. Any
expense reasonably incurred by or on behalf of the Purchaser or the Trustee in
connection with enforcing any obligations of the Seller or the Originator under
this Agreement will be promptly reimbursed by the Seller or the Originator, as
applicable.
(e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller shall either (i) deliver in escrow to the Purchaser or to any assignee,
transferee or designee of the Purchaser for examination the Mortgage File
pertaining to each Mortgage Loan, or (ii) make such Mortgage Files available to
the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser, the Trust
Administrator or the Trustee, and their respective designees, upon reasonable
notice to the Seller during normal business hours before the Closing Date and
within 60 days after the Closing Date. If any such person makes such examination
prior to the Closing Date and identifies any Mortgage Loans that do not conform
to the requirements of the Purchaser as described in this Agreement, such
Mortgage Loans shall be deleted from the Closing Schedule. The Purchaser may, at
its option and without notice to the Seller, purchase all or part of the
Mortgage Loans without
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conducting any partial or complete examination. The fact that the Purchaser or
any person has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect the rights of the Purchaser
or any assignee, transferee or designee of the Purchaser to demand repurchase or
other relief as provided herein or under the Pooling and Servicing
Agreement.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
AND THE ORIGINATOR.
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(a) The Originator hereby represents and warrants to the Seller and
the Purchaser, as of the date hereof and as of the Closing Date, and covenants,
that:
(i) The Originator is duly organized, validly existing and in
good standing as a corporation under the laws of the State of California with
full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. The Originator had the full corporate power and authority
to own the Mortgage Loans and to transfer and convey the Mortgage Loans to the
Seller pursuant to the Purchase and Servicing Agreement, and the Originator has
the full corporate power and authority to execute and deliver, engage in the
transactions contemplated by, and perform and observe the terms and conditions
of this Agreement;
(ii) The Originator has duly authorized the execution, delivery
and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser and the Seller, constitutes a legal, valid and binding
obligation of the Originator, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization or by general principles of equity;
(iii) The execution, delivery and performance of this Agreement
by the Originator (x) does not conflict and will not conflict with, does not
breach and will not result in a breach of and does not constitute and will not
constitute a default (or an event, which with notice or lapse of time or both,
would constitute a default) under (A) any terms or provisions of the articles of
incorporation or by-laws of the Originator, (B) any term or provision of any
material agreement, contract, instrument or indenture, to which the Originator
is a party or by which the Originator or any of its property is bound, or (C)
any law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Originator or any
of its property and (y) does not create or impose and will not result in the
creation or imposition of any lien, charge or encumbrance which would have a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans;
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Originator to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Originator of, or compliance by the Originator with, this Agreement or the
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consummation by the Originator of any other transaction contemplated hereby and
by the Pooling and Servicing Agreement; provided, however, that the Originator
makes no representation or warranty regarding federal or state securities laws
in connection with the sale or distribution of the Certificates;
(v) With respect to any statement regarding the intentions of
the Originator, this Agreement does not contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements contained
herein not misleading. The written statements, reports and other documents
prepared and furnished or to be prepared and furnished by the Originator
pursuant to this Agreement or in connection with the transactions contemplated
hereby taken in the aggregate do not contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements contained
therein not misleading;
(vi) The Originator is not in violation of, and the execution
and delivery of this Agreement by the Originator and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over the
Originator or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Originator or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder;
(vii) The Originator is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act. No event has occurred, including but
not limited to a change in insurance coverage, that would make the Originator
unable to comply with HUD eligibility requirements or that would require
notification to HUD;
(viii) The Originator does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(ix) Immediately prior to the payment to the Originator of the
purchase price for each Mortgage Loan pursuant to the Purchase and Servicing
Agreement, the Originator was the owner of the related Mortgage and the
indebtedness evidenced by the related Mortgage Note, and, upon the payment to
the Originator of such purchase price, in the event that the Originator retains
or has retained record title, the Originator shall retain such record title to
each Mortgage, each related Mortgage Note and the related Mortgage Files with
respect thereto in trust for the Purchaser as the owner thereof from and after
the date hereof;
(x) There are no actions or proceedings against, or
investigations known to it of, the Originator before any court, administrative
or other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Originator which
occurred pursuant to the Purchase and Servicing Agreement or the consummation of
the transactions contemplated by this Agreement or (C) that might prohibit or
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materially and adversely affect the performance by the Originator of its
obligations under, or validity or enforceability of, this Agreement;
(xi) The consummation of the transactions contemplated by this
Agreement and the Purchase and Servicing Agreement are in the ordinary course of
business of the Originator, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Originator pursuant to the Purchase and
Servicing Agreement were not subject to the bulk transfer or any similar
statutory provisions;
(xii) The information delivered by the Originator to the Seller
with respect to the Originator's loan loss, foreclosure and delinquency
experience on mortgage loans underwritten to the same standards as the Mortgage
Loans and covering mortgaged properties similar to the Mortgaged Properties, is
true and correct in all material respects;
(xiii) The Originator has not dealt with any broker, investment
banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans pursuant to the Purchase and Servicing
Agreement; and
(xiv) There is no litigation currently pending or, to the best
of the Originator's knowledge without independent investigation, threatened
against the Originator that would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the issuance of the Certificates or the
execution, delivery, performance or enforceability of this Agreement, or that
would result in a material adverse change in the financial condition of the
Originator.
(b) The Seller hereby represents and warrants, as of the date hereof
and as of the Closing Date, and covenants, that:
(i) The Seller is a corporation, duly organized and validly
existing and in good standing under the laws of the State of New York with full
corporate power and authority to conduct its business as presently conducted by
it to the extent material to the consummation of the transactions contemplated
herein. The Seller had the full corporate power and authority to acquire the
Mortgage Loans. The Seller has the full corporate power and authority to own the
Mortgage Loans and to transfer and convey the Mortgage Loans to the Purchaser
and has the full corporate power and authority to execute and deliver, engage in
the transactions contemplated by, and perform and observe the terms and
conditions of this Agreement;
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller, all requisite corporate action having been
taken, and (assuming the due authorization, execution and delivery hereof by the
Purchaser and the Originator) constitutes the valid, legal and binding
obligation of the Seller, enforceable in accordance with its terms, except as
such enforcement may be limited by (A) bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, (B) general equity principles (regardless of
whether such enforcement is considered in a proceeding
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in equity or at law) or (C) public policy considerations underlying the
securities laws, to the extent that such public policy considerations limit the
enforceability of the provisions of this Agreement which purport to provide
indemnification from securities laws liabilities;
(iii) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required, under federal laws or the laws of the State of New York, for the
execution, delivery and performance by the Seller of, or compli ance by the
Seller with, this Agreement or the consummation by the Seller of any other
transaction contemplated hereby and by the Pooling and Servicing Agreement;
provided, however, that the Seller makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates;
(iv) No certificate of an officer, statement or other
information furnished in writing or report delivered by the Seller to the
Purchaser, any affiliate of the Purchaser or the Trustee for use in connection
with the purchase of the Mortgage Loans and the transactions contemplated
hereunder and under the Pooling and Servicing Agreement will contain any untrue
statement of a material fact, or omit a material fact necessary to make the
information, certificate, statement or report not misleading in any material
respect;
(v) Neither the sale of the Mortgage Loans to the Purchaser, nor
the execution, delivery or performance of this Agreement by the Seller,
conflicts or will conflict with or results or will result in a breach of or
constitutes or will constitute a default (or an event, which with notice or
lapse of time or both, would constitute a default) under (A) any terms or
provisions of the certificate of incorporation or by-laws of the Seller, (B) any
term or provision of any material agreement, contract, instrument or indenture,
to which the Seller is a party or by which the Seller or any of its property is
bound, or (C) any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Seller or any of its property, or results or will result in the creation or
imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any docu ments or instruments
evidencing or securing the Mortgage Loans;
(vi) The Seller has not dealt with any broker, investment
banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans;
(vii) There is no litigation currently pending or, to the best
of the Seller's knowledge, threatened against the Seller that would reasonably
be expected to adversely affect the transfer of the Mortgage Loans, the issuance
of the Certificates, the execution, delivery, performance or enforceability of
this Agreement or that would result in a material adverse change in the
financial condition of the Seller;
(viii) Each Mortgage Note, each Mortgage, each Assignment and
any other document required to be delivered by or on behalf of the Seller under
this Agreement or the Pooling and Servicing Agreement to the Purchaser or any
assignee, transferee or designee of the
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Purchaser for each Mortgage Loan has been or will be, in accordance with Section
4(b) hereof, delivered to the Purchaser or any such assignee, transferee or
designee. With respect to each Mortgage Loan, the Seller is in possession of a
complete Mortgage File in compliance with the Pooling and Servicing Agreement,
except for such documents that (A) have been delivered (1) to the Purchaser or
any assignee, transferee or designee of the Purchaser or (2) for recording to
the appropriate public recording office and have not yet been returned or (B)
are not required to be delivered to the Purchaser or any assignee, transferee or
designee of the Purchaser until 90 days following the Closing Date or such later
date as provided in Section 4;
(ix) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Seller or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder.
(x) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Seller pursuant to this Agreement are not subject
to the bulk transfer or any similar statutory provisions in effect in any
relevant jurisdiction, except any as may have been complied with;
(xi) The Seller does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement.
(xii) The Seller (A) is a solvent entity and is paying its debts
as they become due and (B) after giving effect to the transfer of the Mortgage
Loans, will be a solvent entity and will have sufficient resources to pay its
debts as they become due;
(xiii) The form of endorsement of each Mortgage Note satisfied
the requirement, if any, of endorsement in order to transfer all right, title
and interest of the party so endorsing, as noteholder or assignee thereof, in
and to that Mortgage Note; and each Assignment to be delivered hereunder is in
recordable form and is sufficient to effect the assignment of and to transfer to
the assignee thereunder the benefits of the assignor, as mortgagee or assignee
thereof, under each Mortgage to which that Assignment relates;
(xiv) The transfer of the Mortgage Loans to the Purchaser at the
Closing Date will be treated by the Seller for financial accounting and
reporting purposes as a sale of assets;
(xv) Immediately prior to the sale of the Mortgage Loans to the
Purchaser as herein contemplated, the Seller had good title to, and was the sole
owner of, the Mortgage
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Loans, and such sale validly transfers the Mortgage Loans to the Purchaser free
and clear of any pledge, lien, encumbrance or security interest; and
(xvi) With respect to the Mortgage Loans, the Seller hereby
represents and warrants, as of the date hereof and as of the Closing Date, that
each Mortgage Loan constitutes a "qualified mortgage" within the meaning of
Section 860(G)(a)(3) of the Code.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR AND THE
SELLER RELATING TO THE MORTGAGE LOANS.
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(a) PRINCIPLES OF CONSTRUCTION. The Originator, the Seller and the
Purchaser understand, acknowledge and agree that, notwithstanding that the
representations and warranties set forth in Section 6(b) are made as of the
Closing Date, each such representation and warranty made with respect to any
Mortgage Loan that was purchased by the Seller from the Originator under the
Purchase and Servicing Agreement more than 90 days prior to the Closing Date
(with respect to each such Mortgage Loan, the related "Seller Purchase Date") is
made and shall be deemed to have been made to the Purchaser and the Seller by
the Originator solely as of the date which is 90 days following the related
Seller Purchase Date and not as of any later date, and each such representation
and warranty with respect to any such Mortgage Loan is made and shall be deemed
to have been made to the Purchaser solely by the Seller as of the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE LOANS.
The Originator hereby represents and warrants to the Seller and the Purchaser
(except as provided in Section 6(a) above), or the Seller hereby represents and
warrants to the Purchaser (in the case of those representations and warranties
subject to Section 6(a) above), as the case may be, as of the Closing Date, that
as to each Mortgage Loan as of the Closing Date:
(i) The information set forth in the Mortgage Loan Schedule, as
transmitted electronically to the Seller by the Originator (as such transmitted
information may have been amended in writing by the Originator with the written
consent of the Seller subsequent to such transmission) is complete, true and
correct as of the Cut-off Date and the information in the Mortgage Loan
Schedule, as transmitted by the Seller to the Purchaser on the Closing Date is
complete, true and correct as of the Closing Date;
(ii) Except with respect to the Mortgage Loans listed on Exhibit 7
attached hereto, all payments required to be made prior to the first day of the
month in which the Closing Date occurs for such Mortgage Loan under the terms of
the Mortgage Note have been made; the Originator has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party other
than the owner of the related Mortgaged Property, directly or indirectly, for
the payment of any amount required by the Mortgage Note or Mortgage; and as of
the Closing Date, no payment required under any Mortgage Loan has been 30 days
delinquent more than once during the last twelve months and except with respect
to ____% of the Mortgage Loans by aggregate principal balance as of the Cut-off
Date, which were sixty days or more but less than ninety days delinquent, no
Mortgage Loan has ever been 60 or more days delinquent;
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(iii) At the origination of such Mortgage Loan, there were no
delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments, including assessments payable in future
installments or other outstanding charges affecting the related Mortgaged
Property, and, to the knowledge of the Originator, as of the Closing Date, there
are no delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments, including assessments payable in future
installments or other outstanding charges affecting the related Mortgaged
Property;
(iv) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage, and which have been delivered to the
Trustee; the substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the related policy, and
is reflected on the Mortgage Loan Schedule. No instrument of waiver, alteration
or modification has been executed, and no Mortgagor has been released, in whole
or in part, except in connection with an assumption agreement approved by the
title insurer, to the extent required by the policy, and which assumption
agreement has been delivered to the Trustee and the terms of which are reflected
in the Mortgage Loan Schedule;
(v) The Mortgage Note and the Mortgage are not subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(vi) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located, pursuant to insurance policies conforming to the requirements of the
Pooling and Servicing Agreement. All such insurance policies contain a standard
mortgagee clause naming the Originator, its successors and assigns as mortgagee
and all premiums thereon have been paid. If upon origination of the Mortgage
Loan, the Mortgaged Property was in an area identified on a Flood Hazard Map or
Flood Insurance Rate Map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect which policy conforms to the
requirements of Xxxxxx Xxx. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(vii) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit
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protection, equal credit opportunity or disclosure laws applicable to the
origination and servicing of Mortgage Loan have been complied with;
(viii) The Mortgage has not been satisfied, canceled, subordinated
or rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction, cancellation,
subordination, rescission or release;
(ix) The Mortgage is a valid, existing and enforceable first or
second lien on the Mortgaged Property, including all improvements on the
Mortgaged Property subject only to (a) the lien of current real property taxes
and assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording being acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and which do not adversely
affect the appraised value of the Mortgaged Property, and (c) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property and (d)
the first lien on the Mortgaged Property, in the case of Mortgages that are
second liens. Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, existing and enforceable first or second lien and first or
second priority security interest on the property described therein and the
Originator had full right to sell and assign the same to the Seller pursuant to
the Purchase and Servicing Agreement and the Seller has full right to sell and
assign the same to the Purchaser. Unless otherwise disclosed on Exhibit 7
hereto, the Mortgaged Property was not, as of the date of origination of the
Mortgage Loan, subject to a mortgage, deed of trust, deed to secured debt or
other security instrument creating a lien subordinate to the lien of the
Mortgage;
(x) The Mortgage Note and the related Mortgage are genuine and each
is the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms;
(xi) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties;
(xii) The proceeds of the Mortgage Loan have been fully disbursed to
or for the account of the Mortgagor and there is no obligation for the Mortgagee
to advance additional funds thereunder and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage have been paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage;
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(xiii) As of the Closing Date and prior to the sale of the Mortgage
Loan hereunder to the Purchaser, the Seller was the sole legal, beneficial and
equitable owner of the Mortgage Note and the Mortgage and had full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest (this
portion of this representation is made by the Seller only); as of the closing
date as defined in the Purchase and Servicing Agreement and prior to the sale of
the Mortgage Loan to the Seller pursuant to the Purchase and Servicing
Agreement, the Originator was the sole legal, beneficial and equitable owner of
the Mortgage Note and the Mortgage and had full right to transfer and sell the
Mortgage Loan to the Seller free and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest (this portion of this representation
is made by the Originator only);
(xiv) To the best of the Originator's knowledge, all parties which
have had any interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise, are (or, during the period in which they held and disposed
of such interest, were) in compliance with any and all applicable "doing
business" and licensing requirements of the laws of the state wherein the
Mortgaged Property is located;
(xv) The Mortgage Loan is covered by an ALTA lender's title
insurance policy or other title insurance acceptable to Xxxxxx Xxx, issued by a
title insurer acceptable to Xxxxxx Mae and qualified to do business in the
jurisdiction where the Mortgaged Property is located (or, in the case of
Mortgaged Properties located in areas in which such policies are not generally
available, an attorney's certificate or opinion of title acceptable to Xxxxxx
Xxx), insuring (subject to the exceptions contained in (ix)(a), (b) and (c)
above) the Originator, its successors and assigns as to the first or second
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan. Additionally, such lender's title insurance policy affirmatively insures
ingress and egress to and from the Mortgaged Property, and against encroachments
by or upon the Mortgaged Property or any interest therein. The Originator is the
sole insured of such lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this Agreement.
No claims have been made under such lender's title insurance policy, and no
prior holder of the related Mortgage, including the Originator, has done, by act
or omission, anything which would impair the coverage of such lender's title
insurance policy;
(xvi) Except with respect to the permitted delinquencies on certain
Mortgage Loans as described in Section 6(b)(ii) above and listed on Exhibit 7
attached hereto, there is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration, and the
Originator has not waived any default, breach, violation or event of
acceleration;
(xvii) There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that under
law could give rise to such lien) affecting the related Mortgaged Property which
are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
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(xviii) All improvements that were considered in determining the
appraised value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property;
(xix) The Mortgage Loan was (i) originated (as the term is used for
the purposes of the Secondary Mortgage Market Enhancement Act) by the Originator
or by a savings and loan association, a savings bank, a commercial bank or
similar banking institution which is supervised and examined by a federal or
state authority, or by a mortgagee approved as such by the Secretary of HUD or
(ii) acquired by the Originator directly through loan brokers or correspondents
such that (a) the Mortgage Loan was originated in conformity with the
Originator's underwriting guidelines, (b) the Originator approved the Mortgage
Loan prior to funding thereof and (c) the Originator provided the funds used to
originate the Mortgage Loan and acquired the Mortgage Loan on the date of
origination thereof;
(xx) Principal payments on the Mortgage Loan commenced no more than
two (2) months after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loan bears interest at the Mortgage Interest Rate. Except as disclosed
in the Mortgage Loan Schedule, the Mortgage Note is payable on the first day of
each month. Interest on the Mortgage Loan is calculated on the basis of a 360
day year consisting of twelve 30 day months. The Mortgage Note does not permit
negative amortization;
(xxi) The origination and collection practices used by the
Originator with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been serviced by the Originator and
any predecessor servicer in accordance with the terms of the Mortgage Note. With
respect to escrow deposits and Escrow Payments, if any, all such payments are in
the possession of, or under the control of, the Originator and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or Escrow Payments or
other charges or payments due the Originator have been capitalized under any
Mortgage or the related Mortgage Note;
(xxii) The Mortgaged Property is free of damage and waste to the
best of the Originator's knowledge and there is no proceeding pending for the
total or partial condemnation thereof;
(xxiii) The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) otherwise by
judicial foreclosure. Since the date of origination of the Mortgage Loan, the
Mortgaged Property has not been subject to any bankruptcy proceeding or
foreclosure proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Mortgagor which would interfere with the right to
-15-
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage. The Mortgagor has not notified the Originator and the Originator has
no knowledge of any relief requested or allowed to the Mortgagor under the
Soldiers and Sailors Civil Relief Act of 1940;
(xxiv) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (ix) above;
(xxv) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Mortgage Loan
application, by a qualified appraiser who met the requirements of the
Originator's appraisal policy and procedures and who had no interest, direct or
indirect in the Mortgaged Property or in any loan made on the security thereof,
whose compensation is not affected by the approval or disapproval of the
Mortgage Loan and who met the minimum qualifications of Xxxxxx Xxx or Xxxxxxx
Mac;
(xxvi) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;
(xxvii) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Originator, the Mortgagor, or anyone on
behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature;
(xxviii) The Mortgagor has executed a statement to the effect that
the Mortgagor has received all disclosure materials required by applicable law;
and if the Mortgage Loan is a Refinanced Mortgage Loan, the Mortgagor has
received all disclosure and rescission materials required by applicable law with
respect to the making of a Refinanced Mortgage Loan, and evidence of such
receipt is and will remain in the Mortgage File;
(xxix) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;
(xxx) The Mortgage Note, the Mortgage, the Assignment of Mortgage
and any other documents required to be delivered with respect to each Mortgage
Loan pursuant to the Pooling and Servicing Agreement, have been delivered to the
Trustee all in compliance with the specific requirements of the Pooling and
Servicing Agreement;
-16-
(xxxi) The Mortgaged Property is lawfully occupied under applicable
law; to the best of the Originator's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities;
(xxxii) To the best of the Originator's knowledge, no error,
omission, misrepresentation, negligence, fraud or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any person, including,
without limitation, the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan or in the
application of any insurance in relation to such Mortgage Loan;
(xxxiii) The Assignment of Mortgage, is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxiv) Any principal advances made to the Mortgagor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
or second lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title evidence
acceptable to Xxxxxx Mae and Xxxxxxx Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan;
(xxxv) Except as disclosed on the Mortgage Loan Schedule, no
Mortgage Loan has a balloon payment feature;
(xxxvi) If the Residential Dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development), such condominium or planned unit development
project meets Xxxxxx Mae's eligibility requirements;
(xxxvii) Except as disclosed on Exhibit 7 hereto, neither the
Originator nor any affiliate of the Originator has made no mortgage on any
Mortgaged Property other than the Mortgage Loan;
(xxxviii) The Mortgage Loan was not intentionally selected by the
Seller in a manner intended to adversely affect the interest of the Purchaser
(this portion of this representation is made by the Seller only); the Mortgage
Loan was not intentionally selected by the Originator in a manner intended to
adversely affect the interest of the Seller (this portion of this representation
is made by the Originator only);
(xxxix) The Seller has not dealt with any broker or agent or other
Person who might be entitled to a fee, commission or compensation in connection
with the transaction contemplated
-17-
by this Agreement other than the Purchaser except as disclosed on Exhibit 7
hereto (this portion of this representation is made by the Seller only); the
Originator did not deal with any broker or agent or other Person who might be
entitled to a fee, commission or compensation in connection with the transaction
contemplated by the Purchase and Servicing Agreement other than the Seller
except as the Originator previously disclosed to the Seller in writing (this
portion of this representation is made by the Originator only);
(xl) The Mortgaged Property consists of a parcel of real property of
not more than ten acres with a single family residence erected thereon, or a two
to four-family dwelling, or an individual condominium unit in a low-rise or
high-rise condominium project, or an individual unit in a planned unit
development. The Mortgaged Property is improved with a Residential Dwelling.
Without limiting the foregoing, the Mortgaged Property does NOT consist of any
of the following property types: (a) co-operative units, (b) log homes, (c)
earthen homes, (d) underground homes, (e) mobile homes and (f) manufactured
homes (as defined in the Xxxxxx Xxx Seller-Servicer's Guide), except when the
appraisal indicates that the home is of comparable construction to a stick or
beam construction home, is readily marketable, has been permanently affixed to
the site and is not in a mobile home "park." The Mortgaged Property is either a
fee simple estate or a long-term residential lease. If the Mortgage Loan is
secured by a long-term residential lease, unless otherwise specifically
disclosed in the Mortgage Loan Schedule, (A) the terms of such lease expressly
permit the mortgaging of the leasehold estate, the assignment of the lease
without the lessor's consent (or the lessor's consent has been obtained and such
consent is the Mortgage File) and the acquisition by the holder of the Mortgage
of the rights of the lessee upon foreclosure or assignment in lieu of
foreclosure or provide the holder of the Mortgage with substantially similar
protection; (B) the terms of such lease do not (x) allow the termination thereof
upon the lessee's default without the holder of the Mortgage being entitled to
receive written notice of, and opportunity to cure, such default or (y) prohibit
the holder of the Mortgage from being insured under the hazard insurance policy
relating to the Mortgaged Property; (C) the original term of such lease is not
less than 15 years; (D) the term of such lease does not terminate earlier than
five years after the maturity date of the Mortgage Note; and (E) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates for
residential properties is a widely accepted practice;
(xli) At the time of origination, the Loan-To-Value Ratio (or the
combined loan-to-value ratio in the case of second lien Mortgage Loans) of the
Mortgage Loan was not greater than _____%;
(xlii) The Mortgage, and if required by applicable law the related
Mortgage Note, contains a provision for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event that the Mortgaged
Property is sold or transferred without the prior written consent of the
Mortgagee, at the option of the Mortgagee;
(xliii) No Mortgage Loan has a Stated Principal Balance in excess of
$_______; and
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(xliv) The information set forth in the Prepayment Charge Schedule
is complete, true and correct in all material respects, and each Prepayment
Charge is permissible, enforceable and collectible under applicable state law
subject to bankruptcy and equitable enforcement limitations.
SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION AND FOR
BREACH OF REPRESENTATION AND WARRANTY.
---------------------------------------------------------
(a) The representations and warranties contained in Section 6 shall
not be impaired by any review and examination of loan files or other documents
evidencing or relating to the Mortgage Loans or any failure on the part of the
Seller or the Purchaser to review or examine such documents and shall inure to
the benefit of any assignee, transferee or designee of the Purchaser, including
the Trustee for the benefit of holders of the Certificates. Except with respect
to the representation and warranty contained in Section 6(b)(xxxii), with
respect to the representations and warranties contained herein as to which the
Originator or the Seller, as the case may be, has no knowledge, if it is
discovered that the substance of any such representation and warranty was
inaccurate as of the date such representation and warranty was made or deemed to
be made, and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan or the interest therein of the Purchaser or the
Purchaser's assignee, transferee or designee, then notwithstanding the lack of
knowledge by the Originator or the Seller, as the case may be, with respect to
the substance of such representation and warranty being inaccurate at the time
the representation and warranty was made, the Originator or the Seller, as the
case may be, shall take such action described in the following paragraph in
respect of such Mortgage Loan. With respect to the representation and warranty
contained in Section 6(b)(xxxii), if it is discovered that the substance of the
representation and warranty contained in Section 6(b)(xxxii) was innaccurate as
of the date such representation and warranty was made or deemed to be made, and
such inaccuracy materially and adversely affects the value of the related
Mortgage Loan or the interest therein of the Purchaser or the Purchaser's
assignee, transferee or designee, then notwithstanding the lack of knowledge of
the Seller and regardless of the rules of construction set forth in Section
6(a), with respect to the substance of such representation and warranty being
inaccurate at the time the representation and warranty was made, the Seller
shall take such action described in the following paragraph in respect of such
Mortgage Loan.
Upon discovery by the Originator, the Seller, the Purchaser or any
assignee, transferee or designee of the Purchaser of any materially defective
document in, or that any material document was not transferred by the Seller or
not transferred by the Originator to the Seller (as listed on the Trustee's
Preliminary Exception Report) as part of any Mortgage File, or of a breach of
any of the representations and warranties contained in Section 6 that materially
and adversely affects the value of any Mortgage Loan or the interest therein of
the Purchaser or the Purchaser's assignee, transferee or designee, the party
discovering such breach shall give prompt written notice to the other parties
hereto. Within sixty (60) days of its discovery or its receipt of notice of any
such missing documentation that was not transferred by the Seller or not
transferred by the Originator to the Seller as described above, or of materially
defective documentation, or of any such breach of a representation and warranty,
the Originator or the Seller, as the case may
-19-
be, promptly shall deliver such missing document or cure such defect or breach
in all material respects or, in the event the Originator or the Seller, as the
case may be, cannot deliver such missing document or cannot cure such defect or
breach, the Originator or the Seller, as the case may be, shall, within ninety
(90) days of its discovery or receipt of notice, repurchase the affected
Mortgage Loan at the Purchase Price (as such term is defined in the Pooling and
Servicing Agreement). Notwithstanding the preceding sentences of this paragraph,
to the extent that the Originator would otherwise be required to repurchase such
affected Mortgage Loan and such obligation results from the breach of any of the
representations or warranties that are made or deemed to have been made by the
Seller, then the Seller (and not the Originator) shall be required to repurchase
such affected Mortgage Loan in the manner described above, and the Purchaser
shall have no remedy against the Originator therefor; provided, however, that to
the extent that the Seller would otherwise be required to repurchase the
affected Mortgage Loans and such obligation results from the breach of any of
the representations or warranties that are made or deemed to have been made by
the Originator, then the Originator (and not the Seller) shall be required to
repurchase the affected Mortgage Loans in the manner described above, and the
Purchaser shall have no remedy against the Seller therefor. The Originator or
the Seller, as the case may be, shall amend the Closing Schedule to reflect the
withdrawal of such Mortgage Loan from the terms of this Agreement and the
Pooling and Servicing Agreement. The Originator or the Seller, as the case may
be, shall deliver to the Purchaser such amended Closing Schedule and shall
deliver such other documents as are required by this Agreement or the Pooling
and Servicing Agreement within five (5) days of any such amendment. Any
repurchase pursuant to this Section 7(a) shall be accomplished by transfer to an
account designated by the Purchaser of the amount of the Purchase Price in
accordance with Section 2.03 of the Pooling and Servicing Agreement. Any
repurchase required by this Section shall be made in a manner consistent with
Section 2.03 of the Pooling and Servicing Agreement.
(b) It is understood and agreed that the obligations of the
Originator set forth in this Section 7 to cure or repurchase a defective
Mortgage Loan constitute the sole remedies of the Seller and the Purchaser
against the Originator respecting a missing or defective document or a breach of
the representations and warranties contained in Section 6. It is understood and
agreed that the obligations of the Seller set forth in this Section 7 to cure or
repurchase a defective Mortgage Loan constitute the sole remedies of the
Purchaser against the Seller respecting a missing document or a breach of the
representations and warranties contained in Section 6.
SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The closing of
the purchase and sale of the Mortgage Loans shall be held at the New York City
office of Xxxxxxx Xxxxxxxx & Wood at 10:00 a.m. New York City time on the
Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under
this Agreement shall be true and correct in all material
respects as of the date as of which they are made and no event
shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement;
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(b) All of the representations and warranties of the Originator
under this Agreement shall be true and correct in all material
respects as of the date as of which they are made and no event
shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement;
(c) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from
escrow at the time of closing), all Closing Documents as
specified in Section 9 of this Agreement, in such forms as are
agreed upon and acceptable to the Purchaser, duly executed by
all signatories other than the Purchaser as required pursuant
to the respective terms thereof;
(d) The Seller shall have delivered or caused to be delivered and
released to the Purchaser or to its designee, all documents
(including without limitation, the Mortgage Loans) required to
be so delivered by the Purchaser pursuant to Section 2.01 of
the Pooling and Servicing Agreement; and
(e) All other terms and conditions of this Agreement and the
Pooling and Servicing Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall deliver or
cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Mortgage Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds.
SECTION 9. CLOSING DOCUMENTS. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
(a) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Originator, the Purchaser, the
Certificate Insurer and Xxxxxxx Xxxxx Xxxxxx Inc. (the
"Underwriter") may rely, in the form of Exhibit 1 hereto, and
attached thereto copies of the certificate of incorporation,
by-laws and certificate of good standing of the Seller under
the laws of New York;
(b) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Purchaser, the Certificate Insurer and
the Underwriter may rely, in the form of Exhibit 2 hereto,
with respect to certain facts regarding the sale of the
Mortgage Loans by the Seller to the Purchaser;
(c) An Opinion of Counsel of the Seller, dated the Closing Date
and addressed to the Originator, the Purchaser, the
Certificate Insurer and the Underwriter, substantially in the
form attached hereto as Exhibit 3;
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(d) An Officer's Certificate of the Originator, dated the Closing
Date, upon which the Seller, the Purchaser, the Certificate
Insurer and the Underwriter may rely, in the form of Exhibit 4
hereto, and attached thereto copies of the certificate of
incorporation, by-laws and certificate of good standing of the
Originator under the laws of its state of incorporation;
(e) An opinion of Counsel of the Originator, dated the Closing
Date and addressed to the Seller, the Purchaser, the
Certificate Insurer and the Underwriter substantially in the
form attached hereto as Exhibit 5;
(f) Such opinions of counsel as the Rating Agencies or the Trustee
may request in connection with the sale of the Mortgage Loans
by the Seller to the Purchaser or the Seller's execution and
delivery of, or performance under, this Agreement;
(g) A letter from KPMG Peat Marwick L.L.P., certified public
accountants, dated the date hereof, to the effect that they
have performed certain specified procedures as a result of
which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Purchaser's Prospectus Supplement, dated December 18, 1998,
under the captions "Summary--The Mortgage Loans," "Risk
Factors," "The Mortgage Pool" (except with respect to the
information contained under the caption "The Mortgage
Pool--New Century Underwriting Programs") and "Pooling and
Servicing Agreement--Option One Mortgage Corporation" agrees
with the records of the Originator;
(h) The Originator shall deliver to the Seller for inclusion in
the Prospectus Supplement for Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates,
Series 1998-NC7, under the captions "The Mortgage Pool"
(except with respect to the information contained under the
caption "The Mortgage Pool--New Century Underwriting
Programs") and "Pooling and Servicing Agreement--Option One
Mortgage Corporation", or for inclusion in other offering
material such publicly available information regarding the
Originator, its financial condition and its mortgage loan
delinquency, foreclosure and loss experience, underwriting
standards and any similar nonpublic, unaudited financial
information;
(i) A letter from KPMG Peat Marwick L.L.P., certified public
accountants, dated the date hereof and to the effect that they
have performed certain specified procedures as a result of
which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Purchaser's Prospectus Supplement, dated December 18, 1998
under the captions "Summary of Prospectus Supplement", "Yield
on the Certificates"
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and "Description of the Certificates" agrees with the records
of the Seller; and
(j) Such further information, certificates, opinions and documents
as the Purchaser or the Underwriter may reasonably request.
SECTION 10. COSTS. The Originator shall pay (or shall reimburse the
Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments of Mortgage, the fees and expenses of the
Originator's accountants and attorneys, the costs and expenses incurred in
connection with producing the Originator's or any subservicer's loan loss,
foreclosure and delinquency experience, and the costs and expenses incurred in
connection with obtaining the documents referred to in Sections 9(d), 9(e) and
9(g). The Seller shall pay (or shall reimburse the Purchaser or any other Person
to the extent that the Purchaser or such other Person shall pay) the costs and
expenses of printing (or otherwise reproducing) and delivering this Agreement,
the Pooling and Servicing Agreement, the Certificates, the prospectus and
prospectus supplement, and any private placement memorandum relating to the
Certificates, the Insurance Agreement and other related documents, the initial
fees, costs and expenses of the Trustee and the Trust Administrator, the initial
fees, costs and expenses of FSA, the fees and expenses of the Seller's counsel
in connection with the preparation of all documents relating to the
securitization of the Mortgage Loans, the filing fee charged by the Securities
and Exchange Commission for registration of the Certificates and the fees
charged by any rating agency to rate the Certificates. All other costs and
expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expense.
SECTION 11. SERVICING. The Originator has represented to the
Purchaser that the Mortgage Loans are being serviced by the Originator, in its
capacity as servicer under the Purchase and Servicing Agreement, and are not
subject to any other servicing agreements with third parties. It is understood
and agreed among the Originator, the Seller and the Purchaser that the Mortgage
Loans are to be delivered free and clear of any servicing agreements. The
Originator, without reimbursement from the Purchaser, shall pay any fees or
penalties required by any servicer for releasing the Mortgage Loans from any
such servicing agreement and shall arrange for the orderly transfer, as of the
Cut-off Date, of such servicing from any such servicer to the Originator in its
capacity as Servicer. The Mortgage Loans shall be serviced by the Originator, in
its capacity as Servicer, in accordance with the terms of the Pooling and
Servicing Agreement. For so long as the Originator services the Mortgage Loans,
the Originator shall be entitled to the Servicing Fee and such other payments as
provided for under the terms of the Pooling and Servicing Agreement.
SECTION 12. INDEMNIFICATION. The Originator shall indemnify and hold
harmless each of (i) the Purchaser, (ii) the Seller, (iii) the Underwriter, (iv)
FSA, (v) the Person, if any, to which the Purchaser assigns its rights in and to
a Mortgage Loan and each of their respective successors and assigns and (vi)
each person, if any, who controls the Purchaser within
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the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933
Act") ((i) through (vi) collectively, the "Indemnified Party") against any and
all losses, claims, expenses, damages or liabilities to which the Indemnified
Party may become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, expenses, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus Supplement dated
December 18, 1998 (the "Prospectus Supplement") or any private placement
memorandum (the "Private Placement Memorandum") relating to the offering by the
Purchaser or an affiliate thereof, of the Class CE Certificates and Class P
Certificates, or the omission or the alleged omission to state therein the
material fact necessary in order to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon(i) information furnished in writing to the Purchaser or any of its
affiliates by the Originator including, but not limited to, information
contained in the data file, specifically for use in the preparation of the
Prospectus Supplement and more specifically, for use in the preparation of
information in the Prospectus Supplement set forth under the captions,
"Summary-- The Mortgage Loans," "Risk Factors," "The Mortgage Pool," (except
with respect to information contained under the caption "The Mortgage Pool--New
Century Underwriting Programs), "Pooling and Servicing Agreement--Option One
Mortgage Corporation" and, with respect to any private placement memorandum, any
information of a comparable nature, or (ii) the data files containing
information with respect to the Mortgage Loans as transmitted by modem to the
Purchaser by the Originator on or about December __, 1998 (as such transmitted
information may have been amended in writing by the Originator with the written
consent of the Purchaser subsequent to such transmission), (b) any
representation, warranty or covenant made by the Originator herein or in the
Pooling and Servicing Agreement, on which the Purchaser has relied, being, or
alleged to be, untrue or incorrect or (c) any updated collateral information
provided by the Underwriter to a purchaser of the Certificates derived from the
data contained in clause (ii) and the Remittance Report or a current collateral
tape obtained from the Originator or an affiliate of the Originator, including
the current loan balances of the Mortgage Loans; provided, however, that to the
extent that any such losses, claims, expenses, damages or liabilities to which
the Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the
Originator described in clause (a), (b) or (c) above and (2) any other factual
basis, the Originator shall indemnify and hold harmless the Indemnified Party
only to the extent that the losses, claims, expenses, damages, or liabilities of
the person or persons asserting the claim are determined to rise from or be
based upon matters set forth in clause (1) above and do not result from the
gross negligence or willful misconduct of such Indemnified Party. This indemnity
shall be in addition to any liability that the Originator may otherwise have.
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale
and delivery on the Closing Date of the Mortgage Loans described on the Mortgage
Loan Schedule in accordance with the terms and conditions of this Agreement is
mandatory. It is specifically understood and agreed that each Mortgage Loan is
unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser in the event of the Seller's failure to deliver the
Mortgage Loans on or before the Closing Date. The Seller hereby grants to the
Purchaser a lien on and a
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continuing security interest in the Seller's interest in each Mortgage Loan and
each document and instrument evidencing each such Mortgage Loan to secure the
performance by the Seller of its obligation hereunder, and the Seller agrees
that it holds such Mortgage Loans in custody for the Purchaser, subject to the
Purchaser's (i) right, prior to the Closing Date, to reject any Mortgage Loan to
the extent permitted by this Agreement, and (ii) obligation to deliver or cause
to be delivered the consideration for the Mortgage Loans pursuant to Section 8
hereof. Any Mortgage Loans rejected by the Purchaser shall concurrently
therewith be released from the security interest created hereby. All rights and
remedies of the Purchaser under this Agreement are distinct from, and cumulative
with, any other rights or remedies under this Agreement or afforded by law or
equity and all such rights and remedies may be exercised concurrently,
independently or successively.
Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Mortgage Loans, if delivery to
the Purchaser has occurred, and the security interest created by this Section 12
shall be deemed to have been released.
SECTION 14. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by fax and, receipt of which is confirmed by telephone, if to the
Purchaser, addressed to the Purchaser at Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Mortgage Finance Group, fax (000) 000-0000, or such other
address as may hereafter be furnished to the Seller and the Originator in
writing by the Purchaser; if to the Seller, addressed to the Seller at Seven
Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage Finance Group,
fax (000) 000-0000, or to such other address as the Seller may designate in
writing to the Purchaser and the Originator; if to the Originator, addressed to
the Originator at 0000 X. Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx 00000,
Attention: Xx. Xxxxxxx Xxxxxxx, fax (000) 000-0000, or to such other address as
the Originator may designate in writing to the Purchaser and the Seller.
SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
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SECTION 16. AGREEMENT OF PARTIES. The Originator, the Seller and the
Purchaser each agree to execute and deliver such instruments and take such
actions as either of the others may, from time to time, reasonably request in
order to effectuate the purpose and to carry out the terms of this Agreement and
the Pooling and Servicing Agreement.
SECTION 17. SURVIVAL. (a) The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
(b) The Originator agrees that the representations, warranties and
agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller and
the Purchaser notwithstanding any investigation heretofore or hereafter made by
the Seller or the Purchaser or on the behalf of either of them, and that the
representations, warranties and agreements made by the Originator herein or in
any such certificate shall continue in full force and effect, notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND THAT THE
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.
SECTION 19. MISCELLANEOUS. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans by the Seller to the Purchaser as provided in Section 4
hereof be, and be construed as, a sale
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of the Mortgage Loans by the Seller to the Purchaser and not as a pledge of the
Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. However, in the event that, notwithstanding the
aforementioned intent of the parties, the Mortgage Loans are held to be property
of the Seller, then (a) it is the express intent of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller and (b) (1) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the New York Uniform Commercial Code; (2) the conveyance
provided for in Section 4 hereof shall be deemed to be a grant by the Seller to
the Purchaser of a security interest in all of the Seller's right, title and
interest in and to the Mortgage Loans and all amounts payable to the holders of
the Mortgage Loans in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including without limitation all amounts, other
than investment earnings, from time to time held or invested in the Collection
Account whether in the form of cash, instruments, securities or other property;
(3) the possession by the Purchaser or its agent of Mortgage Notes, the related
Mortgages and such other items of property that constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (4) notifications to
persons holding such property and acknowledgments, receipts or confirmations
from persons holding such property shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Purchaser for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Purchaser pursuant to Section 4(d) hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Purchaser
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.
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IN WITNESS WHEREOF, the Purchaser, the Seller and the Originator
have caused their names to be signed by their respective officers thereunto duly
authorized as of the date first above written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By:_____________________________
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President
SALOMON BROTHERS REALTY CORP.
By:_____________________________
Name: Xxxxxxx X. Xxxxx
Title: Authorized Agent
OPTION ONE MORTGAGE CORPORATION
By:_____________________________
Name:
Title:
EXHIBIT 1
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER]
I, ________________, hereby certify that I am a duly Authorized
Agent of Salomon Brothers Realty Corp., a New York corporation (the "Seller"),
and further certify as follows:
1. Attached hereto is a true and correct copy of the Certificate of
Incorporation and By-laws of the Seller, all of which are in full force
and effect on the date hereof. There has been no amendment or other
document filed affecting the Certificate of Incorporation of the Seller
since December 20, 1982, and no such amendment has been authorized. There
has been no amendment or other document filed affecting the By-laws of the
Seller since October 7, 1986, and no such amendment has been authorized.
Attached hereto is a good standing certificate issued by the Secretary of
State of the State of New York with respect to the Seller. No event has
occurred since the date thereof that, to the best knowledge of the
undersigned, has affected the good standing of the Seller under the laws
of New York.
2. There are no actions, suits or proceedings pending or, to the
best of my knowledge, threatened against or affecting the Seller which, if
adversely determined, individually or in the aggregate, would materially
and adversely affect the Seller's ability to perform its obligations under
the Mortgage Loan Purchase Agreement (the "Mortgage Loan Purchase
Agreement"), dated December 18, 1998, among the Seller, Option One
Mortgage Corporation and Salomon Brothers Mortgage Securities VII, Inc
(the "Depositor"). No proceedings looking toward merger, consolidation or
liquidation, dissolution or bankruptcy of the Seller are pending or
contemplated.
3. Each person who, as an officer or representative of the Seller,
signed the Mortgage Loan Purchase Agreement and any other document
delivered prior hereto or on the date hereof in connection with the
purchase described in the Mortgage Loan Purchase Agreement was, at the
respective times of such signing and delivery, and is now, duly elected or
appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their genuine
signatures.
4. All of the representations and warranties of the Seller under the
Mortgage Loan Purchase Agreement are true and correct in all material
respects as of the Closing Date subject, in the case of the Closing
Schedule delivered pursuant to the Mortgage Loan Purchase Agreement, to
such amendments thereto as were duly made on or before the date hereof and
no event has occurred with respect to the Seller which, with notice or the
passage of time or both, would constitute a default under the Mortgage
Loan Purchase Agreement.
5. The information set forth in the Mortgage Loan Schedule attached
as an exhibit to the Pooling and Servicing Agreement is true and correct
in all material respects.
6. The transactions contemplated in the Mortgage Loan Purchase
Agreement will be reported as a sale in the Seller's financial reports.
7. With respect to its sale of the Mortgage Loans and the
transactions and undertakings contemplated by the Mortgage Loan Purchase
Agreement, the Seller has complied in all material respects with all the
obligations by which it is bound and has satisfied in all material
respects all the conditions on its part to be performed or satisfied prior
to the Closing Date.
8. Capitalized terms used but not defined herein shall have the
meanings assigned in the Mortgage Loan Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
By:_____________________________
Name:
Title: Authorized Agent
I, , an ________________ of Salomon Brothers Realty Corp., hereby
certify that ________________ is a duly appointed, qualified and acting
Authorized Agent of the Seller and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
By:_____________________________
Name:
Title:
EXHIBIT 2
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER WITH RESPECT TO CERTAIN
FACTS REGARDING THE SALE OF THE MORTGAGE LOANS]
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates
Series 1998-NC7
CERTIFICATE OF
SALOMON BROTHERS REALTY CORP.
Reference is made to the sale of mortgage loans (the "Mortgage
Loans") by Salomon Brothers Realty Corp. ("SBRC") to Salomon Brothers Mortgage
Securities VII, Inc. (the "Depositor") pursuant to a Mortgage Loan Purchase
Agreement, dated December 18, 1998, among SBRC, Option One Mortgage Corporation
and the Depositor (the "Option One Purchase Agreement") and a Mortgage Loan
Purchase Agreement, dated December 18, 1998, among SBRC, New Century Mortgage
Corporation and the Depositor (the "New Century Purchase Agreement"; together
with the Option One Purchase Agreement, the "Purchase Agreements") and the
simultaneous issuance of Mortgage Pass-Through Certificates, Series 1998-NC7,
Class A, Class CE, Class P, Class R-I, Class R-II and Class R-III (the
"Certificates"), pursuant to a Pooling and Servicing Agreement, dated as of
December 1, 1998 (the "Pooling and Servicing Agreement") among the Depositor as
depositor, New Century Mortgage Corporation as master servicer (in such
capacity, the "Master Servicer") and a servicer, Option One Mortgage Corporation
as a servicer, Firstar Bank Milwaukee, N.A. as trustee (the "Trustee") and U.S.
Bank National Association as trust administrator (the "Trust Administrator"). In
consideration for its purchase of the Mortgage Loans, the Depositor will deliver
to SBRC immediately available funds. The Depositor will sell the Certificates to
Xxxxxxx Xxxxx Xxxxxx Inc. (the "Underwriter") for offer and sale pursuant to the
terms of an Underwriting Agreement, dated December 18, 1998 (the "Underwriting
Agreement"), between the Depositor and the Underwriter. The Purchase Agreement,
the Pooling and Servicing Agreement and the Underwriting Agreement together, are
hereinafter collectively referred to as the "Agreements". Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Agreements.
The undersigned is a duly appointed Authorized Agent of Salomon
Brothers Realty Corp. and hereby certifies after reasonable investigation that:
1. The price to be paid to SBRC for the Mortgage Loans will have
been paid in full at the closing of the sale pursuant to the Purchase
Agreements, and no agreement or arrangement exists or will exist that permits
the modification of the consideration for the Mortgage Loans subsequent to that
sale. SBRC will not have any right or obligation to repurchase any Mortgage
Loan, except as provided in the Purchase Agreements.
2 Each Mortgage Note and each related Mortgage has been
appropriately prepared and duly executed and delivered by the related Mortgagor,
and each Mortgage has been appropriately recorded in the applicable jurisdiction
and any intervening endorsement of any Mortgage Note, and any intervening
assignment of any Mortgage, which was required in order to transfer to SBRC
ownership of the Mortgage Loans, was obtained and completed.
3. Each Mortgage Note has been endorsed or assigned in a manner that
satisfies any requirement necessary to transfer to the Trustee all right, title
and interest of the party so endorsing or assigning, as noteholder or transferee
thereof, in and to that Mortgage Note, as provided in the Purchase Agreements
and the Pooling and Servicing Agreement. Each Assignment to the Trustee is in
recordable form and is sufficient to effect the assignment and transfer to the
Depositor of the benefits of the assignor, as original mortgagee or assignee
thereof, under each Mortgage to which that Assignment relates, as provided in
the Purchase Agreements and the Pooling and Servicing Agreement. Each Assignment
to the Trustee has been or will be appropriately recorded to the extent required
under applicable law, as provided in the Pooling and Servicing Agreement.
4. Each original Mortgage Note, each original recorded Mortgage,
each original recorded intervening Assignment and each Assignment to the Trustee
has been delivered to the Trustee at the direction of the Depositor, and the
Trustee will maintain continuous actual possession of each of the foregoing in
the State of New York. Neither the Trustee nor any agent of the Trustee that has
or will have possession of any Mortgage Note, Mortgage or Assignment is, or will
be, at any time during the term of the Pooling and Servicing Agreement, an
affiliate of SBRC or otherwise under the direct or indirect control of SBRC.
5. Immediately prior to the transfer of the Mortgage Loans by SBRC
to the Depositor, SBRC was the sole owner of each Mortgage Loan, free and clear
of any and all prior liens, mortgages, security interests, pledges,
participation interests, adverse claims, charges or other equities or
encumbrances of any nature, and had full right and authority to sell, assign and
transfer the Mortgage Loans.
6. No Mortgage Note, Mortgage or other document constituting part of
the Mortgage File reflects or will reflect on its face any interest that is
inconsistent with the ownership interest of SBRC in and to the Mortgage Loans or
the transfer of the Mortgage Loans by SBRC to the Depositor.
7. The transfer of the Mortgage Loans by SBRC to the Depositor as
provided in the Purchase Agreements is intended by SBRC to be, and is in fact, a
contemporaneous exchange in which SBRC receives new value.
8. SBRC was solvent at all relevant times prior to, and will not be
rendered insolvent by, the transfer of the Mortgage Loans to the Depositor.
9. SBRC did not transfer the Mortgage Loans to the Depositor with
any intent to hinder, delay or defraud any of SBRC's creditors.
10. None of SBRC, the Depositor, the Master Servicer, the Servicer,
the Trustee or the Trust Administrator, or any agent acting on behalf of any of
them, has been or will become a party to any fraud or illegality affecting any
Mortgage Loan or Certificate.
11. No breach of the Agreements by any party, misrepresentation or
failure by any party to perform all acts required to be performed prior to the
Closing Date, or fraud or mistake on the part of any party to the Agreements in
connection with the transactions contemplated by the Agreements, has occurred or
will occur.
12. No party to the Agreements has taken or will take any action
that is unreasonable, arbitrary or capricious, or that is not taken in good
faith or in a commercially reasonable manner, affecting the Mortgage Loans in
connection with the transactions contemplated by the Agreements.
13. There is not and will not be any other agreement among the
parties to the Agreements that modifies or otherwise supplements the agreement
of the parties as expressed in the Agreements.
14. SBRC does not have and will not have any right to modify or
alter the terms of the transfer of the Mortgage Loans by SBRC to the Depositor,
or to substitute or add any mortgage loan thereafter, except as provided in the
Agreements.
15. SBRC will not take any action that is inconsistent with the
ownership interest in the Mortgage Loans evidenced by the Certificates. SBRC
will promptly indicate to other persons or entities, when a response is
appropriate, that the Mortgage Loans were transferred by SBRC to the Depositor.
SBRC will not claim any ownership interest directly in the Mortgage Loans other
than that represented by Certificates in which it may have an ownership interest
from time to time.
16. Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, SBRC will report the transfer of the Mortgage Loans
to the Depositor, as provided in the respective Purchase Agreements as a sale of
all of its interest in the Mortgage Loans. SBRC has been advised by or has
confirmed with its independent public accountants for similar transactions that
the sale will be so classified under GAAP in accordance with Statement No. 125
of the Financial Accounting Standards Board.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of December __, 1998.
SALOMON BROTHERS REALTY CORP.
By:_____________________________
Name:
Title: Authorized Agent
EXHIBIT 3
[FORM OF OPINION OF COUNSEL FOR THE SELLER]
December __, 1998
Salomon Brothers Mortgage Financial Security Assurance Inc.
Securities VII, Inc. 000 Xxxx Xxxxxx
Seven World Trade Center New York, New York 10022
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx Xxxxxx Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1998-NC7
---------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Salomon Brothers Realty Corp. (the
"Seller") in connection with the sale of mortgage loans (the "Mortgage Loans")
by the Seller to Salomon Brothers Mortgage Securities VII, Inc. (the
"Depositor") pursuant to a Mortgage Loan Purchase Agreement, dated December 18,
1998, among the Seller, Option One Mortgage Corporation and the Depositor (the
"Option One Purchase Agreement") and a Mortgage Loan Purchase Agreement, dated
December 18, 1998, among the Seller, New Century Mortgage Corporation and the
Depositor (the "New Century Purchase Agreement"; together with the Option One
Purchase Agreement, the "Agreements"). This opinion is being delivered to you
pursuant to Section 9(c) of each of the Agreements. Capitalized terms used but
not defined herein have the meanings set forth in the Agreements or in
agreements referred to therein.
In rendering this opinion letter, we do not express any opinion
concerning any law other than the law of the State of New York and the federal
law of the United States, and we do not express any opinion concerning the
application of the "doing business" laws or the securities laws of any
jurisdiction other than the federal securities laws of the United States. In
addition, we do not express any opinion on any issue not expressly addressed
below.
In rendering this opinion letter, we have examined the Agreements,
the certificate of incorporation and by-laws of the Seller and such records and
other documents as we have deemed necessary. As to matters of fact, we have
examined and relied upon representations of the Seller contained in the
Agreements, and where we have deemed appropriate, representations or
certifications of officers of the Seller, the Depositor or public officials. We
have assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents submitted to us as copies. We have assumed, except as to the Seller,
that all parties had the corporate power and authority to enter into and perform
all obligations thereunder and, as to such parties, we also have assumed the due
authorization by all requisite corporate action, the due execution and delivery
and the validity and binding effect and enforceability of such documents. We
have further assumed that there is not and will not be any other agreement that
materially supplements or otherwise modifies the agreements expressed in the
Agreements. We have further assumed the conformity of the Mortgage Loans and
related documents to the requirements of the Agreements.
Based upon the foregoing, we are of the opinion that:
1. The Seller is a corporation duly organized and validly existing and
in good standing under the laws of the State of New York and has the
requisite corporate power to own its properties, to conduct its
business as presently conducted by it, to own the Mortgage Loans to
which each Agreement relates, to transfer and convey such Mortgage
Loans to the Depositor and to enter into and perform its obligations
under each of the Agreements.
2. Each of the Agreements have been duly authorized, executed and
delivered by the Seller and, upon due authorization, execution and
delivery by the other parties thereto, will constitute the valid,
legal and binding agreement of the Seller, enforceable against the
Seller in accordance with its terms, except as enforceability may be
limited by (a) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the
rights of creditors and (b) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law.
3. No consent, approval, authorization or order of any State of New
York or federal court or governmental agency or body is required for
the consummation by the Seller of the transactions contemplated by
the Agreements except for those consents, approvals, authorizations
or orders that previously have been obtained.
4. Neither the transfer of the Mortgage Loans as provided in the
Agreements, nor the fulfillment of the terms of or the consummation
of any other of the transactions contemplated by the Agreements,
will result in a breach of any term or provision of the certificate
of incorporation or by-laws of the Seller or, to the best of our
knowledge, will conflict with, result in a breach, violation or
acceleration of or constitute a default under, the terms of any
indenture or other agreement or instrument to which the Seller is a
party or by which it is bound, or any State of New York or federal
statute applicable to the Seller, or any order or regulation of any
State of New York or federal court, regulatory body, administrative
agency or governmental body having jurisdiction over the Seller.
5. To the best of our knowledge, there are no actions, proceedings or
investigations pending or threatened against the Seller before any
court, administrative agency or other tribunal (a) asserting the
invalidity of either of the Agreements, (b) seeking to prevent the
consummation of any of the transactions contemplated in either of
the Agreements or (c) that might materially and adversely affect the
performance
by the Seller of its obligations under, or the validity or
enforceability of, the Agreements.
This opinion letter is rendered for the sole benefit of each
addressee hereof, and no other person is entitled to rely hereon. Copies of this
letter may not be furnished to any other person, nor may any portion of this
letter be quoted, circulated or referred to in any other document, without our
prior written consent.
Very truly yours,
XXXXXXX XXXXXXXX & XXXX
By
EXHIBIT 4
[FORM OF OFFICER'S CERTIFICATE OF ORIGINATOR]
Option One Mortgage Corporation
Officer's Certificate
I, ____________________________, hereby certify that I am the duly
elected _____________________________________, of Option One Mortgage
Corporation, a California corporation (the "Company"), and further certify, on
behalf of the Company as follows:
1. Attached hereto as Attachment I is a true and correct copy of the
Certificate of Incorporation and By-laws of the Company as in full force and
effect on the date hereof. No event has occurred since ________________ which
has affected the good standing of the Company under the laws of the State of
California.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Company are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the
Company, signed (a) the Mortgage Loan Purchase Agreement (the "Purchase
Agreement") dated December 18, 1998 among the Company, Salomon Brothers Realty
Corp. and Salomon Brothers Mortgage Securities VII, Inc. ("SBMSVII"), or (b) any
other document delivered prior hereto or on the date hereof in connection with
the transactions contemplated by the Purchase Agreement and the Pooling and
Servicing Agreement dated as of December 1, 1998 among SBMSVII, the Company, New
Century Mortgage Corporation, Firstar Bank Milwaukee, N.A. and U.S. Bank
National Association (the "Pooling and Servicing Agreement") was, at the
respective times of such signing and delivery, and is as of the date hereof,
duly elected or appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on such documents
are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of
the resolutions duly adopted by the board of directors of the Company on
__________, 199_ (the "Resolutions") with respect to the transactions
contemplated by the Purchase Agreement and the Pooling and Servicing Agreement;
said Resolutions have not been amended or modified, annulled or revoked and are
in full force and effect on the date hereof.
5. All of the representations and warranties of the Company
contained in the Purchase Agreement are true and correct in all material
respects as of the Closing Date, and no event has occurred which, with notice or
the passage of time or both, would constitute a default under the Purchase
Agreement.
6. The Company has performed all of its duties and has satisfied all
of the material conditions on its part to be performed or satisfied prior to the
Closing Date.
All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated: December __, 1998
(Seal) OPTION ONE MORTGAGE CORPORATION
By:_____________________________
Name:
Title:
I, _____________________, [Assistant] Secretary of ________________
____________________, hereby certify that _____________________________________
is the duly elected, qualified and acting _________________________________ of
_______________________________ and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: December __, 1998
OPTION ONE MORTGAGE CORPORATION
By:_____________________________
Name:
Title:
EXHIBIT 5
[FORM OF OPINION OF COUNSEL FOR ORIGINATOR]
December __, 1998
Salomon Brothers Mortgage Securities VII, Inc. Financial Security Assurance Inc.
Seven World Trade Center 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx Xxxxxx Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1998-NC7
---------------------------------------------------
Ladies and Gentlemen:
I have acted as counsel to Option One Mortgage Corporation, a California
corporation (the "Company"), in connection with the sale of certain mortgage
loans, previously sold by the Company to Salomon Brothers Realty Corp.
("Realty"), to Salomon Brothers Securities VII, Inc. ("SBMSVII") pursuant to a
Mortgage Loan Purchase Agreement, dated December 18, 1998 (the "Purchase
Agreement"), among the Company, Realty and SBMSVII. Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates, Series 1998-NC7 have
or will be issued pursuant to the Pooling and Servicing Agreement, dated as of
December 1, 1998 (the "Pooling Agreement"), among SBMSVII, the Company, New
Century Mortgage Corporation, Firstar Bank Milwaukee, N.A. and U.S. Bank
National Association. Capitalized terms not otherwise defined herein have the
meanings set forth in the Pooling and Servicing Agreement.
In connection with rendering this opinion letter, I, or attorneys
working under my direction, have examined, among other things, originals,
certified copies or copies otherwise identified to my satisfaction as being true
copies of the following:
A. The Purchase Agreement;
B. The Pooling and Servicing Agreement;
C. The Company's Certificate of Incorporation and Bylaws, as amended to
date; and
D. Resolutions adopted by the Board of Directors of the Company with
specific reference to actions relating to the transactions covered
by this opinion.
For the purpose of rendering this opinion, I have made such documentary, factual
and legal examinations as I deemed necessary under the circumstances. As to
factual matters, I have relied upon statements, certificates and other
assurances of public officials and of officers and other
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representatives of the Company, and upon such other certificates as I deemed
appropriate, which factual matters have not been independently established or
verified by me. I have also assumed, among other things, the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to me as originals, and the conformity to original documents
of all documents submitted to me as copies and the authenticity of the originals
of such copied documents.
On the basis of and subject to the foregoing examination, and in
reliance thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of California with corporate power and
authority to own its properties and conduct its business as presently conducted
by it. The Company has the corporate power and authority to execute, deliver,
and perform its obligations under the Purchase Agreement.
2. The Purchase Agreement has been duly and validly authorized, executed
and delivered by the Company.
3. The Purchase Agreement constitutes valid, legal and binding
obligations of the Company, enforceable against the Company in accordance with
its terms.
4. No consent, approval, authorization or order of any state or federal
court or government agency or body is required for the execution, delivery and
performance by the Company of the Purchase Agreement or the consummation of the
transactions contemplated by the Purchase Agreement, except for those consents,
approvals, authorizations or orders which previously have been obtained.
5. The fulfillment of the terms of or the consummation of the
transactions contemplated in the Purchase Agreement will not result in a breach
of any term or provision of the Certificate of Incorporation or By-laws of the
Company, or, to the best of my knowledge, will conflict with, result in a breach
or violation of, or constitute a default under, (i) the terms of any indenture
or other agreement or instrument known to me to which the Company is a party or
by which it is bound, (ii) any State of California or federal statute or
regulation applicable to the Company, or (iii) any order of any State of
California or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company, except in any such case
where the default, breach or violation would not have a material adverse effect
on the Company or its ability to perform its obligations under the Purchase
Agreement.
6. There is no action, suit, proceeding or investigation pending or, to
the best of my knowledge, threatened against the Company which, in my judgment,
either in any one instance or in the aggregate, would draw into question the
validity of the Purchase Agreement, which seeks
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to prevent the consummation of any of the transactions contemplated in the
Purchase Agreement or which would be likely to impair materially the ability of
the Company to perform under the terms of the Purchase Agreement.
7. No information has come to my attention that causes me to believe
that the information contained in SBMSVII's Prospectus Supplement, dated
December 18, 1998, relating to the Company, its financial condition, its
underwriting standards and its loan portfolio, specifically the information in
the "Summary--The Mortgage Loans," "Risk Factors," "The Mortgage Pool" (except
with respect to the information contained under the caption "The Mortgage
Pool--New Century Underwriting Programs") and "Pooling and Servicing
Agreement--Option One Mortgage Corporation" contained an untrue statement of
material fact or omitted to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
The opinions above are subject to the following additional assumptions,
exceptions, qualifications and limitations:
A. I have assumed that all parties to the Purchase Agreement other than
the Seller have all requisite power and authority to execute,
deliver and perform their respective obligations under the Purchase
Agreement, and that the Purchase Agreement has been duly authorized
by all necessary corporate actions on the part of such parties, has
been executed and delivered by such parties and constitutes the
legal, valid and binding obligations of such parties.
B. My opinion expressed paragraphs 3 above is subject to the
qualifications that (i) the enforceability of the Purchase Agreement
may be limited by the effect of laws relating to (1) bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally,
including, without limitation, the effect of statutory or other laws
regarding fraudulent conveyances or preferential transfers, and (2)
general principles of equity upon the specific enforceability of any
of the remedies, covenants or other provisions of the Purchase
Agreement and upon the availability of injunctive relief or other
equitable remedies and the application of principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) as such principles relate to limit
or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such
enforcement may be brought; and (ii) I express no opinion herein
with respect to the validity, legality, binding effect or
enforceability of provisions for indemnification in the Purchase
Agreement to the extent such provisions may be held to be
unenforceable as contrary to public policy.
C. I have assumed, without independent check or certification, that
there are no agreements or understandings among the Company, Realty
and any other party
-4-
which would expand, modify or otherwise affect the terms of the
documents described herein or the respective rights or obligations
of the parties thereunder.
I express no opinion as to whether the courts of the United States
located in California or state courts of California would respect or enforce any
contractual provision regarding choice of law, selection of forum or waiver of a
jury trial.
This opinion is given to you for your sole benefit, and no other person
or entity is entitled to rely hereon.
I am admitted to practice in the State of California, and I render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of California and the Federal laws of the United States of America.
Very truly yours,
_____________________________
EXHIBIT 6
Loan #: ____________
Borrower: _____________
LOST NOTE AFFIDAVIT
-------------------
I, as _____________ of ____________________, a _____________ corporation
am authorized to make this Affidavit on behalf of _____________________ (the
"Seller"). In connection with the administration of the Mortgage Loans held by
____________________, a _________________ corporation as Seller on behalf of
Salomon Brothers Mortgage Securities VII, Inc. (the "Purchaser"),
_____________________ (the "Deponent"), being duly sworn, deposes and says that:
1. The Seller's address is : _____________________________
_____________________________
_____________________________
2. The Seller previously delivered to the Purchaser a signed Initial
Certification with respect to such Mortgage and/or Assignment of
Mortgage;
3. Such Mortgage Note and/or Assignment of Mortgage was assigned or sold
to the Purchaser by ________________________, a ____________ corporation
pursuant to the terms and provisions of a Mortgage Loan Purchase
Agreement dated as of December 18, 1998;
4. Such Mortgage Note and/or Assignment of Mortgage is not outstanding
pursuant to a request for release of Documents;
5. Aforesaid Mortgage Note and/or Assignment of Mortgage (the
"Original") has been lost;
6. Deponent has made or caused to be made a diligent search for the
Original and has been unable to find or recover same;
7. The Seller was the Seller of the Original at the time of the loss;
and
8. Deponent agrees that, if said Original should ever come into Seller's
possession, custody or power, Seller will immediately and without
consideration surrender the Original to the Purchaser.
9. Attached hereto is a true and correct copy of (i) the Note, endorsed
in blank by the Mortgagee and (ii) the Mortgage or Deed of Trust (strike
one) which secures the Note, which Mortgage or Deed of Trust is recorded
in the county where the property is located.
10. Deponent hereby agrees that the Seller (a) shall indemnify and hold
harmless the Purchaser, its successors and assigns, against any loss,
liability or damage, including reasonable attorney's fees, resulting
from the unavailability of any Notes, including but not limited to any
loss, liability or damage arising from (i) any false statement contained
in this Affidavit, (ii) any claim of any party that has already
purchased a mortgage loan evidenced by the Lost Note or any interest in
such mortgage loan, (iii) any claim of any borrower with respect to the
existence of terms of a mortgage loan evidenced by the Lost Note on the
related property to the fact that the mortgage loan is not evidenced by
an original note and (iv) the issuance of a new instrument in lieu
thereof (items (i) through (iv) above hereinafter referred to as the
"Losses") and (b) if required by any Rating Agency in connection with
placing such Lost Note into a Pass-Through Transfer, shall obtain a
surety from an insurer acceptable to the applicable Rating Agency to
cover any Losses with respect to such Lost Note.
11. This Affidavit is intended to be relied upon by the Purchaser, its
successors and assigns. _____________________, a ______________
corporation represents and warrants that is has the authority to perform
its obligations under this Affidavit of Lost Note.
Executed this ____ day, of ___________ 199_.
SELLER
By:___________________________
Name:
Title:
On this ___ day of ________, 199_, before me appeared _________________
to me personally known, who being duly sworn did say that he is the
_____________________ of ____________________ a ______________ corporation and
that said Affidavit of Lost Note was signed and sealed on behalf of such
corporation and said acknowledged this instrument to be the free act and deed of
said corporation.
Signature:
[Seal]
EXHIBIT 7
Exceptions to the Representation and Warranty Contained In Section 6(ii)
------------------------------------------------------------------------
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (this "Agreement"), dated
December 18, 1998, among Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation (the "Purchaser"), Option One Mortgage Corporation, a
California corporation (the "Originator") and Salomon Brothers Realty Corp., a
New York corporation (the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell the Mortgage Loans (as hereinafter
identified) to the Purchaser on the terms and subject to the conditions set
forth in this Agreement. The Mortgage Loans were purchased by the Seller from
the Originator pursuant to a certain Mortgage Loan Purchase and Servicing
Agreement, dated as of March 1, 1998 (the "Purchase and Servicing Agreement"),
between the Seller as initial purchaser and the Originator as seller and
servicer. The Purchaser intends to deposit the Mortgage Loans into a mortgage
pool comprising of the Trust Fund. The Trust Fund will be evidenced by a single
series of mortgage pass-through certificates designated as Series 1998-NC7 (the
"Certificates"). The Certificates will consist of six classes of certificates.
The Certificates will be issued pursuant to a Pooling and Servicing Agreement,
dated as of December 1, 1998 (the "Pooling and Servicing Agreement"), among the
Purchaser as depositor, New Century Mortgage Corporation as master servicer (in
such capacity, the "Master Servicer") and a servicer, the Company as a servicer,
Firstar Bank Milwaukee, N.A. as trustee (the "Trustee") and U.S. Bank National
Association as trust administrator (the "Trust Administrator"). Capitalized
terms used but not defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell, and the
Purchaser agrees to purchase, on or before December 22, 1998 (the "Closing
Date"), certain conventional, one- to four-family, fixed-rate residential
mortgage loans (the "Mortgage Loans"), having an aggregate principal balance as
of the close of business on December 1, 1998 (the "Cut-off Date") of
approximately $703,557,762.96 (the "Closing Balance"), after giving effect to
all payments due on the Mortgage Loans on or before the Cut-off Date, whether or
not received, including the right to any Prepayment Charges payable by the
related Mortgagors in connection with any Principal Prepayments on the Mortgage
Loans.
SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the Seller have
agreed upon which of the mortgage loans owned by the Seller are to be purchased
by the Purchaser pursuant to this Agreement and the Seller will prepare or cause
to be prepared on or prior to the Closing Date a final schedule (the "Closing
Schedule") that shall describe such Mortgage Loans and set forth all of the
Mortgage Loans to be purchased under this Agreement, including the related
Prepayment Charges. The Closing Schedule will conform to the requirements set
forth in this Agreement and to the definition of "Mortgage Loan Schedule" under
the Pooling and Servicing Agreement. The Closing Schedule shall be used as the
Mortgage Loan Schedule under the Pooling and Servicing Agreement.
-2-
SECTION 3. CONSIDERATION.
(a) In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall, as described in Section 8, pay to or upon the
order of the Seller in immediately available funds an amount (the "Purchase
Price") equal to approximately _____% times the Closing Balance, plus accrued
interest thereon from the Cut-off Date up to but not including the Closing Date.
(b) The Purchaser or any assignee, transferee or designee of the
Purchaser shall be entitled to all scheduled payments of principal due after the
Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, the Purchaser
will assign all of its right, title and interest in and to the Mortgage Loans,
together with its rights under this Agreement, to the Trustee for the benefit of
the Certificateholders.
SECTION 4. TRANSFER OF THE MORTGAGE LOANS.
(a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Mortgage Loans, including the related Prepayment Charges. The
contents of each Mortgage File not delivered to the Purchaser or to any
assignee, transferee or designee of the Purchaser on or prior to the Closing
Date are and shall be held in trust by the Seller for the benefit of the
Purchaser or any assignee, transferee or designee of the Purchaser. Upon the
sale of the Mortgage Loans, the ownership of each Mortgage Note, the related
Mortgage and the other contents of the related Mortgage File is vested in the
Purchaser and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or that come into the possession of the Seller
on or after the Closing Date shall immediately vest in the Purchaser and shall
be delivered immediately to the Purchaser or as otherwise directed by the
Purchaser.
(b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on or
prior to the Closing Date, deliver or cause to be delivered to the Purchaser or
any assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:
(i) the original Mortgage Note, endorsed in the following form:
"Pay to the order of Norwest Bank Minnesota, N.A., as Trustee," with all
prior and intervening endorsements showing a complete chain of endorsement
from the originator to the Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of recording thereon;
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(iii) an original Assignment of Mortgage executed in the
following form: "Firstar Bank Milwaukee, N.A. as Trustee under the
applicable pooling and servicing agreement";
(iv) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator to the
Person assigning the Mortgage to the Trustee as contemplated by the
immediately preceding clause (iii);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy, together with
all endorsements or riders that were issued with or subsequent to the
issuance of such policy, insuring the priority of the Mortgage as a first
or second lien on the Mortgaged Property represented therein as a fee
interest vested in the Mortgagor.
Within thirty (30) Business Days following the Closing Date, Option
One will prepare, execute and deliver to the Trust Administrator an endorsement
for each of the Mortgage Loans endorsing each Mortgage Note in the following
form: "Pay to the order of Firstar Bank Milwaukee, N.A., as Trustee under the
applicable agreement, without recourse" and the endorsement provided for in
Section 4(b)(i) hereof will be voided by the Trust Administrator.
The Seller, at the expense of the Originator, promptly shall (within
sixty Business Days following the later of the Closing Date and the date of
receipt by the Seller of the recording information for a Mortgage, but in no
event later than ninety days following the Closing Date) submit or cause to be
submitted for recording, at no expense to the Seller or the Purchaser (or the
Trust Fund, the Certificate Insurer, the Trustee or the Trust Administrator
under the Pooling and Servicing Agreement), in the appropriate public office for
real property records, each Assignment referred to in clauses (b)(iii) and
(b)(iv) of this Section 4. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Originator on behalf of the
Seller, at the expense of the Originator, promptly shall prepare a substitute
Assignment or cure such defect, as the case may be, and thereafter cause each
such Assignment to be duly recorded.
Notwithstanding anything to the contrary contained in this Section
4, with respect to a maximum of approximately 1.0% of the Mortgage Loans, by
aggregate principal balance of the Mortgage Loans as of the Cut-off Date, if any
original Mortgage Note referred to in Section 4(b)(i) above cannot be located,
the obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon delivery to the Purchaser or any assignee, transferee or designee
of the Purchaser of a photocopy of such Mortgage Note, if available, with a lost
note affidavit substantially in the form of Exhibit 6 hereto. If any of the
original Mortgage Notes for which a lost note affidavit was delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser within three
Business Days; and if any document referred to in Section 4(b)(ii) or 4(b)(iv)
above has been submitted for recording but
-4-
either (x) has not been returned from the applicable public recording office or
(y) has been lost or such public recording office has retained the original of
such document, the obligations of the Seller hereunder shall be deemed to have
been satisfied upon delivery to the Purchaser or any assignee, transferee or
designee of the Purchaser promptly upon receipt thereof by or on behalf of the
Seller of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original.
In the event that the original lender's title insurance policy has
not yet been issued, the Seller shall deliver to the Purchaser or any assignee,
transferee or designee of the Purchaser a written commitment or interim binder
or preliminary report of title issued by the title insurance or escrow company.
The Seller shall deliver to the Purchaser or any assignee, transferee or
designee of the Purchaser promptly upon receipt by the Seller of any such
original title insurance policy or original Primary Mortgage Insurance Policy.
Each original document relating to a Mortgage Loan which is not
delivered to the Purchaser or its assignee, transferee or designee, if held by
the Seller or the Originator, shall be so held for the benefit of the Purchaser
or its assignee, transferee or designee.
(c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered pursuant
to Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before or after the Closing
Date (and with respect to each document permitted to be delivered after the
Closing Date, within seven days of its delivery) to ascertain that all required
documents have been executed and received and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule.
(d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the right
to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller or the Originator, and the assignee
shall succeed to the rights and obligations hereunder of the Purchaser. Any
expense reasonably incurred by or on behalf of the Purchaser or the Trustee in
connection with enforcing any obligations of the Seller or the Originator under
this Agreement will be promptly reimbursed by the Seller or the Originator, as
applicable.
(e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller shall either (i) deliver in escrow to the Purchaser or to any assignee,
transferee or designee of the Purchaser for examination the Mortgage File
pertaining to each Mortgage Loan, or (ii) make such Mortgage Files available to
the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser, the Trust
Administrator or the Trustee, and their respective designees, upon reasonable
notice to the Seller during normal business hours before the Closing Date and
within 60 days after the Closing Date. If any such person makes such examination
prior to the Closing Date and identifies any Mortgage Loans that do not conform
to the requirements of the Purchaser as described in this Agreement, such
Mortgage Loans shall be deleted from the Closing Schedule. The Purchaser may, at
its option and without notice to the Seller, purchase all or part of the
Mortgage Loans without
-5-
conducting any partial or complete examination. The fact that the Purchaser or
any person has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect the rights of the Purchaser
or any assignee, transferee or designee of the Purchaser to demand repurchase or
other relief as provided herein or under the Pooling and Servicing
Agreement.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
AND THE ORIGINATOR.
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(a) The Originator hereby represents and warrants to the Seller and
the Purchaser, as of the date hereof and as of the Closing Date, and covenants,
that:
(i) The Originator is duly organized, validly existing and in
good standing as a corporation under the laws of the State of California with
full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. The Originator had the full corporate power and authority
to own the Mortgage Loans and to transfer and convey the Mortgage Loans to the
Seller pursuant to the Purchase and Servicing Agreement, and the Originator has
the full corporate power and authority to execute and deliver, engage in the
transactions contemplated by, and perform and observe the terms and conditions
of this Agreement;
(ii) The Originator has duly authorized the execution, delivery
and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser and the Seller, constitutes a legal, valid and binding
obligation of the Originator, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization or by general principles of equity;
(iii) The execution, delivery and performance of this Agreement
by the Originator (x) does not conflict and will not conflict with, does not
breach and will not result in a breach of and does not constitute and will not
constitute a default (or an event, which with notice or lapse of time or both,
would constitute a default) under (A) any terms or provisions of the articles of
incorporation or by-laws of the Originator, (B) any term or provision of any
material agreement, contract, instrument or indenture, to which the Originator
is a party or by which the Originator or any of its property is bound, or (C)
any law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Originator or any
of its property and (y) does not create or impose and will not result in the
creation or imposition of any lien, charge or encumbrance which would have a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans;
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Originator to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Originator of, or compliance by the Originator with, this Agreement or the
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consummation by the Originator of any other transaction contemplated hereby and
by the Pooling and Servicing Agreement; provided, however, that the Originator
makes no representation or warranty regarding federal or state securities laws
in connection with the sale or distribution of the Certificates;
(v) With respect to any statement regarding the intentions of
the Originator, this Agreement does not contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements contained
herein not misleading. The written statements, reports and other documents
prepared and furnished or to be prepared and furnished by the Originator
pursuant to this Agreement or in connection with the transactions contemplated
hereby taken in the aggregate do not contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements contained
therein not misleading;
(vi) The Originator is not in violation of, and the execution
and delivery of this Agreement by the Originator and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over the
Originator or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Originator or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder;
(vii) The Originator is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act. No event has occurred, including but
not limited to a change in insurance coverage, that would make the Originator
unable to comply with HUD eligibility requirements or that would require
notification to HUD;
(viii) The Originator does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(ix) Immediately prior to the payment to the Originator of the
purchase price for each Mortgage Loan pursuant to the Purchase and Servicing
Agreement, the Originator was the owner of the related Mortgage and the
indebtedness evidenced by the related Mortgage Note, and, upon the payment to
the Originator of such purchase price, in the event that the Originator retains
or has retained record title, the Originator shall retain such record title to
each Mortgage, each related Mortgage Note and the related Mortgage Files with
respect thereto in trust for the Purchaser as the owner thereof from and after
the date hereof;
(x) There are no actions or proceedings against, or
investigations known to it of, the Originator before any court, administrative
or other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Originator which
occurred pursuant to the Purchase and Servicing Agreement or the consummation of
the transactions contemplated by this Agreement or (C) that might prohibit or
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materially and adversely affect the performance by the Originator of its
obligations under, or validity or enforceability of, this Agreement;
(xi) The consummation of the transactions contemplated by this
Agreement and the Purchase and Servicing Agreement are in the ordinary course of
business of the Originator, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Originator pursuant to the Purchase and
Servicing Agreement were not subject to the bulk transfer or any similar
statutory provisions;
(xii) The information delivered by the Originator to the Seller
with respect to the Originator's loan loss, foreclosure and delinquency
experience on mortgage loans underwritten to the same standards as the Mortgage
Loans and covering mortgaged properties similar to the Mortgaged Properties, is
true and correct in all material respects;
(xiii) The Originator has not dealt with any broker, investment
banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans pursuant to the Purchase and Servicing
Agreement; and
(xiv) There is no litigation currently pending or, to the best
of the Originator's knowledge without independent investigation, threatened
against the Originator that would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the issuance of the Certificates or the
execution, delivery, performance or enforceability of this Agreement, or that
would result in a material adverse change in the financial condition of the
Originator.
(b) The Seller hereby represents and warrants, as of the date hereof
and as of the Closing Date, and covenants, that:
(i) The Seller is a corporation, duly organized and validly
existing and in good standing under the laws of the State of New York with full
corporate power and authority to conduct its business as presently conducted by
it to the extent material to the consummation of the transactions contemplated
herein. The Seller had the full corporate power and authority to acquire the
Mortgage Loans. The Seller has the full corporate power and authority to own the
Mortgage Loans and to transfer and convey the Mortgage Loans to the Purchaser
and has the full corporate power and authority to execute and deliver, engage in
the transactions contemplated by, and perform and observe the terms and
conditions of this Agreement;
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller, all requisite corporate action having been
taken, and (assuming the due authorization, execution and delivery hereof by the
Purchaser and the Originator) constitutes the valid, legal and binding
obligation of the Seller, enforceable in accordance with its terms, except as
such enforcement may be limited by (A) bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, (B) general equity principles (regardless of
whether such enforcement is considered in a proceeding
-8-
in equity or at law) or (C) public policy considerations underlying the
securities laws, to the extent that such public policy considerations limit the
enforceability of the provisions of this Agreement which purport to provide
indemnification from securities laws liabilities;
(iii) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required, under federal laws or the laws of the State of New York, for the
execution, delivery and performance by the Seller of, or compli ance by the
Seller with, this Agreement or the consummation by the Seller of any other
transaction contemplated hereby and by the Pooling and Servicing Agreement;
provided, however, that the Seller makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates;
(iv) No certificate of an officer, statement or other
information furnished in writing or report delivered by the Seller to the
Purchaser, any affiliate of the Purchaser or the Trustee for use in connection
with the purchase of the Mortgage Loans and the transactions contemplated
hereunder and under the Pooling and Servicing Agreement will contain any untrue
statement of a material fact, or omit a material fact necessary to make the
information, certificate, statement or report not misleading in any material
respect;
(v) Neither the sale of the Mortgage Loans to the Purchaser, nor
the execution, delivery or performance of this Agreement by the Seller,
conflicts or will conflict with or results or will result in a breach of or
constitutes or will constitute a default (or an event, which with notice or
lapse of time or both, would constitute a default) under (A) any terms or
provisions of the certificate of incorporation or by-laws of the Seller, (B) any
term or provision of any material agreement, contract, instrument or indenture,
to which the Seller is a party or by which the Seller or any of its property is
bound, or (C) any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Seller or any of its property, or results or will result in the creation or
imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any docu ments or instruments
evidencing or securing the Mortgage Loans;
(vi) The Seller has not dealt with any broker, investment
banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans;
(vii) There is no litigation currently pending or, to the best
of the Seller's knowledge, threatened against the Seller that would reasonably
be expected to adversely affect the transfer of the Mortgage Loans, the issuance
of the Certificates, the execution, delivery, performance or enforceability of
this Agreement or that would result in a material adverse change in the
financial condition of the Seller;
(viii) Each Mortgage Note, each Mortgage, each Assignment and
any other document required to be delivered by or on behalf of the Seller under
this Agreement or the Pooling and Servicing Agreement to the Purchaser or any
assignee, transferee or designee of the
-9-
Purchaser for each Mortgage Loan has been or will be, in accordance with Section
4(b) hereof, delivered to the Purchaser or any such assignee, transferee or
designee. With respect to each Mortgage Loan, the Seller is in possession of a
complete Mortgage File in compliance with the Pooling and Servicing Agreement,
except for such documents that (A) have been delivered (1) to the Purchaser or
any assignee, transferee or designee of the Purchaser or (2) for recording to
the appropriate public recording office and have not yet been returned or (B)
are not required to be delivered to the Purchaser or any assignee, transferee or
designee of the Purchaser until 90 days following the Closing Date or such later
date as provided in Section 4;
(ix) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Seller or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder.
(x) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Seller pursuant to this Agreement are not subject
to the bulk transfer or any similar statutory provisions in effect in any
relevant jurisdiction, except any as may have been complied with;
(xi) The Seller does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement.
(xii) The Seller (A) is a solvent entity and is paying its debts
as they become due and (B) after giving effect to the transfer of the Mortgage
Loans, will be a solvent entity and will have sufficient resources to pay its
debts as they become due;
(xiii) The form of endorsement of each Mortgage Note satisfied
the requirement, if any, of endorsement in order to transfer all right, title
and interest of the party so endorsing, as noteholder or assignee thereof, in
and to that Mortgage Note; and each Assignment to be delivered hereunder is in
recordable form and is sufficient to effect the assignment of and to transfer to
the assignee thereunder the benefits of the assignor, as mortgagee or assignee
thereof, under each Mortgage to which that Assignment relates;
(xiv) The transfer of the Mortgage Loans to the Purchaser at the
Closing Date will be treated by the Seller for financial accounting and
reporting purposes as a sale of assets;
(xv) Immediately prior to the sale of the Mortgage Loans to the
Purchaser as herein contemplated, the Seller had good title to, and was the sole
owner of, the Mortgage
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Loans, and such sale validly transfers the Mortgage Loans to the Purchaser free
and clear of any pledge, lien, encumbrance or security interest; and
(xvi) With respect to the Mortgage Loans, the Seller hereby
represents and warrants, as of the date hereof and as of the Closing Date, that
each Mortgage Loan constitutes a "qualified mortgage" within the meaning of
Section 860(G)(a)(3) of the Code.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR AND THE
SELLER RELATING TO THE MORTGAGE LOANS.
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(a) PRINCIPLES OF CONSTRUCTION. The Originator, the Seller and the
Purchaser understand, acknowledge and agree that, notwithstanding that the
representations and warranties set forth in Section 6(b) are made as of the
Closing Date, each such representation and warranty made with respect to any
Mortgage Loan that was purchased by the Seller from the Originator under the
Purchase and Servicing Agreement more than 90 days prior to the Closing Date
(with respect to each such Mortgage Loan, the related "Seller Purchase Date") is
made and shall be deemed to have been made to the Purchaser and the Seller by
the Originator solely as of the date which is 90 days following the related
Seller Purchase Date and not as of any later date, and each such representation
and warranty with respect to any such Mortgage Loan is made and shall be deemed
to have been made to the Purchaser solely by the Seller as of the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE LOANS.
The Originator hereby represents and warrants to the Seller and the Purchaser
(except as provided in Section 6(a) above), or the Seller hereby represents and
warrants to the Purchaser (in the case of those representations and warranties
subject to Section 6(a) above), as the case may be, as of the Closing Date, that
as to each Mortgage Loan as of the Closing Date:
(i) The information set forth in the Mortgage Loan Schedule, as
transmitted electronically to the Seller by the Originator (as such transmitted
information may have been amended in writing by the Originator with the written
consent of the Seller subsequent to such transmission) is complete, true and
correct as of the Cut-off Date and the information in the Mortgage Loan
Schedule, as transmitted by the Seller to the Purchaser on the Closing Date is
complete, true and correct as of the Closing Date;
(ii) Except with respect to the Mortgage Loans listed on Exhibit 7
attached hereto, all payments required to be made prior to the first day of the
month in which the Closing Date occurs for such Mortgage Loan under the terms of
the Mortgage Note have been made; the Originator has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party other
than the owner of the related Mortgaged Property, directly or indirectly, for
the payment of any amount required by the Mortgage Note or Mortgage; and as of
the Closing Date, no payment required under any Mortgage Loan has been 30 days
delinquent more than once during the last twelve months and except with respect
to ____% of the Mortgage Loans by aggregate principal balance as of the Cut-off
Date, which were sixty days or more but less than ninety days delinquent, no
Mortgage Loan has ever been 60 or more days delinquent;
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(iii) At the origination of such Mortgage Loan, there were no
delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments, including assessments payable in future
installments or other outstanding charges affecting the related Mortgaged
Property, and, to the knowledge of the Originator, as of the Closing Date, there
are no delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments, including assessments payable in future
installments or other outstanding charges affecting the related Mortgaged
Property;
(iv) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage, and which have been delivered to the
Trustee; the substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the related policy, and
is reflected on the Mortgage Loan Schedule. No instrument of waiver, alteration
or modification has been executed, and no Mortgagor has been released, in whole
or in part, except in connection with an assumption agreement approved by the
title insurer, to the extent required by the policy, and which assumption
agreement has been delivered to the Trustee and the terms of which are reflected
in the Mortgage Loan Schedule;
(v) The Mortgage Note and the Mortgage are not subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(vi) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located, pursuant to insurance policies conforming to the requirements of the
Pooling and Servicing Agreement. All such insurance policies contain a standard
mortgagee clause naming the Originator, its successors and assigns as mortgagee
and all premiums thereon have been paid. If upon origination of the Mortgage
Loan, the Mortgaged Property was in an area identified on a Flood Hazard Map or
Flood Insurance Rate Map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect which policy conforms to the
requirements of Xxxxxx Xxx. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(vii) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit
-12-
protection, equal credit opportunity or disclosure laws applicable to the
origination and servicing of Mortgage Loan have been complied with;
(viii) The Mortgage has not been satisfied, canceled, subordinated
or rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction, cancellation,
subordination, rescission or release;
(ix) The Mortgage is a valid, existing and enforceable first or
second lien on the Mortgaged Property, including all improvements on the
Mortgaged Property subject only to (a) the lien of current real property taxes
and assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording being acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and which do not adversely
affect the appraised value of the Mortgaged Property, and (c) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property and (d)
the first lien on the Mortgaged Property, in the case of Mortgages that are
second liens. Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, existing and enforceable first or second lien and first or
second priority security interest on the property described therein and the
Originator had full right to sell and assign the same to the Seller pursuant to
the Purchase and Servicing Agreement and the Seller has full right to sell and
assign the same to the Purchaser. Unless otherwise disclosed on Exhibit 7
hereto, the Mortgaged Property was not, as of the date of origination of the
Mortgage Loan, subject to a mortgage, deed of trust, deed to secured debt or
other security instrument creating a lien subordinate to the lien of the
Mortgage;
(x) The Mortgage Note and the related Mortgage are genuine and each
is the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms;
(xi) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties;
(xii) The proceeds of the Mortgage Loan have been fully disbursed to
or for the account of the Mortgagor and there is no obligation for the Mortgagee
to advance additional funds thereunder and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage have been paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage;
-13-
(xiii) As of the Closing Date and prior to the sale of the Mortgage
Loan hereunder to the Purchaser, the Seller was the sole legal, beneficial and
equitable owner of the Mortgage Note and the Mortgage and had full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest (this
portion of this representation is made by the Seller only); as of the closing
date as defined in the Purchase and Servicing Agreement and prior to the sale of
the Mortgage Loan to the Seller pursuant to the Purchase and Servicing
Agreement, the Originator was the sole legal, beneficial and equitable owner of
the Mortgage Note and the Mortgage and had full right to transfer and sell the
Mortgage Loan to the Seller free and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest (this portion of this representation
is made by the Originator only);
(xiv) To the best of the Originator's knowledge, all parties which
have had any interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise, are (or, during the period in which they held and disposed
of such interest, were) in compliance with any and all applicable "doing
business" and licensing requirements of the laws of the state wherein the
Mortgaged Property is located;
(xv) The Mortgage Loan is covered by an ALTA lender's title
insurance policy or other title insurance acceptable to Xxxxxx Xxx, issued by a
title insurer acceptable to Xxxxxx Mae and qualified to do business in the
jurisdiction where the Mortgaged Property is located (or, in the case of
Mortgaged Properties located in areas in which such policies are not generally
available, an attorney's certificate or opinion of title acceptable to Xxxxxx
Xxx), insuring (subject to the exceptions contained in (ix)(a), (b) and (c)
above) the Originator, its successors and assigns as to the first or second
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan. Additionally, such lender's title insurance policy affirmatively insures
ingress and egress to and from the Mortgaged Property, and against encroachments
by or upon the Mortgaged Property or any interest therein. The Originator is the
sole insured of such lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this Agreement.
No claims have been made under such lender's title insurance policy, and no
prior holder of the related Mortgage, including the Originator, has done, by act
or omission, anything which would impair the coverage of such lender's title
insurance policy;
(xvi) Except with respect to the permitted delinquencies on certain
Mortgage Loans as described in Section 6(b)(ii) above and listed on Exhibit 7
attached hereto, there is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration, and the
Originator has not waived any default, breach, violation or event of
acceleration;
(xvii) There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that under
law could give rise to such lien) affecting the related Mortgaged Property which
are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
-14-
(xviii) All improvements that were considered in determining the
appraised value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property;
(xix) The Mortgage Loan was (i) originated (as the term is used for
the purposes of the Secondary Mortgage Market Enhancement Act) by the Originator
or by a savings and loan association, a savings bank, a commercial bank or
similar banking institution which is supervised and examined by a federal or
state authority, or by a mortgagee approved as such by the Secretary of HUD or
(ii) acquired by the Originator directly through loan brokers or correspondents
such that (a) the Mortgage Loan was originated in conformity with the
Originator's underwriting guidelines, (b) the Originator approved the Mortgage
Loan prior to funding thereof and (c) the Originator provided the funds used to
originate the Mortgage Loan and acquired the Mortgage Loan on the date of
origination thereof;
(xx) Principal payments on the Mortgage Loan commenced no more than
two (2) months after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loan bears interest at the Mortgage Interest Rate. Except as disclosed
in the Mortgage Loan Schedule, the Mortgage Note is payable on the first day of
each month. Interest on the Mortgage Loan is calculated on the basis of a 360
day year consisting of twelve 30 day months. The Mortgage Note does not permit
negative amortization;
(xxi) The origination and collection practices used by the
Originator with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been serviced by the Originator and
any predecessor servicer in accordance with the terms of the Mortgage Note. With
respect to escrow deposits and Escrow Payments, if any, all such payments are in
the possession of, or under the control of, the Originator and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or Escrow Payments or
other charges or payments due the Originator have been capitalized under any
Mortgage or the related Mortgage Note;
(xxii) The Mortgaged Property is free of damage and waste to the
best of the Originator's knowledge and there is no proceeding pending for the
total or partial condemnation thereof;
(xxiii) The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) otherwise by
judicial foreclosure. Since the date of origination of the Mortgage Loan, the
Mortgaged Property has not been subject to any bankruptcy proceeding or
foreclosure proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Mortgagor which would interfere with the right to
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sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage. The Mortgagor has not notified the Originator and the Originator has
no knowledge of any relief requested or allowed to the Mortgagor under the
Soldiers and Sailors Civil Relief Act of 1940;
(xxiv) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (ix) above;
(xxv) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Mortgage Loan
application, by a qualified appraiser who met the requirements of the
Originator's appraisal policy and procedures and who had no interest, direct or
indirect in the Mortgaged Property or in any loan made on the security thereof,
whose compensation is not affected by the approval or disapproval of the
Mortgage Loan and who met the minimum qualifications of Xxxxxx Mae or Xxxxxxx
Mac;
(xxvi) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;
(xxvii) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Originator, the Mortgagor, or anyone on
behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature;
(xxviii) The Mortgagor has executed a statement to the effect that
the Mortgagor has received all disclosure materials required by applicable law;
and if the Mortgage Loan is a Refinanced Mortgage Loan, the Mortgagor has
received all disclosure and rescission materials required by applicable law with
respect to the making of a Refinanced Mortgage Loan, and evidence of such
receipt is and will remain in the Mortgage File;
(xxix) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;
(xxx) The Mortgage Note, the Mortgage, the Assignment of Mortgage
and any other documents required to be delivered with respect to each Mortgage
Loan pursuant to the Pooling and Servicing Agreement, have been delivered to the
Trustee all in compliance with the specific requirements of the Pooling and
Servicing Agreement;
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(xxxi) The Mortgaged Property is lawfully occupied under applicable
law; to the best of the Originator's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities;
(xxxii) To the best of the Originator's knowledge, no error,
omission, misrepresentation, negligence, fraud or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any person, including,
without limitation, the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan or in the
application of any insurance in relation to such Mortgage Loan;
(xxxiii) The Assignment of Mortgage, is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxiv) Any principal advances made to the Mortgagor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
or second lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title evidence
acceptable to Xxxxxx Mae and Xxxxxxx Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan;
(xxxv) Except as disclosed on the Mortgage Loan Schedule, no
Mortgage Loan has a balloon payment feature;
(xxxvi) If the Residential Dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development), such condominium or planned unit development
project meets Xxxxxx Mae's eligibility requirements;
(xxxvii) Except as disclosed on Exhibit 7 hereto, neither the
Originator nor any affiliate of the Originator has made no mortgage on any
Mortgaged Property other than the Mortgage Loan;
(xxxviii) The Mortgage Loan was not intentionally selected by the
Seller in a manner intended to adversely affect the interest of the Purchaser
(this portion of this representation is made by the Seller only); the Mortgage
Loan was not intentionally selected by the Originator in a manner intended to
adversely affect the interest of the Seller (this portion of this representation
is made by the Originator only);
(xxxix) The Seller has not dealt with any broker or agent or other
Person who might be entitled to a fee, commission or compensation in connection
with the transaction contemplated
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by this Agreement other than the Purchaser except as disclosed on Exhibit 7
hereto (this portion of this representation is made by the Seller only); the
Originator did not deal with any broker or agent or other Person who might be
entitled to a fee, commission or compensation in connection with the transaction
contemplated by the Purchase and Servicing Agreement other than the Seller
except as the Originator previously disclosed to the Seller in writing (this
portion of this representation is made by the Originator only);
(xl) The Mortgaged Property consists of a parcel of real property of
not more than ten acres with a single family residence erected thereon, or a two
to four-family dwelling, or an individual condominium unit in a low-rise or
high-rise condominium project, or an individual unit in a planned unit
development. The Mortgaged Property is improved with a Residential Dwelling.
Without limiting the foregoing, the Mortgaged Property does NOT consist of any
of the following property types: (a) co-operative units, (b) log homes, (c)
earthen homes, (d) underground homes, (e) mobile homes and (f) manufactured
homes (as defined in the Xxxxxx Xxx Seller-Servicer's Guide), except when the
appraisal indicates that the home is of comparable construction to a stick or
beam construction home, is readily marketable, has been permanently affixed to
the site and is not in a mobile home "park." The Mortgaged Property is either a
fee simple estate or a long-term residential lease. If the Mortgage Loan is
secured by a long-term residential lease, unless otherwise specifically
disclosed in the Mortgage Loan Schedule, (A) the terms of such lease expressly
permit the mortgaging of the leasehold estate, the assignment of the lease
without the lessor's consent (or the lessor's consent has been obtained and such
consent is the Mortgage File) and the acquisition by the holder of the Mortgage
of the rights of the lessee upon foreclosure or assignment in lieu of
foreclosure or provide the holder of the Mortgage with substantially similar
protection; (B) the terms of such lease do not (x) allow the termination thereof
upon the lessee's default without the holder of the Mortgage being entitled to
receive written notice of, and opportunity to cure, such default or (y) prohibit
the holder of the Mortgage from being insured under the hazard insurance policy
relating to the Mortgaged Property; (C) the original term of such lease is not
less than 15 years; (D) the term of such lease does not terminate earlier than
five years after the maturity date of the Mortgage Note; and (E) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates for
residential properties is a widely accepted practice;
(xli) At the time of origination, the Loan-To-Value Ratio (or the
combined loan-to-value ratio in the case of second lien Mortgage Loans) of the
Mortgage Loan was not greater than _____%;
(xlii) The Mortgage, and if required by applicable law the related
Mortgage Note, contains a provision for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event that the Mortgaged
Property is sold or transferred without the prior written consent of the
Mortgagee, at the option of the Mortgagee;
(xliii) No Mortgage Loan has a Stated Principal Balance in excess of
$_______; and
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(xliv) The information set forth in the Prepayment Charge Schedule
is complete, true and correct in all material respects, and each Prepayment
Charge is permissible, enforceable and collectible under applicable state law
subject to bankruptcy and equitable enforcement limitations.
SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION AND FOR
BREACH OF REPRESENTATION AND WARRANTY.
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(a) The representations and warranties contained in Section 6 shall
not be impaired by any review and examination of loan files or other documents
evidencing or relating to the Mortgage Loans or any failure on the part of the
Seller or the Purchaser to review or examine such documents and shall inure to
the benefit of any assignee, transferee or designee of the Purchaser, including
the Trustee for the benefit of holders of the Certificates. Except with respect
to the representation and warranty contained in Section 6(b)(xxxii), with
respect to the representations and warranties contained herein as to which the
Originator or the Seller, as the case may be, has no knowledge, if it is
discovered that the substance of any such representation and warranty was
inaccurate as of the date such representation and warranty was made or deemed to
be made, and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan or the interest therein of the Purchaser or the
Purchaser's assignee, transferee or designee, then notwithstanding the lack of
knowledge by the Originator or the Seller, as the case may be, with respect to
the substance of such representation and warranty being inaccurate at the time
the representation and warranty was made, the Originator or the Seller, as the
case may be, shall take such action described in the following paragraph in
respect of such Mortgage Loan. With respect to the representation and warranty
contained in Section 6(b)(xxxii), if it is discovered that the substance of the
representation and warranty contained in Section 6(b)(xxxii) was innaccurate as
of the date such representation and warranty was made or deemed to be made, and
such inaccuracy materially and adversely affects the value of the related
Mortgage Loan or the interest therein of the Purchaser or the Purchaser's
assignee, transferee or designee, then notwithstanding the lack of knowledge of
the Seller and regardless of the rules of construction set forth in Section
6(a), with respect to the substance of such representation and warranty being
inaccurate at the time the representation and warranty was made, the Seller
shall take such action described in the following paragraph in respect of such
Mortgage Loan.
Upon discovery by the Originator, the Seller, the Purchaser or any
assignee, transferee or designee of the Purchaser of any materially defective
document in, or that any material document was not transferred by the Seller or
not transferred by the Originator to the Seller (as listed on the Trustee's
Preliminary Exception Report) as part of any Mortgage File, or of a breach of
any of the representations and warranties contained in Section 6 that materially
and adversely affects the value of any Mortgage Loan or the interest therein of
the Purchaser or the Purchaser's assignee, transferee or designee, the party
discovering such breach shall give prompt written notice to the other parties
hereto. Within sixty (60) days of its discovery or its receipt of notice of any
such missing documentation that was not transferred by the Seller or not
transferred by the Originator to the Seller as described above, or of materially
defective documentation, or of any such breach of a representation and warranty,
the Originator or the Seller, as the case may
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be, promptly shall deliver such missing document or cure such defect or breach
in all material respects or, in the event the Originator or the Seller, as the
case may be, cannot deliver such missing document or cannot cure such defect or
breach, the Originator or the Seller, as the case may be, shall, within ninety
(90) days of its discovery or receipt of notice, repurchase the affected
Mortgage Loan at the Purchase Price (as such term is defined in the Pooling and
Servicing Agreement). Notwithstanding the preceding sentences of this paragraph,
to the extent that the Originator would otherwise be required to repurchase such
affected Mortgage Loan and such obligation results from the breach of any of the
representations or warranties that are made or deemed to have been made by the
Seller, then the Seller (and not the Originator) shall be required to repurchase
such affected Mortgage Loan in the manner described above, and the Purchaser
shall have no remedy against the Originator therefor; provided, however, that to
the extent that the Seller would otherwise be required to repurchase the
affected Mortgage Loans and such obligation results from the breach of any of
the representations or warranties that are made or deemed to have been made by
the Originator, then the Originator (and not the Seller) shall be required to
repurchase the affected Mortgage Loans in the manner described above, and the
Purchaser shall have no remedy against the Seller therefor. The Originator or
the Seller, as the case may be, shall amend the Closing Schedule to reflect the
withdrawal of such Mortgage Loan from the terms of this Agreement and the
Pooling and Servicing Agreement. The Originator or the Seller, as the case may
be, shall deliver to the Purchaser such amended Closing Schedule and shall
deliver such other documents as are required by this Agreement or the Pooling
and Servicing Agreement within five (5) days of any such amendment. Any
repurchase pursuant to this Section 7(a) shall be accomplished by transfer to an
account designated by the Purchaser of the amount of the Purchase Price in
accordance with Section 2.03 of the Pooling and Servicing Agreement. Any
repurchase required by this Section shall be made in a manner consistent with
Section 2.03 of the Pooling and Servicing Agreement.
(b) It is understood and agreed that the obligations of the
Originator set forth in this Section 7 to cure or repurchase a defective
Mortgage Loan constitute the sole remedies of the Seller and the Purchaser
against the Originator respecting a missing or defective document or a breach of
the representations and warranties contained in Section 6. It is understood and
agreed that the obligations of the Seller set forth in this Section 7 to cure or
repurchase a defective Mortgage Loan constitute the sole remedies of the
Purchaser against the Seller respecting a missing document or a breach of the
representations and warranties contained in Section 6.
SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The closing of
the purchase and sale of the Mortgage Loans shall be held at the New York City
office of Xxxxxxx Xxxxxxxx & Wood at 10:00 a.m. New York City time on the
Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under
this Agreement shall be true and correct in all material
respects as of the date as of which they are made and no event
shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement;
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(b) All of the representations and warranties of the Originator
under this Agreement shall be true and correct in all material
respects as of the date as of which they are made and no event
shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement;
(c) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from
escrow at the time of closing), all Closing Documents as
specified in Section 9 of this Agreement, in such forms as are
agreed upon and acceptable to the Purchaser, duly executed by
all signatories other than the Purchaser as required pursuant
to the respective terms thereof;
(d) The Seller shall have delivered or caused to be delivered and
released to the Purchaser or to its designee, all documents
(including without limitation, the Mortgage Loans) required to
be so delivered by the Purchaser pursuant to Section 2.01 of
the Pooling and Servicing Agreement; and
(e) All other terms and conditions of this Agreement and the
Pooling and Servicing Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall deliver or
cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Mortgage Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds.
SECTION 9. CLOSING DOCUMENTS. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
(a) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Originator, the Purchaser, the
Certificate Insurer and Xxxxxxx Xxxxx Xxxxxx Inc. (the
"Underwriter") may rely, in the form of Exhibit 1 hereto, and
attached thereto copies of the certificate of incorporation,
by-laws and certificate of good standing of the Seller under
the laws of New York;
(b) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Purchaser, the Certificate Insurer and
the Underwriter may rely, in the form of Exhibit 2 hereto,
with respect to certain facts regarding the sale of the
Mortgage Loans by the Seller to the Purchaser;
(c) An Opinion of Counsel of the Seller, dated the Closing Date
and addressed to the Originator, the Purchaser, the
Certificate Insurer and the Underwriter, substantially in the
form attached hereto as Exhibit 3;
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(d) An Officer's Certificate of the Originator, dated the Closing
Date, upon which the Seller, the Purchaser, the Certificate
Insurer and the Underwriter may rely, in the form of Exhibit 4
hereto, and attached thereto copies of the certificate of
incorporation, by-laws and certificate of good standing of the
Originator under the laws of its state of incorporation;
(e) An opinion of Counsel of the Originator, dated the Closing
Date and addressed to the Seller, the Purchaser, the
Certificate Insurer and the Underwriter substantially in the
form attached hereto as Exhibit 5;
(f) Such opinions of counsel as the Rating Agencies or the Trustee
may request in connection with the sale of the Mortgage Loans
by the Seller to the Purchaser or the Seller's execution and
delivery of, or performance under, this Agreement;
(g) A letter from KPMG Peat Marwick L.L.P., certified public
accountants, dated the date hereof, to the effect that they
have performed certain specified procedures as a result of
which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Purchaser's Prospectus Supplement, dated December 18, 1998,
under the captions "Summary--The Mortgage Loans," "Risk
Factors," "The Mortgage Pool" (except with respect to the
information contained under the caption "The Mortgage
Pool--New Century Underwriting Programs") and "Pooling and
Servicing Agreement--Option One Mortgage Corporation" agrees
with the records of the Originator;
(h) The Originator shall deliver to the Seller for inclusion in
the Prospectus Supplement for Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates,
Series 1998-NC7, under the captions "The Mortgage Pool"
(except with respect to the information contained under the
caption "The Mortgage Pool--New Century Underwriting
Programs") and "Pooling and Servicing Agreement--Option One
Mortgage Corporation", or for inclusion in other offering
material such publicly available information regarding the
Originator, its financial condition and its mortgage loan
delinquency, foreclosure and loss experience, underwriting
standards and any similar nonpublic, unaudited financial
information;
(i) A letter from KPMG Peat Marwick L.L.P., certified public
accountants, dated the date hereof and to the effect that they
have performed certain specified procedures as a result of
which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Purchaser's Prospectus Supplement, dated December 18, 1998
under the captions "Summary of Prospectus Supplement", "Yield
on the Certificates"
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and "Description of the Certificates" agrees with the records
of the Seller; and
(j) Such further information, certificates, opinions and documents
as the Purchaser or the Underwriter may reasonably request.
SECTION 10. COSTS. The Originator shall pay (or shall reimburse the
Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments of Mortgage, the fees and expenses of the
Originator's accountants and attorneys, the costs and expenses incurred in
connection with producing the Originator's or any subservicer's loan loss,
foreclosure and delinquency experience, and the costs and expenses incurred in
connection with obtaining the documents referred to in Sections 9(d), 9(e) and
9(g). The Seller shall pay (or shall reimburse the Purchaser or any other Person
to the extent that the Purchaser or such other Person shall pay) the costs and
expenses of printing (or otherwise reproducing) and delivering this Agreement,
the Pooling and Servicing Agreement, the Certificates, the prospectus and
prospectus supplement, and any private placement memorandum relating to the
Certificates, the Insurance Agreement and other related documents, the initial
fees, costs and expenses of the Trustee and the Trust Administrator, the initial
fees, costs and expenses of FSA, the fees and expenses of the Seller's counsel
in connection with the preparation of all documents relating to the
securitization of the Mortgage Loans, the filing fee charged by the Securities
and Exchange Commission for registration of the Certificates and the fees
charged by any rating agency to rate the Certificates. All other costs and
expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expense.
SECTION 11. SERVICING. The Originator has represented to the
Purchaser that the Mortgage Loans are being serviced by the Originator, in its
capacity as servicer under the Purchase and Servicing Agreement, and are not
subject to any other servicing agreements with third parties. It is understood
and agreed among the Originator, the Seller and the Purchaser that the Mortgage
Loans are to be delivered free and clear of any servicing agreements. The
Originator, without reimbursement from the Purchaser, shall pay any fees or
penalties required by any servicer for releasing the Mortgage Loans from any
such servicing agreement and shall arrange for the orderly transfer, as of the
Cut-off Date, of such servicing from any such servicer to the Originator in its
capacity as Servicer. The Mortgage Loans shall be serviced by the Originator, in
its capacity as Servicer, in accordance with the terms of the Pooling and
Servicing Agreement. For so long as the Originator services the Mortgage Loans,
the Originator shall be entitled to the Servicing Fee and such other payments as
provided for under the terms of the Pooling and Servicing Agreement.
SECTION 12. INDEMNIFICATION. The Originator shall indemnify and hold
harmless each of (i) the Purchaser, (ii) the Seller, (iii) the Underwriter, (iv)
FSA, (v) the Person, if any, to which the Purchaser assigns its rights in and to
a Mortgage Loan and each of their respective successors and assigns and (vi)
each person, if any, who controls the Purchaser within
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the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933
Act") ((i) through (vi) collectively, the "Indemnified Party") against any and
all losses, claims, expenses, damages or liabilities to which the Indemnified
Party may become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, expenses, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus Supplement dated
December 18, 1998 (the "Prospectus Supplement") or any private placement
memorandum (the "Private Placement Memorandum") relating to the offering by the
Purchaser or an affiliate thereof, of the Class CE Certificates and Class P
Certificates, or the omission or the alleged omission to state therein the
material fact necessary in order to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon(i) information furnished in writing to the Purchaser or any of its
affiliates by the Originator including, but not limited to, information
contained in the data file, specifically for use in the preparation of the
Prospectus Supplement and more specifically, for use in the preparation of
information in the Prospectus Supplement set forth under the captions,
"Summary-- The Mortgage Loans," "Risk Factors," "The Mortgage Pool," (except
with respect to information contained under the caption "The Mortgage Pool--New
Century Underwriting Programs), "Pooling and Servicing Agreement--Option One
Mortgage Corporation" and, with respect to any private placement memorandum, any
information of a comparable nature, or (ii) the data files containing
information with respect to the Mortgage Loans as transmitted by modem to the
Purchaser by the Originator on or about December __, 1998 (as such transmitted
information may have been amended in writing by the Originator with the written
consent of the Purchaser subsequent to such transmission), (b) any
representation, warranty or covenant made by the Originator herein or in the
Pooling and Servicing Agreement, on which the Purchaser has relied, being, or
alleged to be, untrue or incorrect or (c) any updated collateral information
provided by the Underwriter to a purchaser of the Certificates derived from the
data contained in clause (ii) and the Remittance Report or a current collateral
tape obtained from the Originator or an affiliate of the Originator, including
the current loan balances of the Mortgage Loans; provided, however, that to the
extent that any such losses, claims, expenses, damages or liabilities to which
the Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the
Originator described in clause (a), (b) or (c) above and (2) any other factual
basis, the Originator shall indemnify and hold harmless the Indemnified Party
only to the extent that the losses, claims, expenses, damages, or liabilities of
the person or persons asserting the claim are determined to rise from or be
based upon matters set forth in clause (1) above and do not result from the
gross negligence or willful misconduct of such Indemnified Party. This indemnity
shall be in addition to any liability that the Originator may otherwise have.
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale
and delivery on the Closing Date of the Mortgage Loans described on the Mortgage
Loan Schedule in accordance with the terms and conditions of this Agreement is
mandatory. It is specifically understood and agreed that each Mortgage Loan is
unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser in the event of the Seller's failure to deliver the
Mortgage Loans on or before the Closing Date. The Seller hereby grants to the
Purchaser a lien on and a
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continuing security interest in the Seller's interest in each Mortgage Loan and
each document and instrument evidencing each such Mortgage Loan to secure the
performance by the Seller of its obligation hereunder, and the Seller agrees
that it holds such Mortgage Loans in custody for the Purchaser, subject to the
Purchaser's (i) right, prior to the Closing Date, to reject any Mortgage Loan to
the extent permitted by this Agreement, and (ii) obligation to deliver or cause
to be delivered the consideration for the Mortgage Loans pursuant to Section 8
hereof. Any Mortgage Loans rejected by the Purchaser shall concurrently
therewith be released from the security interest created hereby. All rights and
remedies of the Purchaser under this Agreement are distinct from, and cumulative
with, any other rights or remedies under this Agreement or afforded by law or
equity and all such rights and remedies may be exercised concurrently,
independently or successively.
Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Mortgage Loans, if delivery to
the Purchaser has occurred, and the security interest created by this Section 12
shall be deemed to have been released.
SECTION 14. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by fax and, receipt of which is confirmed by telephone, if to the
Purchaser, addressed to the Purchaser at Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Mortgage Finance Group, fax (000) 000-0000, or such other
address as may hereafter be furnished to the Seller and the Originator in
writing by the Purchaser; if to the Seller, addressed to the Seller at Xxxxx
Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage Finance Group,
fax (000) 000-0000, or to such other address as the Seller may designate in
writing to the Purchaser and the Originator; if to the Originator, addressed to
the Originator at 0000 X. Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx 00000,
Attention: Xx. Xxxxxxx Xxxxxxx, fax (000) 000-0000, or to such other address as
the Originator may designate in writing to the Purchaser and the Seller.
SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
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SECTION 16. AGREEMENT OF PARTIES. The Originator, the Seller and the
Purchaser each agree to execute and deliver such instruments and take such
actions as either of the others may, from time to time, reasonably request in
order to effectuate the purpose and to carry out the terms of this Agreement and
the Pooling and Servicing Agreement.
SECTION 17. SURVIVAL. (a) The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
(b) The Originator agrees that the representations, warranties and
agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller and
the Purchaser notwithstanding any investigation heretofore or hereafter made by
the Seller or the Purchaser or on the behalf of either of them, and that the
representations, warranties and agreements made by the Originator herein or in
any such certificate shall continue in full force and effect, notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND THAT THE
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.
SECTION 19. MISCELLANEOUS. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans by the Seller to the Purchaser as provided in Section 4
hereof be, and be construed as, a sale
-26-
of the Mortgage Loans by the Seller to the Purchaser and not as a pledge of the
Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. However, in the event that, notwithstanding the
aforementioned intent of the parties, the Mortgage Loans are held to be property
of the Seller, then (a) it is the express intent of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller and (b) (1) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the New York Uniform Commercial Code; (2) the conveyance
provided for in Section 4 hereof shall be deemed to be a grant by the Seller to
the Purchaser of a security interest in all of the Seller's right, title and
interest in and to the Mortgage Loans and all amounts payable to the holders of
the Mortgage Loans in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including without limitation all amounts, other
than investment earnings, from time to time held or invested in the Collection
Account whether in the form of cash, instruments, securities or other property;
(3) the possession by the Purchaser or its agent of Mortgage Notes, the related
Mortgages and such other items of property that constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (4) notifications to
persons holding such property and acknowledgments, receipts or confirmations
from persons holding such property shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Purchaser for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Purchaser pursuant to Section 4(d) hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Purchaser
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.
-27-
IN WITNESS WHEREOF, the Purchaser, the Seller and the Originator
have caused their names to be signed by their respective officers thereunto duly
authorized as of the date first above written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By:_____________________________
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President
SALOMON BROTHERS REALTY CORP.
By:_____________________________
Name: Xxxxxxx X. Xxxxx
Title: Authorized Agent
OPTION ONE MORTGAGE CORPORATION
By:_____________________________
Name:
Title:
EXHIBIT 1
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER]
I, ________________, hereby certify that I am a duly Authorized
Agent of Salomon Brothers Realty Corp., a New York corporation (the "Seller"),
and further certify as follows:
1. Attached hereto is a true and correct copy of the Certificate of
Incorporation and By-laws of the Seller, all of which are in full force
and effect on the date hereof. There has been no amendment or other
document filed affecting the Certificate of Incorporation of the Seller
since December 20, 1982, and no such amendment has been authorized. There
has been no amendment or other document filed affecting the By-laws of the
Seller since October 7, 1986, and no such amendment has been authorized.
Attached hereto is a good standing certificate issued by the Secretary of
State of the State of New York with respect to the Seller. No event has
occurred since the date thereof that, to the best knowledge of the
undersigned, has affected the good standing of the Seller under the laws
of New York.
2. There are no actions, suits or proceedings pending or, to the
best of my knowledge, threatened against or affecting the Seller which, if
adversely determined, individually or in the aggregate, would materially
and adversely affect the Seller's ability to perform its obligations under
the Mortgage Loan Purchase Agreement (the "Mortgage Loan Purchase
Agreement"), dated December 18, 1998, among the Seller, Option One
Mortgage Corporation and Salomon Brothers Mortgage Securities VII, Inc
(the "Depositor"). No proceedings looking toward merger, consolidation or
liquidation, dissolution or bankruptcy of the Seller are pending or
contemplated.
3. Each person who, as an officer or representative of the Seller,
signed the Mortgage Loan Purchase Agreement and any other document
delivered prior hereto or on the date hereof in connection with the
purchase described in the Mortgage Loan Purchase Agreement was, at the
respective times of such signing and delivery, and is now, duly elected or
appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their genuine
signatures.
4. All of the representations and warranties of the Seller under the
Mortgage Loan Purchase Agreement are true and correct in all material
respects as of the Closing Date subject, in the case of the Closing
Schedule delivered pursuant to the Mortgage Loan Purchase Agreement, to
such amendments thereto as were duly made on or before the date hereof and
no event has occurred with respect to the Seller which, with notice or the
passage of time or both, would constitute a default under the Mortgage
Loan Purchase Agreement.
5. The information set forth in the Mortgage Loan Schedule attached
as an exhibit to the Pooling and Servicing Agreement is true and correct
in all material respects.
6. The transactions contemplated in the Mortgage Loan Purchase
Agreement will be reported as a sale in the Seller's financial reports.
7. With respect to its sale of the Mortgage Loans and the
transactions and undertakings contemplated by the Mortgage Loan Purchase
Agreement, the Seller has complied in all material respects with all the
obligations by which it is bound and has satisfied in all material
respects all the conditions on its part to be performed or satisfied prior
to the Closing Date.
8. Capitalized terms used but not defined herein shall have the
meanings assigned in the Mortgage Loan Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
By:_____________________________
Name:
Title: Authorized Agent
I, , an ________________ of Salomon Brothers Realty Corp., hereby
certify that ________________ is a duly appointed, qualified and acting
Authorized Agent of the Seller and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
By:_____________________________
Name:
Title:
EXHIBIT 2
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER WITH RESPECT TO CERTAIN
FACTS REGARDING THE SALE OF THE MORTGAGE LOANS]
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates
Series 1998-NC7
CERTIFICATE OF
SALOMON BROTHERS REALTY CORP.
Reference is made to the sale of mortgage loans (the "Mortgage
Loans") by Salomon Brothers Realty Corp. ("SBRC") to Salomon Brothers Mortgage
Securities VII, Inc. (the "Depositor") pursuant to a Mortgage Loan Purchase
Agreement, dated December 18, 1998, among SBRC, Option One Mortgage Corporation
and the Depositor (the "Option One Purchase Agreement") and a Mortgage Loan
Purchase Agreement, dated December 18, 1998, among SBRC, New Century Mortgage
Corporation and the Depositor (the "New Century Purchase Agreement"; together
with the Option One Purchase Agreement, the "Purchase Agreements") and the
simultaneous issuance of Mortgage Pass-Through Certificates, Series 1998-NC7,
Class A, Class CE, Class P, Class R-I, Class R-II and Class R-III (the
"Certificates"), pursuant to a Pooling and Servicing Agreement, dated as of
December 1, 1998 (the "Pooling and Servicing Agreement") among the Depositor as
depositor, New Century Mortgage Corporation as master servicer (in such
capacity, the "Master Servicer") and a servicer, Option One Mortgage Corporation
as a servicer, Firstar Bank Milwaukee, N.A. as trustee (the "Trustee") and U.S.
Bank National Association as trust administrator (the "Trust Administrator"). In
consideration for its purchase of the Mortgage Loans, the Depositor will deliver
to SBRC immediately available funds. The Depositor will sell the Certificates to
Xxxxxxx Xxxxx Xxxxxx Inc. (the "Underwriter") for offer and sale pursuant to the
terms of an Underwriting Agreement, dated December 18, 1998 (the "Underwriting
Agreement"), between the Depositor and the Underwriter. The Purchase Agreement,
the Pooling and Servicing Agreement and the Underwriting Agreement together, are
hereinafter collectively referred to as the "Agreements". Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Agreements.
The undersigned is a duly appointed Authorized Agent of Salomon
Brothers Realty Corp. and hereby certifies after reasonable investigation that:
1. The price to be paid to SBRC for the Mortgage Loans will have
been paid in full at the closing of the sale pursuant to the Purchase
Agreements, and no agreement or arrangement exists or will exist that permits
the modification of the consideration for the Mortgage Loans subsequent to that
sale. SBRC will not have any right or obligation to repurchase any Mortgage
Loan, except as provided in the Purchase Agreements.
2 Each Mortgage Note and each related Mortgage has been
appropriately prepared and duly executed and delivered by the related Mortgagor,
and each Mortgage has been appropriately recorded in the applicable jurisdiction
and any intervening endorsement of any Mortgage Note, and any intervening
assignment of any Mortgage, which was required in order to transfer to SBRC
ownership of the Mortgage Loans, was obtained and completed.
3. Each Mortgage Note has been endorsed or assigned in a manner that
satisfies any requirement necessary to transfer to the Trustee all right, title
and interest of the party so endorsing or assigning, as noteholder or transferee
thereof, in and to that Mortgage Note, as provided in the Purchase Agreements
and the Pooling and Servicing Agreement. Each Assignment to the Trustee is in
recordable form and is sufficient to effect the assignment and transfer to the
Depositor of the benefits of the assignor, as original mortgagee or assignee
thereof, under each Mortgage to which that Assignment relates, as provided in
the Purchase Agreements and the Pooling and Servicing Agreement. Each Assignment
to the Trustee has been or will be appropriately recorded to the extent required
under applicable law, as provided in the Pooling and Servicing Agreement.
4. Each original Mortgage Note, each original recorded Mortgage,
each original recorded intervening Assignment and each Assignment to the Trustee
has been delivered to the Trustee at the direction of the Depositor, and the
Trustee will maintain continuous actual possession of each of the foregoing in
the State of New York. Neither the Trustee nor any agent of the Trustee that has
or will have possession of any Mortgage Note, Mortgage or Assignment is, or will
be, at any time during the term of the Pooling and Servicing Agreement, an
affiliate of SBRC or otherwise under the direct or indirect control of SBRC.
5. Immediately prior to the transfer of the Mortgage Loans by SBRC
to the Depositor, SBRC was the sole owner of each Mortgage Loan, free and clear
of any and all prior liens, mortgages, security interests, pledges,
participation interests, adverse claims, charges or other equities or
encumbrances of any nature, and had full right and authority to sell, assign and
transfer the Mortgage Loans.
6. No Mortgage Note, Mortgage or other document constituting part of
the Mortgage File reflects or will reflect on its face any interest that is
inconsistent with the ownership interest of SBRC in and to the Mortgage Loans or
the transfer of the Mortgage Loans by SBRC to the Depositor.
7. The transfer of the Mortgage Loans by SBRC to the Depositor as
provided in the Purchase Agreements is intended by SBRC to be, and is in fact, a
contemporaneous exchange in which SBRC receives new value.
8. SBRC was solvent at all relevant times prior to, and will not be
rendered insolvent by, the transfer of the Mortgage Loans to the Depositor.
9. SBRC did not transfer the Mortgage Loans to the Depositor with
any intent to hinder, delay or defraud any of SBRC's creditors.
10. None of SBRC, the Depositor, the Master Servicer, the Servicer,
the Trustee or the Trust Administrator, or any agent acting on behalf of any of
them, has been or will become a party to any fraud or illegality affecting any
Mortgage Loan or Certificate.
11. No breach of the Agreements by any party, misrepresentation or
failure by any party to perform all acts required to be performed prior to the
Closing Date, or fraud or mistake on the part of any party to the Agreements in
connection with the transactions contemplated by the Agreements, has occurred or
will occur.
12. No party to the Agreements has taken or will take any action
that is unreasonable, arbitrary or capricious, or that is not taken in good
faith or in a commercially reasonable manner, affecting the Mortgage Loans in
connection with the transactions contemplated by the Agreements.
13. There is not and will not be any other agreement among the
parties to the Agreements that modifies or otherwise supplements the agreement
of the parties as expressed in the Agreements.
14. SBRC does not have and will not have any right to modify or
alter the terms of the transfer of the Mortgage Loans by SBRC to the Depositor,
or to substitute or add any mortgage loan thereafter, except as provided in the
Agreements.
15. SBRC will not take any action that is inconsistent with the
ownership interest in the Mortgage Loans evidenced by the Certificates. SBRC
will promptly indicate to other persons or entities, when a response is
appropriate, that the Mortgage Loans were transferred by SBRC to the Depositor.
SBRC will not claim any ownership interest directly in the Mortgage Loans other
than that represented by Certificates in which it may have an ownership interest
from time to time.
16. Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, SBRC will report the transfer of the Mortgage Loans
to the Depositor, as provided in the respective Purchase Agreements as a sale of
all of its interest in the Mortgage Loans. SBRC has been advised by or has
confirmed with its independent public accountants for similar transactions that
the sale will be so classified under GAAP in accordance with Statement No. 125
of the Financial Accounting Standards Board.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of December __, 1998.
SALOMON BROTHERS REALTY CORP.
By:_____________________________
Name:
Title: Authorized Agent
EXHIBIT 3
[FORM OF OPINION OF COUNSEL FOR THE SELLER]
December __, 1998
Salomon Brothers Mortgage Financial Security Assurance Inc.
Securities VII, Inc. 000 Xxxx Xxxxxx
Seven World Trade Center New York, New York 10022
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx Xxxxxx Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1998-NC7
---------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Salomon Brothers Realty Corp. (the
"Seller") in connection with the sale of mortgage loans (the "Mortgage Loans")
by the Seller to Salomon Brothers Mortgage Securities VII, Inc. (the
"Depositor") pursuant to a Mortgage Loan Purchase Agreement, dated December 18,
1998, among the Seller, Option One Mortgage Corporation and the Depositor (the
"Option One Purchase Agreement") and a Mortgage Loan Purchase Agreement, dated
December 18, 1998, among the Seller, New Century Mortgage Corporation and the
Depositor (the "New Century Purchase Agreement"; together with the Option One
Purchase Agreement, the "Agreements"). This opinion is being delivered to you
pursuant to Section 9(c) of each of the Agreements. Capitalized terms used but
not defined herein have the meanings set forth in the Agreements or in
agreements referred to therein.
In rendering this opinion letter, we do not express any opinion
concerning any law other than the law of the State of New York and the federal
law of the United States, and we do not express any opinion concerning the
application of the "doing business" laws or the securities laws of any
jurisdiction other than the federal securities laws of the United States. In
addition, we do not express any opinion on any issue not expressly addressed
below.
In rendering this opinion letter, we have examined the Agreements,
the certificate of incorporation and by-laws of the Seller and such records and
other documents as we have deemed necessary. As to matters of fact, we have
examined and relied upon representations of the Seller contained in the
Agreements, and where we have deemed appropriate, representations or
certifications of officers of the Seller, the Depositor or public officials. We
have assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents submitted to us as copies. We have assumed, except as to the Seller,
that all parties had the corporate power and authority to enter into and perform
all obligations thereunder and, as to such parties, we also have assumed the due
authorization by all requisite corporate action, the due execution and delivery
and the validity and binding effect and enforceability of such documents. We
have further assumed that there is not and will not be any other agreement that
materially supplements or otherwise modifies the agreements expressed in the
Agreements. We have further assumed the conformity of the Mortgage Loans and
related documents to the requirements of the Agreements.
Based upon the foregoing, we are of the opinion that:
1. The Seller is a corporation duly organized and validly existing and
in good standing under the laws of the State of New York and has the
requisite corporate power to own its properties, to conduct its
business as presently conducted by it, to own the Mortgage Loans to
which each Agreement relates, to transfer and convey such Mortgage
Loans to the Depositor and to enter into and perform its obligations
under each of the Agreements.
2. Each of the Agreements have been duly authorized, executed and
delivered by the Seller and, upon due authorization, execution and
delivery by the other parties thereto, will constitute the valid,
legal and binding agreement of the Seller, enforceable against the
Seller in accordance with its terms, except as enforceability may be
limited by (a) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the
rights of creditors and (b) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law.
3. No consent, approval, authorization or order of any State of New
York or federal court or governmental agency or body is required for
the consummation by the Seller of the transactions contemplated by
the Agreements except for those consents, approvals, authorizations
or orders that previously have been obtained.
4. Neither the transfer of the Mortgage Loans as provided in the
Agreements, nor the fulfillment of the terms of or the consummation
of any other of the transactions contemplated by the Agreements,
will result in a breach of any term or provision of the certificate
of incorporation or by-laws of the Seller or, to the best of our
knowledge, will conflict with, result in a breach, violation or
acceleration of or constitute a default under, the terms of any
indenture or other agreement or instrument to which the Seller is a
party or by which it is bound, or any State of New York or federal
statute applicable to the Seller, or any order or regulation of any
State of New York or federal court, regulatory body, administrative
agency or governmental body having jurisdiction over the Seller.
5. To the best of our knowledge, there are no actions, proceedings or
investigations pending or threatened against the Seller before any
court, administrative agency or other tribunal (a) asserting the
invalidity of either of the Agreements, (b) seeking to prevent the
consummation of any of the transactions contemplated in either of
the Agreements or (c) that might materially and adversely affect the
performance
by the Seller of its obligations under, or the validity or
enforceability of, the Agreements.
This opinion letter is rendered for the sole benefit of each
addressee hereof, and no other person is entitled to rely hereon. Copies of this
letter may not be furnished to any other person, nor may any portion of this
letter be quoted, circulated or referred to in any other document, without our
prior written consent.
Very truly yours,
XXXXXXX XXXXXXXX & XXXX
By
EXHIBIT 4
[FORM OF OFFICER'S CERTIFICATE OF ORIGINATOR]
Option One Mortgage Corporation
Officer's Certificate
I, ____________________________, hereby certify that I am the duly
elected _____________________________________, of Option One Mortgage
Corporation, a California corporation (the "Company"), and further certify, on
behalf of the Company as follows:
1. Attached hereto as Attachment I is a true and correct copy of the
Certificate of Incorporation and By-laws of the Company as in full force and
effect on the date hereof. No event has occurred since ________________ which
has affected the good standing of the Company under the laws of the State of
California.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Company are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the
Company, signed (a) the Mortgage Loan Purchase Agreement (the "Purchase
Agreement") dated December 18, 1998 among the Company, Salomon Brothers Realty
Corp. and Salomon Brothers Mortgage Securities VII, Inc. ("SBMSVII"), or (b) any
other document delivered prior hereto or on the date hereof in connection with
the transactions contemplated by the Purchase Agreement and the Pooling and
Servicing Agreement dated as of December 1, 1998 among SBMSVII, the Company, New
Century Mortgage Corporation, Firstar Bank Milwaukee, N.A. and U.S. Bank
National Association (the "Pooling and Servicing Agreement") was, at the
respective times of such signing and delivery, and is as of the date hereof,
duly elected or appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on such documents
are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of
the resolutions duly adopted by the board of directors of the Company on
__________, 199_ (the "Resolutions") with respect to the transactions
contemplated by the Purchase Agreement and the Pooling and Servicing Agreement;
said Resolutions have not been amended or modified, annulled or revoked and are
in full force and effect on the date hereof.
5. All of the representations and warranties of the Company
contained in the Purchase Agreement are true and correct in all material
respects as of the Closing Date, and no event has occurred which, with notice or
the passage of time or both, would constitute a default under the Purchase
Agreement.
6. The Company has performed all of its duties and has satisfied all
of the material conditions on its part to be performed or satisfied prior to the
Closing Date.
All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated: December __, 1998
(Seal) OPTION ONE MORTGAGE CORPORATION
By:_____________________________
Name:
Title:
I, _____________________, [Assistant] Secretary of ________________
____________________, hereby certify that _____________________________________
is the duly elected, qualified and acting _________________________________ of
_______________________________ and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: December __, 1998
OPTION ONE MORTGAGE CORPORATION
By:_____________________________
Name:
Title:
EXHIBIT 5
[FORM OF OPINION OF COUNSEL FOR ORIGINATOR]
December __, 1998
Salomon Brothers Mortgage Securities VII, Inc. Financial Security Assurance Inc.
Seven World Trade Center 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx Xxxxxx Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1998-NC7
---------------------------------------------------
Ladies and Gentlemen:
I have acted as counsel to Option One Mortgage Corporation, a California
corporation (the "Company"), in connection with the sale of certain mortgage
loans, previously sold by the Company to Salomon Brothers Realty Corp.
("Realty"), to Salomon Brothers Securities VII, Inc. ("SBMSVII") pursuant to a
Mortgage Loan Purchase Agreement, dated December 18, 1998 (the "Purchase
Agreement"), among the Company, Realty and SBMSVII. Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates, Series 1998-NC7 have
or will be issued pursuant to the Pooling and Servicing Agreement, dated as of
December 1, 1998 (the "Pooling Agreement"), among SBMSVII, the Company, New
Century Mortgage Corporation, Firstar Bank Milwaukee, N.A. and U.S. Bank
National Association. Capitalized terms not otherwise defined herein have the
meanings set forth in the Pooling and Servicing Agreement.
In connection with rendering this opinion letter, I, or attorneys
working under my direction, have examined, among other things, originals,
certified copies or copies otherwise identified to my satisfaction as being true
copies of the following:
A. The Purchase Agreement;
B. The Pooling and Servicing Agreement;
C. The Company's Certificate of Incorporation and Bylaws, as amended to
date; and
D. Resolutions adopted by the Board of Directors of the Company with
specific reference to actions relating to the transactions covered
by this opinion.
For the purpose of rendering this opinion, I have made such documentary, factual
and legal examinations as I deemed necessary under the circumstances. As to
factual matters, I have relied upon statements, certificates and other
assurances of public officials and of officers and other
- 2 -
representatives of the Company, and upon such other certificates as I deemed
appropriate, which factual matters have not been independently established or
verified by me. I have also assumed, among other things, the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to me as originals, and the conformity to original documents
of all documents submitted to me as copies and the authenticity of the originals
of such copied documents.
On the basis of and subject to the foregoing examination, and in
reliance thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of California with corporate power and
authority to own its properties and conduct its business as presently conducted
by it. The Company has the corporate power and authority to execute, deliver,
and perform its obligations under the Purchase Agreement.
2. The Purchase Agreement has been duly and validly authorized, executed
and delivered by the Company.
3. The Purchase Agreement constitutes valid, legal and binding
obligations of the Company, enforceable against the Company in accordance with
its terms.
4. No consent, approval, authorization or order of any state or federal
court or government agency or body is required for the execution, delivery and
performance by the Company of the Purchase Agreement or the consummation of the
transactions contemplated by the Purchase Agreement, except for those consents,
approvals, authorizations or orders which previously have been obtained.
5. The fulfillment of the terms of or the consummation of the
transactions contemplated in the Purchase Agreement will not result in a breach
of any term or provision of the Certificate of Incorporation or By-laws of the
Company, or, to the best of my knowledge, will conflict with, result in a breach
or violation of, or constitute a default under, (i) the terms of any indenture
or other agreement or instrument known to me to which the Company is a party or
by which it is bound, (ii) any State of California or federal statute or
regulation applicable to the Company, or (iii) any order of any State of
California or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company, except in any such case
where the default, breach or violation would not have a material adverse effect
on the Company or its ability to perform its obligations under the Purchase
Agreement.
6. There is no action, suit, proceeding or investigation pending or, to
the best of my knowledge, threatened against the Company which, in my judgment,
either in any one instance or in the aggregate, would draw into question the
validity of the Purchase Agreement, which seeks
-3-
to prevent the consummation of any of the transactions contemplated in the
Purchase Agreement or which would be likely to impair materially the ability of
the Company to perform under the terms of the Purchase Agreement.
7. No information has come to my attention that causes me to believe
that the information contained in SBMSVII's Prospectus Supplement, dated
December 18, 1998, relating to the Company, its financial condition, its
underwriting standards and its loan portfolio, specifically the information in
the "Summary--The Mortgage Loans," "Risk Factors," "The Mortgage Pool" (except
with respect to the information contained under the caption "The Mortgage
Pool--New Century Underwriting Programs") and "Pooling and Servicing
Agreement--Option One Mortgage Corporation" contained an untrue statement of
material fact or omitted to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
The opinions above are subject to the following additional assumptions,
exceptions, qualifications and limitations:
A. I have assumed that all parties to the Purchase Agreement other than
the Seller have all requisite power and authority to execute,
deliver and perform their respective obligations under the Purchase
Agreement, and that the Purchase Agreement has been duly authorized
by all necessary corporate actions on the part of such parties, has
been executed and delivered by such parties and constitutes the
legal, valid and binding obligations of such parties.
B. My opinion expressed paragraphs 3 above is subject to the
qualifications that (i) the enforceability of the Purchase Agreement
may be limited by the effect of laws relating to (1) bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally,
including, without limitation, the effect of statutory or other laws
regarding fraudulent conveyances or preferential transfers, and (2)
general principles of equity upon the specific enforceability of any
of the remedies, covenants or other provisions of the Purchase
Agreement and upon the availability of injunctive relief or other
equitable remedies and the application of principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) as such principles relate to limit
or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such
enforcement may be brought; and (ii) I express no opinion herein
with respect to the validity, legality, binding effect or
enforceability of provisions for indemnification in the Purchase
Agreement to the extent such provisions may be held to be
unenforceable as contrary to public policy.
C. I have assumed, without independent check or certification, that
there are no agreements or understandings among the Company, Realty
and any other party
-4-
which would expand, modify or otherwise affect the terms of the
documents described herein or the respective rights or obligations
of the parties thereunder.
I express no opinion as to whether the courts of the United States
located in California or state courts of California would respect or enforce any
contractual provision regarding choice of law, selection of forum or waiver of a
jury trial.
This opinion is given to you for your sole benefit, and no other person
or entity is entitled to rely hereon.
I am admitted to practice in the State of California, and I render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of California and the Federal laws of the United States of America.
Very truly yours,
_____________________________
EXHIBIT 6
Loan #: ____________
Borrower: _____________
LOST NOTE AFFIDAVIT
-------------------
I, as _____________ of ____________________, a _____________ corporation
am authorized to make this Affidavit on behalf of _____________________ (the
"Seller"). In connection with the administration of the Mortgage Loans held by
____________________, a _________________ corporation as Seller on behalf of
Salomon Brothers Mortgage Securities VII, Inc. (the "Purchaser"),
_____________________ (the "Deponent"), being duly sworn, deposes and says that:
1. The Seller's address is : _____________________________
_____________________________
_____________________________
2. The Seller previously delivered to the Purchaser a signed Initial
Certification with respect to such Mortgage and/or Assignment of
Mortgage;
3. Such Mortgage Note and/or Assignment of Mortgage was assigned or sold
to the Purchaser by ________________________, a ____________ corporation
pursuant to the terms and provisions of a Mortgage Loan Purchase
Agreement dated as of December 18, 1998;
4. Such Mortgage Note and/or Assignment of Mortgage is not outstanding
pursuant to a request for release of Documents;
5. Aforesaid Mortgage Note and/or Assignment of Mortgage (the
"Original") has been lost;
6. Deponent has made or caused to be made a diligent search for the
Original and has been unable to find or recover same;
7. The Seller was the Seller of the Original at the time of the loss;
and
8. Deponent agrees that, if said Original should ever come into Seller's
possession, custody or power, Seller will immediately and without
consideration surrender the Original to the Purchaser.
9. Attached hereto is a true and correct copy of (i) the Note, endorsed
in blank by the Mortgagee and (ii) the Mortgage or Deed of Trust (strike
one) which secures the Note, which Mortgage or Deed of Trust is recorded
in the county where the property is located.
10. Deponent hereby agrees that the Seller (a) shall indemnify and hold
harmless the Purchaser, its successors and assigns, against any loss,
liability or damage, including reasonable attorney's fees, resulting
from the unavailability of any Notes, including but not limited to any
loss, liability or damage arising from (i) any false statement contained
in this Affidavit, (ii) any claim of any party that has already
purchased a mortgage loan evidenced by the Lost Note or any interest in
such mortgage loan, (iii) any claim of any borrower with respect to the
existence of terms of a mortgage loan evidenced by the Lost Note on the
related property to the fact that the mortgage loan is not evidenced by
an original note and (iv) the issuance of a new instrument in lieu
thereof (items (i) through (iv) above hereinafter referred to as the
"Losses") and (b) if required by any Rating Agency in connection with
placing such Lost Note into a Pass-Through Transfer, shall obtain a
surety from an insurer acceptable to the applicable Rating Agency to
cover any Losses with respect to such Lost Note.
11. This Affidavit is intended to be relied upon by the Purchaser, its
successors and assigns. _____________________, a ______________
corporation represents and warrants that is has the authority to perform
its obligations under this Affidavit of Lost Note.
Executed this ____ day, of ___________ 199_.
SELLER
By:___________________________
Name:
Title:
On this ___ day of ________, 199_, before me appeared _________________
to me personally known, who being duly sworn did say that he is the
_____________________ of ____________________ a ______________ corporation and
that said Affidavit of Lost Note was signed and sealed on behalf of such
corporation and said acknowledged this instrument to be the free act and deed of
said corporation.
Signature:
[Seal]
EXHIBIT 7
Exceptions to the Representation and Warranty Contained In Section 6(ii)
------------------------------------------------------------------------
EXHIBIT E-1
-----------
REQUEST FOR RELEASE
(for Trustee/Custodian)
Loan Information
----------------
Name of Mortgagor: ________________________________
Master Servicer
Loan No.: ________________________________
Trustee/Custodian
-----------------
Name: ________________________________
Address: ________________________________
Trustee/Custodian
Mortgage File No.: ________________________________
Depositor
---------
Name: SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
Address: ________________________________
________________________________
Certificates: Mortgage Pass-Through Certificates, Series 1998-NC7.
The undersigned Master Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of Mortgage
Pass-Through Cert ificates, Series 1998-NC7, the documents referred to below
(the "Documents"). All capitalized terms not otherwise defined in this Request
for Release shall have the meanings given them in the Pooling and Servicing
Agreement, dated as of December 1, 1998, among the Trustee, the Trust
Administrator, the Depositor, the Master Servicer and the Servicer (the "Pooling
and Servicing Agreement").
( ) Promissory Note dated _______________, 19__, in the original principal sum
of $__________, made by _____________________, payable to, or endorsed to
the order of, the Trustee.
( ) Mortgage recorded on _________________________ as instrument no.
____________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.
( ) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County Recorder's
Office of the County of _______________, State of _______________________
in book/reel/docket ____________ of official records at page/image
____________.
( ) Other documents, including any amendments, assignments or other assumptions
of the Mortgage Note or Mortgage.
( ) ________________________________
( ) ________________________________
( ) ________________________________
( ) ________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.
(2) The Master Servicer shall not cause or permit the Documents to
become subject to, or encumbered by, any claim, liens, security interest,
charges, writs of
attachment or other impositions nor shall the Master Servicer assert or
seek to assert any claims or rights of setoff to or against the Documents
or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been remitted
to the Collection Account and except as expressly provided in the
Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Master Servicer
shall at all times be earmarked for the account of the Trustee, and the
Master Servicer shall keep the Documents and any proceeds separate and
distinct from all other property in the Master Servicer's possession,
custody or control.
Dated:
NEW CENTURY MORTGAGE CORPORATION
By:________________________________
Name:
Title:
EXHIBIT E-2
-----------
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-NC7
______________________________________________ HEREBY CERTIFIES THAT HE/SHE IS
AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:_____________ BORROWER'S NAME:_______________________________
COUNTY:__________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLEC TION ACCOUNT PURSUANT TO
SECTION 3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
________________________________ DATED:______________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
EXHIBIT F-1
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
[Trustee]
________________________________
________________________________
Re: Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates,
Series 1998-NC7, Class ___, representing a ___%
Class ___ Percentage Interest
-----------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the "Transferor")
to ________________ (the "Transferee") of the captioned mortgage pass-through
certificates (the "Certificates"), the Transferor hereby certifies as follows:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
December 1, 1998, among Salomon Brothers Mortgage Securities VII, Inc. as
Depositor, New Century Mortgage Corporation as Master Servicer and servicer,
Option One Mortgage Corporation as Servicer, Firstar Bank Milwaukee, N.A. as
Trustee and U.S. Bank National Association as Trust Administrator (the "Pooling
and
Servicing Agreement"), pursuant to which Pooling and Servicing Agreement the
Certificates were issued.
Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
[Transferor]
By:________________________________
Name:
Title:
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
[Trustee]
________________________________
________________________________
Re: Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates,
Series 1998-NC7, Class ___, representing a ___%
Class ___ Percentage Interest
-----------------------------------------------
Ladies and Gentlemen:
In connection with the purchase from ______________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:
1. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") under the Securities Act of 1933 (the
"1933 Act") and has completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. The Transferee is aware that
the sale to it is being made in reliance on Rule 144A. The Transferee is
acquiring the Certificates for its own account or for the account of a
qualified institutional buyer, and understands that such Certificate may be
resold, pledged or transferred only (i) to a person reasonably believed to
be a qualified institutional buyer that purchases for its own account or
for the account of a qualified institutional buyer to whom notice is given
that the resale, pledge or transfer is being made in reliance on Rule 144A,
or (ii) pursuant to another exemption from registration under the 1933 Act.
2. The Transferee has been furnished with all information regarding
(a) the Certificates and distributions thereon, (b) the nature, performance
and servicing of the Mortgage Loans, (c) the Pooling and Servicing
Agreement referred to below, and (d) any credit enhancement mechanism
associated with the Certificates, that it has requested.
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of December 1, 1998, among Salomon Brothers Mortgage Securities VII,
Inc. as Depositor, New Century Mortgage Corporation as Master Servicer, Firstar
Bank Milwaukee, N.A. as trustee and U.S. Bank National Association as Trust
Administrator, pursuant to which the Certificates were issued.
[TRANSFEREE]
By:________________________________
Name:
Title:
ANNEX 1 TO EXHIBIT F-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and U.S. Bank National Association, as Trust Administrator,
with respect to the mortgage pass-through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned and/or
invested on a discretionary basis $______________________1 in securities (except
for the excluded securities referred to below) as of the end of the Transferee's
most recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Transferee satisfies the criteria in the category marked
below.
___ CORPORATION, ETC. The Transferee is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or any organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986.
___ BANK. The Transferee (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, A COPY OF WHICH IS ATTACHED
HERETO.
___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over any
such institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of
_______________________
1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
at least $25,000,000 as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.
___ BROKER-DEALER. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Transferee is an insurance company whose
primary and predominant business activity is the writing of insurance
or the reinsuring of risks underwritten by insurance companies and
which is subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the District of
Columbia.
___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA PLAN. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ INVESTMENT ADVISOR. The Transferee is an investment advisor registered
under the Investment Advisers Act of 1940.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee and did not include any of
the securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another enterprise and the Transferee is not itself a reporting
company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", the Transferee
agrees that, in connection with any purchase of securities sold to the
Transferee for the account of a third party (including any separate account) in
reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Certificates will
constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.
Dated:
________________________________
Print Name of Transferee
By:_____________________________
Name:
Title:
ANNEX 2 TO EXHIBIT F-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and U.S. Bank National Association, as Trust Administrator,
with respect to the mortgage pass-through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company Act
of 1940, and (ii) as marked below, the Transferee alone, or the Transferee's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year. For purposes of determining the amount of
securities owned by the Transferee or the Transferee's Family of Investment
Companies, the cost of such securities was used.
____ The Transferee owned $___________________ in securities (other than
the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies which owned
in the aggregate $______________ in securities (other than the
excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this certification
is made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Certificates will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.
Dated:
Print Name of Transferee or Advisor
By:________________________________
Name:
Title:
IF AN ADVISER:
___________________________________
Print Name of Transferee
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser named
below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer", as defined in
Rule 144A, ("Rule 144A") under the Securities Act of 1933, as amended.
3. As of the date specified below (which is not earlier than the last
day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on a
discretionary basis by the Purchaser was in excess of $100,000,000.
Name of Purchaser______________________________________________________________
By: (Signature)___________________________________________________________
Name of Signatory______________________________________________________________
Title__________________________________________________________________________
Date of this certificate_______________________________________________________
Date of information provided in paragraph 3____________________________________
EXHIBIT F-2
-----------
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
____________________________ , being duly sworn, deposes, represents
and warrants as follows:
1. I am a ______________________ of ____________________________ (the
"Owner") a corporation duly organized and existing under the laws of
______________, the record owner of Salomon Brothers Mortgage Securities VII,
Inc., Mortgage Pass-Through Certificates, Series 1998-NC7, [Class R-I] [Class
R-II] [and Class R-III] (the "Class R Certificates"), on behalf of whom I make
this affidavit and agreement. Capitalized terms used but not defined herein have
the respective meanings assigned thereto in the Pooling and Servicing Agreement
pursuant to which the Class R Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
____________________, 199___ and (ii) is acquiring the Class R Certificates for
its own account or for the account of another Owner from which it has received
an affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified organization"
means the United States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is not selected by
any such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government or
organization, any rural electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally exempt from federal
income tax unless such organization is subject to the tax on unrelated business
taxable income.
3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person includes a broker,
nominee or middleman) for a non-Permitted Transferee, on the agent; (iii) that
the person otherwise liable for the tax shall be relieved of liability for the
tax if the transferee furnishes to such person an affidavit that the transferee
is a Permitted Transferee and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that each of the
Class R Certificates may be a "noneconomic residual interest" within the meaning
of proposed Treasury regulations promulgated under the Code and that the
transferor of a "noneconomic residual interest" will remain liable for any taxes
due with respect to the
income on such residual interest, unless no significant purpose of the transfer
is to impede the assessment or collection of tax.
4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the taxable year of the
pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is aware that the Trustee will not register the transfer
of any Class R Certificate unless the transferee, or the transferee's agent,
delivers to the Trustee, among other things, an affidavit in substantially the
same form as this affidavit. The Owner expressly agrees that it will not
consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class R Certificates will only be owned, directly
or indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is ___________________.
8. The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 5.02(d) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.
10. The Owner anticipates that it will, so long as it holds the Class
R Certificates, have sufficient assets to pay any taxes owed by the holder of
such Class R Certificates, and hereby represents to and for the benefit of the
person from whom it acquired the Class R Certificates that the Owner intends to
pay taxes associated with holding such Class R Certificates as they become due,
fully understanding that it may incur tax liabilities in excess of any cash
flows generated by the Class R Certificates.
11. The Owner has no present knowledge that it may become insolvent or
subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.
12. The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or entity that will
not have sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the representations
required by Section 5.02(d) of the Pooling and Servicing Agreement under which
the Class R Certificate were issued and will not consummate any such transfer if
it knows, or knows facts that should lead it to believe, that any such
representations are false.
15. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trustee an affidavit, which represents
and warrants that it is not transferring the Class R Certificates to impede the
assessment or collection of any tax and that it has no actual knowledge that the
proposed transferee: (i) has insufficient assets to pay any taxes owed by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding for so long as the Class R Certificates
remains outstanding; and (iii) is not a "Permitted Transferee".
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States may be included in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 199___.
[OWNER]
By:________________________________
Name:
Title: [Vice] President
ATTEST:
By:________________________________
Name:
Title: [Assistant] Secretary
Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of __________, 199___.
____________________________________
Notary Public
County of_____________________
State of______________________
My Commission expires:
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss. :
COUNTY OF NEW YORK)
____________________________, being duly sworn, deposes, represents
and warrants as follows:
1. I am a ____________________ of __________________________ (the "Owner"), a
corporation duly organized and existing under the laws of ______________, on
behalf of whom I make this affidavit.
2. The Owner is not transferring the [Class R-I][Class R-II][Class
R-III] (the "Residual Certificates") to impede the assessment or collection of
any tax.
3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to the Trust
Administrator a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit F-2. The Owner does not know or
believe that any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically paid
its debts as they became due and has found no significant evidence to indicate
that the Purchaser will not continue to pay its debts as they become due in the
future. The Owner understands that the transfer of a Residual Certificate may
not be respected for United States income tax purposes (and the Owner may
continue to be liable for United States income taxes associated therewith)
unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 199___.
[OWNER]
By:________________________________
Name:
Title: [Vice] President
ATTEST:
By:________________________________
Name:
Title: [Assistant] Secretary
Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of __________, 199___.
________________________________
Notary Public
County of____________________
State of_____________________
My Commission expires:
EXHIBIT G
---------
FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE
_____________, 199__
Salomon Brothers Mortgage Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
U.S. Bank National Association
________________________________
________________________________
New Century Mortgage Corporation
________________________________
________________________________
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates,
Series 1998-NC7, Class ___
----------------------------------------------
Dear Sirs:
__________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") $____________ Initial
Certificate Principal Balance of Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1998-NC7, Class ___ (the
"Certificates"), issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of December 1, 1998 among Salomon
Brothers Mortgage Securities VII, Inc. as depositor (the "Depositor"), New
Century Mortgage Corporation as master servicer (in such capacity, the "Master
Servicer") and servicer, Option One Mortgage Corporation as servicer, Firstar
Bank Milwaukee, N.A. as trustee and U.S. Bank National Association as trust
administrator (the "Trust Administrator"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in the Pooling and
Servicing Agreement. The Transferee hereby certifies, represents and warrants
to, and covenants with the Depositor, the Trustee, the Trust Administrator and
the Master Servicer that the following statements in either (1) or (2) are
accurate:
_____ (1) The Certificates (i) are not being acquired by, and will not
be transferred to, any employee benefit plan within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or other retirement arrangement, including
individual retirement accounts and annuities, Xxxxx plans and bank
collective investment funds and insurance company general or separate
accounts in
which such plans, accounts or arrangements are invested, that is
subject to Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986 (the "Code") (any of the foregoing, a "Plan"), (ii) are
not being acquired with "plan assets" of a Plan within the meaning of
the Department of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101,
and (iii) will not be transferred to any entity that is deemed to be
investing in plan assets within the meaning of the DOL regulation at 29
C.F.R. ss. 2510.3-101; or
_____ (2) The purchase of Certificates is permissible under applicable
law, will not constitute or result in any prohibited transaction under
ERISA or Section 4975 of the Code, will not subject the Depositor, the
Trustee or the Master Servicer to any obligation in addition to those
undertaken in the Pooling and Servicing Agreement and each of the
following statements are accurate: (a) the Transferee is an insurance
company; (b) the source of funds used to purchase such Certificates is
an "insurance company general account" (as such term is defined in
Prohibited Transaction Class Exemption ("PTCE") 95-60 issued by the
DOL); (c) the conditions set forth in Sections I and III of PTCE 95-60
have been satisfied and the purchase, holding and transfer of
Certificates by or on behalf of the Transferee are exempt under PTCE
95-60; and (d) there is no Plan with respect to which the amount of
such general account's reserves and liabilities for contracts held by
or on behalf of such Plan and all other Plans maintained by he same
employer (or any "affiliate" thereof, as defined in PTCE 95-60) or by
the same employee organization exceed 10% of the total of all reserves
and liabilities of such general account (as determined under PTCE
95-60) as of the date of the acquisition of the Certificates.
Very truly yours,
___________________________________
By:________________________________
Name:
Title:
EXHIBIT H
FORM OF REPORT PURSUANT TO SECTION 4.06
EXHIBIT I
FORM OF LOST NOTE AFFIDAVIT
LOST NOTE AFFIDAVIT
-------------------
I, as _____________ of ____________________, a _____________ corporation
am authorized to make this Affidavit on behalf of _____________________ (the
"Seller"). In connection with the administration of the Mortgage Loans held by
____________________, a _________________ corporation as Seller on behalf of
Salomon Brothers Mortgage Securities VII, Inc. (the "Purchaser"),
_____________________ (the "Deponent"), being duly sworn, deposes and says that:
1. The Seller's address is : _____________________________
_____________________________
_____________________________
2. The Seller previously delivered to the Purchaser a signed Initial
Certification with respect to such Mortgage and/or Assignment of
Mortgage;
3. Such Mortgage Note and/or Assignment of Mortgage was assigned or sold
to the Purchaser by ________________________, a ____________ corporation
pursuant to the terms and provisions of a Mortgage Loan Purchase
Agreement dated as of December 18, 1998;
4. Such Mortgage Note and/or Assignment of Mortgage is not outstanding
pursuant to a request for release of Documents;
5. Aforesaid Mortgage Note and/or Assignment of Mortgage (the
"Original") has been lost;
6. Deponent has made or caused to be made a diligent search for the
Original and has been unable to find or recover same;
7. The Seller was the Seller of the Original at the time of the loss;
and
8. Deponent agrees that, if said Original should ever come into Seller's
possession, custody or power, Seller will immediately and without
consideration surrender the Original to the Purchaser.
9. Attached hereto is a true and correct copy of (i) the Note, endorsed
in blank by the Mortgagee and (ii) the Mortgage or Deed of Trust (strike
one) which secures the Note, which Mortgage or Deed of Trust is recorded
in the county where the property is located.
10. Deponent hereby agrees that the Seller (a) shall indemnify and hold
harmless the Purchaser, its successors and assigns, against any loss,
liability or damage, including reasonable attorney's fees, resulting
from the unavailability of any Notes, including but not limited to any
loss, liability or damage arising from (i) any false statement contained
in this Affidavit, (ii) any claim of any party that has already
purchased a mortgage loan evidenced by the Lost Note or any interest in
such mortgage loan, (iii) any claim of any borrower with respect to the
existence of terms of a mortgage loan evidenced by the Lost Note on the
related property to the fact that the mortgage loan is not evidenced by
an original note and (iv) the issuance of a new instrument in lieu
thereof (items (i) through (iv) above hereinafter referred to as the
"Losses") and (b) if required by any Rating Agency in connection with
placing such Lost Note into a Pass-Through Transfer, shall obtain a
surety from an insurer acceptable to the applicable Rating Agency to
cover any Losses with respect to such Lost Note.
11. This Affidavit is intended to be relied upon by the Purchaser, its
successors and assigns. _____________________, a ______________
corporation represents and warrants that is has the authority to perform
its obligations under this Affidavit of Lost Note.
Executed this ____ day, of ___________ 199_.
SELLER
By:___________________________
Name:
Title:
On this ___ day of ________, 199_, before me appeared _________________
to me personally known, who being duly sworn did say that he is the
_____________________ of ____________________ a ______________ corporation and
that said Affidavit of Lost Note was signed and sealed on behalf of such
corporation and said acknowledged this instrument to be the free act and deed of
said corporation.
Signature:
[Seal]
Schedule 1
----------
MORTGAGE LOAN SCHEDULE
FILED BY PAPER
Schedule 2
SCHEDULE OF PREPAYMENT CHARGES
AVAILABLE UPON REQUEST
