EXHIBIT 4.1
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Relating to
CENTEX HOME EQUITY LOAN TRUST 2001-A
Among
CHEC FUNDING, LLC,
as Depositor,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Seller,
CHEC CONDUIT FUNDING, LLC,
as Conduit Seller,
XXXXXXX STREET FUNDING II, LLC,
as Conduit Seller II,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Servicer,
and
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
Dated as of March 1, 2001
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. Definitions..............................................................2
Section 1.02. Use of Words and Phrases................................................29
Section 1.03. Captions; Table of Contents.............................................30
Section 1.04. Opinions................................................................30
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. Establishment of the Trust..............................................31
Section 2.02. Office..................................................................31
Section 2.03. Purposes and Powers.....................................................31
Section 2.04. Appointment of the Trustee; Declaration of Trust........................31
Section 2.05. Expenses of the Trust...................................................31
Section 2.06. Ownership of the Trust..................................................32
Section 2.07. Situs of the Trust......................................................32
Section 2.08. Designation of Interests in REMICS......................................32
Section 2.09. Miscellaneous REMIC Provisions..........................................35
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR, THE SERVICER AND THE SELLER; COVENANT OF SELLER TO
CONVEY HOME EQUITY LOANS
Section 3.01. Representations and Warranties of the Depositor.........................37
Section 3.02. Representations and Warranties of the Servicer..........................39
Section 3.03. Representations and Warranties of the Sellers...........................41
Section 3.04. Covenants of Sellers to Take Certain Actions with Respect to the
Home Equity Loans in Certain Situations.................................44
Section 3.05. Sale Treatment of the Home Equity Loans and Qualified Replacement
Mortgages...............................................................54
Section 3.06. Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
Certification by Trustee................................................58
Section 3.07. Reserved................................................................60
Section 3.08. Custodian...............................................................60
Section 3.09. Cooperation Procedures..................................................60
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. Issuance of Certificates................................................61
Section 4.02. Sale of Certificates....................................................61
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. Terms...................................................................62
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Section 5.02. Forms...................................................................62
Section 5.03. Execution, Authentication and Delivery..................................62
Section 5.04. Registration and Transfer of Certificates...............................63
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates.......................65
Section 5.06. Persons Deemed Owners...................................................66
Section 5.07. Cancellation............................................................66
Section 5.08. Limitation on Transfer of Ownership Rights..............................66
Section 5.09. Assignment of Rights....................................................68
ARTICLE VI COVENANTS
Section 6.01. Distributions...........................................................69
Section 6.02. Money for Distributions to be Held in Trust; Withholding................69
Section 6.03. Protection of Trust Estate..............................................70
Section 6.04. Performance of Obligations..............................................71
Section 6.05. Negative Covenants......................................................71
Section 6.06. No Other Powers.........................................................72
Section 6.07. Limitation of Suits.....................................................72
Section 6.08. Unconditional Rights of Owners to Receive Distributions.................73
Section 6.09. Rights and Remedies Cumulative..........................................73
Section 6.10. Delay or Omission Not Waiver............................................73
Section 6.11. Control by Owners.......................................................73
Section 6.12. Indemnification by CHEC.................................................74
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. Collection of Money.....................................................75
Section 7.02. Establishment of Accounts...............................................75
Section 7.03. Flow of Funds...........................................................75
Section 7.04. Supplemental Interest Reserve Fund......................................79
Section 7.05. Investment of Accounts..................................................80
Section 7.06. Payment of Trust Expenses...............................................80
Section 7.07. Eligible Investments....................................................80
Section 7.08. Accounting and Directions by Trustee....................................82
Section 7.09. Reports by Trustee to Owners and Certificate Insurer....................83
Section 7.10. Reports by Trustee......................................................86
ARTICLE VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. Servicer and Sub-Servicers..............................................88
Section 8.02. Collection of Certain Home Equity Loan Payments.........................89
Section 8.03. Sub-Servicing Agreements Between Servicer and Sub-Servicers.............89
Section 8.04. Successor Sub-Servicers.................................................90
Section 8.05. Liability of Servicer; Indemnification..................................90
Section 8.06. No Contractual Relationship Between Sub-Servicer, Trustee or the
Owners..................................................................91
Section 8.07. Assumption or Termination of Sub-Servicing Agreement by Trustee.........91
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Section 8.08. Principal and Interest Account..........................................91
Section 8.09. Delinquency Advances and Servicing Advances.............................93
Section 8.10. Compensating Interest; Repurchase of Home Equity Loans..................94
Section 8.11. Maintenance of Insurance................................................95
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution Agreements.............96
Section 8.13. Realization Upon Defaulted Home Equity Loans; Workout of Home
Equity Loans............................................................97
Section 8.14. Trustee to Cooperate; Release of Files..................................98
Section 8.15. Servicing Compensation..................................................99
Section 8.16. Annual Statement as to Compliance......................................100
Section 8.17. Annual Independent Certified Public Accountants' Reports...............100
Section 8.18. Access to Certain Documentation and Information Regarding the
Home Equity Loans......................................................100
Section 8.19. Assignment of Agreement................................................101
Section 8.20. Removal of Servicer; Retention of Servicer; Resignation of Servicer....101
Section 8.21. Inspections by Certificate Insurer; Errors and Omissions Insurance.....106
Section 8.22. Additional Servicing Responsibilities for Second Mortgage Loans........106
Section 8.23. The Group II Home Equity Loans.........................................106
Section 8.24. Merger, Conversion, Consolidation or Succession to Business of
Servicer...............................................................107
Section 8.25. Notices of Material Events.............................................107
Section 8.26. Indemnification by the Servicer........................................108
Section 8.27. Reports on Foreclosure and Abandonment of Properties...................108
ARTICLE IX TERMINATION OF TRUST
Section 9.01. Termination of Trust...................................................109
Section 9.02. Termination Upon Option of the Owner of the Class X-IO Certificates....109
Section 9.03. Termination Upon Loss of REMIC Status..................................111
Section 9.04. Disposition of Proceeds................................................113
Section 9.05. Netting of Amounts.....................................................113
ARTICLE X THE TRUSTEE
Section 10.01. Certain Duties and Responsibilities....................................114
Section 10.02. Removal of Trustee for Cause...........................................116
Section 10.03. Certain Rights of the Trustee..........................................117
Section 10.04. Not Responsible for Recitals or Issuance of Certificates...............119
Section 10.05. May Hold Certificates..................................................119
Section 10.06. Money Held in Trust....................................................120
Section 10.07. Compensation and Reimbursement.........................................120
Section 10.08. Corporate Trustee Required; Eligibility................................120
Section 10.09. Resignation and Removal; Appointment of Successor......................121
Section 10.10. Acceptance of Appointment by Successor Trustee.........................122
Section 10.11. Merger, Conversion, Consolidation or Succession to Business of the
Trustee ...............................................................123
Section 10.12. Reporting; Withholding.................................................123
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Section 10.13. Liability of the Trustee...............................................124
Section 10.14. Appointment of Co-Trustee or Separate Trustee..........................124
Section 10.15. Appointment of Custodians..............................................125
ARTICLE XI MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions...................................127
Section 11.02. Form of Documents Delivered to the Trustee.............................127
Section 11.03. Acts of Owners.........................................................128
Section 11.04. Notices, etc. to Trustee..............................................128
Section 11.05. Notices and Reports to Owners; Waiver of Notices.......................129
Section 11.06. Rules by Trustee.......................................................129
Section 11.07. Successors and Assigns.................................................129
Section 11.08. Severability...........................................................130
Section 11.09. Benefits of Agreement..................................................130
Section 11.10. Legal Holidays.........................................................130
Section 11.11. Governing Law; Submission to Jurisdiction..............................130
Section 11.12. Counterparts...........................................................131
Section 11.13. Usury..................................................................131
Section 11.14. Amendment..............................................................131
Section 11.15. Paying Agent; Appointment and Acceptance of Duties.....................132
Section 11.16. REMIC Status...........................................................133
Section 11.17. Additional Limitation on Action and Imposition of Tax..................135
Section 11.18. Appointment of Tax Matters Person......................................135
Section 11.19. The Certificate Insurer................................................136
Section 11.20. Reserved...............................................................136
Section 11.21. Third Party Rights.....................................................136
Section 11.22. Notices................................................................136
Section 11.23. Rule 144A Information..................................................139
ARTICLE XII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. Trust Estate and Accounts Held for Benefit of the Certificate Insurer..140
Section 12.02. Claims Upon the Policies; Policy Payments Account......................140
Section 12.03. Effect of Payments by the Certificate Insurer; Subrogation.............141
Section 12.04. Notices to the Certificate Insurer.....................................142
Section 12.05. Third-Party Beneficiary................................................142
Section 12.06. Rights to the Certificate Insurer To Exercise Rights of Owners.........142
Section 12.07. Trustee to Hold the Certificate Insurance Policies.....................142
Section 12.08. Trustee to Act Solely with Consent of the Certificate Insurer..........142
SCHEDULE I-A SCHEDULE OF THE GROUP I HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF THE GROUP II HOME EQUITY LOANS
SCHEDULE I-C SELLER SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-D CONDUIT SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-E CONDUIT II SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-F INVESTMENT INSTRUCTIONS TO TRUSTEE
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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 B FORM OF CLASS X-IO CERTIFICATE
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF CERTIFICATE RE: HOME EQUITY LOANS PREPAID IN
FULL AFTER THE CUT-OFF DATE
EXHIBIT E-1 FORM OF TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
EXHIBIT E-2 FORM OF CUSTODIAN'S ACKNOWLEDGEMENT OF RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT I-1 FORM OF CERTIFICATE REGARDING TRANSFER (ACCREDITED INVESTOR)
EXHIBIT I-2 FORM OF CERTIFICATE OF TRANSFER (RULE 144A)
EXHIBIT J HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
EXHIBIT K DEFINITION OF GROUP II TARGET OVERCOLLATERALIZATION AMOUNT
EXHIBIT L DEFINITION OF GROUP I TARGET OVERCOLLATERALIZATION AMOUNT
EXHIBIT M FORM OF LETTER REGARDING REPORTING OBLIGATIONS
UNDER THE SECURITIES EXCHANGE ACT OF 1934
EXHIBIT N FORM OF LIQUIDATION REPORT
EXHIBIT O FORM OF REQUEST FOR RELEASE OF DOCUMENTS
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POOLING AND SERVICING AGREEMENT, relating to CENTEX HOME EQUITY LOAN TRUST
2001-A, dated as of March 1, 2001 by and among CHEC FUNDING, LLC, a Delaware
limited liability company, in its capacity as the depositor (the "Depositor"),
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION, a Nevada
corporation ("CHEC") in its capacities as the seller (in such capacity, the
"Seller") and as the servicer (in such capacity, the "Servicer"), CHEC CONDUIT
FUNDING, LLC, a Delaware limited liability company (the "Conduit Seller"),
XXXXXXX STREET FUNDING II, LLC, a Delaware limited liability company (the
"Conduit Seller II"; together with the Conduit Seller, the "Conduit Sellers";
and together with Seller, the "Sellers") and BANK ONE, NATIONAL ASSOCIATION, a
national banking association, in its capacity as the trustee (the "Trustee").
WHEREAS, the Seller wishes to establish a trust and two subtrusts and
provide for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Seller and the Conduit Sellers wish to sell to the Depositor,
the Depositor wishes to purchase from the Seller and the Conduit Sellers and to
sell to the Trustee, and the Trustee wishes to purchase, the Home Equity Loans;
WHEREAS, the Servicer has agreed to service the Home Equity Loans, which
constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed and
authenticated by the Trustee, valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done;
WHEREAS, Bank One, National Association is willing to serve in the
capacity of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer") is
intended to be a third-party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Depositor, the Sellers, the Servicer, and the Trustee
hereby agree as follows:
CONVEYANCE
The Seller with respect to the Seller Home Equity Loans, the Conduit
Seller with respect to the Conduit Home Equity Loans, and the Conduit Seller II
with respect to the Conduit II Home Equity Loans each hereby bargains, sells,
conveys, assigns and transfers to the Depositor, in trust, without recourse and
for the exclusive benefit of the Owners of the Certificates and the Certificate
Insurer, all of its right, title and interest in and to (a) all principal
collected and interest due on the Home Equity Loans on and after the Cut-Off
Date and any and all other benefits accruing from the Home Equity Loans which
the Depositor is causing to be delivered to the Custodian on behalf of the
Trustee herewith, together with the related Home Equity Loan
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documents and the Depositor's interest in any Property, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing; and
(b) proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified herein (the "Home Equity Loan Assets").
The Depositor, concurrently with the execution and delivery hereof, hereby
sells, transfers, assigns, sets over and otherwise conveys to the Trustee for
the benefit of the Owners of the Certificates and the Certificate Insurer,
without recourse, all the right, title and interest of the Depositor in and to
the Trust Estate.
In addition to the foregoing, the Depositor shall cause the Certificate
Insurer to deliver two Certificate Insurance Policies to the Trustee for the
benefit of the Owners of the Class A Certificates.
The Trustee acknowledges such sale, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform the duties herein in
accordance with the provisions of the Operative Documents.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02, 8.08
or 12.02 hereof.
"Adjusted Certificate Rate": As of any date of determination thereof, a
rate equal to the sum of (a) the Weighted Average Certificate Rate and (b) any
portion of the Premium Amount (calculated as a percentage of the then
outstanding principal amount of the Class A Certificates) and the Trustee Fee
(calculated as a percentage of the outstanding Loan Balances as of the first day
of the related Remittance Period) in each case then accrued and outstanding.
"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.
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"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of the calendar
month of each Remittance Period for the twelve immediately preceding Remittance
Periods and the denominator of which is the aggregate of the Loan Balances as of
the Cut-Off Date.
"Appraised Value": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
or, in the case of a Home Equity Loan which is a purchase money mortgage, the
sales price of the Property, if such sales price is less than such appraised
value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Sellers and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, Assistant Secretary or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and having direct responsibility for the
administration of this Agreement or any other officers of the Trustee to whom a
matter arising under this Agreement may be referred.
"Available Funds": As to each Home Equity Loan Group and Distribution
Date, the amount on deposit in the Certificate Account with respect to such Home
Equity Loan Group on the Distribution Date, disregarding the amounts of any
Insured Payments to be made on the Distribution Date.
"Available Funds Shortfall": As to each Home Equity Loan Group and
Distribution Date, an amount equal to the excess, if any, of (x) the aggregate
of the amounts required to be distributed pursuant to clauses (ii) and (iii) of
Section 7.03(b) over (y) the Available Funds for such payments for such related
Home Equity Loan Group and Distribution Date.
"Business Day": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in New York, New York, Dallas, Texas, the city
in which the Corporate Trust Office is located or the city in which the
Certificate Insurer is located or, with respect to the obligations of the
Custodian hereunder, the State of California, are authorized or obligated by law
or executive order to be closed.
"Carry-Forward Amount": With respect to any Class of Class A Certificates
and any Distribution Date, an amount equal to the sum of (1) the amount, if any,
by which (x) the Current Interest for such Class for the immediately preceding
Distribution Date exceeded (y) the amount of the actual distribution made to
Owners of such Class with respect to interest on such Class on
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the immediately preceding Distribution Date and (2) interest on such excess for
the related Interest Period at the related Certificate Rate for the Class of
Class A Certificates.
"Certificate": Any one of the Class A Certificates, the Class X-IO
Certificates or the Class R Certificates, each representing the interests and
the rights described in this Agreement.
"Certificate Account": The segregated certificate account established in
accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "Bank One, National Association, as Trustee on behalf of the
Owners of the Centex Home Equity Loan Trust 2001-A, Centex Home Equity Loan
Asset-Backed Certificates." The Certificate Account shall be an Eligible
Account.
"Certificate Insurance Policies": The Certificate Guaranty Insurance
Policies (numbers: 34656 and 34657) dated March 15, 2001 with respect to the
Class A Certificates and all endorsements thereto, issued by the Certificate
Insurer for the benefit of the Owners of the Class A Certificates.
"Certificate Insurer": MBIA Insurance Corporation, a stock insurance
company organized under the laws of the State of New York and any successor
thereto.
"Certificate Insurer Default": The existence and continuance of any of the
following:
(a) the Certificate Insurer fails to make a payment required under
either of the Certificate Insurance Policies in accordance with their terms; or
(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance law or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Certificate Insurer or for all or any material portion
of its property or (ii) authorizing the taking of possession by a custodian,
trustee, agent, or receiver of the Certificate Insurer or of all or any material
portion of its property.
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"Certificate Principal Balance": As of the Startup Day as to each of the
following Classes of Class A Certificates, the principal balances thereof, as
follows:
Class A-l Certificates - $133,000,000
Class A-2 Certificates - $59,000,000
Class A-3 Certificates - $70,000,000
Class A-4 Certificates - $80,000,000
Class A-5 Certificates - $41,300,000
Class A-6 Certificates - $43,000,000
Class A-7 Certificates - $48,700,000
As of any time of determination after the Startup Day, with respect to a
Class of Class A Certificates, the Certificate Principal Balance of such Class
as of the Startup Day less the aggregate of all amounts actually distributed to
such Class in reduction of such Class' Certificate Principal Balance pursuant to
Section 7.03 hereof on all prior Distribution Dates; provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Certificate Principal Balance of a Class shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
The Class X-IO Certificates and the Class R Certificates do not have a
Certificate Principal Balance.
"Certificate Rate": Any of the Class A-1 Certificate Rate, the Class A-2
Certificate Rate, the Class A-3 Certificate Rate, the Class A-4 Certificate
Rate, the Class A-5 Certificate Rate, the Class A-6 Certificate Rate or the
Class A-7 Certificate Rate.
"CHEC": Centex Credit Corporation d/b/a Centex Home Equity Corporation.
"Civil Relief Act Interest Shortfalls": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Remittance
Period as a result of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, the amount, if any, by which (i) interest collectible on such Home
Equity Loans during the most recently ended Remittance Period is less than (ii)
interest accrued thereon for such Remittance Period pursuant to the Note at the
related Coupon Rate.
"Class": Any class of the Class A Certificates or the Class X-IO
Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Group I Certificates or Group II
Certificates.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-l Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each
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evidencing an interest designated as a "regular interest" in REMIC I created
hereunder for purposes of the REMIC Provisions.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"Class A-7 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"Class A-1 Certificate Rate": With respect to any Distribution Date and
the Class A-1 Certificates, 5.64% per annum.
"Class A-2 Certificate Rate": With respect to any Distribution Date and
the Class A-2 Certificates, 5.61% per annum.
"Class A-3 Certificate Rate": With respect to any Distribution Date and
the Class A-3 Certificates, 5.93% per annum.
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"Class A-4 Certificate Rate": With respect to any Distribution Date and
the Class A-4 Certificates, 6.47% per annum.
"Class A-5 Certificate Rate": With respect to any Distribution Date and
the Class A-5 Certificates, the lesser of (A) 6.80% per annum (or 7.30% per
annum for each Interest Period occurring after the Clean-Up Call Date) and (B)
the Group I Net WAC Cap for the Distribution Date.
"Class A-6 Certificate Rate": With respect to any Distribution Date and
the Class A-6 Certificates, the lesser of (A) 6.25% per annum and (B) the Group
I Net WAC Cap for the Distribution Date.
"Class A-6 Calculation Percentage": For any Distribution Date will be the
fraction, expressed as a percentage, the numerator of which is the Certificate
Principal Balance of the Class A-6 Certificates, and the denominator of which is
the total of the Certificate Principal Balances of the Group I Certificates, in
each case before giving effect to any distributions in reduction of the
Certificate Principal Balances of the Group I Certificates pursuant to Section
7.03 hereof.
"Class A-6 Lockout Distribution Amount": For any Distribution Date will be
an amount equal to the product of (1) the applicable Class A-6 Lockout
Percentage for the Distribution Date, (2) the Class A-6 Calculation Percentage
and (3) the Class A Principal Distribution Amount available for distribution
with respect to the Group I Certificates for the Distribution Date. In no event
shall the Class A-6 Lockout Distribution Amount exceed the outstanding
Certificate Principal Balance of the Class A-6 Certificates or the Class A
Principal Distribution Amount available for distribution applicable to the Group
I Certificates for the Distribution Date.
"Class A-6 Lockout Percentage": For each Distribution Date will be as
follows:
Distribution Date Lockout Percentage
----------------- ------------------
April 2001 through March 2004 0%
April 2004 through March 2006 45%
April 2006 through March 2007 80%
April 2007 through March 2008 100%
April 2008 and thereafter 300%
"Class A-7 Available Funds Cap": With respect to any Interest Period and
the related Distribution Date will be a rate per annum equal to the fraction,
expressed as a percentage, the numerator of which is the product of (a) the
weighted average of the Net Coupon Rates (minus the Minimum Spread) on the Group
II Home Equity Loans as of the beginning of the related Remittance Period and
(b) the aggregate Loan Balance of the Group II Home Equity Loans as of the
beginning of the related Remittance Period, and the denominator of which is the
outstanding Certificate Principal Balance of the Class A-7 Certificates (before
giving effect to payments of principal on the Distribution Date) (adjusted to an
effective rate, calculated by multiplying such fraction by 30 and dividing by
the actual number of days elapsed in the related Interest Period, reflecting
accrued interest calculated on the basis of a 360-day year and the actual number
of days elapsed).
7
"Class A-7 Certificateholders' Interest Index Carryover": The sum of (A)
the excess of (1) the amount of interest the Class A-7 Certificates would
otherwise be entitled to receive on the Distribution Date had the Class A-7
Certificate Rate been calculated at the Class A-7 Formula Rate for the
Distribution Date over (2) the amount of interest payable on the Class A-7
Certificates at the Class A-7 Available Funds Cap for the Distribution Date and
(B) the Class A-7 Certificateholders' Interest Index Carryover for all previous
Distribution Dates not previously paid to Class A-7 Certificateholders
(including any interest accrued thereon at the Class A-7 Formula Rate).
"Class A-7 Certificate Rate": With respect to any Distribution Date and
the Class A-7 Certificates, the lesser of (A) the Class A-7 Formula Rate and (B)
the Class A-7 Available Funds Cap for the Distribution Date.
"Class A-7 Formula Rate": For any Distribution Date is the sum of (1)
LIBOR and (2) 0.24% per annum (or 0.48% per annum for each Interest Period
occurring after the Clean-Up Call Date).
"Class A Distribution Amount": For each Home Equity Loan Group and
Distribution Date shall be the sum of (x) Current Interest for the Class A
Certificates related to the Home Equity Loan Group and (y) the Class A Principal
Distribution Amount for the Home Equity Loan Group and all other amounts
distributed in reduction of the Certificate Principal Balances of the related
Class A Certificates pursuant to Section 7.03(b) hereof.
"Class A Principal Distribution Amount": With respect to the Class A
Certificates of the related Home Equity Loan Group and each Distribution Date
shall equal the excess, if any, of
(1) the sum of (without duplication):
(A) the principal portion of all scheduled monthly payments on
the Home Equity Loans related to the Home Equity Loan Group actually
received by the Servicer during the related Remittance Period and
any Prepayments on the Home Equity Loans made by the Mortgagors of
Home Equity Loans in the related Home Equity Loan Group and actually
received by the Servicer during the related Remittance Period in
each case to the extent the amounts are received by the Trustee on
or prior to the Monthly Remittance Date;
(B) the outstanding principal balance of each Home Equity Loan
in the related Home Equity Loan Group that was repurchased by the
Seller or purchased by the Servicer on or prior to the related
Monthly Remittance Date in each case to the extent the amounts are
received by the Trustee on or prior to the Monthly Remittance Date;
(C) any Substitution Amounts relating to principal, delivered
by the Seller on the related Monthly Remittance Date in connection
with a substitution of a Home Equity Loan in the related Home Equity
Loan Group;
(D) all Net Liquidation Proceeds actually collected by or on
behalf of the Servicer with respect to the Home Equity Loans in the
related Home Equity Loan
8
Group during the related Remittance Period (to the extent the Net
Liquidation Proceeds relate to principal) in each case to the extent
the amounts are received by the Trustee on or prior to the Monthly
Remittance Date;
(E) the amount of any Collateralization Deficit with respect
to the related Home Equity Loan Group for the Distribution Date; and
(F) the principal portion of the proceeds received by the
Trustee with respect to the related Home Equity Loan Group upon
termination of the Trust (to the extent the proceeds relate to
principal); over
(2) the amount of any Overcollateralization Release Amount with
respect to the related Home Equity Loan Group for the Distribution Date;
provided, however, on the Distribution Date occurring in April 2031, the
Class A Principal Distribution Amount payable to any outstanding Class of
Class A Certificates shall be no less than the Certificate Principal
Balance for such Class of Class A Certificates.
"Class R Certificate": Any one of the Certificates designated on the face
thereof as a Class R Certificate, substantially in the form annexed hereto as
Exhibit C, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein. The Class R Certificate shall evidence (i) an
interest designated as the Class R-1 Certificate which is the "residual
interest" in REMIC I and (ii) an interest designated as the Class R-2
Certificate which is the "residual interest" in REMIC II for the purposes of the
REMIC Provisions. The Owner of the Class R Certificate shall be entitled to
separate such Certificate into its component Class R-1 and Class R-2 Certificate
parts, as further described in the Class R Certificate attached hereto as
Exhibit C.
"Class X-IO Certificate": Any one of the Certificates designated on the
face thereof as a Class X-IO Certificate, substantially in the form annexed
hereto as Exhibit B, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein, and evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for the purposes
of the REMIC Provisions.
"Class X-IO Distribution Amount": With respect to any Distribution Date,
the lesser of (i) the aggregate Available Funds, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
7.03(b)(i) through 7.03(b)(viii) hereof and (ii) the sum of the amounts
described in footnotes (5) and (6) of Section 2.08(b) for the current and for
all prior Distribution Dates less amounts distributed to the Class X-IO
Certificates on prior Distribution Dates (including amounts described in Section
7.03(b)(ix)).
"Clean-Up Call Date": The first Distribution Date following the last day
of the Remittance Period on which the aggregate Loan Balance of all the Home
Equity Loans has declined to less than 20% of the aggregate Loan Balance of the
Home Equity Loans as of the Cut-Off Date.
"Closing": As defined in Section 4.02 hereof.
9
"Code": The Internal Revenue Code of 1986, as amended.
"Collateralization Deficit": With respect to either Home Equity Loan Group
and any Distribution Date, the amount, if any, by which (x) the related
aggregate of the Certificate Principal Balances with respect to such Home Equity
Loan Group, after taking into account the payment of all distributions with
respect to such Home Equity Loan Group on such Distribution Date (without regard
to any Insured Payment to be made on such Distribution Date in respect of any
Collateralization Deficit and except for any distributions in respect of the
Collateralization Deficit with respect to such Home Equity Loan Group), exceeds
(y) the aggregate Loan Balances of the Home Equity Loans in such Home Equity
Loan Group as of the close of business on the last day of the related Remittance
Period.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Conduit Home Equity Loans": The home equity loans listed on the Conduit
Schedule of Home Equity Loans.
"Conduit II Home Equity Loans": The home equity loans listed on the
Conduit II Schedule of Home Equity Loans.
"Conduit Schedule of Home Equity Loans": The Schedule of Home Equity Loans
attached as Schedule I-D hereto.
"Conduit II Schedule of Home Equity Loans": The Schedule of Home Equity
Loans attached as Schedule I-E hereto.
"Conduit Seller": CHEC Conduit Funding, LLC, a Delaware limited liability
company.
"Conduit Sellers": The Conduit Seller and Conduit Seller II.
"Conduit Seller II": Xxxxxxx Street Funding II, LLC, a Delaware limited
liability company.
"Conduit Servicer": CHEC in its capacity as servicer with respect to the
Conduit Warehousing Facility.
"Conduit Servicer II": CHEC in its capacity as servicer with respect to
the Conduit II Warehousing Facility.
"Conduit Servicers": The Conduit Servicer and Conduit Servicer II.
"Conduit Warehousing Facility": The Purchase Agreement dated November 16,
1999 among CHEC Conduit Funding, LLC, Centex Credit Corporation, Citibank, N.A.,
certain investors, Citicorp North America, Inc., as Investor Agent, Credit
Lyonnais New York Branch, as Investor Agent, and BMO Xxxxxxx Xxxxx Corp., as
Investor Agent, and Citicorp North America, Inc., as Agent, as amended.
10
"Conduit II Warehousing Facility": The Mortgage Loan Purchase and
Servicing Agreement dated February 6, 2001 among Xxxxxxx Street Funding II, LLC,
Centex Credit Corporation d/b/a Centex Home Equity Corporation and Centex
Corporation, as amended.
"Corporate Trust Office": The principal office of the Trustee at 1 Bank
Xxx Xxxxx, Xxxxx XX0-0000, Xxxxxxx, Xxxxxxxx 00000-0000, Attn: Global Corporate
Trust Services (as of the Startup Day), or at such other address as the Trustee
may designate by notice to the Depositor, the Seller, the Servicer, the Owners
and the Certificate Insurer, or the principal office of any successor Trustee
hereunder.
"Coupon Rate": The rate of interest borne by each Note from time to time.
"Cram Down Loss": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance of such Home Equity Loan, the amount of such
reduction. A "Cram Down Loss" shall be deemed to have occurred on the date of
issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof, the
aggregate of all Realized Losses since the Startup Day as a percentage of the
Original Aggregate Loan Balance.
"Current Interest": With respect to each Class of Class A Certificates
means, with respect to any Distribution Date: (1) the aggregate amount of
interest accrued during the related Interest Period at the related Certificate
Rate on the Certificate Principal Balance of the Class of Class A Certificates
plus (2) the Carry-Forward Amount, if any, with respect to the Class of Class A
Certificates; provided, however, that with respect to each Class of Class A
Certificates, the amount described in clause (1) above will be reduced by the
Class' pro rata share of any Civil Relief Act Interest Shortfalls (based on the
amount of interest otherwise due to such Class for such Interest Period)
relating to such Home Equity Loan Group during the related Remittance Period.
"Current WAC Excess": With respect to any Distribution Date, the portion
of Current Interest being distributed with respect to the Class A-7 Certificates
equal to interest accrued thereon at a rate equal to the excess of the Class A-7
Certificate Rate over the Group II Net WAC Cap.
"Custodial Agreement": The Custodial Agreement dated as of March 1, 2001
between the Custodian, the Servicer and the Trustee.
"Custodian": Bank One Trust Company, N.A., as Custodian on behalf of the
Trustee pursuant to the Custodial Agreement and any successor Custodian.
"Cut-Off Date": The later of (i) the opening of business on March 1, 2001
and (ii) the date of origination with respect to a Home Equity Loan, but in no
event later than the Startup Day.
"Deficiency Amount": Means, as of any Distribution Date, the excess, if
any, of (a) the sum of (1) the Current Interest for the related Class A
Certificates for the Distribution Date and
11
(2) the Group I Guaranteed Principal Amount or the Group II Guaranteed Principal
Amount, as applicable, for the Distribution Date over (b) the related Total
Available Funds for such Distribution Date (net of the Premium Amount, the
Trustee Fee and Transition Expenses, if any, of the related Home Equity Loan
Group and after giving effect to the cross-collateralization provisions of this
Agreement).
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date. A Home Equity Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit G
hereto and delivered by the Depositor to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"Depositor": CHEC Funding, LLC, a Delaware limited liability company, or
any successor thereto.
"Depository": The Depository Trust Company, 0 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, 00000, and any successor Depository.
"Designated Depository Institution": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer, acting in its fiduciary capacity, having combined capital and surplus
of at least $100,000,000; provided, however, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A" by Standard & Poor's and "A2" by Xxxxx'x
and if rated by Fitch, "A" by Fitch and (ii) the Servicer shall provide the
Trustee and the Certificate Insurer with a statement, which the Trustee will
send to the Owners, identifying the location and account information of the
Principal and Interest Account upon a change in the location of such account.
"Determination Date": The 15th day of each month, or if such day is not a
Business Day, the preceding Business Day, commencing in April 2001.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
12
"Distribution Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day. The first Distribution Date will be April
25, 2001.
"Due Date": With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Note exclusive of any days of grace.
"Eligible Account": Either (A) a segregated account or accounts maintained
with an institution whose deposits are insured by the FDIC, the unsecured and
uncollateralized debt obligations of which institution shall be rated AA or
higher by Standard & Poor's and, in the case of any institution other than Bank
One, National Association, Aa2 or higher by Xxxxx'x (in the case of its
long-term obligations), and if rated by Fitch, A- or F1 or higher by Fitch, and
in the highest short term rating category by each of Standard & Poor's and
Xxxxx'x and if rated by Fitch, Fitch (in the case of its short-term
obligations), and which is (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, (iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer and each of the Rating Agencies or (B) a
segregated trust account or accounts maintained with the Corporate Trust Office
of the Trustee, or the trust department of a federal or state chartered
depository institution acceptable to each Rating Agency and the Certificate
Insurer, having capital and surplus of not less than $100,000,000, acting in its
fiduciary capacity.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Extra Principal Distribution Amount": Means as to either the Group I or
Group II Certificates and any Distribution Date, the lesser of (1) the related
Target Deficiency and (2) the related Net Monthly Excess Cashflow.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Custodian on behalf of the Trustee
pursuant to Section 3.05(b) hereof pertaining to a particular Home Equity Loan
and any additional documents required to be added to the File pursuant to this
Agreement.
"Final Certification": As defined in Section 3.06(c) hereof.
"Final Determination": As defined in Section 9.03(a) hereof.
13
"Final Recovery Determination": With respect to any defaulted Home Equity
Loan or REO Property (other than a Home Equity Loan purchased by the Seller, the
Depositor or the Servicer), a determination made by the Servicer that all
recoveries which the Servicer, in its reasonable business judgment, expects to
be finally recoverable in respect thereof have been so recovered or that the
Servicer believes in its reasonable business judgment the cost of obtaining any
additional recoveries therefrom would exceed the amount of such recoveries. The
Servicer shall maintain records of each Final Recovery Determination.
"Final Scheduled Distribution Date": As set out in Section 2.08(c) hereof
with respect to each Class A Certificate.
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"Fitch": Fitch, Inc. or any successor thereto.
"Fixed Rate Certificates": Any of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and Class A-6 Certificates.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
"FNMA Guide": FNMA's Servicing Guide, as the same may be amended by FNMA
from time to time.
"Group I": With respect to the Home Equity Loans, the pool of Home Equity
Loans identified in the related Schedule of Home Equity Loans as having been
assigned to Group I in Schedule I-A hereto, including any Qualified Replacement
Mortgages delivered in replacement thereof. Group I refers, with respect to the
Conduit Home Equity Loans, to the Home Equity Loans listed in the Conduit
Schedule of Home Equity Loans that are also assigned to Group I in Schedule I-A
hereto, and with respect to the Seller Home Equity Loans, to the Home Equity
Loans listed in the Seller Schedule of Home Equity Loans that are also assigned
to Group I in Schedule I-A hereto.
"Group I Certificates": Any of the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the Class
A-5 Certificates and the Class A-6 Certificates.
"Group I Guaranteed Principal Amount": Means (a) with respect to any
Distribution Date other than the Distribution Date in April 2031, the
Collateralization Deficit with respect to Group I for the Distribution Date and
(b) with respect to the Distribution Date in April 2031, the aggregate of the
Certificate Principal Balances of the Group I Certificates after giving effect
to distributions thereon on the Distribution Date (including Insured Payments
distributed in respect of clause (a) above but excluding any other Insured
Payment).
"Group I Monthly Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest received (including any
Delinquency Advances) during the
14
related Remittance Period with respect to the Home Equity Loans in Group I (net
of the Group I Servicing Fee), (ii) all Compensating Interest paid by the
Servicer on such Monthly Remittance Date with respect to Group I, (iii) the
portion of the Loan Purchase Price amounts and Substitution Amounts relating to
interest on the Home Equity Loans in Group I paid by CHEC on or prior to such
Monthly Remittance Date, (iv) the interest portion of all Net Liquidation
Proceeds actually collected by the Servicer with respect to the Home Equity
Loans in Group I during the related Remittance Period, (v) the principal
actually collected by the Servicer with respect to Home Equity Loans in Group I
during the related Remittance Period, (vi) the outstanding principal balance of
each Home Equity Loan in Group I that was purchased from the Trustee on or prior
to such Monthly Remittance Date, to the extent such outstanding principal
balance was actually deposited in the Principal and Interest Account on or prior
to such Monthly Remittance Date, (vii) any Substitution Amounts relating to
principal delivered by CHEC in connection with a substitution of a Home Equity
Loan in Group I, to the extent such Substitution Amounts were actually deposited
in the Principal and Interest Account on or prior to such Monthly Remittance
Date, (viii) the principal portion of all Net Liquidation Proceeds actually
collected by the Servicer with respect to Home Equity Loans in Group I during
the related Remittance Period (to the extent such Net Liquidation Proceeds
related to principal) and (ix) the amount of investment losses required to be
deposited pursuant to Section 8.08(b).
"Group I Net WAC Cap": With respect to any Distribution Date, a rate per
annum equal to the weighted average of the Net Coupon Rates on the Group I Home
Equity Loans as of the beginning of the related Remittance Period.
"Group II": With respect to the Home Equity Loans, the pool of Home Equity
Loans identified in the related Schedule of Home Equity Loans as having been
assigned to Group II in Schedule I-B hereto, including any Qualified Replacement
Mortgages delivered in replacement thereof. Group II refers, with respect to the
Conduit Home Equity Loans, to the Home Equity Loans listed in the Conduit
Schedule of Home Equity Loans that are also assigned to Group II in Schedule I-B
hereto; and with respect to the Seller Home Equity Loans, to the Home Equity
Loans listed in the Seller Schedule of Home Equity Loans that are also assigned
to Group II in Schedule I-B hereto.
"Group II Certificates": The Class A-7 Certificates.
"Group II Guaranteed Principal Amount": Means (a) with respect to any
Distribution Date other than the Distribution Date in April 2031, the
Collateralization Deficit with respect to Group II for the Distribution Date and
(b) with respect to the Distribution Date in April 2031, the Certificate
Principal Balance of the Group II Certificates after giving effect to
distributions thereon on the Distribution Date (including Insured Payments
distributed in respect of clause (a) above but excluding any other Insured
Payment).
"Group II Monthly Remittance Amount": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest received (including any
Delinquency Advances) during the related Remittance Period with respect to the
Home Equity Loans in Group II (net of the Group II Servicing Fee), (ii) all
Compensating Interest paid by the Servicer on such Monthly Remittance Date with
respect to Group II, (iii) the portion of the Loan Purchase Price amounts and
Substitution Amounts relating to interest on the Home Equity Loans in Group II
paid by
15
CHEC on or prior to such Monthly Remittance Date, (iv) the interest portion of
all Net Liquidation Proceeds actually collected by the Servicer with respect to
the Home Equity Loans in Group II during the related Remittance Period, (v) the
principal actually collected by the Servicer with respect to Home Equity Loans
in Group II during the related Remittance Period, (vi) the outstanding principal
balance of each Home Equity Loan in Group II that was purchased from the Trustee
on or prior to such Monthly Remittance Date, to the extent such outstanding
principal balance was actually deposited in the Principal and Interest Account
on or prior to such Monthly Remittance Date, (vii) any Substitution Amounts
relating to principal delivered by CHEC in connection with a substitution of a
Home Equity Loan in Group II, to the extent such Substitution Amounts were
actually deposited in the Principal and Interest Account on or prior to such
Monthly Remittance Date, (viii) the principal portion of all Net Liquidation
Proceeds actually collected by the Servicer with respect to Home Equity Loans in
Group II during the related Remittance Period (to the extent such Net
Liquidation Proceeds related to principal) and (ix) the amount of investment
losses required to be deposited pursuant to Section 8.08(b).
"Group II Net WAC Cap": With respect to any Distribution Date will be the
rate per annum equal to the product of (i) the weighted average Net Coupon Rates
of the Group II Home Equity Loans as of the beginning of the related Remittance
Period minus the Minimum Spread and (ii) a fraction, the numerator of which is
30, and the denominator of which is the actual number of days in the related
Interest Period.
"Highest Lawful Rate": As defined in Section 11.13 hereof.
"Home Equity Loan Assets": The meaning set forth under the heading
"CONVEYANCE" herein.
"Home Equity Loan Group" or "Group": Group I or Group II, as the case may
be. References herein to the related Class of Class A Certificates, when used
with respect to a Home Equity Loan Group, shall mean (A) in the case of Group I,
the Group I Certificates and (B) in the case of Group II, the Group II
Certificates.
"Home Equity Loans": The Conduit Home Equity Loans, the Conduit II Home
Equity Loans and/or the Seller Home Equity Loans, as applicable, together with
any Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate. Where
applicable, the term "Home Equity Loan" includes (i) the terms "First Mortgage
Loan" and "Second Mortgage Loan", and (ii) any Home Equity Loan which is
Delinquent, relates to a foreclosure or relates to a Property which is REO
Property prior to such REO Property's disposition by the Trust. Any home equity
loan which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the Depositor, in fact
was not transferred and assigned to the Trust for any reason whatsoever,
including, without limitation, the incorrectness of the statement set forth in
Section 3.04(b)(x) hereof with respect to such home equity loan, shall
nevertheless be considered a "Home Equity Loan" for all purposes of this
Agreement.
"Indemnification Agreement": The Indemnification Agreement dated as of
March 8, 2001 among the Certificate Insurer, the Seller and the Underwriters.
16
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Insurance Agreement": The Insurance Agreement dated as of March 1, 2001
among the Depositor, CHEC, the Trustee and the Certificate Insurer, as it may be
amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage insurance
policy relating to a Home Equity Loan plus any amount remitted under Section
8.11 hereof.
"Insured Payment": Means (a) as of any Distribution Date, any Deficiency
Amount and (b) any Preference Amount.
"Interest Period": With respect to each Distribution Date and (i) the
Fixed Rate Certificates, the period from the first day of the calendar month
preceding the month of the Distribution Date through the last day of the
calendar month with interest accruing on the basis of a 360-day year consisting
of twelve 30-day months; and (ii) the Variable Rate Certificates, the period
from and including the preceding Distribution Date (or the Startup Day in the
case of the first Distribution Date) to and including the day preceding the
related Distribution Date with interest accruing on the basis of the actual
number of days elapsed in the related Interest Period and a year of 360 days.
"Late Payment Rate": As defined in the Insurance Agreement.
"LIBOR": With respect to any Interest Period for the Class A-7
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loans to leading European banks.
"LIBOR Determination Date": With respect to any Interest Period for the
Class A-7 Certificates, the second London Business Day preceding the
commencement of such Interest Period (or in the case of the initial Interest
Period, March 13, 2001).
"Liquidated Loan": A Home Equity Loan as to which a Final Recovery
Determination has been made.
17
"Liquidation Proceeds": With respect to any Liquidated Loan, all amounts
(including the proceeds of any Insurance Policy) recovered by the Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any date
of determination, the actual outstanding principal balance thereof on the
Cut-Off Date or relevant Replacement Cut-Off Date with respect to a Qualified
Replacement Mortgage less any principal payments relating to such Home Equity
Loan included in previous Monthly Remittance Amounts, provided, however, that
the Loan Balance for any Home Equity Loan that has become a Liquidated Loan
shall be zero as of the first day of the Remittance Period following the
Remittance Period in which such Home Equity Loan becomes a Liquidated Loan, and
at all times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased from
the Trust on or prior to a Monthly Remittance Date pursuant to Section 3.04,
3.06(b) or 8.10(b) hereof, an amount equal to the outstanding principal balance
of such Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus all accrued and unpaid interest on such Home Equity
Loan at the Coupon Rate to but not including the date of such purchase together
with (without duplication) the aggregate amounts of (i) all unreimbursed
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan, (ii) all Delinquency Advances which the Servicer has
theretofore failed to remit with respect to such Home Equity Loan and (iii) all
reimbursed Delinquency Advances and Servicing Advances to the extent that
reimbursement is not made from the Mortgagor.
"Loan-to-Value Ratio": As of any particular date (i) with respect to any
First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien relating to such Second Mortgage Loan as of the date
of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"London Business Day": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"Manufactured Home": A unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Mortgagor under the related
Home Equity Loan treated as real estate under applicable state law.
"Maximum Rate": With respect to any Home Equity Loan in Group II, means
the maximum rate at which interest may accrue on such Home Equity Loan.
"Minimum Spread": A percentage per annum equal to 0% for Distribution
Dates which occur prior to April 2002 and 0.50% for Distribution Dates which
occur in April 2002 or thereafter.
18
"Monthly Payment": With respect to any Home Equity Loan and any Remittance
Period, the payment of principal, if any, and interest due on the Due Date in
such Remittance Period pursuant to the related Note.
"Monthly Remittance Amount": The sum of the Group I Monthly Remittance
Amount and the Group II Monthly Remittance Amount.
"Monthly Remittance Date": The 18th day of each month, or if the 18th day
is not a Business Day, the preceding Business Day.
"Moody's": Xxxxx'x Investors Service, Inc. or any successor thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgagor": Each obligor on a Note.
"Net Coupon Rate": With respect to any Home Equity Loan in Group I or
Group II, means a rate per annum equal to the Coupon Rate of such Home Equity
Loan minus the sum of (i) the rate at which the Servicing Fee accrues, (ii) the
rate at which the Trustee Fee accrues and (iii) the applicable Premium Amount
(expressed as a per annum percentage of the aggregate Loan Balance of the Home
Equity Loans in Group I or Group II, as applicable).
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of such Home Equity Loan
and unreimbursed Delinquency Advances relating to such Home Equity Loan. In no
event shall Net Liquidation Proceeds with respect to any Liquidated Loan be less
than zero.
"Net Monthly Excess Cashflow": With respect to each Home Equity Loan Group
and Distribution Date, the Available Funds remaining for such Home Equity Loan
Group, if any, after the application of clauses (i) through (vi) of Section
7.03(b).
"90-Day Delinquent Loan": With respect to any Determination Date, (i) all
REO Properties and (ii) each Home Equity Loan with respect to which any portion
of a Monthly Payment is, as of the last day of the prior Remittance Period,
three months (calculated from Due Date with respect to such Home Equity Loan to
Due Date) or more past due (without giving effect to any grace period).
"90+ Delinquency Percentage (Rolling Three Month)": With respect to any
Determination Date, the average of the percentage equivalents of the fractions
determined for each of the three immediately preceding Remittance Periods (or
such fewer number of Remittance Periods since the Cut-Off Date, in the case of
the first two Determination Dates) the numerator of each of which is equal to
the sum of (without duplication) (i) the aggregate Loan Balance of 90-Day
Delinquent Loans, and (ii) the aggregate outstanding principal balance of Home
Equity Loans in foreclosure and the denominator of which is the Loan Balance of
all of the Home Equity Loans as of the end of such Remittance Period.
19
"Nonrecoverable Advance" means with respect to any Home Equity Loan for
which a Final Recovery Determination has been made, any Delinquency Advance or
Servicing Advance previously made and not reimbursed from proceeds on the
related Home Equity Loan or under Section 7.03(b)(xi) hereof which the Servicer
has determined, in good faith business judgment, as evidenced by an Officer's
Certificate delivered to the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not be ultimately
recovered.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Trustee and the
Certificate Insurer.
"Operative Documents": Collectively, this Agreement, the Certificate
Insurance Policies, the Certificates, the Custodial Agreement, the
Indemnification Agreement and the Insurance Agreement.
"Opinion of Counsel": A written opinion of counsel acceptable, in form and
substance, to the Trustee and the Certificate Insurer and delivered to the
Trustee, the Rating Agencies and the Certificate Insurer.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all Home
Equity Loans as of the Cut-Off Date, which is $475,000,663.84.
"Outstanding": With respect to all Certificates of a Class, as of any date
of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or delivered
to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen for
which replacement Certificates have been issued as provided for in Section
5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned to
the Trustee.
"Overcollateralization Amount": With respect to each Home Equity Loan
Group and Distribution Date, the excess, if any, of (x) the aggregate Loan
Balance of the Home Equity Loans in the Home Equity Loan Group as of the close
of business on the last day of the preceding Remittance Period over (y) the
aggregate outstanding Certificate Principal Balances of
20
the related Class A Certificates as of the Distribution Date (after taking into
account the payment of the Class A Principal Distribution Amount related to the
Home Equity Loan Group on the Distribution Date).
"Overcollateralization Release Amount": As to either the Group I or Group
II Certificates and any Distribution Date (i) prior to the third Distribution
Date following the Clean-Up Call Date, the lesser of (1) the sum of the amount
calculated pursuant to clauses (1)(A), (1)(B), (1)(C), (1)(D) and (1)(F) of the
definition of Class A Principal Distribution Amount for such Home Equity Loan
Group and Distribution Date to the extent of the related Available Funds
remaining after distribution pursuant to clauses (i) and (ii) of Section 7.03(b)
for such related Distribution Date and (2) the excess, if any, of (A) the
related Overcollateralization Amount over (B) the related Target
Overcollateralization Amount and (ii) on and after the third Distribution Date
following the Clean-Up Call Date, zero.
"Owner" or "Certificateholder": The Person in whose name a Certificate is
registered in the Register, and the Certificate Insurer, to the extent described
in Section 12.06 hereof.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or any
other Person that meets the eligibility standards for the Paying Agent specified
in Section 11.15 hereof and is authorized by the Trustee and the Depositor to
make payments on the Certificates on behalf of the Trustee.
"Percentage Interest": With respect to a Class of Class A Certificates, a
fraction, expressed as a decimal, the numerator of which is the principal
balance represented by such Class A Certificate as of the Startup Day and the
denominator of which is the Certificate Principal Balance represented by all the
Class A Certificates of such Class as of the Startup Day. With respect to the
Class X-IO or Class R Certificates, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate, all of
which shall total 100% with respect to the related Class.
"Person": Any individual, corporation, limited partnership, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Policy Payments Account": The policy payments account maintained by the
Trustee pursuant to Section 12.02(b) hereof. The Policy Payments Account shall
be an Eligible Account.
"Premium Amount": As defined in the Insurance Agreement.
"Preference Amount": Means any amount previously distributed to an Owner
on the Class A Certificates that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer which is not a Scheduled Principal Payment and which is
not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any
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month or months subsequent to the month of prepayment, the portion of
Substitution Amounts representing principal, the portion of the Loan Purchase
Price of any Home Equity Loan purchased from the Trust pursuant to Section 3.04,
3.06(b) or 8.10(b) hereof representing principal and the proceeds of any
Insurance Policy which are to be applied as a payment of principal on the
related Home Equity Loan shall be deemed to be Prepayments for all purposes of
this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in connection
with a foreclosed Home Equity Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof. The Principal and
Interest Account shall be an Eligible Account.
"Prohibited Transaction": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(2) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Property": The underlying property securing a Home Equity Loan.
"Prospectus": The Depositor's Prospectus dated March 8, 2001 constituting
part of the Registration Statement.
"Prospectus Supplement": The Centex Home Equity Loan Trust 2001-A
Prospectus Supplement dated March 8, 2001 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.04 and 3.06(b) hereof, which (i) has a Coupon Rate
at least equal to the Coupon Rate of the Home Equity Loan being replaced, (ii)
is secured by Property that is of the same or better property type as, or is a
single family dwelling and the same or better occupancy status as, the Property
securing the Home Equity Loan being replaced or is a primary residence, (iii)
shall mature no later than the latest Final Scheduled Distribution Date with
respect to the related Home Equity Loan Group, (iv) has a Loan-to-Value Ratio as
of the Replacement Cut-Off Date no higher than the Loan-to-Value Ratio of the
replaced Home Equity Loan at such time, (v) shall be of the same or higher
credit quality classification (determined in accordance with the Seller's credit
underwriting guidelines set forth in the Seller's underwriting manual) as the
Home Equity Loan which such Qualified Replacement Mortgage replaces, (vi) shall
be a First
22
Mortgage Loan if the Home Equity Loan which such Qualified Replacement Mortgage
replaces was a First Mortgage Loan and shall be a First Mortgage Loan or Second
Mortgage Loan if the Home Equity Loan which such Qualified Replacement Mortgage
replaces was a Second Mortgage Loan, (vii) has an outstanding principal balance
as of the related Replacement Cut-Off Date equal to or less than the outstanding
principal balance of the replaced Home Equity Loan as of such Replacement
Cut-Off Date, (viii) shall not provide for a "balloon" payment if the related
Home Equity Loan did not provide for a "balloon" payment (and if such related
Home Equity Loan provided for a "balloon" payment, such Qualified Replacement
Mortgage shall have an original maturity of not less than the original maturity
of such related Home Equity Loan), (ix) shall be a fixed rate Home Equity Loan
if the Home Equity Loan being replaced is in Group I or an adjustable rate Home
Equity Loan if the Home Equity Loan being replaced is in Group II, (x) satisfies
the criteria set forth from time to time in the definition thereof at Section
860G(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust, (xi) satisfies the representations and warranties set forth in Section
3.04(b) hereof, (xii) shall not be 30 days or more Delinquent and (xiii) if such
Home Equity Loan being replaced is in Group II, shall adjust based on the same
index as, have no lower margin than, have the same interval between adjustment
dates as and have a maximum Coupon Rate no lower than, and a minimum Coupon Rate
no lower than, the Home Equity Loan being replaced. In the event that one or
more home equity loans are proposed to be substituted for one or more Home
Equity Loans, the Certificate Insurer may allow the foregoing tests to be met on
a weighted average basis or other aggregate basis acceptable to the Certificate
Insurer, as evidenced by a written approval delivered to the Trustee by the
Certificate Insurer, except that the requirements of clauses (i), (iii), (iv),
(ix), (x), (xi) and (xii) hereof must be satisfied as to each Qualified
Replacement Mortgage.
"Rating Agencies": Collectively, Xxxxx'x, Fitch and Standard & Poor's.
"Realized Loss": As to any Liquidated Loan (or, in the case of a Cram Down
Loss, a Home Equity Loan that is not a Liquidated Loan), the amount (not less
than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as of
the date of liquidation, (y) the amount of accrued but unpaid interest thereon
and (z) the amount of any Cram Down Loss with respect thereto is in excess of
(B) the Net Liquidation Proceeds, if any, realized thereon.
"Record Date": With respect to (i) any Distribution Date and each Class of
Fixed Rate Certificates and the Class R Certificates, the last Business Day of
the calendar month immediately preceding the calendar month in which such
Distribution Date occurs and (ii) any Distribution Date and the Variable Rate
Certificates and the Class X-IO Certificates, the Business Day immediately
preceding such Distribution Date, or if definitive Variable Rate Certificates
have been issued, the last Business Day of the calendar month immediately
preceding the calendar month in which such Distribution Date occurs.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC, provided that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by CHEC which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) which are not Affiliates of the Seller, (iii) whose quotations
appear on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Seller.
23
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Commission (Registration Number 333-93255), including all
amendments thereto and including the Prospectus and Prospectus Supplement
relating to the Class A Certificates.
"Reimbursement Amount": With respect to each Home Equity Loan Group and
any Distribution Date, the sum of (x)(i) all Insured Payments previously paid to
the Trustee by the Certificate Insurer and not previously repaid to the
Certificate Insurer pursuant to Section 7.03(b) hereof plus (ii) interest
accrued on each such Insured Payment not previously repaid calculated at the
Late Payment Rate and (y)(i) any amounts then due and owing to the Certificate
Insurer under the Insurance Agreement (including, without limitation, any unpaid
Premium Amount relating to such Distribution Date or an earlier Distribution
Date) plus (ii) interest on such amounts at the Late Payment Rate. The
Certificate Insurer shall notify the Trustee, the Depositor and the Seller in
writing of the amount of any Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC I": The segregated group of assets consisting of the REMIC II
Regular Interests as defined in Section 2.08 hereof and constituting a REMIC
created hereunder.
"REMIC II": The segregated pool of assets consisting of all the assets of
the Trust Estate other than the Supplemental Interest Reserve Account and the
REMIC II Regular Interests and constituting a REMIC created hereunder. Expenses
and fees of the Trust shall be paid from REMIC II.
"REMIC Opinion": As defined in Section 3.04 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and revenue rulings promulgated thereunder, as the foregoing may be
in effect from time to time.
"Remittance Period": With respect to each Monthly Remittance Date, the
calendar month immediately preceding such Monthly Remittance Date.
"REO Property": A Property acquired by the Servicer on behalf of the Trust
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the opening of business of the first day of the calendar month in
which such Qualified Replacement Mortgage is conveyed to the Trust.
24
"Representation Letter": Letters to, or agreements with, the Depository to
effectuate a book-entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any Distribution
Date, the aggregate Available Funds, if any, remaining after the making of all
applications, transfers and disbursements described in Sections 7.03(b)(i)
through 7.03(b)(xii) hereof. It is anticipated that there will not be any
Residual Net Monthly Excess Cashflow.
"Schedule of Home Equity Loans": The Conduit Schedule of Home Equity
Loans, the Conduit II Schedule of Home Equity Loans the Seller Schedule of Home
Equity Loans, Schedule I-A hereto or Schedule I-B hereto, as the context may
require.
"Scheduled Principal Payment": As of any date of calculation, with respect
to a Home Equity Loan, the then stated scheduled monthly installment of
principal payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": Centex Credit Corporation d/b/a Centex Home Equity Corporation,
a Nevada corporation.
"Seller Home Equity Loans": The home equity loans listed on the Seller
Schedule of Home Equity Loans.
"Sellers": The Seller, the Conduit Seller and the Conduit Seller II.
"Seller Schedule of Home Equity Loans": The Schedule of Home Equity Loans
attached as Schedule I-C hereto.
"Senior Lien": With respect to any Second Mortgage Loan, the home equity
loan relating to the corresponding Property having a first priority lien.
"Servicer": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, and its permitted successors and assigns.
25
"Servicer Loss Test": The Servicer Loss Test for any period set out below
is satisfied if the Cumulative Loss Percentage for such period does not exceed
the percentage set out for such period below (provided, that for purposes of the
Servicer Loss Test, Realized Losses attributable solely to Cram Down Losses
shall be excluded from the calculation of Cumulative Loss Percentage):
Period Cumulative Loss Percentage
------ --------------------------
April 2001 - March 2002 0.75%
April 2002 - March 2003 2.00%
April 2003 - March 2004 3.00%
April 2004 - March 2005 4.00%
April 2005 - March 2006 5.00%
April 2006 and thereafter 6.00%
Notwithstanding anything contained herein to the contrary, the Certificate
Insurer may, in its sole discretion, without the giving of notice to or the
receipt of the consent of the Owners modify this definition of Servicer Loss
Test for the purpose of raising the percentages set out above for any period or
periods or eliminating, in whole or in part, the definition hereof, provided,
that the Trustee and the Rating Agencies shall have been notified in writing of
such modification prior to the effective date of such modification and such
modification shall not have resulted in a downgrading of the then-current
ratings of the Class A Certificates, without regard to the Certificate Insurance
Policies.
"Servicer Termination Event": As defined in Section 8.20(a) hereof.
"Servicer Termination Test": The Servicer Termination Test is satisfied
for any date of determination thereof, if (w) the Servicer's Tangible Net Worth
is at least the greater of (i) $70,000,000 and (ii) the amount required pursuant
to any credit facility of the Servicer, (x) the 90+ Delinquency Percentage
(Rolling Three Month) is less than or equal to 13.0%, (y) the Servicer Loss Test
is satisfied and (z) the Annual Loss Percentage (Rolling Twelve Month) for the
twelve month period immediately preceding the date of determination thereof is
less than or equal to 1.50%.
Notwithstanding anything contained herein to the contrary, the Certificate
Insurer may, in its sole discretion, without the giving of notice to or the
receipt of the consent of the Owners, modify this definition of Servicer
Termination Test for the purpose of reducing the amount specified in clause
(w)(i) above or raising the percentages set out above for any period or periods
or eliminating, in whole or in part, the definition hereof, provided, that the
Trustee and the Rating Agencies shall have been notified in writing of such
modification prior to the effective date of such modification and such
modification shall not have resulted in a downgrading of the then-current
ratings of the Class A Certificates, without regard to the Certificate Insurance
Policies.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
26
"Servicing Fee": With respect to any Home Equity Loan Group and a
Remittance Period, an amount retained by the Servicer as compensation for
servicing and administration duties relating to the Home Equity Loans in such
Home Equity Loan Group pursuant to Section 8.15 hereof and equal to one month's
interest at 0.50% per annum of the then aggregate outstanding Loan Balance of
such Home Equity Loans as of the first day of each Remittance Period payable on
a monthly basis; provided, however, that if a successor Servicer is appointed
pursuant to Section 8.20 hereof, the Servicing Fee shall be the amount as agreed
upon by the Trustee, the Certificate Insurer and the successor Servicer, and the
per annum rate at which the Servicing Fee is calculated shall not exceed 0.50%
per annum.
"60-Day Delinquent Loan": With respect to any Determination Date, (i) all
REO Properties and (ii) each Home Equity Loan with respect to which any portion
of a Monthly Payment is, as of the last day of the prior Remittance Period, two
months (calculated from Due Date with respect to such Home Equity Loan to Due
Date) or more past due (without giving effect to any grace period).
"Standard & Poor's": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. or any successor thereto.
"Startup Day": March 15, 2001.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer and
any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"Substitution Amount": With respect to the substitution of any Qualified
Replacement Mortgage for any Home Equity Loan, as of the related Replacement
Cut-Off Date, the excess, if any, of the outstanding principal balance of such
Home Equity Loan over the outstanding principal balance of the Qualified
Replacement Mortgage, together with the aggregate amount of all unreimbursed
Delinquency Advances and unreimbursed Servicing Advances made, and all accrued
and unpaid interest, with respect to such Home Equity Loan.
"Supplemental Interest Reserve Fund": The Supplemental Interest Reserve
Fund established and maintained as described in Section 7.02(a).
"Tangible Net Worth": Shall mean the difference between: (A) the tangible
assets of the Seller or Servicer, as applicable, and its Affiliates calculated
in accordance with generally accepted accounting principles, as reduced by
adequate reserves in each case where a reserve is appropriate; and (B) all
indebtedness, including subordinated debt, of the Seller or Servicer, as
applicable, and its Affiliates; provided, however, that (i) intangible assets
such as patents, trademarks, trade names, copyrights, licenses, good will,
organization costs, advances or loans to, or receivables from, directors,
officers, employees or affiliates, prepaid assets, amounts relating to covenants
not to compete, pension assets, deferred charges or treasury stock of any
27
securities unless the same are readily marketable in the United States of
America or are entitled to be used as a credit against federal income tax
liabilities, shall not be included in the calculation of (A) above, (ii)
securities included as tangible assets shall be valued at their current market
price or cost, whichever is lower and (iii) any write-up in book value of any
assets shall not be taken into account.
"Target Deficiency": As to either the Group I or Group II Certificates and
any Distribution Date, the excess, if any, of (1) the related Target
Overcollateralization Amount for such Distribution Date over (2) the related
Overcollateralization Amount for such Distribution Date after giving effect to
the distribution of the related Class A Principal Distribution Amount on such
Distribution Date but prior to any distributions of Extra Principal Distribution
Amount; provided, however, that in no event will the Target Deficiency be less
than zero.
"Target Overcollateralization Amount": The required level of the
Overcollateralization Amount for each Home Equity Loan Group with respect to a
Distribution Date. The Target Overcollateralization Amount for Group I is set
forth in Exhibit L hereof. The Target Overcollateralization Amount for Group II
is set forth in Exhibit K hereof.
"Tax Matters Person": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code (or where the context
requires, the Trustee acting as agent for the Tax Matters Person).
"Telerate Page 3750": The display designated as page "3750" on the Bridge
Telerate Service (or such other page as may replace page 3750 on that report for
the purpose of displaying London interbank offered rates of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Termination Price": Means, with respect to Sections 9.02 and 9.03 hereof,
and on any date of determination thereof, an amount equal to the sum of (w) the
greater of (A) the outstanding Certificate Principal Balance for the Class A
Certificates and (B) the fair market value of the Home Equity Loans
(disregarding accrued interest), (x) one month's interest on such amount
(calculated at the Adjusted Certificate Rate), (y) all Reimbursement Amounts and
(z) the sum of the aggregate amount of any unreimbursed Delinquency Advances,
unreimbursed Servicing Advances, unreimbursed Compensating Interest and any
Delinquency Advances which the Servicer has theretofore failed to remit.
"Total Available Funds": As to each Distribution Date and a Home Equity
Loan Group, the sum of (x) the amount on deposit in the Certificate Account with
respect to the Home Equity Loan Group and (y) any amounts on deposit in the
Certificate Account with respect to the other Home Equity Loan Group to be
applied to the related Classes of Class A Certificates pursuant to Section
7.03(b)(v) hereof on the Distribution Date (disregarding the amount of any
Insured Payment to be made on the Distribution Date).
"Transition Expenses": Expenses incurred by the Trustee in connection with
the transfer of servicing upon the termination of the Servicer for a Servicer
Termination Event; provided that the amount shall not exceed $50,000 in any one
calendar year (and no more than $100,000 in the aggregate).
28
"Trust": Centex Home Equity Loan Trust 2001-A, the trust created under
this Agreement which shall be comprised of two sub-trusts; one for Group I and
any Trust assets allocable to such Group I and the other for Group II and any
Trust assets allocable to such Group II.
"Trust Estate": (a) The Home Equity Loan Assets and (b) such amounts as
may be held by the Trustee in the Certificate Account, together with investment
earnings on such amounts, and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, inclusive of investment
earnings thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer).
"Trustee": Bank One, National Association, a national banking association,
not in its individual capacity but solely as Trustee under this Agreement, and
any successor hereunder.
"Trustee Fee": The fee payable monthly to the Trustee on each Distribution
Date in an amount equal to $1,000.00.
"Trustee Reimbursable Expenses": As of any Distribution Date, the sum of
(a) any Trustee Fee and Transition Expenses not paid pursuant to clauses (i) or
(iv) of Section 7.03(b) on such Distribution Date and (b) any amounts owed to
the Trustee pursuant to Sections 2.05, 6.12, 7.06, 8.20(o), 10.07, 10.13 and
11.16(a)(v) hereof, and, if the Trustee is acting as Custodian, any related
custodial fees (including all attorney fees and expenses).
"Underwriters": Banc of America Securities LLC, Xxxxxx Brothers Inc. and
Xxxxxxx Xxxxx Xxxxxx Inc.
"Variable Rate Certificates": The Class A-7 Certificates.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X-IO
Certificates (such Voting Rights to be allocated among the Owners of
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class R
Certificates in the aggregate, or if separate Class R-1 and Class R-2
Certificates are issued, 0.50% to each such Class (such Voting Rights to be
allocated among the Owners of Certificates of each such Class in accordance with
their respective Percentage Interests), and (c) the remaining Voting Rights
shall be allocated among Owners of the Classes of Class A Certificates in
proportion to the Certificate Principal Balances of their respective Class A
Certificates on such date.
"Weighted Average Certificate Rate": As to the Class A Certificates and
any Distribution Date, the weighted average of the Class A-l Certificate Rate,
the Class A-2 Certificate Rate, the Class A-3 Certificate Rate, the Class A-4
Certificate Rate, the Class A-5 Certificate Rate, the Class A-6 Certificate Rate
and the Class A-7 Certificate Rate, weighted by, respectively, the Certificate
Principal Balance of each such Class of Class A Certificates as of such
Distribution Date prior to taking into account any distributions to be made on
such Distribution Date.
Section 1.02. Use of Words and Phrases.
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"Herein," "hereby," "hereunder," "hereof," "hereinbefore," "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
Section 1.03. Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04. Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law) and may state that no opinion is expressed on the availability
of the remedy of specific enforcement, injunctive relief or any other equitable
remedy. Any opinion required to be furnished by any Person hereunder must be
delivered by counsel upon whose opinion the addressee of such opinion may
reasonably rely, and such opinion may state that it is given in reasonable
reliance upon an opinion of another, a copy of which must be attached,
concerning the laws of a foreign jurisdiction. Any opinion delivered hereunder
shall be addressed to the Rating Agencies, the Certificate Insurer and the
Trustee.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws of
the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "Centex Home Equity Loan Trust 2001-A" and which shall contain
two subtrusts.
Section 2.02. Office.
The office of the Trust shall be in care of the Trustee, addressed to Bank
One, National Association, at its Corporate Trust Office.
Section 2.03. Purposes and Powers.
The purpose of the Trust is to engage in the following activities and only
such activities: (i) the issuance of the Certificates and the acquiring, owning
and holding of Home Equity Loans and the Trust Estate in connection therewith;
(ii) activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith, including the
investment of moneys in accordance with this Agreement; and (iii) such other
activities as may be required in connection with conservation of the Trust
Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either REMIC I or REMIC II as a REMIC.
Section 2.04. Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners and the Certificate Insurer.
Section 2.05. Expenses of the Trust.
All expenses of the Trust, including (i) the fees and reimbursable
expenses of the Trustee in connection with the performance of its duties
hereunder and (ii) to the extent not set forth herein, any other expenses of the
Trustee that have been reviewed and approved by the Seller, which review shall
not be required in connection with the enforcement of a remedy by the Trustee
resulting from a default under this Agreement, shall be paid pursuant to Section
7.03(b).
31
Section 2.06. Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07. Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created in the
State of New York. The Trust's only office will be at the office of the Trustee
as set forth in Section 2.02 hereof.
Section 2.08. Designation of Interests in REMICs.
(a) The Trustee shall elect that each of REMIC I and REMIC II (which
together constitute the Trust) shall be treated as a REMIC under Section 860D of
the Code. Any inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections. The assets of REMIC II shall include the
Home Equity Loans, the Accounts, any REO Property and any proceeds of the
foregoing. The REMIC II Regular Interests shall constitute the assets of REMIC
I.
(b) REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class
II-M-1 and Class II-M-2 Interests (the "REMIC II Regular Interests"), which will
be uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC II and (y) the Class R-2 Certificates, which are hereby
designated as the single "residual interest" in REMIC II (the REMIC II Regular
Interests, together with the Class R-2 Certificates, the "REMIC II
Certificates"). The REMIC II Regular Interests shall be recorded on the records
of REMIC II as being issued to and held by the Trustee on behalf of REMIC I.
Any Net Monthly Excess Cashflow for either Group that is used to pay an
amount to the Class A Certificates pursuant to Section 7.03(b) (vii), (viii) and
(xii) (the "Turbo Amount") and that is payable from interest on the Home Equity
Loans will not be paid as principal to the REMIC II Regular Interests, but
instead a portion of the interest payable with respect to the Class II-M-1
Interest which equals .01% of the Turbo Amount that is applied to Group I
Certificates will be payable as a reduction of the principal balances of the
Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and Class
II-A-6 Interests, in the same manner in which the Turbo Amount is allocated
among the Class X-0, Xxxxx X-0, Class A-3, Class A-4, Class A-5 and Class A-6
Certificates, respectively, and a portion of the interest payable with respect
to the Class II-M-2 Interest which equals .01% of the Turbo Amount that is
applied to the Group II Certificates will be payable as a reduction of the
principal balance of the Class II-A-7 Interests (and will be accrued and added
to principal on the Class II-M-1 and Class II-M-2 Interests in the same
proportion as interest otherwise payable on such REMIC II Regular Interests is
used to reduce principal on other REMIC II Regular Interests as just described).
Principal payments on Group I shall be allocated 99.99% to the Class II-M-1
Interest, and .01% to the Class II-A-1, Class II-A-2, Class II-A-3, Class
II-A-4, Class II-A-5 and Class II-A-6 Interests until paid in full.
32
The aggregate amount of principal allocated to the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6 Interests shall be
apportioned among such REMIC II Regular Interests in the same manner in which
principal from Group I is payable with respect to the Class X-0, Xxxxx X-0,
Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, respectively.
Notwithstanding the above, principal payments on Group I that are attributable
to the Overcollateralization Release Amount shall be allocated 100% to the Class
II-M-1 Interest. Principal payments on Group II shall be allocated 99.99% to the
Class II-M-2 Interest and .01% to the Class II-A-7 Interests until paid in full.
Notwithstanding the above, the principal payments on Group II that are
attributable to the Overcollateralization Release Amount shall be allocated 100%
to the Class II-M-2 Interest. Realized losses shall be applied such that after
all distributions have been made on such Distribution Date: (i) the principal
balances of the Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class
II-A-5, Class II-A-6 and Class II-A-7 Interests are each .01% of the principal
balances of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6
and Class A-7 Certificates, respectively; (ii) the principal balance of the
Class II-M-1 Interest is equal to the aggregate Loan Balance of Group I less the
sum of the principal balances of the Class II-A-1, Class II-A-2, Class II-A-3,
Class II-A-4, Class II-A-5 and Class II-A-6 Interests; and (iii) the principal
balance of the Class II-M-2 Interest is equal to the aggregate Loan Balance of
Group II less the principal balance of the Class II-A-7 Interests. The REMIC II
Certificates will have the following designations and Certificate Rates, and
distributions of principal and interest thereon shall be allocated to the
Certificates in the following manner:
REMIC II Allocation of Allocation of
Certificates Initial Balance Certificate Rate Principal Interest
------------ --------------- ---------------- --------- --------
II-A-1 $13,300 (1) (3) (4)(5)
II-A-2 $5,900 (1) (3) (4)(5)
II-A-3 $7,000 (1) (3) (4)(5)
II-A-4 $8,000 (1) (3) (4)(5)
II-A-5 $4,130 (1) (3) (4)(5)
II-A-6 $4,300 (1) (3) (4)(5)
II-A-7 $4,870 (2) (3) (4)(6)
II-M-1 $426,257,370 (1) (3) (4)(5)
33
REMIC II Allocation of Allocation of
Certificates Initial Balance Certificate Rate Principal Interest
------------ --------------- ---------------- --------- --------
II-M-2 $48,695,130 (2) (3) (4)(6)
R-2 0% N/A N/A(7)
----------
(1) The Certificate Rate on this REMIC II Regular Interest shall at any
time of determination equal the weighted average of the Net Coupon Rates of the
Home Equity Loans in Group I.
(2) The Certificate Rate on this REMIC II Regular Interest shall at any
time of determination equal the weighted average of the Net Coupon Rates of the
Home Equity Loans in Group II.
(3) Principal will be allocated to and apportioned among the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7 Certificates
in the same proportion as principal from the Home Equity Loans is payable with
respect to such Certificates, except that a portion of such principal in an
amount equal to the Overcollateralization Release Amount shall first be
allocated to the Class X-IO Certificates, and all principal will be allocated to
the Class X-IO Certificates after the principal balances of the Group I and
Group II Certificates have been reduced to zero.
(4) Except as provided in footnotes (5) and (6), interest will be
allocated among the Class X-0, Xxxxx X-0, Class A-3, Class A-4, Class A-5, Class
A-6 and Class A-7 Certificates in the same proportion as interest is payable on
such Certificates.
(5) Any interest with respect to this REMIC II Certificate in excess of
the product of (i) 10,000 times the weighted average coupon of the Class II-A-1,
Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6 and Class
II-M-1 Interests where each of the Class II-A-1, Class II-A-2, Class II-A-3,
Class II-A-4, Class II-A-5, Class II-A-6 Interests is subject to a cap and floor
equal to the rate on each of Class X-0, Xxxxx X-0, Class A-3, Class A-4, Class
A-5 and Class A-6 Certificates, respectively and the Class II-M-1 Interest is
subject to a cap equal to 0% and (ii) the principal balance of this REMIC II
Certificate, shall not be allocated to the Group I or Group II Certificates but
will be allocated to the Class X-IO Certificates. However, the Class X-IO
Certificates shall be subordinated to the extent provided in Section 7.03.
(6) Any interest with respect to this REMIC II Certificate in excess of
the product of (i) 10,000 times the weighted average coupon of the Class II-A-7
and Class II-M-2 Interests, where the Class II-A-7 Interest is subject to a cap
and floor equal to the lesser of the Certificate Rate on the Class A-7
Certificates or the Group II Net WAC Cap, and the Class II-M-2 Interest is
subject to a cap equal to 0% and (ii) the principal balance of this REMIC II
Certificate, shall not be allocated to the Group I or Group II Certificates, but
will be allocated to the Class X-IO Certificates. However, the Class X-IO
Certificates shall be subordinated to the extent provided in Section 7.03.
34
(7) On each Distribution Date, available funds, if any, remaining in REMIC
II after payments of interest and principal and expenses of the Trust, as
designated above, will be distributed to the Class R-2 Certificate. It is
expected that there will not be any significant distributions on the Class R-2
Certificates.
(c) The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7 and Class X-IO Certificates are hereby designated as "regular
interests" with respect to REMIC I (the "REMIC I Regular Certificates") and the
Class R-1 Certificate is hereby designated as the single "residual interest"
with respect to REMIC I. On each Distribution Date, available funds, if any,
remaining in REMIC I after payments of interest and principal as designated
herein shall be distributed to the Class R-1 Certificates. The beneficial
ownership interest in the REMIC I created hereunder shall be evidenced by the
interests having the following characteristics and terms:
Initial Certificate Final Scheduled
Class Designation Principal Balance Distribution Date
----------------- ----------------- -----------------
Class A-1 $133,000,000 February 25, 2016
Class A-2 $59,000,000 May 25, 2020
Class A-3 $70,000,000 November 25, 2025
Class A-4 $80,000,000 July 25, 2029
Class A-5 $41,300,000 April 25, 2031
Class A-6 $43,000,000 April 25, 2031
Class A-7 $48,700,000 April 25, 2031
Class X-IO (1)
Class R-1 (1)
----------
(1) The Class X-IO and Class R-1 Certificates do not have a Certificate
Principal Balance.
(d) For federal income tax purposes, the "latest possible maturity date"
for each of the REMIC I Regular Certificates and the REMIC II Regular Interests
is April 25, 2035.
Section 2.09. Miscellaneous REMIC Provisions.
(a) The Startup Day is hereby designated as the "startup day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(b) The Owner of the Tax Matters Person Residual Interest in each REMIC
created hereunder is hereby designated as "tax matters person" as defined in the
REMIC Provisions with respect to the REMIC.
(c) The Trust and each REMIC created hereunder shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
35
(d) The Trustee shall cause each REMIC created hereunder to elect to be
treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such election to be treated
as a REMIC. The Trustee shall report all expenses of the Trust Estate to each
REMIC created hereunder.
(e) For all federal tax law purposes, amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
each respective REMIC created hereunder.
(f) The Trustee shall provide to the Internal Revenue Service and to the
person described in Section 860E(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to each REMIC created hereunder. Such
information will be provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
36
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE
SERVICER AND THE SELLERS; COVENANT OF SELLER TO CONVEY HOME
EQUITY LOANS
Section 3.01. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee and
the Certificate Insurer that as of the Startup Day:
(a) The Depositor is a limited liability company duly formed and validly
existing under the laws governing its creation and existence, is not in
violation of the laws of any state in which any Property or the Depositor is
located or doing business which violation would materially and adversely affect
the condition (financial or other) or the operations of the Depositor or its
properties or the ability of the Trust to collect amounts due on any Home Equity
Loan and is in good standing in each jurisdiction in which the nature of its
business or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite limited liability company power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement and the other Operative
Documents to which it is a party by the Depositor and its performance and
compliance with the terms of this Agreement and the other Operative Documents to
which it is a party have been duly authorized by all necessary limited liability
company action on the part of the Depositor and will not violate the Depositor's
certificate of formation or amended and restated limited liability company
agreement or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Depositor is a
party or by which the Depositor is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof and thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default could materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which could materially and adversely
37
affect its performance hereunder and under the other Operative Documents to
which the Depositor is a party.
(e) No litigation, proceeding or investigation is pending with respect to
which the Depositor has received service of process or, to the best of the
Depositor's knowledge, threatened against the Depositor which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or might have
consequences that would materially and adversely affect the validity or
enforceability of the Home Equity Loans or the Depositor's performance hereunder
and under the other Operative Documents to which the Depositor is a party.
(f) The statements contained in the Registration Statement which describe
the Depositor or matters or activities for which the Depositor is responsible in
accordance with the Operative Documents or which are attributed to the Depositor
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with respect
to the Depositor or omit to state a material fact required to be stated therein
or necessary in order to make the statements contained therein with respect to
the Depositor not misleading.
(g) Immediately prior to the sale and assignment by the Depositor to the
Trustee on behalf of the Trust of each Home Equity Loan, the Depositor had good
title to each Home Equity Loan (insofar as such title was conveyed to it by the
Sellers) subject to no prior lien, claim, participation interest, mortgage,
security interest, pledge, charge or other encumbrance or other interest of any
nature (other than liens which will be simultaneously released).
(h) As of the Startup Day, the Depositor has transferred all right, title
and interest in the Home Equity Loans to the Trustee on behalf of the Trust.
(i) The Depositor has not transferred the Home Equity Loans to the Trustee
on behalf of the Trust with any intent to hinder, delay or defraud any of its
creditors.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance
38
by the Depositor of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
Section 3.02. Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly formed and validly existing under
the laws governing its creation and existence, is in compliance with the laws of
each state in which any Property is located to the extent necessary to enable it
to perform its obligations hereunder and is in good standing in each
jurisdiction in which the nature of its business or the properties owned or
leased by it make such qualification necessary. The Servicer has all requisite
corporate power and authority to own and operate its properties, to carry out
its business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which the Servicer is a party.
(b) The execution and delivery of this Agreement and any other Operative
Document to which it is a party by the Servicer and its performance and
compliance with the terms hereof and thereof have been duly authorized by all
necessary corporate action on the part of the Servicer and will not violate the
Servicer's articles of incorporation or by-laws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Servicer is a party or by which the Servicer is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Servicer or any of
its properties.
(c) This Agreement and the other Operative Documents to which the Servicer
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof and thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default could materially and adversely affect the
condition (financial or otherwise) or operations of the Servicer or its
properties or the consequences of which could materially and adversely affect
its performance hereunder or under the other Operative Documents to which the
Servicer is a party.
(e) No litigation, proceeding or investigation is pending with respect to
which the Servicer has received service of process or, to the best of the
Servicer's knowledge, threatened against the Servicer which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or
39
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect the validity or the enforceability of the
Home Equity Loans or the Servicer's performance hereunder and under the other
Operative Documents to which the Servicer is a party.
(f) The statements contained in the Registration Statement which describe
the Servicer or matters or activities for which the Servicer is responsible in
accordance with the Operative Documents or which are attributed to the Servicer
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with respect
to the Servicer or omit to state a material fact required to be stated therein
or necessary to make the statements contained therein with respect to the
Servicer not misleading.
(g) The Servicing Fee is a "current (normal) servicing fee rate" as that
term is used in Statement of Financial Accounting Standards No. 65 issued by the
Financial Accounting Standards Board. Neither the Servicer nor any Affiliate
thereof will report on any financial statements any part of the Servicing Fee as
an adjustment to the sales price of the Home Equity Loans.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(i) The collection practices used by the Servicer with respect to the Home
Equity Loans have been, in all material respects, legal, proper, prudent and
customary in the home equity mortgage servicing business.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
(k) The Servicer is not in default under any agreement involving financial
obligations or on any outstanding obligation, in any such case which could
materially adversely impact the financial condition or operations of the
Servicer or adversely impact the Servicer's performance of its obligations under
the Operative Documents.
(l) There are no Sub-Servicers as of the Startup Day.
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(m) The Servicer will terminate any Sub-Servicer within ninety (90) days
after being directed by the Certificate Insurer to do so.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. As promptly as practicable, but in any event within 60 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Certificate Insurer or by the
Trustee with the written consent of the Certificate Insurer pursuant to Section
8.20 hereof; provided, however, that if the Servicer can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an additional
90 days with the written approval of the Certificate Insurer.
Section 3.03. Representations and Warranties of the Sellers.
Each of the Seller and the Conduit Sellers, as applicable, hereby
severally and not jointly represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) In the case of the Seller, that it is a corporation, and in the case
of the Conduit Sellers, that they are limited liability companies, duly formed
and validly existing under the laws governing their creation and existence,
neither the Seller nor either of the Conduit Sellers is in violation of the laws
of any state in which any Property or either of the Seller or any of the Conduit
Sellers, as applicable, is located or doing business which violation would
materially and adversely affect the condition (financial or otherwise) or
operations of the Seller or either of the Conduit Sellers, as applicable, or its
properties or the ability of the Trust to collect any amounts on any Home Equity
Loan and each of the Seller and the Conduit Sellers is in good standing in each
jurisdiction in which the nature of its business or the properties owned or
leased by it make such qualification necessary. The Seller or either of the
Conduit Sellers, as applicable, has all requisite corporate or limited liability
company, as applicable, power and authority to own and operate its properties,
to carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other Operative
Documents to which the Seller or either of the Conduit Sellers, as applicable,
is a party and its performance and compliance with the terms of this Agreement
and the other Operative Documents to which it is a party have been duly
authorized by all necessary corporate, limited liability company or other
action, as applicable, and will not violate its articles of incorporation or
by-laws, in the case of the Seller, or by all necessary limited liability
company action and will not violate their amended and restated limited liability
company agreements or certificates of formation, in the
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case of each of the Conduit Sellers, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in a breach of, any material contract, agreement or other instrument to
which it is a party or by which it is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over it or any of its properties.
(c) This Agreement and the other Operative Documents to which the Seller
or either of the Conduit Sellers, as applicable, is a party, assuming due
authorization, execution and delivery by the other parties hereto and thereto,
each constitutes a valid, legal and binding obligation of the Seller or either
of the Conduit Sellers, as applicable, enforceable hereof and thereof against it
in accordance with the terms hereof and thereof, except as the enforcement
hereof and thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) Neither the Seller nor either of the Conduit Sellers, as applicable,
is in default with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or governmental agency,
which default could materially and adversely affect the condition (financial or
other) or operations of the Seller or either of the Conduit Sellers, as
applicable, or its properties or the consequences of which could materially and
adversely affect its performance hereunder and under the other Operative
Documents to which it is a party.
(e) No litigation, proceeding or investigation is pending with respect to
which the Seller or either of the Conduit Sellers, as applicable, has received
service of process or, to the best of its knowledge, threatened against it which
litigation, proceeding or investigation might have consequences that would
prohibit its entering into this Agreement or any other Operative Documents to
which it is a party or that would materially and adversely affect the condition
(financial or otherwise) or operations of the Seller or either of the Conduit
Sellers, as applicable, or its properties or might have consequences that would
materially and adversely affect the validity or enforceability of the Home
Equity Loans or its performance hereunder and under the other Operative
Documents to which it is a party.
(f) The statements contained in the Registration Statement which describe
the Seller or either of the Conduit Sellers, as applicable, or matters or
activities for which it is responsible in accordance with the Operative
Documents or which are attributed to it therein are true and correct in all
material respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Seller or either of the Conduit
Sellers, as applicable, or omit to state a material fact required to be stated
therein or necessary in order to make the statements contained therein with
respect to the Seller or either of the Conduit Sellers, as applicable, not
misleading.
(g) Reserved.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than
42
any such actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Seller or either of the
Conduit Sellers, as applicable, makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Seller or either of the
Conduit Sellers, as applicable, of the Operative Documents to which it is a
party, have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending proceedings
or appeals (administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken, and are
adequate to authorize the consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of the Seller or either
of the Conduit Sellers, as applicable, and the performance by the Seller or
either of the Conduit Sellers, as applicable, of its obligations under this
Agreement and such of the other Operative Documents to which it is a party.
(i) The origination practices used by the Seller with respect to the Home
Equity Loans have been, in all material respects, legal, proper, prudent and
customary in the home equity lending business. All of the Home Equity Loans were
originated by the Seller, an Affiliate of the Seller or a broker for
simultaneous assignment to the Seller or were acquired by the Seller from
correspondent lenders and reunderwritten to comply with the Seller's
underwriting standards.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller or the Conduit Sellers, as applicable.
(k) The Trustee, the Seller and the Conduit Sellers have no obligation to
register the Trust and the Trust has no obligation to register as an investment
company under the Investment Company Act of 1940, as amended.
(l) The Seller or either of the Conduit Sellers, as applicable, is not
insolvent, nor will it be made insolvent by the transfer of the Home Equity
Loans, nor are the Seller or the Conduit Sellers, as applicable, aware of any
pending insolvency.
(m) The Seller or either of the Conduit Sellers, as applicable, received
fair consideration and reasonably equivalent value in exchange for the sale of
the interests in the Home Equity Loans transferred by it.
(n) The Seller or either of the Conduit Sellers, as applicable, did not
sell any interest in any Home Equity Loan with any intent to hinder, delay or
defraud any of its creditors.
(o) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(p) The Seller or either of the Conduit Sellers, as applicable, is not in
default under any agreement involving financial obligations or on any
outstanding obligation, in any such case which would materially adversely impact
the financial condition or operations of the Seller or either of the Conduit
Sellers, as applicable, or its obligations under the Operative Documents.
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(q) To the best knowledge of the Seller or either of the Conduit Sellers,
as applicable, there has been no material adverse change in any information
submitted by the Seller or either of the Conduit Sellers, as applicable, in
writing to the Certificate Insurer with respect to the transactions contemplated
by this Agreement (unless such information was subsequently supplemented in
writing to the Certificate Insurer).
(r) The sale, transfer, assignment and conveyance of Home Equity Loans by
the Seller or either of the Conduit Sellers, as applicable, pursuant to this
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by the Seller or either of the Conduit Sellers, as applicable,
the Depositor or the Trustee to any federal, state or local government
("Transfer Taxes") other than Transfer Taxes which have been or will be paid as
due by the Seller or either of the Conduit Sellers, as applicable. The Seller or
either of the Conduit Sellers, as applicable, shall pay, and otherwise indemnify
and hold the Certificate Insurer harmless, on an after-tax basis, from and
against any and all such Transfer Taxes (it being understood that the
Certificate Insurer shall have no obligation to pay such Transfer Taxes).
(s) No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by the Seller or either of the Conduit
Sellers, as applicable, contains any untrue statement of a material fact or
omits to state any material fact necessary to make the certificate, statement or
report not misleading.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Section 3.04. Covenants of Sellers to Take Certain Actions with Respect to
the Home Equity Loans in Certain Situations.
(a) Upon the discovery by the Depositor, the Seller, the Conduit Sellers,
the Servicer, the Certificate Insurer, any Sub-Servicer, any Owner, the
Custodian or the Trustee (each, for purposes of this paragraph, a party) that
the representations and warranties set forth in clause (b) below were untrue in
any material respect, without regard to any limitation set forth therein
concerning the knowledge of the Seller or the Servicer as to the facts stated
therein, as of the Startup Day (or in the case of a Qualified Replacement
Mortgage, as of the respective Replacement Cut-Off Date), with the result that
the interests of the Owners or of the Certificate Insurer in the related Home
Equity Loan are, or may be, materially and adversely affected, the party
discovering such breach shall give prompt written notice to the other parties.
Upon the earliest to occur of CHEC's discovery, its receipt of notice of breach
from any one of the other parties or such time as a situation resulting from an
existing statement which is untrue materially and adversely affects the
interests of the Owners or of the Certificate Insurer, without regard to any
limitation set forth therein concerning the knowledge of CHEC as to the facts
stated therein, CHEC hereby covenants and warrants that it shall promptly cure
such breach in all material respects or that it shall on or before the second
Monthly Remittance Date next succeeding such discovery, receipt of notice or
such time (i) substitute in lieu of each Home Equity Loan which has given rise
to the requirement for action by CHEC a Qualified Replacement Mortgage and
deliver the Substitution Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan from the Trust at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the
44
Principal and Interest Account; provided, however, that if CHEC can establish to
the reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, the period of time in which CHEC must substitute a
Qualified Replacement Mortgage or purchase such Home Equity Loan may be extended
with the written approval of the Certificate Insurer. It is understood and
agreed that the obligation of CHEC so to substitute or purchase any Home Equity
Loan as to which such a statement set forth below in this Section 3.04 is untrue
in any material respect and has not been remedied shall constitute the sole
remedy respecting a discovery of any such statement which is untrue in any
material respect available to the Owners, the Trustee on behalf of the Owners
and the Certificate Insurer. Notwithstanding any provision of this Agreement to
the contrary, with respect to any Home Equity Loan which is not in default or as
to which no default is imminent, no repurchase or substitution pursuant to
Section 3.04 or 3.06 shall be made unless CHEC obtains for the Trustee and the
Certificate Insurer at its expense an Opinion of Counsel experienced in federal
income tax matters to the effect that such a repurchase or substitution would
not constitute a Prohibited Transaction for the Trust or either REMIC created
hereunder or otherwise subject the Trust or either REMIC created hereunder to
tax and would not jeopardize the status of either REMIC created hereunder as a
REMIC (a "REMIC Opinion") addressed to the Trustee and the Certificate Insurer
and acceptable to the Certificate Insurer and the Trustee. CHEC shall also
deliver an Officer's Certificate to the Trustee and the Certificate Insurer
concurrently with the delivery of a Qualified Replacement Mortgage pursuant to
Sections 3.04 and 3.06(b) stating that such Home Equity Loan meets the
requirements of the definition of a Qualified Replacement Mortgage and that all
other conditions to the substitution thereof have been satisfied. Any Home
Equity Loan as to which repurchase or substitution was delayed pursuant to this
Section shall be repurchased or substituted for (subject to compliance with
Section 3.04 or 3.06(b), as the case may be) upon the earlier of (a) the
occurrence of a default or imminent default with respect to such Home Equity
Loan and (b) receipt by the Trustee and the Certificate Insurer of a REMIC
Opinion.
(b) The Seller, with respect to the Seller Home Equity Loans, and the
Servicer, in consideration of its appointment hereunder, with respect to the
Conduit Home Equity Loans, the Conduit II Home Equity Loans and with respect to
the Home Equity Loans taken as a whole or by Group, hereby represent, warrant
and covenant to the Trustee, the Depositor, the Servicer, the Certificate
Insurer and the Owners that as of the Startup Day (or the Replacement Cut-Off
Date, with respect to a Qualified Replacement Mortgage):
(i) The information with respect to each Home Equity Loan set forth
in the related Schedule of Home Equity Loans is true and correct in all
material respects as of the Cut-Off Date;
(ii) Each of the Seller and the Conduit Sellers has transferred good
and marketable title (without any implication of a ready market for the
sale thereof) to the Home Equity Loans (including the related Notes) and
other items of the Trust Estate, and upon receipt of each Home Equity Loan
and other items of the Trust Estate by the Trustee (including the related
Note), the Trust will have good and marketable title (without any
implication of a ready market for the sale thereof) to such Home Equity
Loan (including the related Note) and such items of the Trust Estate, free
and clear of any lien, charge, mortgage, encumbrance or rights of others,
except as permitted under Section 3.04(b)(ix) and except for liens that
will be simultaneously released. All the original or certified
45
documentation set forth in Section 3.05 (including all material documents
related thereto) with respect to each Home Equity Loan has been delivered
to the Custodian on behalf of the Trustee on the Startup Day or as
otherwise provided in Section 3.05. To the Seller's or the Servicer's best
knowledge, no such documentation contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained therein not misleading;
(iii) Each Home Equity Loan being transferred to the Trust is a
Qualified Mortgage and is a Mortgage;
(iv) Each Property is a fee simple estate in a single parcel of real
property improved by a single family residential dwelling (except 552
Properties that are condominiums, townhouses, manufactured housing,
two-to-four family residential dwellings or PUDs), and no more than 1.09%
and 0.60%, respectively, of the aggregate Loan Balance of the Home Equity
Loans in Group I and Group II as of the Cut-Off Date are secured by
Properties that are Manufactured Homes, each of which is considered to be
real property under the applicable local law;
(v) As of the Cut-Off Date or Replacement Cut-Off Date, as
applicable, no Home Equity Loan has a Loan-to-Value Ratio in excess of
100%;
(vi) Each Home Equity Loan is being serviced by the Servicer in
accordance with the terms of this Agreement;
(vii) The Note related to each Home Equity Loan in Group I bears a
current Coupon Rate of at least 5.99% per annum and the Note related to
each Home Equity Loan in Group II bears a current Coupon Rate of at least
7.150% per annum;
(viii) Each Note with respect to the Home Equity Loans will provide
for a schedule of substantially level and equal Monthly Payments (or
periodic rate adjustments in the case of the Home Equity Loans in Group
II), which are sufficient to amortize fully the principal balance of such
Note on or before its maturity date, except for 661 Home Equity Loans,
representing approximately 11.53% of the aggregate Loan Balance of the
Home Equity Loans in Group I as of the Cut-Off Date, which may provide for
a "balloon" payment due at the end of the 15th year, and no Home Equity
Loan is a graduated payment loan;
(ix) As of the Startup Day, each Mortgage is a valid and enforceable
first or second lien of record (or is in the process of being recorded) on
the Property subject in the case of any Second Mortgage Loan only to a
Senior Lien on such Property and subject in all cases to the exceptions to
title set forth in the title insurance policy (or the binding commitment
therefor) or attorney's opinion of title, with respect to the related Home
Equity Loan, which exceptions are generally acceptable to banking
institutions in connection with their regular mortgage lending activities,
and such other exceptions to which similar properties are commonly subject
and which do not individually, or in the aggregate, materially and
adversely affect the benefits of the security intended to be provided by
such Mortgage;
46
(x) Immediately prior to the transfer and assignment of the Home
Equity Loans by the Seller, the Conduit Seller or the Conduit Seller II,
as applicable, to the Depositor and by the Depositor to the Trustee herein
contemplated, the Seller, the Conduit Sellers and the Depositor, as the
case may be, each held good and marketable title (without any implication
of a ready market for the sale thereof) to, and was the sole owner of,
each Home Equity Loan (including the related Note) conveyed by the Seller
(or either of the Conduit Sellers, as applicable) subject to no liens,
charges, mortgages, encumbrances or rights of others except as set forth
in clause (ix) or other liens which will be released simultaneously with
such transfer and assignment; and immediately upon the transfer and
assignment herein contemplated, the Trustee will hold good and marketable
title (without any implication of a ready market for the sale thereof) to,
and be the sole owner of, each Home Equity Loan subject to no liens,
charges, mortgages, encumbrances or rights of others except as set forth
in paragraph (ix) or other liens which will be released simultaneously
with such transfer and assignment;
(xi) As of the Cut-Off Date, 0.12% of the Home Equity Loans are
between 30 and 59 days Delinquent and none of the Home Equity Loans is
more than 59 days Delinquent;
(xii) To the best knowledge of the Seller or the Servicer, as
applicable, there is no delinquent tax or assessment lien on any Property,
and each Property is free of substantial damage and is in good repair
(ordinary wear and tear excepted);
(xiii) To the best knowledge of the Seller or the Servicer, as
applicable, there is no valid and enforceable right of offset, claim,
defense or counterclaim to any Note or Mortgage, including the obligation
of the related Mortgagor to pay the unpaid principal of or interest on
such Note, nor has any such claim, defense, offset or counterclaim been
asserted;
(xiv) To the best knowledge of the Seller or the Servicer, as
applicable, there is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in all
material respects with applicable state and federal laws and regulations,
including, without limitation, the federal Truth-in-Lending Act (as
amended by the Xxxxxx Community Development and Regulatory Improvement Act
of 1994) and other consumer protection, usury, equal credit opportunity,
disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) if a title
insurance policy is not available in the applicable state, an attorney's
opinion of title has been obtained but no title policy has been obtained,
(b) for certain of the Home Equity Loans the original principal balance of
which was equal to or less than $40,000, a title report and indemnity has
been obtained, or (c) a lender's title insurance policy (or a binding
commitment therefor), issued in standard American Land Title Association
form by a title insurance company authorized to transact business in the
state in which the related
47
Property is situated, in an amount at least equal to the original balance
of such Home Equity Loan together, in the case of a Second Mortgage Loan,
with the then-original principal amount of the mortgage note relating to
the Senior Lien, insuring the mortgagee's interest under the related Home
Equity Loan as the holder of a valid first or second mortgage lien of
record on the real Property described in the related Mortgage, as the case
may be, subject only to exceptions of the character referred to in
paragraph (ix) above, was effective on the date of the origination of such
Home Equity Loan, and, as of the Startup Day, such policy (or commitment)
is valid and thereafter (or upon issuance pursuant to the commitment) such
policy shall continue in full force and effect;
(xvii) The improvements upon each Property are covered by a valid
and existing hazard insurance policy with a carrier generally acceptable
to the Servicer that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance
of the related Home Equity Loan (together, in the case of a Second
Mortgage Loan, with the outstanding principal balance of the Senior Lien),
(B) the minimum amount required to compensate for damage or loss on a
replacement cost basis or (C) the full insurable value of the Property;
(xviii) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the requirements
of the current guidelines of the Flood Insurance Administration is in
effect with respect to such Property with a carrier generally acceptable
to the Servicer in an amount representing coverage not less than the least
of (A) the outstanding principal balance of the related Home Equity Loan
(together, in the case of a Second Mortgage Loan, with the outstanding
principal balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973;
(xix) Each Mortgage and Note are the legal, valid and binding
obligation of the maker thereof and are enforceable in accordance with
their terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law),
and all parties to each Home Equity Loan had full legal capacity to
execute all documents relating to such Home Equity Loan and convey the
estate therein purported to be conveyed;
(xx) The Seller or the Servicer, as applicable, has caused and will
cause to be performed any and all acts required to be performed to
preserve the rights and remedies of the Trustee in any Insurance Policies
applicable to any Home Equity Loans delivered by the Seller or either of
the Conduit Sellers including, without limitation, any necessary
notifications of insurers, assignments of policies or interests therein,
and establishments of co-insured, joint loss payee and mortgagee rights in
favor of the Trustee;
48
(xxi) As of the Cut-Off Date, no more than 0.26% of the aggregate
Loan Balance of the Home Equity Loans in either Home Equity Loan Group is
secured by Properties located within any single zip code area;
(xxii) Each original Mortgage was recorded or is in the process of
being recorded, and all subsequent assignments of the original Mortgage
(other than unrecorded warehouse assignments which are being
simultaneously released in connection with the Closing) have been
delivered for recordation or have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien
thereof as against creditors of or purchasers from the Seller or either of
the Conduit Sellers (or, subject to Section 3.05 hereof, are in the
process of being recorded); each Mortgage and assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Property securing such Mortgage is located;
(xxiii) The terms of each Note and each Mortgage have not been
impaired, waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the Owners and the Certificate Insurer and which has been delivered to
the Trustee. The substance of any such waiver, alteration or modification
is reflected on the related Schedule of Home Equity Loans;
(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to make
future advances thereunder. Any and all requirements as to completion of
any on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing or recording such Home Equity Loans were
paid and the Mortgagor is not entitled to any refund of any amounts paid
or due under the related Note or Mortgage;
(xxv) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvi) No Home Equity Loan has a shared appreciation feature or
other contingent interest feature;
(xxvii) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
(xxviii) Each Mortgage contains a provision for the acceleration of
the payment of the unpaid principal balance of the related Home Equity
Loan in the event the related Property is sold without the prior consent
of the mortgagee thereunder;
(xxix) Any advances made after the date of origination of a Home
Equity Loan but prior to the Cut-Off Date have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the respective Schedule of Home
Equity Loans. The consolidated principal amount does not exceed the
original principal amount of the related Home Equity Loan. No Note permits
49
or obligates the Servicer to make future advances to the related
Mortgagor at the option of the Mortgagor;
(xxx) To the best knowledge of the Seller or the Servicer, as
applicable, there is no proceeding pending or threatened for the total or
partial condemnation of any Property, nor is such a proceeding currently
occurring, and each Property is undamaged by waste, fire, water, flood,
earthquake, earth movement or other casualty;
(xxxi) All of the improvements which were included for the purposes
of determining the Appraised Value of any Property lie wholly within the
boundaries and building restriction lines of such Property, and no
improvements on adjoining properties encroach upon such Property, and are
stated in the title insurance policy and affirmatively insured;
(xxxii) To the best knowledge of the Seller or the Servicer, as
applicable, (A) no improvement located on or being part of any Property is
in violation of any applicable zoning law or regulation and (B) all
inspections, licenses and certificates required by applicable law to be
made or issued with respect to all occupied portions of each Property and
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting certificates,
have been made by or obtained from the appropriate authorities and such
Property is lawfully occupied under the applicable law;
(xxxiii) With respect to each Mortgage constituting 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 such Mortgage,
and no fees or expenses are or will become payable by the Owners or the
Trust to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the related Mortgagor;
(xxxiv) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for
the realization against the related Property of the benefits of the
security, including (A) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (B) otherwise by judicial foreclosure. There
is no homestead or other exemption other than any applicable Mortgagor
redemption rights available to the related Mortgagor which would
materially interfere with the right to sell the related Property at a
trustee's sale or the right to foreclose the related Mortgage;
(xxxv) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; and none of the Servicer, the Seller, the Conduit
Sellers nor the Conduit Servicers, as applicable, has waived any default,
breach, violation or event of acceleration or advanced funds, directly or
indirectly, for the payment of any amount required under any Home Equity
Loan;
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(xxxvi) No instrument of release or waiver has been executed in
connection with any Home Equity Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if any,
and which has been delivered to the Trustee;
(xxxvii) Reserved;
(xxxviii) Each Home Equity Loan was underwritten in accordance with
or reunderwritten to comply with the credit underwriting guidelines of the
Seller as set forth in the Seller's Policies and Procedures Manual, as in
effect on the date hereof, and such Manual conforms in all material
respects to the description thereof set forth in the Registration
Statement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject Property;
(x1) The Home Equity Loans were not selected for inclusion in the
Trust on any basis intended to adversely affect the Trust or the
Certificate Insurer;
(x1i) No more than 1.97% and 1.23% of the aggregate Loan Balance of
the Home Equity Loans in Group I and Group II, respectively, as of the
Cut-Off Date, are secured by Properties that are non-owner occupied
Properties (i.e., investor-owned and vacation);
(x1ii) The Seller or the Servicer, as applicable, has no actual
knowledge that there exist any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive Environmental
Response Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental
legislation, on any Property, and no violations of any local, state or
federal environmental law, rule or regulation exist with respect to any
Property;
(x1iii) The Seller (and, the originator, if not the Seller) was
properly licensed or otherwise authorized, to the extent required by
applicable law, to originate or purchase each Home Equity Loan; and the
consummation of the transactions herein contemplated, including, without
limitation, the receipt of interest by the Owners and the ownership of the
Home Equity Loans by the Trustee as trustee of the Trust will not involve
the violation of such laws;
(x1iv) With respect to each Property subject to a ground lease (i)
the current ground lessor has been identified and all ground rents which
have previously become due and owing have been paid; (ii) the ground lease
term extends, or is automatically renewable, for at least five years
beyond the maturity date of the related Home Equity Loan; (iii) the ground
lease has been duly executed and recorded; (iv) the amount of the ground
rent and any increases therein are clearly identified in the lease and are
for predetermined amounts at predetermined times; (v) the ground rent
payment is included in the borrower's monthly payment as an expense item
in determining the qualification of the borrower for such Home Equity
Loan; (vi) the Trust has the right to cure defaults on the ground lease;
and (vii) the terms and conditions of the leasehold do not prevent the
51
free and absolute marketability of the Property. As of the Cut-Off Date,
the Loan Balance of the Home Equity Loans with related Properties subject
to ground leases does not exceed 2.0% of the Original Aggregate Loan
Balance;
(x1v) As of the Startup Day, with respect to any Second Mortgage
Loan, none of the Seller, the Servicer, the Conduit Sellers nor the
Conduit Servicers, as applicable, has received a notice of default of any
Senior Lien secured by any Property which has not been cured by a party
other than the Seller;
(x1vi) No Home Equity Loan is subject to a rate reduction pursuant
to a buydown program;
(x1vii) Reserved;
(x1viii) The Coupon Rate on each Home Equity Loan is calculated on
the basis of a year of 360 days with twelve 30-day months;
(x1ix) Each Home Equity Loan was originated by the Seller, an
Affiliate of the Seller or a broker for simultaneous assignment to the
Seller or was acquired by the Seller from correspondent lenders and
reunderwritten to comply with the Seller's underwriting standards;
(1) Neither the operation of any of the terms of each Note and each
Mortgage nor the exercise of any right thereunder will render either the
Note or the Mortgage unenforceable, in whole or in part, nor subject it to
any right of rescission, claim, set-off, counterclaim or defense,
including, without limitation, the defense of usury;
(1i) Any adjustment to the Coupon Rate on a Home Equity Loan in
Group II has been legal, proper and in accordance with the terms of the
related Note;
(1ii) No Home Equity Loan in Group II is subject to negative
amortization;
(1iii) As of the Cut-Off Date, the FTC holder regulation provided in
16 C.F.R. Part 433 applies to none of the Home Equity Loans;
(1iv) As of the Cut-Off Date, a portion of the Home Equity Loans are
"mortgages" as defined in 15 U.S.C. 1602(aa), and with respect to each
such Home Equity Loan, no Mortgagor has or will have a claim or defense
under such law;
(1v) Reserved;
(1vi) The rights with respect to each Home Equity Loan are
assignable by the Seller or the Conduit Sellers, as applicable, without
the consent of any Person other than consents which will have been
obtained on or before the Startup Day;
(1vii) The Seller or either of the Conduit Sellers, as applicable,
has duly fulfilled all obligations to be fulfilled on the lender's part
under or in connection with the origination, acquisition and assignment of
the Home Equity Loans and the related
52
Mortgage and Note, and has done nothing to impair the rights of the
Trustee, the Certificate Insurer or the Owners in payments with respect
thereto;
(1viii) To the Seller's or the Servicer's, as applicable, knowledge,
the documents, instruments and agreements submitted by each Mortgagor for
loan underwriting were not falsified and contain no untrue statement of a
material fact and do not omit to state a material fact required to be
stated therein or necessary to make the information and statements
contained therein not misleading.
(1ix) No Home Equity Loan matures later than April 25, 2031.
(1x) The first date on which the applicable Mortgagor must make a
payment on each Home Equity Loan is no later than April 1, 2001; and
(1xi) With respect to each Home Equity Loan that is a Second
Mortgage Loan:
(a) The related Senior Lien does not provide for negative
amortization.
(b) None of the Servicer, the Seller, the Conduit Seller, the
Conduit Servicer, the Conduit Seller II or the Conduit Servicer II
as applicable, has received, or is aware of, a notice of default of
any Senior Lien which has not been cured.
(c) To the best knowledge of the Seller or the Servicer, as
applicable, no funds provided to the Mortgagor from a Second
Mortgage Loan were concurrently used as a down payment for the
Senior Lien.
(c) In the event that any such repurchase pursuant to this Section results
in a prohibited transaction tax as specified in the REMIC Opinion delivered
pursuant to Section 3.04(a), the Trustee shall immediately notify the Seller in
writing thereof and the Seller will, within 10 days of receiving notice thereof
from the Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately available
funds. In the event that any Qualified Replacement Mortgage is delivered by the
Seller to the Trust pursuant to Section 3.04 or Section 3.06 hereof, the Seller
shall be obligated to take the actions described in Section 3.04(a) with respect
to such Qualified Replacement Mortgage upon the discovery by any of the
Depositor, the Owners, the Seller, the Conduit Sellers, the Servicer, the
Certificate Insurer, any Sub-Servicer, the Custodian or the Trustee that the
statements set forth in subsection (b) above are untrue in any material respect,
without regard to any limitation set forth therein concerning the knowledge of
the Seller or the Servicer as to facts stated therein, on the date such
Qualified Replacement Mortgage is conveyed to the Trust, such that the interests
of the Owners or the Certificate Insurer in the related Qualified Replacement
Mortgage are, or may be, materially and adversely affected; provided, however,
that for the purposes of this subsection (c) the statements in subsection (b)
above referring to items "as of the Cut-Off Date" or "as of the Startup Day"
shall be deemed to refer to such items as of the Replacement Cut-Off Date or as
of the date such Qualified Replacement Mortgage is conveyed to the Trust,
respectively. Notwithstanding the fact that a representation contained in
subsection (b) above may be limited to the Seller's or the Servicer's knowledge,
such
53
limitation shall not relieve CHEC of its substitution or repurchase obligation
under this Section and Section 3.06 hereof.
(d) It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Home Equity Loans (including Qualified Replacement Mortgages) to the
Trustee or the Custodian, on behalf of the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05. Sale Treatment of the Home Equity Loans and Qualified
Replacement Mortgages.
(a) The transfer by the Seller and the Conduit Sellers to the Depositor
and by the Depositor to the Trustee of the Home Equity Loans set forth on the
applicable Schedule of Home Equity Loans is absolute and is intended by the
Owners and all parties hereto to be treated as a sale by the Seller, the Conduit
Sellers and the Depositor.
In the event that any such conveyance is deemed to be a loan, the parties
intend that each of the Seller and the Conduit Sellers shall be deemed to have
granted to the Depositor and the Depositor shall be deemed to have granted to
the Trustee a security interest in the Trust Estate, and that this Agreement
shall constitute a security agreement under applicable law.
(b) In connection with the transfer and assignment of the Home Equity
Loans, CHEC agrees to:
(i) deliver without recourse to the Custodian, on behalf of the
Trustee, on the Startup Day with respect to each Home Equity Loan, (A) the
original Note endorsed in blank or to the order of the Trustee ("Pay to
the order of Bank One, National Association, as Trustee for Centex Home
Equity Loan Trust 2001-A, without recourse") and signed by manual
signature of the Seller, the Conduit Seller or the Conduit Seller II, as
applicable, (B) either (1) if the original title insurance policy is not
available, the original title insurance commitment or a copy thereof
certified as a true copy by the closing agent or CHEC, and when available,
the original title insurance policy or a copy certified by the issuer of
the title insurance policy, (2) if title insurance is not available in the
applicable state, the attorney's opinion of title, or (3) for a Home
Equity Loan the original principal balance of which was equal to or less
than $40,000, a title report and indemnity, (C) originals or copies of all
intervening assignments certified as true copies by the closing agent or
CHEC, showing a complete chain of title from origination to the Seller or
either of the Conduit Sellers, if any, including warehousing assignments,
if recorded, (D) originals of all assumption and modification agreements,
if any, (E) either: (1) the original Mortgage, with evidence of recording
thereon (if such original Mortgage has been returned to the Seller or
either of the Conduit Sellers, as applicable, from the applicable
recording office), or a copy of the Mortgage certified as a true copy by
the closing agent or an Authorized Officer of CHEC, or (2) a copy of the
Mortgage certified
54
by the public recording office in those instances where the original
recorded Mortgage has been lost and (F) the original assignments of
Mortgages (as described in clause (b)(ii)) in recordable form and
acceptable for recording in the state or other jurisdiction where the
Property is located;
(ii) cause, within 60 days following the Startup Day with respect to
the Home Equity Loans, assignments of the Mortgages from the Seller or
either of the Conduit Sellers, as applicable, to "Bank One, National
Association, as Trustee of Centex Home Equity Loan Trust 2001-A under the
Pooling and Servicing Agreement dated as of March 1, 2001" to be submitted
for recording in the appropriate jurisdictions; provided, further, that
CHEC shall not be required to record an assignment of a Mortgage if CHEC
furnishes to the Trustee and the Certificate Insurer, on or before the
Startup Day, at CHEC's expense, an Opinion of Counsel with respect to the
relevant jurisdiction that such recording is not necessary to perfect the
Trustee's interest in the related Home Equity Loans (in form and substance
reasonably satisfactory to the Trustee, the Certificate Insurer and the
Rating Agencies); provided further, however, notwithstanding the delivery
of any legal opinions, each assignment of Mortgage shall be recorded by
the Custodian on behalf of the Trustee at the expense of CHEC upon the
earliest to occur of: (i) reasonable direction by the Certificate Insurer,
(ii) the occurrence of a Servicer Termination Event, (iii) if the Seller
is not the Servicer and with respect to any one assignment of Mortgage,
the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Mortgagor under the related Mortgage, or (iv) the occurrence of a
bankruptcy or insolvency relating to the Seller, the Conduit Seller or the
Conduit Seller II, as applicable;
(iii) deliver the title insurance policy or title searches or
reports, the original Mortgages and such recorded assignments, together
with originals or duly certified copies of any and all prior assignments
(other than unrecorded warehouse assignments), to the Custodian, on behalf
of the Trustee, within 15 days of receipt thereof by CHEC, but in any
event, with respect to any Mortgage as to which original recording
information has been made available to the Seller or either of the Conduit
Sellers, within one year after the Startup Day; and
(iv) furnish to the Trustee, the Certificate Insurer and the Rating
Agencies, at CHEC's expense, an Opinion of Counsel with respect to the
sale and perfection of the Home Equity Loans delivered to the Trust in
form and substance satisfactory to the Certificate Insurer.
In instances where the original recorded Mortgage cannot be delivered by
CHEC to the Custodian on behalf of the Trustee prior to or concurrently with the
execution and delivery of this Agreement due to a delay in connection with
recording, CHEC may in lieu of delivering such original recorded Mortgage,
deliver to the Custodian on behalf of the Trustee a copy thereof, provided that
CHEC certifies that the original Mortgage has been delivered to a title
insurance company for recordation after receipt of its policy of title insurance
or binder therefor. In all such instances, CHEC will deliver or cause to be
delivered the original recorded Mortgage to the Custodian on behalf of the
Trustee promptly upon receipt of the original recorded Mortgage but in no event
later than one year after the Startup Day.
55
CHEC hereby confirms to the Trustee that it has made the appropriate
entries in its general records to indicate that such Home Equity Loans have been
transferred to the Trustee and constitute part of the Trust Estate in accordance
with the terms of the trust created hereunder.
Notwithstanding anything to the contrary contained in this Section 3.05,
in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor and each of the Sellers shall
be deemed to have satisfied their obligations hereunder upon delivery to the
Custodian, on behalf of the Trustee, of a copy of such Mortgage, such assignment
or assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred in
clause (b)(ii) above, CHEC shall deliver to the Custodian on behalf of the
Trustee, with a copy to the Trustee, a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by CHEC, which list
shall state the reason why CHEC has not yet submitted such Mortgage assignments
for recording. With respect to any Mortgage assignment disclosed on such list as
not yet submitted for recording for a reason other than a lack of original
recording information, the Custodian, on behalf of the Trustee, shall make an
immediate demand on CHEC to prepare such Mortgage assignments, and shall inform
the Certificate Insurer, in writing, of its failure to prepare such Mortgage
assignments. Thereafter, the Custodian, on behalf of the Trustee, shall
cooperate in executing any documents submitted to the Custodian, on behalf of
the Trustee in connection with this provision. Following the expiration of the
60-day period referred to in clause (b)(ii) above, CHEC shall promptly prepare a
Mortgage assignment for any Mortgage for which original recording information is
subsequently received by CHEC, and shall promptly deliver a copy of such
Mortgage assignment to the Custodian, on behalf of the Trustee. CHEC agrees that
it will follow its normal servicing procedures and attempt to obtain the
original recording information necessary to complete a Mortgage assignment. In
the event that CHEC is unable to obtain such recording information with respect
to any Mortgage prior to the end of the 18th calendar month following the
Startup Day and has not provided to the Custodian, on behalf of the Trustee a
Mortgage assignment with evidence of recording thereon relating to the
assignment of such Mortgage to the Trustee, the Custodian, on behalf of the
Trustee shall notify CHEC of its obligation to provide a completed assignment
(with evidence of recording thereon) on or before the end of the 20th calendar
month following the Startup Day. A copy of such notice shall be sent by the
Custodian, on behalf of the Trustee to the Certificate Insurer and the Trustee.
If no such completed assignment (with evidence of recording thereon) is provided
before the end of such 20th calendar month, the related Home Equity Loan shall
be deemed to have breached the representation contained in clause (xxii) of
Section 3.04(b) hereof; provided, however, that if as of the end of such 20th
calendar month CHEC demonstrates to the satisfaction of the Certificate Insurer
that it is exercising its best efforts to obtain such completed assignment and,
during each month thereafter until such completed assignment is delivered to the
Custodian, on behalf of the Trustee, CHEC continues to demonstrate to the
satisfaction of the Certificate Insurer that it is exercising its best efforts
to obtain such completed assignment, the related Home Equity Loan will not be
deemed to have breached such representation. The requirement to deliver a
completed assignment with evidence of recording thereon will be deemed satisfied
upon delivery of a copy of the completed assignment certified by the applicable
public recording office.
56
Copies of all Mortgage assignments received by the Custodian on behalf of
the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be accomplished
at the expense of CHEC.
(c) In the case of Home Equity Loans which have been prepaid in full on or
after the Cut-Off Date and prior to the Startup Day, CHEC, in lieu of the
foregoing, will deliver within six (6) days after the Startup Day to the Trustee
a certification of an Authorized Officer in the form set forth in Exhibit D.
(d) CHEC shall transfer, assign, set over and otherwise convey, without
recourse, to the Trustee all right, title and interest of CHEC in and to any
Qualified Replacement Mortgage delivered to the Custodian, on behalf of the
Trustee on behalf of the Trust by CHEC pursuant to Section 3.04 or 3.06 hereof
and all its right, title and interest to principal and interest due on such
Qualified Replacement Mortgage on and after the applicable Replacement Cut-Off
Date; provided, however, that CHEC shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such Qualified
Replacement Mortgage prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection with
a repurchase thereof or the conveyance of a Qualified Replacement Mortgage
therefor, the Trustee will transfer, assign, set over and otherwise convey
without recourse or representation, on CHEC's order, all of its right, title and
interest in and to such released Home Equity Loan and all the Trust's right,
title and interest to principal and interest due on such released Home Equity
Loan after the applicable repurchase date or Replacement Cut-Off Date, as the
case may be; provided, however, that the Trust shall reserve and or and retain
all right, title and interest in and to payments of principal and interest due
on such released Home Equity Loan prior to such repurchase date or Replacement
Cut-Off Date, as the case may be.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, CHEC agrees to (i)
deliver or cause to be delivered without recourse to the Custodian, on behalf of
the Trustee on the date of delivery of such Qualified Replacement Mortgage the
original Note relating thereto, endorsed in blank or to the order of the
Trustee, (ii) cause promptly to be recorded an assignment in the appropriate
jurisdictions, (iii) deliver or cause to be delivered the original Qualified
Replacement Mortgage and such recorded assignment, together with original or
duly certified copies of any and all prior assignments, to the Custodian, on
behalf of the Trustee within 15 days of receipt thereof by CHEC (but in any
event within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection with
a repurchase or the conveyance of a Qualified Replacement Mortgage, the
Custodian, on behalf of the Trustee shall deliver on the date of such repurchase
or conveyance of such Qualified Replacement Mortgage and on the order of CHEC
(i) the original Note relating thereto, endorsed,
57
without recourse or representation, in blank or to the order of CHEC, (ii) the
original Mortgage so released and all assignments relating thereto and (iii)
such other documents as constituted the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording, or
is returned from the recorder's office unrecorded due to a defect therein, CHEC
shall prepare or cause to be prepared a substitute assignment or cure such
defect, as the case may be, and thereafter cause each such assignment to be duly
recorded.
Section 3.06. Acceptance by Trustee; Certain Substitutions of Home Equity
Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver and the Trustee agrees to
cause the Custodian to execute and deliver on behalf of the Trustee on the
Startup Day an acknowledgment of receipt of the items delivered by CHEC in the
forms attached as Exhibits E-1 and E-2 hereto, respectively, and declares
through the Custodian that it will hold such documents and any amendments,
replacement or supplements thereto, as well as any other assets included in the
definition of Trust Estate and delivered to the Custodian, on behalf of the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners and the Certificate Insurer. The Trustee agrees,
for the benefit of the Owners and the Certificate Insurer, to cause the
Custodian to review such items within 45 days after the Startup Day (or, with
respect to any document delivered after the Startup Day, within 45 days of
receipt and with respect to any Qualified Replacement Mortgage, within 45 days
after the assignment thereof) and to deliver to the Depositor, the Seller, the
Conduit Sellers, the Servicer, the Trustee and the Certificate Insurer a
certification in the form attached hereto as Exhibit F (a "Pool Certification")
to the effect that, as to each Home Equity Loan listed in the Schedule of Home
Equity Loans (other than any Home Equity Loan paid in full or any Home Equity
Loan specifically identified in such Pool Certification as not covered by such
Pool Certification), (i) all documents required to be delivered to it pursuant
to Section 3.05(b)(i) of this Agreement have been executed and are in its
possession and that the Notes have been endorsed as set forth in Section
3.05(b)(i) hereof, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Home Equity Loan and (iii)
based on its examination and only as to the foregoing documents, the information
set forth on the Schedule of Home Equity Loans accurately reflects the
information set forth in the File, except as may be indicated in an exception
report in the form attached hereto as Exhibit J ("Exception Report"), such
Exception Report to be provided electronically concurrently with the delivery of
the Pool Certification to the e-mail addresses specified by the recipients. The
Custodian, on behalf of the Trustee, shall have no responsibility for reviewing
any File except as expressly provided in this subsection 3.06(a). Without
limiting the effect of the preceding sentence, in reviewing any File, the
Custodian, on behalf of the Trustee, shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment is in proper form (except to determine if the Trustee is the
assignee), whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded. The
Custodian, on behalf of the Trustee, shall be under no duty or obligation to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are
58
genuine, enforceable, or appropriate for the represented purpose or that they
are other than what they purport to be on their face, nor shall the Custodian,
on behalf of the Trustee, be under any duty to determine independently whether
there are any intervening assignments or assumption or modification agreements
with respect to any Home Equity Loan.
(b) If the Custodian, on behalf of the Trustee during such 45-day period
finds any document constituting a part of a File which is not executed, has not
been received, or is unrelated to the Home Equity Loans identified in the
Schedule of Home Equity Loans, or that any Home Equity Loan does not conform to
the description thereof as set forth in the Schedule of Home Equity Loans, the
Custodian, on behalf of the Trustee shall promptly so notify the Depositor,
CHEC, the Owners and the Certificate Insurer. In performing any such review, the
Custodian, on behalf of the Trustee may conclusively rely on CHEC as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the review of the items delivered by CHEC pursuant
to Section 3.05(b)(i) is limited solely to confirming that the documents listed
in Section 3.05(b)(i) have been executed and received, relate to the Files
identified in the Schedule of Home Equity Loans and conform to the description
thereof in the Schedule of Home Equity Loans. CHEC agrees to use reasonable
efforts to remedy a material defect in a document constituting part of a File of
which it is so notified by the Custodian, on behalf of the Trustee. If, however,
within 90 days after such notice to it respecting such defect CHEC has not
remedied the defect and the defect materially and adversely affects the interest
in the related Home Equity Loan of the Owners or the Certificate Insurer, CHEC
will (or will cause an Affiliate to) on the next succeeding Monthly Remittance
Date (i) substitute in lieu of such Home Equity Loan a Qualified Replacement
Mortgage and deliver the Substitution Amount to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home Equity Loan at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account. In connection with any proposed purchase or substitution of a Home
Equity Loan, CHEC shall cause at its expense to be delivered to the Trustee and
to the Certificate Insurer an Opinion of Counsel experienced in federal income
tax matters stating whether or not such a proposed purchase or substitution
would constitute a Prohibited Transaction for the Trust or would jeopardize the
status of either REMIC I or REMIC II as a REMIC, and CHEC shall only be required
to take either such action to the extent such action would not constitute a
Prohibited Transaction for the Trust and would not jeopardize the status of
either REMIC I or REMIC II as a REMIC. Any required purchase or substitution, if
delayed by the absence of such opinion, shall nonetheless occur upon the earlier
of (i) the occurrence of a default or imminent default with respect to the Home
Equity Loan or (ii) the delivery of such opinion.
(c) In addition to the foregoing, the Custodian, on behalf of the Trustee
also agrees to make a review during the 12th month after the Startup Day
indicating the current status of the exceptions previously indicated on the
Exception Report delivered electronically concurrently with the Pool
Certification (the "Final Certification") and, by the end of the 12th month
after the Startup Day, deliver electronically to the Depositor, the Seller, the
Conduit Sellers, the Servicer, the Trustee and the Certificate Insurer (to the
e-mail addresses specified by the recipients) such Final Certification. After
delivery of the Final Certification, the Custodian, on behalf of the Trustee and
the Servicer shall provide electronically to the Certificate Insurer and the
Trustee (to the e-mail addresses specified by the recipients) no less frequently
than monthly updated
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certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07. Reserved.
Section 3.08. Custodian.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, and 8.14 and the related Pool Certification and Final Certification
shall be performed by the Custodian on the Trustee's behalf pursuant to the
Custodial Agreement; provided, however, the Trustee shall remain primarily
liable for such obligations. The fees and expenses of the Custodian will be paid
by the Servicer.
If, pursuant to Section 4.12 of the Custodial Agreement, the Custodian
shall request written instructions from the Trustee, the Trustee hereby agrees
to promptly provide such instructions.
Section 3.09. Cooperation Procedures. CHEC shall, in connection with the
delivery of each Qualified Replacement Mortgage to the Custodian, on behalf of
the Trustee, provide the Trustee with information set forth in the Schedule of
Home Equity Loans with respect to such Qualified Replacement Mortgage.
(a) The Seller, the Conduit Sellers, the Depositor, the Servicer and the
Trustee covenant to provide each other with all data and information required to
be provided by them hereunder at the times required hereunder, and additionally
covenant reasonably to cooperate with each other in providing any additional
information required to be obtained by any of them in connection with their
respective duties hereunder.
(b) The Servicer shall maintain such accurate and complete accounts,
records and computer systems pertaining to each File as shall enable it and the
Trustee to comply with this Agreement. In performing its recordkeeping duties
the Servicer shall act in accordance with the servicing standards set forth in
this Agreement. The Servicer shall conduct, or cause to be conducted, periodic
audits of its accounts, records and computer systems as set forth in Sections
8.16 and 8.17 hereof. The Servicer shall promptly report in writing to the
Trustee any failure on its part to maintain its accounts, records and computer
systems herein provided and promptly take appropriate action to remedy any such
failure.
(c) CHEC further confirms to the Trustee that it has caused the portions
of the electronic ledger relating to the Home Equity Loans to be clearly and
unambiguously marked to indicate that such Home Equity Loans have been sold,
transferred, assigned and conveyed through the Depositor to the Trustee and
constitute part of the Trust Estate in accordance with the terms of the trust
created hereunder.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02. Sale of Certificates.
At 11:00 a.m. New York City time on the Startup Day, at the offices of
Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000 (or at
such other location acceptable to the Seller), the Seller and the Conduit
Sellers will sell and convey the Home Equity Loans and the money, instruments
and other property related thereto to the Depositor and the Depositor will
convey the Home Equity Loans and the money, instruments and other property
related thereto to the Trustee, and the Depositor will cause the Certificate
Insurance Policies to be delivered to the Trustee and the Trustee will deliver
(i) to the Underwriters (as designee of the Depositor), the Class A Certificates
with an aggregate Percentage Interest in each Class equal to 100% registered in
the name of Cede & Co. or in such other names as the Underwriters shall direct,
against payment to the Depositor of the purchase price thereof by wire transfer
of immediately available funds to the Trustee as designee of the Depositor and
(ii) to the respective registered owners thereof (as designees of the Depositor,
the Seller and the Conduit Sellers), Class R Certificates registered in the name
of CHEC Residual Corporation, a Nevada corporation, and the Class X-IO
Certificates, registered in the name of CHEC Residual Corporation, a Nevada
corporation (all such events shall be referred to herein as the "Closing").
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" thereof, no debt of
any Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and the terms of the related
Note and except for the rights of the Trustee on behalf of the Owners of the
Class A Certificates with respect to the Certificate Insurance Policies). The
Class A Certificates are payable solely from payments received on or with
respect to the Home Equity Loans (net of the Servicing Fees, Trustee Fees, and
Premium Amounts), from moneys in the Principal and Interest Account, except as
otherwise provided herein, from earnings on moneys and the proceeds of property
held as a part of the Trust Estate and, upon the occurrence of certain events,
from Insured Payments. Each Certificate entitles the Owner thereof to receive
monthly on each Distribution Date, in order of priority of distributions with
respect to such Class of Certificates as set forth in Section 7.03, a specified
portion of such payments with respect to the Home Equity Loans, and certain
related Insured Payments, pro rata in accordance with such Owner's Percentage
Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee,
any Certificate prior to the Trustee making the final distribution due thereon.
Any such Certificate as to which the Trustee has made the final distribution
thereon shall be deemed canceled and shall no longer be Outstanding for any
purpose of this Agreement.
Section 5.02. Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class X-IO Certificates and
the Class R Certificates shall be in substantially the forms set forth in
Exhibits X-0, X-0, X-0, X-0, X-0, X-0, X-0, X and C hereof, respectively.
Section 5.03. Execution, Authentication and Delivery.
Each Certificate shall be executed on behalf of the Trust, by the manual
signature of one of the Trustee's Authorized Officers at the written direction
of the Servicer. In addition, each Certificate shall be authenticated by the
manual signature of one of the Trustee's Authorized Officers at the written
direction of the Servicer.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Trustee shall, upon proper authentication by the
Trustee, bind the Trust, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the execution and delivery of such
Certificates or did not hold such offices at the date of authentication of such
Certificates.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04. Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Depositor, the Owners and the
Trustee shall have the right to inspect the Register upon reasonable notice
during the Trustee's normal hours and to obtain copies thereof, and the Trustee
shall have the right to rely upon a certificate executed on behalf of the
Registrar by an Authorized Officer thereof as to the names and addresses of the
Owners of the Certificates and the principal amounts and numbers of such
Certificates.
If a Person other than the Trustee is appointed as Registrar by the Owners
of a majority of the aggregate Voting Rights represented by the Certificates
then Outstanding with the consent of the Certificate Insurer, such Owners shall
give the Trustee, the Certificate Insurer and the Owners prompt written notice
of the appointment of such Registrar and of the location, and any change in the
location, of the Register. In connection with any such appointment the
reasonable fees of the Registrar shall be paid, as expenses of the Trust,
pursuant to Section 7.06 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender for
registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
outstanding principal amount or Percentage Interest of the Certificate so
surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate outstanding principal amount or Percentage Interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
(d) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
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(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6 and Class A-7 Certificates shall be issued in denominations of
$1,000 and integral multiples of $1 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and deliver
the Representation Letter with the Depository in the form provided to the
Trustee by the Depositor.
With respect to the Class A Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Depositor, the Servicer,
the Seller, the Certificate Insurer and the Trustee shall have no responsibility
or obligation to Direct or Indirect Participants or beneficial owners for which
the Depository holds Class A Certificates from time to time as a Depository.
Without limiting the immediately preceding sentence, the Depositor, the
Servicer, the Sellers, the Certificate Insurer and the Trustee shall have no
responsibility or obligation with respect to (i) the accuracy of the records of
the Depository, Cede & Co., or any Direct or Indirect Participant with respect
to the ownership interest in the Class A Certificates, (ii) the delivery to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any notice with
respect to the Class A Certificates or (iii) the payment to any Direct or
Indirect Participant or any other Person, other than a registered Owner of a
Class A Certificate as shown in the Register, of any amount with respect to any
distribution of principal or interest on the Class A Certificates. No Person
other than a registered Owner of a Class A Certificate as shown in the Register
shall receive a certificate evidencing such Class A Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and either of CHEC or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to
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terminate the book-entry system through the Depository or (iii) after the
occurrence of a Servicer Termination Event, the beneficial owners of each Class
of Class A Certificates representing Percentage Interests aggregating not less
than 51% of such Class advises the Trustee and Depository through the Direct or
Indirect Participants in writing that the continuation of a book-entry system
through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Owners is no longer in the best
interests of the Owners, the Class A Certificates shall no longer be restricted
to being registered in the Register in the name of Cede & Co. (or a successor
nominee) as nominee of the Depository. In the case of (i) and (ii) above, CHEC
may determine that the Class A Certificates shall be registered in the name of
and deposited with a successor depository operating a global book-entry system,
as may be acceptable to the CHEC and at the expense of CHEC, or such
depository's agent or designee but, if CHEC does not select such alternative
global book-entry system and in the case of (iii) above, the Class A
Certificates may be registered in whatever name or names registered Owners of
Class A Certificates transferring Class A Certificates shall designate, in
accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Class A Certificate is registered in the name of Cede & Co., as
nominee of the Depository, all distributions of principal or interest on such
Class A Certificates and all notices with respect to such Class A Certificates
shall be made and given, respectively, in the manner provided in the
Representation Letter.
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless (provided, that with
respect to an Owner which is an institutional investor, a letter of indemnity
furnished by it shall be sufficient for this purpose), then, in the absence of
written notice to the Trustee or the Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute on behalf of the
Trust and the Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Class, tenor and aggregate principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the Registrar
or Trustee may require the payment from the transferor or transferee of the
related Certificate of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto; any other expenses in connection
with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in exchange for or
in lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Certificates of the same Class duly issued hereunder and such mutilated,
destroyed, lost or stolen Certificate shall not be valid for any purpose.
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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06. Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Certificate,
the Certificate Insurer, the Trustee and any agent of the Trustee may treat the
Person in whose name any Certificate is registered as the Owner of such
Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
Section 5.07. Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy in effect from time to time.
Section 5.08. Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a Class
R Certificate (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit H.
Each holder of a Class R Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial ownership of a
Class X-IO or Class R Certificate shall be made unless such transfer is exempt
from the registration requirements of the Securities Act, and any applicable
state securities laws or is made in accordance with said Securities Act and
laws. In the event of any such transfer: (i) in the case of transfers for which
an investment letter in the form of Exhibit I-1 or I-2 is provided by the
transferee to the Trustee and the Certificate Insurer, the Trustee or the
Depositor shall require a written Opinion of Counsel acceptable to and in form
and substance satisfactory to the Depositor, the Trustee and the Certificate
Insurer to the effect that such transfer may be made pursuant to an
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exemption, describing the applicable exemption and the basis therefor, from said
Securities Act and laws or is being made pursuant to said Securities Act and
laws, which Opinion of Counsel shall not be an expense of the Depositor, the
Trustee, the Trust Estate or the Certificate Insurer; and (ii) in the case of
transfers for which an investment letter in the form of Exhibit I-1 or I-2 is
provided, the investment letter shall not be an expense of the Depositor, the
Trustee, the Trust Estate or the Certificate Insurer. The Owner of a Class X-IO
or Class R Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Certificate Insurer, the Depositor and the
Sellers 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 X-IO or Class R Certificate shall be made
unless the Trustee shall have received either: (i) a representation letter from
the transferee of such Class X-IO or Class R Certificate, acceptable to and in
form and substance satisfactory to the Trustee and the Certificate Insurer
(which may be combined with the investment letter required by subsection (b)
above), to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA nor a plan or other arrangement subject to
Section 406 of ERISA nor a plan or other arrangement subject to Section 4975 of
the Code (collectively, a "Plan"), nor is acting on behalf of any Plan nor using
the assets of any Plan to effect such transfer or (ii) in the event that any
Class X-IO or Class R Certificate is purchased by a Plan, or by a person or
entity acting on behalf of any Plan or using the assets of any Plan to effect
such transfer (including the assets of any Plan held in an insurance company
separate or general account), an Opinion of Counsel, acceptable to and in form
and substance satisfactory to the Trustee and the Certificate Insurer, which
Opinion of Counsel shall not be at the expense of either the Depositor, the
Trustee, the Certificate Insurer or the Trust Estate, to the effect that the
purchase or holding of any Class X-IO or Class R Certificates will not result in
any non-exempt prohibited transaction under ERISA and/or Section 4975 of the
Code, and will not subject the Trustee to any obligation or liability in
addition to those expressly undertaken under this Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of a Certificate to
or on behalf of any Plan without the delivery to the Trustee and the Certificate
Insurer of an Opinion of Counsel as described above shall be null and void and
of no effect.
(d) Reserved.
(e) No sale or other transfer of any Class X-IO Certificates or Class R
Certificate may be made to the Depositor, to any Person that was, at any time,
an owner of a Home Equity Loan, or to any Seller except in connection with (1)
with respect to the Depositor, the initial issuance of such Certificates by the
Trust to the Depositor and, with respect to CHEC and the Conduit Sellers, the
payment in partial consideration for the Home Equity Loans sold by the
applicable Seller or in payment of any deferred purchase price under the Conduit
Warehousing Facility or the Conduit II Warehousing Facility by the Conduit
Sellers to CHEC on the Startup Day and (2) the contemporaneous transfer of such
Certificates to CHEC Residual Corporation, a Nevada corporation.
(f) Notwithstanding anything to the contrary contained in this Section
5.08, the Class R Certificates and Class X-IO Certificates may be transferred to
CHEC Residual Corporation, a Nevada corporation and wholly-owned subsidiary of
the Seller, without regard to Sections 5.08(b), (c) or (e) above.
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Section 5.09. Assignment of Rights.
Other than with respect to any Class R Certificates (unless the Trustee
shall have received a satisfactory Opinion of Counsel to the effect that such
action with respect to a Class R Certificate will not have an adverse effect on
the status of either REMIC I or REMIC II as a "REMIC") an Owner may pledge,
encumber, hypothecate or assign all or any part of its right to receive
distributions hereunder, but such pledge, encumbrance, hypothecation or
assignment shall not constitute a transfer of an ownership interest sufficient
to render the transferee an Owner of the Trust without compliance with the
provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01. Distributions.
On each Distribution Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Class A Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) in each other case, by check or draft mailed on each Distribution Date or,
if requested by any Owner (other than the Depository) of (A) a Class A
Certificate having an original principal balance of not less than $1,000,000 or
(B) a Class X-IO or Class R Certificate having a Percentage Interest of not less
than 10% in writing not later than one Business Day prior to the applicable
Record Date (which request does not have to be repeated unless it has been
withdrawn), to such Owner by wire transfer to an account within the United
States designated no later than five Business Days prior to the related Record
Date, in each case to each Owner of record on the immediately preceding Record
Date.
Section 6.02. Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
for payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) If CHEC has appointed a Paying Agent pursuant to Section 11.15 hereof,
the Trustee will, on the Business Day immediately preceding each Distribution
Date, deposit with such Paying Agent in immediately available funds an aggregate
sum sufficient to pay the amounts then becoming due on the Certificates (to the
extent funds are then available for such purpose in the Certificate Account for
the Class to which such amounts are due) such sum to be held in trust for the
benefit of the Owners entitled thereto.
(c) CHEC may at any time direct any Paying Agent to pay to the Trustee all
sums held in trust by such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which the sums were held by such Paying
Agent; and upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
(d) CHEC shall require the Paying Agent, including the Trustee on behalf
of the Trust, to comply with all requirements of the Code and applicable state
and local law with respect to the withholding from any distributions made by it
to any Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith, and
the Trustee and Paying Agent agree to comply with such requirements.
(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate remaining
unclaimed by the Owner of such
69
Certificate for the period then specified in the escheat laws of the State of
New York after such amount has become due and payable shall be discharged from
such trust and be paid, upon delivery to the Trustee of an Opinion of Counsel
that such payment is permitted by applicable law, first to the Certificate
Insurer on account of any Reimbursement Amount and second to the Depositor; and
the Owner of such Class A Certificate shall thereafter, as an unsecured general
creditor, look only to the Depositor and not to the Certificate Insurer for
payment thereof (but only to the extent of the amounts so paid to the Depositor)
and all liability of the Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the Trustee or such Paying
Agent before being required to make any such payment, may at the expense of the
Trust cause to be published once, in the eastern edition of The Wall Street
Journal, notice that such money remains unclaimed and that, after a date
specified therein, which shall be not fewer than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be paid to
the Certificate Insurer on account of any Reimbursement Amount or to the
Depositor. The Trustee shall, at the written direction of CHEC, also adopt and
employ, at the expense of CHEC, any other reasonable means of notification of
such payment (including but not limited to mailing notice of such payment to
Owners whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Registrar, the Trustee or any Paying Agent,
at the last address of record for each such Owner).
Section 6.03. Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of the
Owners and the Certificate Insurer and, upon written request of the Certificate
Insurer or, with the consent of the Certificate Insurer, at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor (with the consent of the Certificate Insurer) or
the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Trustee, and the ownership interests of the Owners represented
thereby, in such Trust Estate against the claims of all Persons and
parties.
To the extent not covered by the indemnity or other security contemplated
by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any costs or
expenses associated with this section pursuant to Section 7.03(b)(x).
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the
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Certificate Insurer or the Owners as such rights are set forth in this
Agreement; provided, however, that nothing in this Section shall require any
action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have been
requested by the Certificate Insurer or the Owners of a majority of the Voting
Rights represented by the Certificates then Outstanding with the consent of the
Certificate Insurer (unless a Certificate Insurer Default under clause (a) of
the definition thereof has occurred and is continuing); provided, further,
however, that if there is a dispute with respect to payments under a Certificate
Insurance Policy the Trustee's first responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights, indemnities and
immunities hereunder.
Section 6.04. Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing its
duties hereunder pursuant to Section 10.03(g); provided, that the Trustee shall
remain liable for the performance of any such duties notwithstanding any such
contractual arrangement.
Section 6.05. Negative Covenants.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Owner by reason of the payment of any taxes
levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the Trust, any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement to be
impaired, or permit any Person to be released from any covenant or
obligation with respect to the Trust or to the Certificates under this
Agreement, except as may be expressly permitted hereby or (B) permit any
lien, charge, adverse claim, security interest, mortgage or other
71
encumbrance to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or the
proceeds thereof.
Section 6.06. No Other Powers.
The Trustee will not permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07. Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policies,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the Seller and the
Trustee of such Owner's intention to institute such proceeding;
(2) the Owners of not less than 51% of the Voting Rights represented by
the Certificates then Outstanding shall have made written request to
the Trustee to institute such proceeding in its own name as Trustee
establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amounts are owed to the Certificate Insurer, the
Certificate Insurer has consented in writing thereto (unless a
Certificate Insurer Default as defined in clause (a) of the
definition thereof has occurred and is continuing); and
(6) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Owners of a majority
of the Voting Rights represented by the Certificates then
Outstanding;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the
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Certificate Insurer in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provision of this Agreement.
Section 6.08. Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09. Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee, the Certificate Insurer or to the Owners is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 6.10. Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement shall impair
any such right or remedy or constitute a waiver of such right or remedy. Every
right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or by
the Owners, as the case may be.
Section 6.11. Control by Owners.
The Certificate Insurer or the Owners of a majority of the Voting Rights
represented by the Certificates then Outstanding with the consent of the
Certificate Insurer may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust Estate, including, but not limited to,
those powers set forth in Section 6.03 and Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory to
it; and
(3) the Trustee may take any other action deemed proper by the Trustee,
as the case may be, which is not inconsistent with such direction
(and which does not require Certificate Insurer consent or direction
pursuant to the terms of this Agreement); provided, however, that
the Trustee need not take any action which it determines
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might involve it in liability or may be unjustly prejudicial to the
Owners not so directing.
Section 6.12. Indemnification by CHEC.
CHEC agrees to indemnify and hold the Trustee, the Depositor, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Depositor, the Certificate
Insurer and any Owner sustain in any way related to the failure of Sellers to
perform their duties in compliance with the terms of this Agreement. CHEC shall
immediately notify the Trustee, the Depositor, the Certificate Insurer and each
Owner if a claim is made by a third party that the Servicer has failed to
perform its obligations to service and administer the Home Equity Loans in
compliance with the terms of this Agreement, and CHEC shall assume (with the
consent of the Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Depositor, the Servicer, the Sellers, the Trustee, the Certificate Insurer
and/or Owner in respect of such claim. The Trustee shall, in accordance with
instructions received from CHEC, reimburse CHEC only from amounts otherwise
distributable on the Class X-IO and the Class R Certificates for all amounts
advanced by it pursuant to the preceding sentence, except when a final
nonappealable adjudication determines that the claim relates directly to the
failure of the Sellers to perform their duties in compliance with the terms of
this Agreement. The provisions of this Section 6.12 shall survive the
termination of this Agreement, the resignation or removal of the Trustee and the
payment of the outstanding Certificates.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policies,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it as
part of the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02. Establishment of Accounts.
(a) The Depositor shall cause the Certificate Account and the Supplemental
Interest Reserve Fund to be established on the Startup Day, and the Trustee
shall maintain each of the Certificate Account and the Supplemental Interest
Reserve Fund, at the Corporate Trust Office as an Eligible Account to be held by
the Trustee in the name of the Trust on behalf of (i) in the case of the
Certificate Account, the Owners of the Certificates and the Certificate Insurer;
and (ii) in the case of the Supplemental Interest Reserve Fund, the Owners of
the Class A-7 Certificates.
(b) On each Determination Date the Trustee shall determine (subject to the
terms of Section 10.03(j) hereof, based solely on information provided to it
electronically or in writing by the Servicer) with respect to the immediately
following Distribution Date, the amounts that are expected to be on deposit in
the Certificate Account as of such Distribution Date.
Section 7.03. Flow of Funds.
(a) (i) The Trustee shall deposit in the Certificate Account without
duplication, upon receipt, with respect to Group I, the proceeds of any
liquidation of the assets of the Trust insofar as such assets relate to
Group I, all remittances made to the Trustee pursuant to Sections 8.08(e)
and 8.09 with respect to Group I and the Group I Monthly Remittance Amount
remitted by the Servicer.
(ii) The Trustee shall deposit in the Certificate Account without
duplication, upon receipt, with respect to Group II, the proceeds of any
liquidation of the assets of the Trust insofar as such assets relate to
Group II, all remittances made to the Trustee pursuant to Sections 8.08(e)
and 8.09 with respect to Group II and the Group II Monthly Remittance
Amount remitted by the Servicer.
(b) On each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers (based solely on information provided
by the Servicer in writing), for each Home Equity Loan Group from amounts
deposited in the Certificate Account pursuant to subsection (a) for the related
Home Equity Loan Group in the following order of priority, and each such
allocation, transfer and disbursement shall be treated as having occurred only
after all preceding allocations:
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(i) Concurrently, to the Trustee and the Certificate Insurer, the Trustee
Fee and any Transition Expenses for the related Home Equity Loan Group to the
Trustee and, provided that no Certificate Insurer Default as defined in clause
(a) of the definition thereof has occurred and is continuing, the Premium Amount
for the related Classes of Class A Certificates for the Distribution Date to the
Certificate Insurer.
(ii) To the related Classes of Class A Certificates, the related Current
Interest for the Classes (on a pro rata basis based on each Class A
Certificate's Current Interest without priority among the Class A Certificates)
for the Distribution Date.
(iii) To the related Classes of Class A Certificates, an amount up to the
related Class A Principal Distribution Amount in the following order of
priority:
(A) With respect to the Home Equity Loan Group relating to the Group
I Certificates, the Class A Principal Distribution Amount applicable to
the Group I Certificates shall be distributed as follows:
(1) To the Certificateholders of the Class A-6 Certificates,
an amount equal to the Class A-6 Lockout Distribution Amount until
the Certificate Principal Balance of the Class A-6 Certificates has
been reduced to zero; and
(2) The remainder as follows: first, to the Class A-1
Certificateholders until the Certificate Principal Balance of the
Class A-1 Certificates is reduced to zero; second, to the Class A-2
Certificateholders until the Certificate Principal Balance of the
Class A-2 Certificates is reduced to zero; third, to the Class A-3
Certificateholders until the Certificate Principal Balance of the
Class A-3 Certificates is reduced to zero; fourth, to the Class A-4
Certificateholders until the Certificate Principal Balance of the
Class A-4 Certificates is reduced to zero; fifth, to the Class A-5
Certificateholders until the Certificate Principal Balance of the
Class A-5 Certificates is reduced to zero; and sixth to the Class
A-6 Certificateholders until the Certificate Principal Balance of
the Class A-6 Certificates has been reduced to zero;
provided, however, during the continuance of a Certificate Insurer
Default, if there is a Collateralization Deficit with respect to the Group
I Certificates, then the Class A Principal Distribution Amount applicable
to the Group I Certificates shall be distributed pro rata to the
Certificateholders of the Group I Certificates.
(B) With respect to the Home Equity Loan Group relating to the Group
II Certificates, the Class A Principal Distribution Amount applicable to
the Group II Certificates shall be distributed to the Certificateholders
of the Class A-7 Certificates, until the Certificate Principal Balance of
the Class A-7 Certificates is reduced to zero.
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(iv) Concurrently, to the Trustee and the Certificate Insurer, any unpaid
Trustee Fee and any unpaid Transition Expenses for the unrelated Home Equity
Loan Group to the Trustee and, provided that no Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred and is continuing,
any unpaid Premium Amount for the unrelated Class or Classes of Class A
Certificates for the Distribution Date to the Certificate Insurer.
(v) To the Classes of Class A Certificates with respect to the unrelated
Home Equity Loan Group, the amount of the Available Funds Shortfall with respect
to the unrelated Home Equity Loan Group, allocated to Current Interest on such
Classes (on the same pro rata basis as provided in clause (ii) above), to the
extent of any shortfall in Current Interest, and then to principal (allocated in
the same order of priority as provided in clause (iii) above);.
(vi) To the Certificate Insurer, in the following order of priority, the
sum of:
(1) Any Reimbursement Amount owed to the Certificate Insurer with
respect to the related Classes of Class A Certificates; provided that if a
Certificate Insurer Default as defined in clause (a) of the definition
thereof has occurred and is continuing, then the priority of this
allocation shall follow immediately after clause (vii) below; and
(2) Any unpaid Reimbursement Amount owed to the Certificate Insurer
with respect to the unrelated Classes of Class A Certificates; provided
that if a Certificate Insurer Default as defined in clause (a) of the
definition thereof has occurred and is continuing, then the priority of
this allocation shall follow immediately after clause (viii) below.
(vii) To the Classes of Class A Certificates with respect to the related
Home Equity Loan Group, an amount up to the Extra Principal Distribution Amount
for the related Home Equity Loan Group, until the related Target
Overcollateralization Amount is reached, such amounts to be applied in reduction
of the related Certificate Principal Balances in the same order of priority as
the Class A Principal Distribution Amount is to be so applied for such related
Home Equity Loan Group pursuant to clause (iii) above.
(viii) To the Classes of Class A Certificates with respect to the
unrelated Home Equity Loan Group, an amount equal to any Target Deficiency for
such unrelated Home Equity Loan Group remaining after the distributions above
with respect to the unrelated Home Equity Loan Group, such amounts to be applied
in reduction of the related Certificate Principal Balances in the same order of
priority as the Class A Principal Distribution Amount is to be so applied for
such unrelated Home Equity Loan Group pursuant to clause (iii) above.
(ix) To the Class X-IO Certificate, the lesser of the Class X-IO
Distribution Amount and the Class A-7 Certificateholders' Interest Index
Carryover, provided that, pursuant to Section 7.04 hereof, on any Distribution
Date as to which there is any unpaid
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Class A-7 Certificateholders' Interest Index Carryover, the Trustee will
transfer, from amounts that would otherwise be distributable to the Class
X-IO Certificates pursuant to this clause, the amount of any Class A-7
Certificateholders' Interest Index Carryover into the Supplemental
Interest Reserve Fund, for immediate transfer pursuant to this clause to
the Class A-7 Certificates as payment of the Class A-7 Certificateholders'
Interest Index Carryover.
(x) To the Trustee as reimbursement for all Trustee Reimbursable
Expenses incurred in connection with its duties and obligations under this
Agreement, to the extent not paid as Trustee Fees or Transition Expenses
pursuant to clauses (i) or (iv) above.
(xi) To the Servicer to the extent of any unreimbursed Delinquency
Advances, unreimbursed Servicing Advances and unreimbursed Compensating
Interest.
(xii) To the Class X-IO Certificates, an amount equal to the Class
X-IO Distribution Amount less any amounts thereof applied pursuant to
clause (ix) above; provided, however, that on any Distribution Date on
which the Class X-IO Distribution Amount is distributable pursuant to
Section 9.02(d), any Class X-IO Distribution Amount shall instead be
distributed to the Classes of Class A Certificates of the related Home
Equity Loan Group, such amounts to be applied in reduction of the
Certificate Principal Balance of such Classes in the same order of
priority as the Class A Principal Distribution Amount is to be applied for
such related Home Equity Loan Group pursuant to clause (iii) above, and
then to the Classes of Class A Certificates of the unrelated Home Equity
Loan Group, such amounts to be applied in reduction of the Certificate
Principal Balance of such Classes in the same order of priority as the
Class A Principal Distribution Amount is to be applied for such unrelated
Home Equity Loan Group pursuant to clause (iii) above.
(xiii) To the Class R Certificates, the remainder.
(c) Reserved.
(d) Notwithstanding any of the foregoing provisions, the aggregate amounts
distributed on all Distribution Dates to the Owners of the related Class A
Certificates on account of principal pursuant to Section 7.03(b) shall not
exceed the original Certificate Principal Balance of the related Class A
Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Policy Payments Account. On each Distribution Date,
pursuant to Section 12.02(b) hereof, such amounts will be transferred from the
Policy Payments Account to the Certificate Account and the Trustee shall
distribute such Insured Payments, or the proceeds thereof, to the Owners of such
Class A Certificates, first, to the payment of any unpaid Current Interest for
such Class or Classes of Class A Certificates on a pro rata basis, and second,
any remaining Deficiency Amount shall be applied to the related Class A
Principal Distribution Amount on the related Distribution Date, in the same
order of priority as described in Section 7.03(b)(iii).
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(f) The Trustee or Paying Agent shall (i) receive for each Owner of the
Class A Certificates any Insured Payment from the Certificate Insurer and (ii)
disburse the same to the Owners of the related Class A Certificates as set forth
in Section 7.03(e). Insured Payments disbursed by the Trustee or Paying Agent
from proceeds of the Certificate Insurance Policies shall not be considered
payments by the Trust, nor shall such payments discharge the obligation of the
Trust with respect to such Class A Certificates and the Certificate Insurer
shall be entitled to receive the Reimbursement Amount pursuant to Section
7.03(b) hereof. Nothing contained in this paragraph shall be construed so as to
impose duties or obligations on the Trustee that are different from or in
addition to those expressly set forth in this Agreement.
The rights of the Owners to receive distributions from the proceeds of the
Trust Estate, and all ownership interests of the Owners in such distributions,
shall be as set forth in this Agreement. In this regard, all rights of the
Owners of the Class X-IO and Class R Certificates to receive distributions in
respect of the Class X-IO and Class R Certificates shall be subject and
subordinate to the preferential rights of the holders of the Class A
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Class X-IO and Class R
Certificates in amounts deposited in the Accounts from time to time shall not
vest unless and until such amounts are distributed in respect of the Class X-IO
and Class R Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Owners
of the Class X-IO and Class R Certificates shall not be required to refund any
amount properly distributed on the Class X-IO and Class R Certificates pursuant
to this Section 7.03.
Section 7.04. Supplemental Interest Reserve Fund. On the Startup Day, the
holders of the Class X-IO Certificates will deposit, or cause to be deposited,
into the Supplemental Interest Reserve Fund, $10,000. On each Distribution Date
as to which there is Current WAC Excess or Class A-7 Certificateholders'
Interest Index Carryover, the Trustee has been directed to, and shall therefore,
deposit into the Supplemental Interest Reserve Account an amount equal to the
Current WAC Excess of the Current Interest on the Class A-7 Certificates which
is payable pursuant to Section 7.03(b)(ii), and/or the Class A-7
Certificateholders' Interest Index Carryover pursuant to Section 7.03(b)(ix). If
no Current WAC Excess or Class A-7 Certificateholders' Interest Index Carryover
is payable on a Distribution Date, the Trustee shall deposit into the
Supplemental Interest Reserve Fund on behalf of the Class X-IO
Certificateholders an amount such that when added to other amounts already on
deposit in the fund, the aggregate amount on deposit therein is equal to
$10,000. For federal and state income tax purposes, the Class X-IO
Certificateholders will be deemed to be the owners of the Supplemental Interest
Reserve Fund and all amounts deposited into the Supplemental Interest Reserve
Fund (other than the initial $10,000 deposit) shall be treated as amounts
distributed by REMIC II with respect to the Class X-IO Distribution Amount.
Amounts held in the Supplemental Interest Reserve Fund and not distributable to
the Class A-7 Certificateholders on any Distribution Date will be invested by
the Trustee in investments designated by the Class X-IO Certificateholders
having maturities on or prior to the next succeeding Distribution Date on which
such amounts will be distributable to the Class A-7 Certificateholders. Upon the
termination of the Trust, or the payment in full of the Class A-7 Certificates,
all amounts remaining on deposit in the Supplemental Interest Reserve Fund will
be released from the lien of the Trust and distributed to the Class X-IO
Certificateholders or their designees. The Supplemental Interest Reserve Fund
will be part of the Trust but not part of
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either REMIC I or REMIC II and any payments to the Class A-7 Certificates of
Current WAC Excess and Class A-7 Certificateholders' Interest Index Carryover
will not be payments with respect to a "regular interest" in a REMIC within the
meaning of Code Section 860G(a)(1).
Section 7.05. Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of any
Account held by the Trustee for the benefit of the Owners may (i) remain
uninvested or (ii) be invested and reinvested by the Trustee as directed in
writing by the Servicer in the name of the Trustee for the benefit of the Owners
and the Certificate Insurer in one or more Eligible Investments bearing interest
or sold at a discount. The bank serving as Trustee or any Affiliate thereof may
be the obligor on any investment which otherwise qualifies as an Eligible
Investment. No investment in any Account shall mature later than the Business
Day immediately preceding the next Distribution Date. Amounts held in the
Certificate Account shall be invested in Eligible Investments, which Eligible
Investments shall mature no later than the Business Day preceding the
immediately following Distribution Date or, if such Eligible Investments are an
obligation of the Trustee or are money market funds for which the Trustee or any
Affiliate is the manager or the adviser, such Eligible Investments shall mature
no later than the following Distribution Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
as directed in writing by the Servicer a sufficient amount of the investments in
such Account. No investments will be liquidated prior to maturity unless the
proceeds thereof are needed for disbursement.
(c) All income or other gain from investment in the Certificate Account
held by the Trustee shall be withdrawn by the Trustee and remitted to the
Servicer (except with respect to all income or other gain from investment earned
on the Business Day immediately preceding a Distribution Date, which amounts
shall be retained by the Trustee). Any investment losses on amounts held in the
Certificate Account shall, promptly upon realization of such loss, be
contributed by the Servicer to the Trustee for deposit in the Certificate
Account.
Section 7.06. Payment of Trust Expenses.
(a) With respect to the Certificate Account the Trustee shall receive all
income and other gains from investments as described in Section 7.05(c).
(b) The Seller shall pay directly on the Startup Day the reasonable fees
and expenses of counsel to the Trustee.
Section 7.07. Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the 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, FHLMC
senior debt obligations, and FNMA senior debt obligations, but
80
excluding any of such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-l by
Standard & Poor's and P-l by Xxxxx'x and if rated by Fitch, F1+ by Fitch;
provided that any such certificates of deposit must be secured at all times by
collateral described in clause (a) or (b) above, such collateral must be held by
a third party and the Trustee must have a perfected first priority security
interest in such collateral;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is A2 or better by Xxxxx'x and BBB or better by Standard
& Poor's and if rated by Fitch, AA- or better by Fitch) which has combined
capital, surplus and undivided profits of at least $50,000,000 which deposits
are insured by the FDIC and held up to the limits insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in clause
(a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long term obligation rated
P-l or Aa2, respectively, or better by Xxxxx'x and A-1+ or AA, respectively, or
better by Standard & Poor's, and if rated by Fitch, AA- or F1+, respectively, or
better by Fitch provided:
a. A master repurchase agreement or specific written repurchase
agreement governs the transaction;
b. The securities are held free and clear of any lien by the Trustee
or an independent third party acting solely as agent for the Trustee, and
such third party is (a) a Federal Reserve Bank, (b) a bank which is a
member of the FDIC and which has combined capital, surplus and undivided
profits of not less than $125,000,000, or (c) a bank approved in writing
for such purpose by the Certificate Insurer, and the Trustee shall have
received written confirmation from such third party that it holds such
securities, free and clear of any lien, as agent for the Trustee;
c. A perfected first security interest under the Uniform Commercial
Code, or book-entry procedures prescribed at 31 CFR 306.1 et seq. or 31
CFR 350.0 et seq., in such securities is created for the benefit of the
Trustee;
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d. The repurchase agreement has a term of thirty days or less and
the Trustee will value the collateral securities no less frequently than
weekly marked-to-market at current market price plus interest and will
liquidate the collateral securities if any deficiency in the required
collateral percentage is not restored within two business days of such
valuation; and
e. The fair market value of the collateral securities in relation to
the amount of the repurchase obligation, including principal and interest,
is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Xxxxx'x and if rated by Fitch, Fitch;
(j) Any money market fund rated AAAm or AAAm-G by Standard & Poor's and
Aaa by Xxxxx'x and if rated by Fitch, AA by Fitch which funds are registered
under the Investment Company Act of 1940 and whose shares are registered under
the Securities Act, including any such fund that is managed by the Trustee or
any Affiliate of the Trustee or for which the Trustee or any of its Affiliates
acts as an adviser; and
(k) Any other investment permitted by each of the Rating Agencies and the
Certificate Insurer;
provided that no instrument described above 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 provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Distribution Date unless otherwise provided in this Agreement
and that no instrument described hereunder may be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08. Accounting and Directions by Trustee.
By 12:00 noon New York time, on each Distribution Date (or such earlier
period as shall be agreed by the Seller and the Trustee), the Trustee shall
notify (subject to the terms of Section 10.03(j) hereof, based solely on
information provided to the Trustee by the Servicer and upon which the Trustee
may conclusively rely) the Seller, the Depositor, each Owner and the Certificate
Insurer, of the following information with respect to such Distribution Date
(which notification may be given by facsimile, or by telephone promptly
confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account as of the
related Determination Date;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes in the aggregate on the next
Distribution Date;
(3) The amount of any Extra Principal Distribution Amount for each
Group;
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(4) The amount of any Insured Payment to be made by the Certificate
Insurer on such Distribution Date;
(5) The application of the amounts described in clauses (1), (3) and (4)
above to be made on such Distribution Date in accordance with
Section 7.03 hereof;
(6) The Certificate Principal Balance of each Class, the aggregate
amount of the principal of each Class of the Class A Certificates to
be paid on such Distribution Date and the remaining Certificate
Principal Balance of each Class of Class A Certificates following
any such payment;
(7) The amount, if any, of any Realized Losses for each Group for the
related Remittance Period; and
(8) The amount of any Collateralization Deficit, any
Overcollateralization Release Amount and the Target
Overcollateralization Amount for each Group.
Section 7.09. Reports by Trustee to Owners and Certificate Insurer.
(a) On each Distribution Date the Trustee shall transmit a report in
writing to each Owner, the Underwriters, the Depositor, the Certificate Insurer,
Standard & Poor's, Xxxxx'x and Fitch setting forth:
(i) the amount of the distribution with respect to such Owner's
Certificates (based on a Certificate in the original principal amount of
$1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any Prepayments
in full or other Prepayments or other recoveries of principal included
therein with respect to Group I and Group II (based on a Certificate in
the original principal amount of $1,000) and any related Extra Principal
Distribution Amount;
(iii) the amount of such Owner's distributions allocable to interest
(based on a Certificate in the original principal amount of $1,000);
(iv) if the distribution to the Owners of any Class of the Class A
Certificates on such Distribution Date was less than the related Class A
Distribution Amount on such Distribution Date, the related Carry-Forward
Amount and the allocation thereof to the related Classes of Class A
Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates on such Distribution
Date;
(vi) the principal amount of each Class of Class A Certificate which
will be Outstanding and the aggregate Loan Balance of each Group, after
giving effect to any payment of principal on such Distribution Date;
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(vii) the Overcollateralization Amount, Target Overcollateralization
Amount and Collateralization Deficit for each Group, if any, remaining
after giving effect to all distributions and transfers on such
Distribution Date;
(viii) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in computing
their market discount;
(ix) the total of any Substitution Amounts and any Loan Purchase
Price amounts included in such distribution with respect to each Group;
(x) the weighted average Coupon Rate of the Home Equity Loans in
each Group;
(xi) [Reserved];
(xii) such other information as the Certificate Insurer or any Owner
may reasonably request with respect to Delinquent Home Equity Loans;
(xiii) the weighted average gross margin of the Home Equity Loans in
Group II;
(xiv) the largest Loan Balance outstanding in each Group;
(xv) the Class A-7 Certificate Rate for the related Distribution
Date;
(xvi) the Class A-7 Certificateholders' Interest Index Carryover
paid to the Owners of the Class A-7 Certificates for such Distribution
Date and any Class A-7 Certificateholders' Interest Index Carryover
remaining unpaid;
(xvii) the Class A-1 Certificate Rate for the related Distribution
Date;
(xviii) the Class A-2 Certificate Rate for the related Distribution
Date;
(xix) the Class A-3 Certificate Rate for the related Distribution
Date;
(xx) the Class A-4 Certificate Rate for the related Distribution
Date;
(xxi) the Class A-5 Certificate Rate for the related Distribution
Date;
(xxii) the Class A-6 Certificate Rate for the related Distribution
Date;
(xxiii) the Group I Net WAC Cap, the Group II Net WAC Cap and the
Class A-7 Available Funds Cap for such Distribution Date; and
(xxiv) the Reimbursement Amount, if any, for such Distribution Date.
The Servicer shall provide to the Trustee the information described in
Section 8.08(f) and in clause (b) below to enable the Trustee to perform its
reporting obligations under this Section, and such obligations of the Trustee
under this Section are conditioned upon such information
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being received and the information provided in clauses (ii), (ix) and (x) above
shall be based solely upon information contained in the monthly servicing report
provided by the Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on each Distribution Date the Trustee will distribute to
each Owner, the Certificate Insurer, the Underwriters, Standard & Poor's,
Xxxxx'x and Fitch, together with the information described in subsection (a)
preceding, the following information with respect to each Home Equity Loan Group
and for both Groups in the aggregate which is hereby required to be prepared by
the Servicer and furnished to the Trustee for such purpose on or prior to the
related Monthly Remittance Date:
(i) the number and aggregate Loan Balances of Home Equity Loans (a)
30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days
Delinquent, as of the close of business on the last Business Day of the
calendar month immediately preceding the Distribution Date, (d) the number
and aggregate Loan Balances of all Home Equity Loans as of such
Distribution Date after giving effect to any payment of principal on the
last day of the Remittance Period immediately preceding the Distribution
Date and (e) the percentage that each of the amounts represented by
clauses (a), (b) and (c) represent as a percentage of the respective
amounts in clause (d);
(ii) the status and the number and dollar amounts of all Home Equity
Loans in foreclosure proceedings as of the close of business on the last
Business Day of the calendar month immediately preceding such Distribution
Date, separately stating, for this purpose, all Home Equity Loans with
respect to which foreclosure proceedings were commenced in the immediately
preceding calendar month;
(iii) the number of Mortgagors and the Loan Balances of (a) the
related Home Equity Loans involved in bankruptcy proceedings as of the
close of business on the last Business Day of the calendar month
immediately preceding such Distribution Date and (b) Home Equity Loans
that are "balloon" loans;
(iv) the existence and status of any REO Properties, as of the close
of business on the last Business Day of the calendar month immediately
preceding the Distribution Date;
(v) the book value of any REO Property as of the close of business
on the last Business Day of the calendar month immediately preceding the
Distribution Date;
(vi) cumulative Realized Losses incurred on the Home Equity Loans
from the Startup Day to and including the Remittance Period immediately
preceding the Distribution Date;
(vii) the amount of Net Liquidation Proceeds realized on the Home
Equity Loans during the Remittance Period immediately preceding the
Distribution Date;
(viii) the Annual Loss Percentage (Rolling Twelve Month) with
respect to such Distribution Date; and
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(ix) the 90+ Delinquency Percentage (Rolling Three Month) with
respect to such Distribution Date.
The Trustee shall forward such report (together with the information
described in (a) above) concurrently with each distribution to the
Certificateholders, the Rating Agencies and the Certificate Insurer.
(c) The Trustee shall, on behalf of the Trust, cause to be filed with the
Commission any periodic reports required to be filed on behalf of the Trust
under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder. Upon the request of the Trustee, each of the Seller, the
Servicer and the Depositor shall cooperate with the Trustee in the preparation
of any such report and shall provide to the Trustee in a timely manner all such
information or documentation as is in the possession of such Person and that the
Trustee may reasonably request in connection with the performance of its duties
and obligations under this Section.
The Trustee shall file with the Commission a Form 15 with respect to the
Trust as soon as practicable following the first date on which the conditions to
filing thereof have been satisfied. Following the filing of such Form 15, the
Trustee will submit a certificate addressed to an officer of the Depositor
certifying that all filings under the Exchange Act have been made and shall
attach a copy of acceptance slips for such filings. On the Startup Day, the
Depositor shall provide the Trustee with a letter at Closing, substantially in
the form attached hereto as Exhibit M, instructing the Trustee, as filing agent,
to comply with the reporting obligations for the Trust under the Exchange Act.
Section 7.10. Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller, the Certificate
Insurer and each Owner, with respect to the amount on deposit in the Certificate
Account (including the amount therein relating to each Group) and the identity
of the investments included therein, as the Depositor, the Seller, any Owner or
the Certificate Insurer may from time to time reasonably request. Without
limiting the generality of the foregoing, the Trustee shall, at the reasonable
request of the Depositor, the Seller, any Owner or the Certificate Insurer,
transmit promptly to the Depositor, the Seller, any Owner and the Certificate
Insurer copies of all accountings of receipts in respect of the Home Equity
Loans furnished to it by the Servicer and shall notify the Seller and the
Certificate Insurer if any Monthly Remittance Amount has not been received by
the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
(c) The Trustee will make the report referred to in Section 7.09 herein
(and, at its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders and other parties
to this Agreement via the Trustee's internet website, which is presently located
at xxx.xxx.xxxxxxx.xxx. Persons that are unable to use the above website are
entitled to have a paper copy mailed to them via first Class mail by calling the
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Trustee at 0-000-000-0000. The Trustee shall have the right to change the way
the report referred to in Section 7.09 herein is distributed in order to make
such distribution more convenient and/or more accessible to the above parties
and to the Certificateholders. The Trustee shall provide timely and adequate
notification to all above parties and to the Certificateholders regarding any
such change.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the terms of the respective Home Equity
Loans, and with prudent and reasonable care, using the degree of skill and
attention that the Servicer exercises with respect to comparable home equity
loans that it services for itself or others and shall have full power and
authority, acting alone, 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 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 of any Certificate by the Servicer or
any Affiliate of the Servicer; (iii) the Servicer's obligation to make
Delinquency 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.
Subject to Section 8.03 hereof, the Servicer may, and is hereby authorized
to, perform any of its servicing responsibilities with respect to all or certain
of the Home Equity Loans through a Sub-Servicer as it may from time to time
designate, but no such designation of a Sub-Servicer shall serve to release the
Servicer from any of its obligations under this Agreement. Such Sub-Servicer
shall have the rights and powers of the Servicer which have been delegated to
such Sub-Servicer with respect to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to Sections
8.13 and 8.14, the Servicer in its own name or in the name of a Sub-Servicer is
hereby authorized and empowered (i) to execute and deliver, on behalf of itself,
the Owners and the Trustee or any of them, any and all instruments of
satisfaction or cancellation or of partial or full release or discharge and all
other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and provided, further, however, that Section
8.13(a) and Section 8.14(a) shall each constitute a revocable power of attorney
from the Trustee to the Servicer to execute an instrument of satisfaction (or
assignment of Mortgage without recourse) with respect to any Home Equity Loan
held by the Trustee hereunder paid in full or foreclosed (or with respect to
which payment in full has been escrowed). Revocation of the power of attorney
created by the final proviso of the preceding sentence shall take effect upon
(i) the receipt by the Servicer of written notice thereof from the Trustee, (ii)
a Servicer Termination Event or (iii) the termination of the Trust. The Trustee
shall at the written direction of the Servicer execute any documentation
furnished to it by the Servicer for recordation by the Servicer in the
appropriate jurisdictions, as shall be necessary to effectuate the
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foregoing. Subject to Sections 8.13 and 8.14, the Trustee shall, if necessary,
execute a limited power of attorney in the form reasonably acceptable to the
Trustee to the Servicer or any Sub-Servicer and furnish them with any other
documents as the Servicer or such Sub-Servicer shall reasonably request to
enable the Servicer and such Sub-Servicer to carry out their respective
servicing and administrative duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the Trustee
and, if requested by the Certificate Insurer, the Certificate Insurer, the
details concerning the servicing of the Home Equity Loans on computer generated
tape, diskette or other machine readable format which is mutually agreeable.
The Servicer shall give prompt written notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges on
any Property) shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02. Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Home Equity Loans, and shall, to the
extent such procedures shall be consistent with this Agreement and the terms and
provisions of any applicable Insurance Policy, follow collection procedures for
all Home Equity Loans at least as rigorous as those described in the FNMA Guide.
Consistent with the foregoing, the Servicer may in its discretion waive or
permit to be waived any late payment charge, prepayment charge, assumption fee
or any penalty interest in connection with the prepayment of a Home Equity Loan
or any other fee or charge which the Servicer would be entitled to retain
hereunder as servicing compensation. In the event the Servicer shall consent to
the deferment of the due dates for payments due on a Note, the Servicer shall
nonetheless make payment of any required Delinquency Advance with respect to the
payments so extended to the same extent as if such installment were due, owing
and Delinquent and had not been deferred, and shall be entitled to reimbursement
therefor in accordance with Section 8.09(a) hereof.
Section 8.03. Sub-Servicing Agreements Between Servicer and Sub-Servicers.
The Servicer may, with the prior written consent of the Certificate
Insurer and the Trustee, enter into Sub-Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution which is acceptable
to the Certificate Insurer and the Trustee and which (x) is in compliance with
the laws of each state necessary to enable it to perform its obligations under
such Sub-Servicing Agreement, (y) has experience servicing home equity loans
that are similar to the Home Equity Loans and (z) has equity of not less than
$5,000,000 (as determined in accordance with generally accepted accounting
principles). The Servicer shall give written notice to the Trustee, the Owners,
the Certificate Insurer and the Rating Agencies of the appointment of any
Sub-Servicer (and shall receive the confirmation of the Rating Agencies
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that such Sub-Servicer shall not result in a withdrawal or downgrading by any
Rating Agency of the rating or the shadow rating of the Class A Certificates).
For purposes of this Agreement, the Servicer shall be deemed to have received
payments on Home Equity Loans when any Sub-Servicer has received such payments.
Each Sub-Servicer shall be required to service the Home Equity Loans in
accordance with this Agreement and any such Sub-Servicing Agreement shall be
consistent with and not violate the provisions of this Agreement. Each
Sub-Servicing Agreement shall provide that the Trustee (if acting as successor
Servicer) or any other successor Servicer shall have the option to terminate
such agreement without payment of any fees if the original Servicer is
terminated or resigns. The Servicer shall deliver to the Trustee and the
Certificate Insurer copies of all Sub-Servicing Agreements, and any amendments
or modifications thereof, promptly upon the Servicer's execution and delivery of
such instrument.
Section 8.04. Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and to
either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05. Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity 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 such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer agrees to indemnify and hold the Trustee, the Depositor,
the Certificate Insurer and each Owner harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Trustee, the Depositor, the
Certificate Insurer and any Owner may sustain in any way related to the failure
of the Servicer to perform its duties and service the Home Equity Loans in
compliance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee, the Depositor, the Certificate Insurer and each Owner if a
claim is made by a third party with respect to this Agreement, and the Servicer
shall assume (with the consent of the Trustee and the Certificate Insurer) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, the Trustee, the
Depositor, the Certificate Insurer and/or Owner in respect of such claim. The
Trustee shall, in accordance with written instructions received from the
Servicer, reimburse the Servicer only from amounts otherwise distributable on
the Class R Certificates for all amounts advanced by it pursuant to the
preceding sentence, except when a final nonappealable adjudication determines
that the claim relates directly to the failure of the Servicer to perform its
duties in compliance with the Agreement.
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The provisions of this Section 8.05(b) shall survive the termination of this
Agreement, the resignation or removal of the Trustee, and the payment of the
outstanding Certificates.
Section 8.06. No Contractual Relationship Between Sub-Servicer, Trustee or
the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee and the Owners
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 8.07.
Section 8.07. Assumption or Termination of Sub-Servicing Agreement by
Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20 or another successor Servicer, it is
understood and agreed that the Servicer's rights and obligations under any
Sub-Servicing Agreement then in force between the Servicer and a Sub-Servicer
shall be assumed simultaneously by the Trustee or another successor Servicer
without act or deed on part of the Trustee or such successor servicer; provided,
however, that the Trustee (if acting as successor Servicer) or any other
successor Servicer may, with the consent of the Certificate Insurer, and shall,
at the direction of the Certificate Insurer, terminate the Sub-Servicer as
provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at the
expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08. Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account, which shall be an
Eligible Account. The Principal and Interest Account shall be identified on the
records of the Designated Depository Institution as follows: Bank One, National
Association, as Trustee on behalf of MBIA Insurance Corporation and the Owners
of the Centex Home Equity Loan Trust 2001-A Home Equity Loan Asset-Backed
Certificates. If the institution at any time holding the Principal and Interest
Account ceases to be eligible as a Designated Depository Institution hereunder,
then the Servicer shall immediately be required to name a successor institution
meeting the requirements for a Designated Depository Institution hereunder. If
the Servicer fails to name such a successor institution, then the Principal and
Interest Account shall thenceforth be held as a trust account at the Corporate
Trust Office of the Trustee. The Servicer shall notify the Trustee, the
Certificate Insurer and the Owners if there is a change in the name, account
number or institution holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all receipts
required pursuant to Subsection (c) below and related to the Home Equity Loans
to the Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
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(b) All funds in the Principal and Interest Account shall be held (i)
uninvested up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trust for the benefit of the Owners and the Certificate
Insurer. The Trust shall be divided into two separate sub-trusts; one for Group
I and any Trust assets allocable to Group I and the other for Group II and any
Trust assets allocable to Group II. Any investment earnings on funds held in the
Principal and Interest Account shall be for the account of the Servicer and may
only be withdrawn from the Principal and Interest Account by the Servicer
immediately following the remittance of the Monthly Remittance Amount by the
Servicer in accordance with the terms hereof. Any investment losses on amounts
held in the Principal and Interest Account shall be for the account of the
Servicer and promptly upon the realization of such loss shall be contributed by
the Servicer to the Principal and Interest Account. Any references herein to
amounts on deposit in the Principal and Interest Account shall refer to amounts
net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account no
later than the second Business Day after receipt, all principal collected and
interest due on the Home Equity Loans (net of the Servicing Fee related to such
Home Equity Loans) on and after the Cut-Off Date and the Replacement Cut-Off
Date, as applicable, including any Prepayments and Net Liquidation Proceeds,
other recoveries or amounts related to the Home Equity Loans received by the
Servicer and any income from REO Properties, but net of (i) Net Liquidation
Proceeds to the extent such Net Liquidation Proceeds exceed the sum of (A) the
Loan Balance of the related Home Equity Loan immediately prior to liquidation,
plus (B) accrued and unpaid interest on such Home Equity Loan (net of the
related Servicing Fee) plus (C) any unrecovered Cram Down Losses, (ii)
reimbursements for unreimbursed Delinquency Advances and unreimbursed Servicing
Advances (but in each case solely from amounts received on the related Home
Equity Loan) as provided in Section 8.09 and (iii) reimbursements for amounts
deposited in the Principal and Interest Account representing payments of
principal and/or interest on a Note by a Mortgagor which are subsequently
returned by a depository institution as unpaid.
(d) The Servicer may make withdrawals from the Principal and Interest
Account, with respect to each Home Equity Loan Group, for the following
purposes:
(A) on each Monthly Remittance Date, to pay itself the related
Servicing Fees to the extent such Servicing Fees are not
retained by the Servicer;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the Principal
and Interest Account in error;
(D) to reimburse itself for unreimbursed Delinquency Advances and
for unreimbursed Servicing Advances (in each case, solely from
amounts recovered on the related Home Equity Loan) as provided
in Section 8.09;
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(E) to reimburse itself pursuant to Section 8.09(a) for
Nonrecoverable Advances; and
(F) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article IX.
(e) The Servicer shall (i) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Monthly Remittance Amount
allocable to a Remittance Period not later than the related Monthly Remittance
Date, and (ii) on each Monthly Remittance Date, deliver to the Trustee, the
Depositor and the Certificate Insurer, a monthly servicing report, with respect
xto each Home Equity Loan Group, containing (without limitation) the following
information: principal and interest collected in respect of the Home Equity
Loans, scheduled principal and interest that was due on the Home Equity Loans,
relevant information with respect to Liquidated Loans, if any, summary and
detailed delinquency reports, Liquidation Proceeds and other similar information
concerning the servicing of the Home Equity Loans and any other information
requested by the Certificate Insurer (including, without limitation, a
liquidation report with respect to each Liquidated Loan). In addition, the
Servicer shall inform the Trustee and the Certificate Insurer on each Monthly
Remittance Date, with respect to each Home Equity Loan Group, of the amounts of
any Loan Purchase Prices or Substitution Amounts so remitted during the related
Remittance Period, and of the Loan Balance of the Home Equity Loan having the
largest Loan Balance as of such date. The Servicer shall deliver copies of the
monthly statement for the Principal and Interest Account to the Certificate
Insurer promptly upon receipt thereof.
(f) The Servicer shall provide to the Trustee the information described in
Section 8.08(e)(ii) and in Section 7.09(b) to enable the Trustee to perform its
reporting requirements under Section 7.09 and to make the allocations and
disbursements set forth in Sections 7.02 and 7.03.
Section 8.09. Delinquency Advances and Servicing Advances.
(a) On or before each Monthly Remittance Date, the Servicer shall be
required to remit to the Trustee for deposit to the Certificate Account out of
the Servicer's own funds or from collections on any Home Equity Loans that are
not required to be distributed on the Distribution Date occurring during the
month in which such remittance is made (all or any portion of such amount to be
replaced on future Monthly Remittance Dates to the extent required for
distribution) any Delinquent payment of interest with respect to each Delinquent
Home Equity Loan, which payment was not received on or prior to the last day of
the related Remittance Period. Such amounts of the Servicer's own funds so
deposited are "Delinquency Advances".
The Servicer shall be permitted to reimburse itself on any Business Day
for any Delinquency Advances paid from the Servicer's own funds (i) from late
collections on the related Home Equity Loan or (ii) as otherwise provided in
Section 7.03(b).
Notwithstanding the foregoing, in the event that the Servicer determines
in its reasonable business judgment in accordance with the servicing standards
set out herein that any proposed Delinquency Advance would not be recoverable,
the Servicer shall not be required to make Delinquency Advances with respect to
such Home Equity Loan. To the extent that the Servicer
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previously has made Delinquency Advances with respect to a Home Equity Loan that
the Servicer subsequently determines are Nonrecoverable Advances, the Servicer
shall be entitled to reimbursement for such aggregate Nonrecoverable Advances
from collections on any Home Equity Loan on deposit in the Principal and
Interest Account. The Servicer shall deliver an Officer's Certificate of such
determination as to why such amount would not be recoverable to the Trustee and
the Certificate Insurer; the Trustee shall promptly furnish a copy of such
notice to the Owners of the Class R Certificates upon request; provided,
further, that the Servicer shall be entitled to recover any unreimbursed
Delinquency Advances from Liquidation Proceeds for the related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses incurred
in the performance of its servicing obligations, including, but not limited to,
(i) Preservation Expenses, (ii) the cost of any enforcement or judicial
proceedings, including foreclosures, (iii) the cost of the management and
liquidation of REO Property, (iv) advances required by Section 8.13(a), and (v)
expenses incurred pursuant to Section 8.22, except to the extent that such
amounts are determined by the Servicer in its reasonable business judgment not
to be recoverable. Such costs will constitute "Servicing Advances". The Servicer
may recover a Servicing Advance (x) from the Mortgagors to the extent permitted
by the Home Equity Loans or, if not theretofore recovered from the Mortgagor on
whose behalf such Servicing Advance was made, from Liquidation Proceeds realized
upon the liquidation of the related Home Equity Loan and (y) as provided in
Section 7.03(b)(xi). The Servicer shall be entitled to recover the Servicing
Advances from the Liquidation Proceeds on the related Home Equity Loan prior to
the payment of the Liquidation Proceeds to any other party to this Agreement. In
no case may the Servicer recover Servicing Advances from the principal and
interest payments on any other Home Equity Loan except as provided in Section
7.03(b)(xi).
Section 8.10. Compensating Interest; Repurchase of Home Equity Loans.
(a) If any Prepayment in full of a Home Equity Loan occurs during any
calendar month, any shortfall between (x) the interest collected from the
Mortgagor in connection with such payoff, and (y) the full month's interest at
the Coupon Rate that would be due on the related Due Date for such Home Equity
Loan ("Compensating Interest") (but not in excess of the aggregate Servicing Fee
for the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next succeeding Monthly Remittance Date and
shall be included in the Monthly Remittance Amount to be made available to the
Trustee on such Monthly Remittance Date. The Servicer may recover any
unreimbursed payments of Compensating Interest as provided in Section
7.03(b)(xi).
(b) Subject to clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which is 60 days or more Delinquent, or any Home Equity Loan as to which
enforcement proceedings have been brought by the Servicer pursuant to Section
8.13; provided, however, that the Servicer may not purchase any such Home Equity
Loan unless the Servicer has delivered to the Trustee and the Certificate
Insurer at the Servicer's expense, an Opinion of Counsel acceptable to the
Certificate Insurer and to the Trustee to the effect that such a purchase would
not constitute a Prohibited Transaction for the Trust or otherwise subject the
Trust to tax and would not jeopardize the status of REMIC I or
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REMIC II as REMICs. Any such Home Equity Loan so purchased shall be purchased by
the Servicer on or prior to a Monthly Remittance Date at a purchase price equal
to the Loan Purchase Price thereof, which purchase price shall be deposited in
the Principal and Interest Account.
(c) If a Home Equity Loan to be purchased by the Servicer pursuant to
clause (b) above is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans (including Home Equity Loans relating to REO
Property), the Servicer may purchase such Home Equity Loan without having first
notified the Certificate Insurer of such purchase. In all other cases, the
Servicer must notify the Certificate Insurer and the Trustee, in writing, of its
intent to purchase a Home Equity Loan pursuant to clause (b) above and the
Servicer may not purchase such Home Equity Loan without the written consent of
the Certificate Insurer.
(d) The Net Liquidation Proceeds from the disposition of any REO Property
shall be deposited in the Principal and Interest Account and remitted to the
Trustee as part of the Monthly Remittance Amount remitted by the Servicer to the
Trustee.
Section 8.11. Maintenance of Insurance.
(a) (i) The Servicer shall cause to be maintained with respect to each
Home Equity Loan a hazard insurance policy with a carrier generally acceptable
to the Servicer that provides for fire and extended coverage, and which provides
for a recovery by the Trust of insurance proceeds relating to such Home Equity
Loan in an amount not less than the least of (A) the outstanding principal
balance of the Home Equity Loan (plus the related Senior Lien loan, if any), (B)
the minimum amount required to compensate for damage or loss on a replacement
cost basis and (C) the full insurable value of the premises. The Servicer shall
maintain the insurance policies required hereunder in the name of the mortgagee,
its successors and assigns, and shall be named as loss payee. The policies shall
require the insurer to provide the mortgagee with 30 days' notice prior to any
cancellation or as otherwise required by law.
(ii) As an alternative to maintaining a hazard insurance policy with
respect to each Home Equity Loan as described in clause (i) above, the Servicer
may maintain a blanket hazard insurance policy or policies if the insurer or
insurers of such policies are rated investment grade by Xxxxx'x and Standard &
Poor's and if rated by Fitch, Fitch.
(b) If the Home Equity Loan at the time of origination (or if required by
federal law, at any time thereafter) relates to a Property in an area identified
in the Federal Register by the Federal Emergency Management Agency as having
special flood hazards, the Servicer will cause to be maintained with respect
thereto a flood insurance policy in a form meeting the requirements of the then
current guidelines of the Federal Insurance Administration with a carrier
generally acceptable to the Servicer in an amount representing coverage, and
which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related Senior Lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust and the Certificate Insurer out of the Servicer's own funds
for any loss to the Trust or the Certificate
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Insurer resulting from the Servicer's failure to advance premiums for such
insurance required by this Section when so permitted by the terms of the
Mortgage as to which such loss relates.
(c) Amounts collected by the Servicer under any Insurance Policy shall be
deposited into the Principal and Interest Account.
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution Agreements.
When a Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall (except as provided below), to the extent it has knowledge of
such conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Home Equity Loan under any "due-on-sale" clause
contained in the related Mortgage or Note; provided, however, that the Servicer
shall not exercise any such right if the "due-on-sale" clause, in the reasonable
belief of the Servicer, is not enforceable under applicable law, or the
Servicer, in a manner consistent with reasonable commercial practice, and only
if the Servicer reasonably believes assumption by the purchaser would not
materially and adversely affect the interests of the Owners or of the
Certificate Insurer, permits the purchaser of the related Property to assume
such Home Equity Loan. An Opinion of Counsel, provided at the expense of the
Servicer, to the foregoing effect shall conclusively establish the
reasonableness of such belief. In such event, the Servicer shall enter into an
assumption and modification agreement with the person to whom such Property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Note and, unless prohibited by applicable law or the Mortgage
documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer is authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; provided, however, that to the
extent any such substitution of liability agreement would be delivered by the
Servicer outside of its usual procedures for home equity loans held in its own
portfolio the Servicer shall, prior to executing and delivering such agreement,
obtain the prior written consent of the Certificate Insurer. The Home Equity
Loan, as assumed, shall conform in all material respects to the requirements,
representations and warranties of this Agreement. The Servicer shall notify the
Trustee in writing that any such assumption or substitution agreement has been
completed by forwarding to the Custodian on the Trustee's behalf the original
copy of such assumption or substitution agreement (indicating the File to which
it relates) which copy shall be added by the Trustee or by the Custodian on the
Trustee's behalf to the related File and which shall, for all purposes, be
considered a part of such File to the same extent as all other documents and
instruments constituting a part thereof. The Servicer shall be responsible for
recording any such assumption or substitution agreements. In connection with any
such assumption or substitution agreement, no material term of the Home Equity
Loan (including, without limitation, the required monthly payment on the related
Home Equity Loan, the stated maturity, the outstanding principal amount or the
Coupon Rate) shall be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by the Servicer
or the Sub-Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.
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
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hereunder by reason of any assumption of a Home Equity Loan by operation of law
or any assumption which the Servicer may be restricted by law from preventing,
for any reason whatsoever.
Section 8.13. Realization Upon Defaulted Home Equity Loans; Workout of
Home Equity Loans.
(a) The Servicer shall foreclose upon or otherwise comparably effect the
ownership in the name of the Trustee on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 35 months from the close of the taxable year
of its acquisition by the Trust, at such price as the Servicer in good xxxxx
xxxxx necessary to comply with this covenant unless the Servicer obtains for the
Certificate Insurer and the Trustee, an Opinion of Counsel (the expense of which
opinion shall be a Servicing Advance) experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee, addressed to the
Certificate Insurer, the Trustee and the Servicer, to the effect that the
holding by the Trust of such REO Property for any greater period will not result
in the imposition of taxes on "Prohibited Transactions" of the Trust or either
REMIC as defined in Section 860F of the Code or cause either REMIC to fail to
qualify as a REMIC under the REMIC Provisions at any time that any Certificates
are Outstanding. Notwithstanding the generality of the foregoing provisions, the
Servicer shall manage, conserve, protect and operate each REO Property for the
Owners solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by either REMIC created hereunder 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. Pursuant to its efforts to sell such REO Property, the Servicer
shall either itself or through an agent selected by the Servicer protect and
conserve such REO Property in the same manner and to such extent as is customary
in the locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Owners, rent the same, or
any part thereof, as the Servicer deems to be in the best interest of the Owners
for the period prior to the sale of such REO Property. The Servicer shall take
into account the existence of any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive Environmental
Response Compensation and Liability Act, the Resource Conservation and Recovery
Act of 1976, or other federal, state or local environmental legislation, on a
Property in determining whether to foreclose upon or otherwise comparably
convert the ownership of such Property. If the Servicer has actual knowledge of
any environmental or hazardous waste risk with respect to the Property that the
Servicer is contemplating acquiring in foreclosure or deed in lieu of
foreclosure, the Servicer will cause an environmental inspection of the Property
in accordance with the servicing
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standards set forth in this Agreement. The Servicer shall not take any such
action with respect to any Property known by the Servicer to contain such wastes
or substances or to be within one mile of the site of such wastes or substances,
without the prior written consent of the Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan, when it has recovered, whether through trustee's sale, foreclosure
sale or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan" and the Servicer shall promptly submit a liquidation report to
the Certificate Insurer in substantially the form of Exhibit N hereto, provided
that such form is acceptable to the Certificate Insurer.
(c) The Servicer shall not agree to any modification, waiver or amendment
of any provision of any Home Equity Loan unless, in the Servicer's good faith
judgment, such modification, waiver or amendment would minimize the loss that
might otherwise be experienced with respect to such Home Equity Loan and only in
the event of a payment default with respect to such Home Equity Loan or in the
event that a payment default with respect to such Home Equity Loan is reasonably
foreseeable by the Servicer; provided, however, that no such modification,
waiver or amendment shall extend the maturity date of such Home Equity Loan
beyond the date that is six months after the Final Scheduled Distribution Date
of the latest Class of Class A Certificates remaining in the Trust.
Notwithstanding anything set out in this Section 8.13(c) or elsewhere in this
Agreement to the contrary, the Servicer shall be permitted to modify, waive or
amend any provision of a Home Equity Loan if required by statute or a court of
competent jurisdiction to do so.
(d) The Servicer has no intent to foreclose on any Mortgage based on the
delinquency characteristics as of the Startup Day; provided, that the foregoing
does not prevent the Servicer from initiating foreclosure proceedings on any
date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
Section 8.14. Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Custodian, on behalf of the Trustee, a written request of the Servicer, in the
form attached hereto as Exhibit O, signed by an Authorized Officer which states
the purpose of the release of a File. Upon receipt of such written request, the
Custodian, on behalf of the Trustee shall promptly release the related File, in
trust, in its reasonable discretion to (i) the Servicer, (ii) an escrow agent or
(iii) any employee, agent or attorney of the Trustee. Upon any such payment in
full, or the receipt of such notification that such funds have been placed in
escrow, the Servicer is authorized to give, as attorney-in-fact for the Trustee
and the mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the Property
relating to such Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and agreed that
no
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expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Principal and
Interest Account or to the Trustee.
(b) The Servicer shall have the right (upon receiving the prior written
consent of the Certificate Insurer) to accept applications of Mortgagors for
consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of Properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not exceed
the Loan-to-Value Ratio and debt-to-income ratio of such Note on the Cut-Off
Date or Replacement Cut-Off Date, as applicable, and any increase in the
Loan-to-Value Ratio shall not exceed 5% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in respect
of a particular Home Equity Loan and certifying that the criteria set forth in
the immediately preceding sentence have been satisfied, the Trustee shall
execute and deliver to the Servicer the consent or partial release so requested
by the Servicer. A proposed form of consent or partial release, as the case may
be, shall accompany any Officer's Certificate delivered by the Servicer pursuant
to this paragraph. The Servicer shall notify the Certificate Insurer and the
Rating Agencies if an application is approved under clause (y) above without
approval in writing by the Certificate Insurer.
(c) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Custodian, on behalf of the Trustee, shall release the related File
to the Servicer, promptly upon a written request of the Servicer, in the form
attached hereto as Exhibit O, signed by an Authorized Officer, which states the
purpose of the release of a File; provided, however, that no more than 5% of the
outstanding Home Equity Loans (by number) shall be released to the Servicer at
any time without the consent of the Certificate Insurer. Such receipt shall
obligate the Servicer to return the File to the Custodian, on behalf of the
Trustee, when the need therefor by the Servicer no longer exists.
(d) In all cases where the Servicer directs the Custodian, on behalf of
the Trustee, to sign any document or to release a File within a particular
period of time, the Servicer shall notify an Authorized Officer of the Trustee
by telephone of such need and the Trustee shall thereon use its best efforts to
comply with the Servicer's needs, but in any event will comply within two
Business Days of such request.
(e) No costs associated with the procedures described in this Section 8.14
shall be an expense of the Trust.
Section 8.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan Group. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
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pursuant to Section 8.08(c)(i) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 8.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Trustee, the
Certificate Insurer and the successor Servicer.
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.
Section 8.16. Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before July
31 of each year, commencing in 2001, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of any such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
The Servicer shall deliver to the Trustee, the Depositor, the Certificate
Insurer and the Rating Agencies, promptly after having obtained knowledge
thereof but in no event later than five Business Days thereafter, written notice
by means of an Officer's Certificate of any event which with the giving of
notice or the lapse of time would become a Servicer Termination Event.
Section 8.17. Annual Independent Certified Public Accountants' Reports.
On or before July 31 of each year, commencing in 2002, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Seller), shall cause to be delivered to the Trustee, the Certificate
Insurer, the Depositor, and the Rating Agencies a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Certificate Insurer stating that such firm has examined the
Servicer's overall servicing operations in accordance with the requirements of
the Uniform Single Attestation Program for Mortgage Bankers, and stating such
firm's conclusions relating thereto. In the event such firm requires the Trustee
to agree to the procedures performed by such firm, the Servicer shall direct the
Trustee in writing to so agree; it being understood and agreed that the Trustee
will deliver such letter of agreement in conclusive reliance upon the direction
of the Servicer, and the Trustee makes no independent inquiry or investigation
as to, and shall have no obligation or liability in respect of, the sufficiency,
validity, or correctness of such procedures.
Section 8.18. Access to Certain Documentation and Information Regarding
the Home Equity Loans.
The Servicer shall provide to the Trustee and the Certificate Insurer
access to the documentation regarding the Home Equity Loans and the Trust, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it.
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Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Home Equity Loans, the Servicer shall deliver a copy
of such computer tape to the Trustee and in addition shall provide a copy of
such computer tape to the Trustee and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably request.
Section 8.19. Assignment of Agreement.
Other than with respect to entering into Sub-Servicing Agreements pursuant
to Section 8.03 hereof, the Servicer may not assign its obligations under this
Agreement, in whole or in part, unless it shall have first obtained the written
consent of the Trustee and the Certificate Insurer, which such consent shall not
be unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 8.20(h) hereof for a successor
Servicer.
Section 8.20. Removal of Servicer; Retention of Servicer; Resignation of
Servicer.
(a) The Certificate Insurer or the Trustee (with the prior written consent
of the Certificate Insurer) may remove the Servicer upon the occurrence of any
of the following events (each a "Servicer Termination Event"):
(i) The Servicer shall (I) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or similar entity with
respect to itself or its property, (II) admit in writing its inability to
pay its debts generally as they become due, (III) make a general
assignment for the benefit of creditors, (IV) be adjudicated a bankrupt or
insolvent, (V) commence a voluntary case under the federal bankruptcy laws
of the United States of America or any state bankruptcy law or similar
laws or file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate, limited
liability company or other entity action, as applicable, for the purpose
of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Servicer an
order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee,
receiver, liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or other like
relief in respect thereof under any bankruptcy or insolvency law, and, if
such proceeding is being contested by the Servicer in good faith, the same
shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending and
unstayed for any period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or more of its
obligations hereunder and shall continue in default thereof for a period
of thirty (30) days (one (1)
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Business Day in the case of a delay in making a payment or deposit
required of the Servicer under this Agreement) after the earlier of (a)
actual knowledge of an officer of the Servicer or (b) receipt of notice
from the Trustee or the Certificate Insurer of said failure; provided,
however, that if the Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it is diligently pursuing
remedial action, then the cure period may be extended with the written
approval of the Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.02 or in the other
Operative Documents which materially and adversely affects the interests
of the Owners or the Certificate Insurer which remains unremedied for a
period of sixty (60) days after the earlier of the Servicer's discovery or
receipt of notice thereof; provided, however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate Insurer that
it is diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination of the Servicer
with or into any other entity, unless (1) the Servicer or an Affiliate of
the Servicer is the surviving entity of such combination or (2) the
surviving entity (A) is servicing at least $300,000,000 of home equity
loans that are similar to the Home Equity Loans, (B) has Tangible Net
Worth of not less than $70,000,000 (as determined in accordance with
generally accepted accounting principles), (C) is consented to by the
Certificate Insurer (such consent not to be unreasonably withheld) and (D)
agrees to assume the Servicer's obligations hereunder; or
(vi) The failure of the Servicer to satisfy the Servicer Termination
Test; or
(vii) The Servicer shall be declared in default of its credit
facility by its credit facility provider, which default, if left uncured,
would result in termination or acceleration of amounts owed thereunder; or
(viii) Centex Corporation or its successors shall fail to own,
directly or indirectly, at least 51% of the Servicer unless the Servicer
shall be rated at least investment grade by each of Standard & Poor's and
Xxxxx'x and if rated by Fitch, by Fitch.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall continue to act as Servicer under this Agreement until removed as set
forth in this Section 8.20 and a successor Servicer has assumed the servicing
obligations. After the occurrence of a Servicer Termination Event, the
Certificate Insurer or the Trustee (with the prior written consent of the
Certificate Insurer) may remove the Servicer by written notice to the Servicer.
Such termination shall be effective on the date specified in such notice,
provided that a successor Servicer or the Trustee has assumed the servicing
obligations. Upon the effective date of termination of the Servicer, the Trustee
(or another successor Servicer appointed by the Certificate Insurer) shall
assume the servicing obligations hereunder. Notwithstanding the foregoing, the
parties hereto agree that the Trustee, in its capacity as successor Servicer,
immediately will assume all of the obligations of the Servicer to make
Delinquency Advances and the Trustee will assume the other
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duties of the Servicer as soon as practicable, but in no event later than 90
days after the Trustee becomes successor Servicer pursuant to the preceding
sentence. Notwithstanding the foregoing, the Trustee, in its capacity as
successor Servicer, shall not be responsible for the lack of information and or
documents that it cannot obtain through reasonable efforts. The Certificate
Insurer may appoint a successor Servicer other than the Trustee. Until a
successor Servicer has been appointed by the Certificate Insurer, the Trustee
shall be the successor Servicer in all respects without further action, and all
authority and power of the Servicer under this Agreement shall pass to and be
vested in the Trustee on and after the effective date of termination.
Notwithstanding anything herein to the contrary, in no event shall the Trustee
be liable for any Servicing Fee or for any differential in the amount of the
Servicing Fee paid hereunder and the amount necessary to induce any successor
Servicer to act as successor Servicer under this Agreement and the transactions
set forth or provided for herein.
(c) Reserved.
(d) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except upon (i) determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement or (ii) written consent of the
Certificate Insurer and the Trustee. Any such determination under clause (i)
shall be evidenced by an Opinion of Counsel acceptable to the Trustee and the
Certificate Insurer at the expense of the Servicer to such effect which shall be
delivered to the Trustee and the Certificate Insurer.
(e) No removal or resignation of the Servicer shall become effective until
the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its own
expense also shall promptly deliver or cause to be delivered to a successor
Servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(g) Any collections due to the Trust then being held by the Servicer prior
to its removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Trustee (A) may,
unless the Certificate Insurer has appointed a successor Servicer other than the
Trustee, solicit bids for a successor Servicer as described below and (B) until
such time as another successor Servicer is appointed by the Certificate Insurer,
shall assume the duties and obligations of the Servicer hereunder. The Trustee
agrees to act as Servicer during the solicitation process and shall assume all
duties and obligations of the Servicer. The Certificate Insurer may appoint a
successor Servicer other than the Trustee. If the Certificate Insurer fails to
appoint a successor Servicer,
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the Trustee shall, if it is unable to obtain a qualifying bid and is prevented
by law from acting as Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has been designated as an approved
seller-servicer by FNMA or FHLMC for first and second home equity loans and
having equity of not less than $5,000,000 (or such lower level as may be
acceptable to the Certificate Insurer), as determined in accordance with
generally accepted accounting principles, and acceptable to the Certificate
Insurer as the successor to the Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. The compensation of any successor Servicer (other than the Trustee in
its capacity as successor Servicer) so appointed shall be the amount agreed to
between the successor Servicer, the Certificate Insurer and the Trustee (up to a
maximum of 0.50% per annum on the outstanding principal balance of each Home
Equity Loan), together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections 8.08
and 8.15; provided, however, that if the Trustee becomes the successor Servicer
it shall receive as its compensation the same compensation paid to the Servicer
immediately prior to the Servicer's removal or resignation; provided, further,
however, that the predecessor Servicer agrees to pay to the Trustee or other
successor Servicer at such time that it becomes such successor Servicer a set-up
fee of twenty-five dollars ($25) for each Home Equity Loan then included in the
Trust Estate. The amount payable in excess of twenty-five dollars ($25) per Home
Equity Loan, if any, shall be payable to the successor Servicer and reimbursable
pursuant to Section 7.03(b)(x) hereof. The Trustee shall be obligated to serve
as successor Servicer whether or not the fee described in this section is paid
by the Servicer, but shall in any event be entitled to receive, and to enforce
payment of, such fee from the Servicer.
(i) In the event the Trustee elects to solicit bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to servicing compensation in accordance
with clause (h) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price it will pay to obtain
servicing provided that the Certificate Insurer has given its prior written
consent. The Trustee shall deduct from any sum received by the Trustee from the
successor to the Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder. After such
deductions, the remainder of such sum less any amounts due the Trustee or the
Trust from the Servicer shall be paid by the Trustee to the predecessor Servicer
at the time of such sale, transfer and assignment to the Servicer's successor.
(j) The Trustee and such successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing. The predecessor Servicer agrees to cooperate with the Trustee and any
successor Servicer in effecting the termination of the predecessor Servicer's
servicing responsibilities and rights hereunder and shall promptly provide the
Trustee or such successor Servicer, as applicable, all documents and records
reasonably
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requested by it to enable it to assume the Servicer's functions hereunder and
shall promptly also transfer to the Trustee or such successor Servicer, as
applicable, all amounts which then have been or should have been deposited in
the Principal and Interest Account by the Servicer or which are thereafter
received with respect to the Home Equity Loans. Any amounts and documents which
are property of the Trust held by the predecessor Servicer shall be held in
trust on behalf of the Trustee until transferred to the successor Servicer or
Trustee. Neither the Trustee nor any other successor Servicer shall be held
liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer. If the Servicer resigns or is replaced hereunder, the
Servicer agrees to reimburse the Trust, the Owners and the Certificate Insurer
for the costs and expenses associated with the transfer of servicing to the
replacement Servicer, but subject to a maximum reimbursement to all such parties
in the amount of twenty-five dollars ($25) for each Home Equity Loan then
included in the Trust Estate. The amount payable in excess of twenty-five
dollars ($25) per Home Equity Loan, if any, shall be payable to the successor
Servicer and reimbursable pursuant to Section 7.03(b)(x) hereof.
(k) The Trustee or any other successor Servicer, upon assuming the duties
of Servicer hereunder, shall immediately (i) record all assignments of Home
Equity Loans not previously recorded in the name of the Trustee pursuant to
Section 3.05(b)(ii) as a result of an Opinion of Counsel and (ii) make all
Delinquency Advances and Compensating Interest payments and deposit them to the
Principal and Interest Account which the Servicer has theretofore failed to
remit with respect to the Home Equity Loans.
(l) The Servicer which is being removed or is resigning shall give notice
to the Mortgagors and to the Rating Agencies of the transfer of the servicing to
the successor.
(m) The Trustee shall give notice to the Certificate Insurer, the
Depositor, the Owners, the Seller, and the Rating Agencies of the occurrence of
any event described in paragraph (a) above of which the Trustee is aware.
(n) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.21(b) and
shall be entitled to the Servicing Fee and all of the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement. The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer of any
of its representations or warranties contained herein or in any related document
or agreement.
(o) The Trustee shall be entitled to be reimbursed pursuant to Sections
7.03(b) for all Transition Expenses (other than amounts reimbursed pursuant to
paragraph (j) above), including, without limitation, any costs or expenses
associated with the complete transfer of all servicing
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data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee to service the Home Equity
Loans properly and effectively.
Section 8.21. Inspections by Certificate Insurer; Errors and Omissions
Insurance.
(a) At any reasonable time and from time to time upon reasonable notice,
the Trustee, the Certificate Insurer, any Owner of a Class X-IO or Class R
Certificate, or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer during the
Servicer's normal business hours with any of its officers or directors;
provided, however, that the costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer.
(b) The Servicer (including the Trustee if it shall become the Servicer
hereunder) agrees to maintain errors and omissions coverage and a fidelity bond,
each at least to the extent required by Section 305 of Part I of FNMA Guide or
any successor provision thereof; provided, however, that in the event that the
fidelity bond or the errors and omissions coverage is no longer in effect, the
Servicer shall notify the Trustee, the Certificate Insurer and the Owners.
Section 8.22. Additional Servicing Responsibilities for Second Mortgage
Loans.
The Servicer shall file (or cause to be filed) a request for notice of any
action by a superior lienholder under a superior lien for the protection of the
Trustee's interest, where permitted by local law and whenever applicable state
law does not require that a junior lienholder be named as a party defendant in
foreclosure proceedings in order to foreclose such junior lienholder's equity of
redemption.
If the Servicer is notified that any superior lienholder has accelerated
or intends to accelerate the obligations under a Senior Lien, or has declared or
intends to declare a default under the mortgage or the promissory note secured
thereby, or has filed or intends to file an election to have the mortgaged
property sold or foreclosed, the Servicer shall take, on behalf of the Trust,
whatever actions are necessary to protect the interests of the Owners and the
Certificate Insurer, and/or to preserve the security of the related Home Equity
Loan, subject to the application of the REMIC Provisions. The Servicer shall
advance the necessary funds to cure the default or reinstate the Senior Lien, if
such advance is in the best interests of the Certificate Insurer and the Owners;
provided, however, that no such additional advance need be made if such advance
would be nonrecoverable from Liquidation Proceeds on the related Home Equity
Loan. The Servicer shall thereafter take such action as is necessary to recover
the amount so advanced. Any expenses incurred by the Servicer pursuant to this
Section 8.22 shall be Servicing Advances.
Section 8.23. The Group II Home Equity Loans.
The Servicer shall enforce each Home Equity Loan in Group II in accordance
with its terms and shall timely calculate, record, report and apply all interest
rate adjustments in accordance with the related Note. The Servicer's records
shall, at all times, reflect the then Coupon Rate and monthly payment and the
Servicer shall timely notify the Mortgagor of any
106
changes to the Coupon Rate or the Mortgagor's monthly payment. If the Servicer
fails to make either a timely or accurate adjustment to the Coupon Rate or
monthly payment or to notify the Mortgagor of such adjustments, upon the
Servicer's discovery of such error and such continued failure, the Servicer
shall pay from its own funds any shortage. If the Servicer's continued failure
after notice thereof to make a scheduled change affects the Trust's rights to
make future adjustments under the terms of such Home Equity Loan, the Servicer
shall repurchase such Home Equity Loan in accordance with the provisions hereof.
Any amounts paid by the Servicer pursuant to this Section shall not be an
advance and shall not be reimbursable from the proceeds of any Home Equity Loan.
Section 8.24. Merger, Conversion, Consolidation or Succession to Business
of Servicer. Any corporation, limited liability company or other entity into
which the Servicer may be merged or converted or with which it may be
consolidated, or any corporation, limited liability company or other entity
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party or any corporation, limited liability company or other entity
succeeding to all or substantially all of the business of the Servicer shall be
the successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto provided that
such corporation, limited liability company or other entity meets the
qualifications set forth in Section 8.20(h) and the resulting corporation,
limited liability company or other entity has a Tangible Net Worth of at least
$35,000,000.
Section 8.25. Notices of Material Events. The Servicer shall give prompt
notice to the Certificate Insurer, the Trustee, and the Rating Agencies of the
occurrence of any of the following events:
(a) Any default or any fact or event of which the Servicer has knowledge
which results, or which with notice or the passage of time, or both, would
result in the occurrence of a default by the Seller or the Servicer under any
Operative Document or would constitute a material breach of a representation,
warranty or covenant under any Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against the Seller or the
Servicer to which the Servicer has knowledge in any federal, state or local
court or before any governmental body or agency or before any arbitration board
or any such proceedings threatened by any governmental agency, which, if
adversely determined, would have a material adverse effect upon any of the
Seller's or the Servicer's ability to perform its obligations under any
Operative Document;
(c) The commencement of any proceedings by or against the Seller or the
Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, trustee or other similar official shall have
been, or may be, appointed or requested for the Seller or the Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of any of the Seller's or the Servicer's business
that the Seller or the Servicer is to cease or desist, or to undertake, any
practice, program, procedure or policy employed by the Seller or the Servicer in
the conduct of the business of any of them, and such cessation or
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undertaking will materially and adversely affect the conduct of the Seller's or
the Servicer's business or its ability to perform under the Operative Documents
or materially and adversely affect the financial affairs of the Seller or the
Servicer.
Section 8.26. Indemnification by the Servicer. The Servicer agrees to
indemnify and hold the Trustee, the Depositor, the Certificate Insurer and each
Owner harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, the Depositor, the Certificate Insurer and any
Owner may sustain in any way related to the failure of the Servicer to perform
its duties and service the Home Equity Loans in compliance with the terms of
this Agreement. A party against whom a claim is brought shall immediately notify
the other parties and the Rating Agencies if a claim is made by a third party
with respect to this Agreement, and the Servicer shall assume (with the consent
of the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Certificate
Insurer, the Servicer, the Trustee and/or Owner in respect of such claim.
Section 8.27. Reports on Foreclosure and Abandonment of Properties. On or
before February 28th of each year beginning in 2001, the Servicer shall file the
reports of foreclosures and abandonments of any Property required by Code
Section 6050J with the Internal Revenue Service and provide a copy of such
filing to the Trustee. The reports from the Servicer shall be in a form and
substance sufficient to meet the reporting requirements imposed by such Section
6050J.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01. Termination of Trust.
The Trust created hereunder and all obligations created by this Agreement
will terminate upon the payment to the Owners of all Certificates from amounts
other than those available under the Certificate Insurance Policies of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
this Agreement and payment in full of all amounts owed to the Certificate
Insurer upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate, (b) the disposition of all property acquired in respect of any
Home Equity Loan remaining in the Trust Estate and (c) at any time if a
Qualified Liquidation of both Home Equity Loan Groups within the Trust is
effected as described in Section 9.02. In no event, however, will the Trust
created by this Agreement continue beyond the expiration of twenty-one (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 United Kingdom, living
on the date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02. Termination Upon Option of the Owner of the Class X-IO
Certificates.
(a) On any Distribution Date on or after the Clean-Up Call Date, the Owner
of the Class X-IO Certificates may cause the purchase from the Trust of all (but
not fewer than all) Home Equity Loans and all property theretofore acquired in
respect of any Home Equity Loan by foreclosure, deed in lieu of foreclosure, or
otherwise then remaining in the Trust Estate (i) on terms agreed upon between
the Certificate Insurer, the Servicer and the Owners of the Class X-IO and Class
R Certificates (if such terms result in payment to the Owners of the Class A
Certificates of their entire principal balance and interest at their Certificate
Rate (and any Carry-Forward Amount other than any Class A-7 Certificateholders'
Interest Index Carryover)), or (ii) in the absence of such an agreement, at a
price equal to the Termination Price. In connection with such purchase, the
Servicer shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account (less amounts
permitted to be withdrawn by the Servicer pursuant to Section 8.08 (d)), which
deposit shall be deemed to have occurred immediately preceding such purchase.
(b) In the event that the Owner of the Class X-IO Certificates purchases
all Home Equity Loans remaining in the Trust Estate pursuant to Section 9.02(a),
the Trust Estate 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 the final tax return of the
REMICs created hereunder 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 regulations thereunder;
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(ii) During such 90-day liquidation period, and at or prior to the
time of making the final payment on the Certificates, the Trustee shall
sell all of the Home Equity Loans to the Owner of the Class X-IO
Certificates for cash; and
(iii) At the time of the making of the final payment on the
Certificates and payment of all amounts owed to the Certificate Insurer,
the Trustee shall distribute or credit, or cause to be distributed or
credited, to the Owners of the Class X-IO and Class R Certificates all
cash on hand in the Trust Estate (other than cash retained to meet
claims), and the Trust Estate shall terminate at that time.
(c) If the Owner of the Class X-IO Certificates does not repurchase all of
the Home Equity Loans pursuant to clause (a) of this Section 9.02 above on the
Clean-Up Call Date, then on the following Distribution Date the Trustee shall
begin a process for soliciting bids in connection with an auction of the Home
Equity Loans. The Owner of the Class X-IO Certificates may submit a bid in
connection with the auction, however neither of the Sellers nor the Depositor
shall be permitted to submit a bid or otherwise purchase any or all of the Home
Equity Loans in connection with the auction. The Trustee shall provide the Owner
of the Class X-IO Certificates written notice of such auction at least ten (10)
Business Days prior to the date bids must be received in such auction (the
"Auction Date"). The auction shall be conducted as follows:
(i) If at least two bids are received, the Trustee shall solicit and
resolicit new bids from all participating bidders until only one bid
remains or the remaining bidders decline to resubmit bids. The Trustee
shall accept the highest of such remaining bids if it is equal to or in
excess of the Termination Price, consummate the sale and end the auction.
If less than two bids are received or the highest bid after the
resolicitation process is completed is not equal to or in excess of the
Termination Price, the Trustee shall not consummate such sale. To
determine if a bid meeting the Termination Price is received, the Trustee
may, and if so requested by the Owner of the Class X-IO Certificates
shall, prior to accepting such bid, consult with a financial advisor,
which may be an Underwriter of the Certificates, to determine if the fair
market value of the Home Equity Loans and related property has been
offered.
(ii) If the first auction conducted by the Trustee does not produce
any bid at least equal to the Termination Price, then the Trustee shall,
beginning on the Distribution Date occurring approximately three months
after the first Auction Date, commence another auction in accordance with
the requirements of this subsection (c). If such second auction does not
produce any bid at least equal to the Termination Price, then the Trustee
shall, beginning on the Distribution Date occurring approximately three
months after the second Auction Date, commence another auction in
accordance with the requirements of this subsection (c), and shall
continue to conduct similar auctions approximately every three months
thereafter until the earliest of (A) the exercise by the Owner of the
Class X-IO Certificates of its repurchase option pursuant to clause (a) of
this Section 9.02 above, (B) receipt by the Trustee of a bid meeting the
conditions specified in the preceding paragraph, or (C) the Distribution
Date on which the Loan Balance of all the Home Equity Loans is reduced to
zero.
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(iii) If the Trustee receives a bid meeting the conditions specified
in this subsection (c), then the Trustee's written acceptance of such bid
shall constitute a plan of complete liquidation within the meaning of
Section 860F of the Code, and the Trustee shall release to the winning
bidder, upon payment of the bid purchase price, the Files pertaining to
the Home Equity Loans being purchased and take such other actions as the
winning bidder may reasonably request to effect the transfer of the Home
Equity Loans to the winning bidder.
(d) If the Owner of the Class X-IO Certificates does not repurchase all of
the Home Equity Loans pursuant to clause (a) of this Section 9.02 on the
Clean-Up Call Date, then on the third Distribution Date following the Clean-Up
Call Date and each Distribution Date thereafter the Owners of the Class A
Certificates shall be entitled to receive the Class X-IO Distribution Amount,
distributable pursuant to Section 7.03(b) (xii) hereof, allocated among the
Classes of Class A Certificates in the order of priority set forth in Section
7.03(b) (xii) hereof.
(e) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final tax
return, which shall be binding upon all successor Owners.
(f) In connection with any purchase pursuant to Section 9.02(a) or (c),
the Owner of the Class X-IO Certificates or other purchaser of the Home Equity
Loans, as the case may be, shall provide to the Trustee and the Certificate
Insurer at the expense of the Owner of the Class X-IO Certificates or other
purchaser of the Home Equity Loans, as the case may be, an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
and the Trustee to the effect that such purchase and liquidation constitutes a
Qualified Liquidation of REMIC I and REMIC II.
(g) Promptly following any purchase described in Section 9.02(a) or (c),
the Trustee will release the Files to the Owner of the Class X-IO Certificates
or other purchaser of the Home Equity Loans, as the case may be, or otherwise
upon their order, in a manner similar to that described in Section 8.14 hereof.
The Owner of the Class X-IO Certificates or other purchaser of the Home Equity
Loans, as the case may be, will promptly prepare and record assignments of
Mortgages from the Trustee to the appropriate person.
Section 9.03. Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or by
a court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that either REMIC created hereunder does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Owners of
a majority in Percentage Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer may direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation, as contemplated
by Section 860F(a)(4) of the Code and (ii) the Certificate Insurer may notify
the Trustee of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer
111
than all) Home Equity Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure, or otherwise in respect of any Home
Equity Loan then remaining in the Trust Estate at a price equal to the
Termination Price.
Upon receipt of such direction from the Certificate Insurer, the Trustee
shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. If, during
the Purchase Option Period, the Owners of the Class R Certificates have not
exercised the option described in the immediately preceding paragraph, then upon
the expiration of the Purchase Option Period (i) in the event that the
Certificate Insurer or the Owners of the Class A Certificates with the consent
of the Certificate Insurer have given the Trustee the direction described in
clause (a)(i) above, the Trustee shall sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust Estate, each in accordance with the
plan of complete liquidation, such that, if so directed, the liquidation of the
Trust Estate, the distribution of the proceeds of the liquidation and the
termination of this Agreement occur no later than the close of the 60th day, or
such later day as the Certificate Insurer or the Owners of the Class A
Certificates with the consent of the Certificate Insurer shall permit or direct
in writing, after the expiration of the Purchase Option Period and (ii) in the
event that the Certificate Insurer has given the Trustee notice of the
Certificate Insurer's determination to purchase the Trust Estate described in
clause (a)(ii) preceding the Certificate Insurer shall, within 60 days, purchase
all (but not fewer than all) Home Equity Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure or otherwise in respect of
any Home Equity Loan then remaining in the Trust Estate. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on deposit in
the Principal and Interest Account for deposit to the Certificate Account (less
amounts permitted to be withdrawn by the Servicer pursuant to Section 8.08(d)),
which deposit shall be deemed to have occurred immediately preceding such
purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an Opinion of Counsel
experienced in federal income tax matters, acceptable to the Certificate Insurer
and selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account (less amounts permitted to be withdrawn by the Servicer
pursuant to Section 8.08(d)), which deposit shall be deemed to have occurred
immediately preceding such purchase. The foregoing opinion shall be deemed
satisfactory
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unless the Certificate Insurer gives the Owners of a majority of the Percentage
Interest of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt by the Certificate Insurer of such
opinion.
Section 9.04. Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
Termination Price or other liquidation of the Trust Estate pursuant to this
Article IX to the Certificate Account for distribution in accordance with the
priorities set forth in Section 7.03(b) hereof; provided, however, that any
amounts representing unreimbursed Delinquency Advances and Servicing Advances
theretofore funded by the Servicer from the Servicer's own funds shall be paid
by the Trustee to the Servicer from the proceeds of the Trust Estate.
Notwithstanding the foregoing, no distribution of the proceeds of any
Termination Price shall be made to the Owners of the Class X-IO and Class R
Certificates until all such amounts have been applied in reduction of any
outstanding Class A-7 Certificateholders' Interest Index Carryover.
Section 9.05. Netting of Amounts.
If any Person paying the Termination Price would receive a portion of the
amount to be paid, such Person may net any such amount against the Termination
Price otherwise payable.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01. Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions or any other resolutions,
statements, reports, documents, orders or other instruments which by any
provision hereof are specifically required to be furnished to the Trustee, shall
be under a duty to examine the same to determine whether or not on their face
they conform to the requirements of this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Certificate Insurer, the Sellers or the Depositor
hereunder. If any such instrument is found not to conform in any material
respect to the requirements of this Agreement, the Trustee shall notify the
Certificate Insurer if it cannot be timely corrected. Notwithstanding the
foregoing, if a Servicer Termination Event of which an Authorized Officer of the
Trustee shall have actual knowledge has occurred and has not been cured or
waived, the Trustee shall exercise such of the rights and powers vested in it by
this Agreement, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Notwithstanding the appointment of the Servicer hereunder, the Trustee
is hereby empowered to perform the duties of the Servicer it being expressly
understood, however, that the foregoing describes a power and not an obligation
of the Trustee (unless the Servicer shall have resigned or been terminated and a
successor Servicer shall not have been appointed pursuant to the terms of this
Agreement), and that all parties hereto agree that, prior to any termination of
the Servicer, the Servicer and, thereafter, the Trustee or any other successor
Servicer shall perform such duties. Specifically, and not in limitation of the
foregoing, the Trustee shall upon termination or resignation of the Servicer,
and pending the appointment of any other Person as successor Servicer have the
power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
(v) to enforce the Home Equity Loans;
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(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest; and
(vii) to conduct an auction of the Home Equity Loans pursuant to Section
9.02.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) This subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) The Trustee shall not be personally liable for any error of judgment
made in good faith by an Authorized Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts;
(iii) The Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the
direction of the Certificate Insurer or of the Owners of a majority
in Percentage Interest of the Certificates of the affected Class or
Classes and the Certificate Insurer relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement relating to such Certificates;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default unless an Authorized Officer
of the Trustee shall have received written notice thereof or an
Authorized Officer shall have actual knowledge thereof. In the
absence of receipt of such notice, the Trustee may conclusively
assume that there is no default; and
(v) Subject to the other provisions of this Agreement and without
limiting the generality of this Section 10.01, the Trustee shall
have no duty (A) to see to any recording, filing, or depositing of
this Agreement or any agreement referred to herein or any financing
statement or continuation statement evidencing a security interest,
or to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance or (C) to see to the payment or
discharge of any tax, assessment, or other governmental charge or
any lien or encumbrance of any kind owing with respect to, assessed
or levied against, any part of the Trust Estate.
(d) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or indemnity reasonably satisfactory to it against such risk or
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liability is not reasonably assured to it. None of the provisions contained in
this Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer under this Agreement, except during such time, if any, as the Trustee
shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in this
Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or to
take any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its satisfaction against any
and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice, or other document it may receive or which may
be alleged to have been delivered to or served upon it by third parties as a
consequence of the assignment of any of the Home Equity Loans hereunder or may
otherwise pertain to its interests in any of the Properties; provided, however,
that the Trustee shall use commercially reasonable efforts to deliver to the
Servicer and the Certificate Insurer any such complaint, claim, demand, notice,
or other document which is delivered to the Corporate Trust Office of the
Trustee and contains sufficient information to enable an Authorized Officer of
the Trustee to identify it as pertaining to a Mortgage or a Property.
(i) The Trustee hereby agrees to disclose the Premium Amount to any Person
upon request.
Section 10.02. Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled
hereto on any Distribution Date any amounts available for distribution
that it has received in accordance with the terms hereof; (provided,
however, that any such failure which is due to circumstances beyond the
control of the Trustee shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in any
certificate or other writing delivered pursuant
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hereto or in connection herewith shall prove to be incorrect in any
material respect as of the time when the same shall have been made, and
such failure or breach shall continue or not be cured for a period of 30
days after there shall have been given, by registered or certified mail,
to the Trustee by the Seller, the Certificate Insurer, or by the Owners of
at least 25% of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding, or, if there are no Class A
Certificates then Outstanding, by such Percentage Interests represented by
the Class X-IO Certificates, or if there are no Class X-IO Certificates
then Outstanding, by such Percentage Interests represented by the Class R
Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Trustee,
and such decree or order shall have remained in force undischarged or
unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing.
The Depositor shall give to the Certificate Insurer and the Rating
Agencies notice of the occurrence of any such event of which the Depositor is
aware.
(b) If any event described an Paragraph (a) occurs and is continuing, then
and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates then Outstanding or if there are no
Class A Certificates then Outstanding by such majority of the Percentage
Interests represented by the Class X-IO Certificates or if there are no Class
X-IO Certificates then Outstanding by such majority of the Percentage Interests
represented by the Class R Certificates, may, whether or not the Trustee resigns
pursuant to Section 10.09(b) hereof, immediately, concurrently with the giving
of notice to the Trustee, and without delaying the 30 days required for notice
therein, appoint a successor Trustee pursuant to the terms of Section 10.09
hereof.
Section 10.03. Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
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(a) the Trustee (acting as Trustee or Tax Matters Person) may request and
may conclusively rely and shall be fully protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the Certificate
Insurer, or the Owners of any Class of Certificates mentioned herein shall be
sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the advice of such counsel
or any opinion of counsel (selected in good faith by the Trustee) shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reasonable reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the request or direction of any of
the Owners pursuant to this Agreement, unless such Owners shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, unless requested in writing to do so by the Owners; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense or liability
as a condition precedent to taking any such action;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
nominees or custodians and shall not be responsible for any willful misconduct
or gross negligence on the part of any agent, attorney, custodian or nominee
appointed with due care;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person and within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act enumerated
in this Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of such act;
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(j) pursuant to the terms of this Agreement, the Servicer is required to
furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate or the Certificate Insurer (either in
writing or orally with prompt written or telecopy confirmations), that such
information or calculations is or are incorrect, or (ii) unless there is a
manifest error in any such information;
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder;
(l) In no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon. The Trustee shall have no
liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity. The Trustee shall invest and reinvest
amounts held in the Certificate Account in Eligible Investments as set forth in
Schedule I-E hereto; and
(m) In the event that the Trustee is also acting as Registrar, transfer
agent or Paying Agent hereunder, the rights and protections afforded to the
Trustee pursuant to this section shall also be afforded to the Registrar,
transfer agent and Paying Agent.
Section 10.04. Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the Certificates,
except the execution and authentication of the Certificates, shall be taken as
the statements of the Depositor, and the Trustee assumes no responsibility for
their correctness (other than with respect to such execution and
authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, the Certificates, the Certificate Insurance
Policies or any Home Equity Loan or document related thereto other than as to
validity and sufficiency of its authentication of the Certificates. The Trustee
shall not 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, the Certificate Insurer, the
Seller or the Servicer in respect of the Home Equity Loans or deposited into or
withdrawn from the Principal and Interest Account or the Certificate Account by
the Depositor, the Servicer or the Seller, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or except as otherwise provided herein to prepare or file any tax returns
or Commission filings for the Trust or to record this Agreement. The Trustee
shall not be required to take notice or be deemed to have notice or knowledge of
any default unless an Authorized Officer of the Trustee shall have received
written notice thereof or an Authorized Officer has actual knowledge thereof. In
the absence of receipt of such notice, the Trustee may conclusively assume that
no default has occurred.
Section 10.05. May Hold Certificates.
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The Trustee, any Paying Agent, Registrar or any other agent of the Trust,
in its individual or any other capacity, may become an Owner or pledgee of
Certificates and may otherwise deal with the Trust, the Certificate Insurer and
the other parties hereto with the same rights it would have if it were not
Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other trust funds except to the extent required herein or required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Depositor and except to the extent
of income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity and income or other gain
actually received by the Trustee on Eligible Investments.
Section 10.07. Compensation and Reimbursement.
As compensation for its services hereunder, the Trustee shall be entitled
to receive the Trustee Fee, any investment income or other benefit derived from
funds or Eligible Investments in the Certificate Account to the extent permitted
by Section 7.05(c), and such other amounts as separately agreed with the Seller.
Except as otherwise provided in this Agreement, the Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Trust and
held harmless against any loss, liability, or "unanticipated out-of-pocket"
expense incurred or paid to third parties (which expenses shall not include
salaries paid to employees, or allocable overhead, of the Trustee) in connection
with or 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 trusts hereunder or the Certificates, other than 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. All such amounts described in the preceding
sentence shall constitute Trustee Reimbursable Expenses. It is understood by the
parties hereto that a "claim" as used in this paragraph includes any claim for
indemnification made by the Custodian under the applicable provisions of the
Custodial Agreement. The Trustee and any director, officer, employee or agent of
the Trustee shall be indemnified by the Seller and held harmless against any
loss, liability or reasonable expenses incurred by the Trustee in performing its
duties as Tax Matters Person for the REMICs created under this Agreement, other
than any loss, liability or expense incurred by reason of willful misfeasance,
negligence or bad faith. When the Trustee incurs expenses or provides services
after the occurrence of a default and the commencement of a voluntary or
involuntary case under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or similar law involving any
of the Sellers or the Servicer, the expenses and fees for such services are
intended to constitute expenses of administration under such laws. The
provisions of this Section 10.07 shall survive the resignation or removal of the
Trustee and the termination of this Agreement.
Section 10.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any state
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authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 subject to supervision or
examination by the United States of America, or any state, acceptable to the
Certificate Insurer and having a deposit rating of at least A- by Standard &
Poor's and A2 by Moody's and if rated by Fitch, A by Fitch. If such Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, 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 condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall, upon the request of the Certificate Insurer, resign
immediately in the manner and with the effect hereinafter specified in this
Article X.
Section 10.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor Trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
the Seller and by mailing notice of resignation by first-class mail, postage
prepaid, to the Certificate Insurer and the Owners at their addresses appearing
on the Register. A copy of such notice shall be sent by the resigning Trustee to
the Rating Agencies. Upon receiving notice of resignation, the Depositor shall
promptly appoint a successor Trustee or Trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor Trustee or
Trustees. If no successor Trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor Trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may remove the
Trustee and appoint a successor Trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee.
(d) The Owners of a majority of the Voting Rights represented by the Class
A Certificates with the prior written consent of the Certificate Insurer, or, if
there are no Class A Certificates then Outstanding, by such majority of the
Voting Rights represented by the Class X-IO and Class R Certificates, may at any
time remove the Trustee and appoint a successor Trustee acceptable to the
Certificate Insurer by delivering to the Trustee to be removed, to the successor
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Trustee so appointed, to the Depositor, to the Servicer and to the Certificate
Insurer, copies of the record of the act taken by the Owners, as provided for in
Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, the
Depositor shall promptly appoint a successor Trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
Trustee and supersede the successor Trustee appointed by the Depositor. If no
successor Trustee shall have been so appointed by the Depositor or the Owners
and shall have accepted appointment in the manner hereinafter provided, any
Owner may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10. Acceptance of Appointment by Successor Trustee.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Depositor on behalf of the Trust, to the Certificate Insurer and
to its predecessor Trustee an instrument accepting such appointment hereunder
and stating its eligibility to serve as Trustee hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts, duties and obligations of its
predecessor hereunder; but, on request of the Depositor, the Certificate Insurer
or the successor Trustee, such predecessor Trustee shall, upon payment of its
charges then unpaid, execute and deliver an instrument transferring to such
successor Trustee all of the rights, powers and trusts of the Trustee so ceasing
to act, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such Trustee so ceasing to act hereunder. Upon
request of any such successor Trustee, the Depositor on behalf of the Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts.
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Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Depositor shall mail notice thereof by first-class mail, postage
prepaid, to the Owners at their last addresses appearing upon the Register and
to the Certificate Insurer. The Depositor shall send a copy of such notice to
the Rating Agencies. If the Depositor fails to mail such notice within ten days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11. Merger, Conversion, Consolidation or Succession to Business
of the Trustee.
Any corporation or association into which the Trustee 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 shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12. Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared by the Seller and required to be filed by the
Trust, including other reports that must be filed with the Owners, such as the
Internal Revenue Service's Form 1066 and Schedule Q. The Trustee shall, upon
written request of the Seller, collect any forms or reports from the Owners
determined by the Seller to be required under applicable federal, state and
local tax laws.
(c) Except as otherwise provided, the Trustee shall have the
responsibility for preparation and execution of those returns, forms, reports
and other documents referred to in this Section.
(d) The Seller covenants and agrees that it shall provide to the Trustee
any information necessary to enable the Trustee to meet its obligations under
subsections (a), (b) and (c) above.
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Section 10.13. Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Sellers, the Certificate Insurer, the
Servicer or any Owner 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 Trustee, its
directors, officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Trustee is the obligor). In addition,
the Depositor and CHEC covenant and agree to indemnify the Trustee and the
Servicer (if the Servicer is also the Trustee) and their officers, directors,
agents and employees from, and hold it harmless against, any and all losses,
liabilities, damages, claims or expenses (including legal fees and expenses) of
whatsoever kind arising out of or in connection with the performance of its
duties hereunder other than those resulting from negligence or bad faith. The
Trustee and any director, officer, employee or agent of the Trustee may
conclusively rely and shall be fully protected in acting or refraining from
acting in good faith on any certificate, notice or other document of any kind
prima facie properly executed and submitted by the Authorized Officer of any
Person respecting any matters arising hereunder. The provisions of this Section
10.13 shall survive the resignation or removal of the Trustee, termination of
this Agreement and the payment of the outstanding Certificates. When the Trustee
incurs expenses or provides services after the occurrence of a default and the
commencement of a voluntary or involuntary case under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or
similar law involving the Sellers or the Servicer, the expenses and fees for
such services are intended to constitute expenses of administration under such
laws.
Section 10.14. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or Property may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
and reasonably acceptable to the Certificate Insurer to act as co-Trustee or
co-Trustees, jointly with the Trustee, of all or any part of the Trust Estate or
separate Trustee or separate Trustees of any part of the Trust Estate, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Owners and the Certificate Insurer, such title to the Trust Estate, or any part
thereof, and, subject to the other provisions of this Section 10.14, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No co-Trustee or
separate Trustee hereunder shall be required to meet the terms of eligibility as
a successor
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Trustee under Section 10.08 and no notice to Owner of the appointment of any
co-Trustee or separate Trustee shall be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate Trustee or co-Trustee jointly
(it being understood that such separate Trustee or co-Trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Estate or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate Trustee or
co-Trustee, but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable by
reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer, the Certificate Insurer and the Trustee acting
jointly may at any time accept the resignation of or remove any separate
Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Certificate Insurer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15. Appointment of Custodians.
The Trustee may appoint one or more Custodians to hold all or a portion of
the Files as agent for the Trustee, by entering into a Custodial Agreement
acceptable to the Certificate Insurer. Subject to this Article X, the Trustee
agrees to comply with the terms of the Custodial
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Agreement and to enforce the terms and provisions thereof against the Custodian
for the benefit of the Owners of the Certificates and the Certificate Insurer.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Sellers, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, each of the Sellers, the Certificate
Insurer or the Owners, as the case may be, shall furnish to the Trustee a
certificate stating that all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Agreement
relating to such particular application or request, no additional certificate
need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02. Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such Authorized Officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, either of the Sellers or
the Servicer, stating that the information with respect to such factual matters
is in the possession of the Depositor, either of the Sellers or the Servicer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the
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certificate or opinion or representations with respect to such matters are
erroneous. Any Opinion of Counsel may also be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Trustee, stating that the information with respect to
such matters is in the possession of the Trustee, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous. Any Opinion of
Counsel may be based on the written opinion of other counsel, in which event
such Opinion of Counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03. Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the Owners
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Owners in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Owner of any Certificate shall bind the Owner of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Trust in reliance thereon, whether or not notation
of such action is made upon such Certificates.
Section 11.04. Notices, etc. to Trustee.
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Any request, demand, authorization, direction, notice, consent, waiver or
act of the Owners under this Agreement or other documents provided or permitted
by this Agreement to be made upon, given or furnished to, or filed with the
Trustee by any Owner, the Certificate Insurer, the Depositor, either of the
Sellers or the Servicer shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with and received by the Trustee at
its Corporate Trust Office as set forth in Section 2.02 hereof.
Section 11.05. Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigned or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Owners shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Owners when such notice is required to be given pursuant
to any provision of this Agreement, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice.
Where this Agreement provides for notice to any Rating Agency that rated
any Certificates, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 11.06. Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07. Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
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Section 11.08. Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.10. Legal Holidays.
In any case where the date of any Distribution Date, any other date on
which any distribution to any Owner is proposed to be paid, or any date on which
a notice is required to be sent to any Person pursuant to the terms of this
Agreement (with the exception of any Monthly Remittance Date) shall not be a
Business Day, then (notwithstanding any other provision of the Certificates or
this Agreement) payment or mailing need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made or mailed on the nominal date of any such Distribution Date, or such other
date for the payment of any distribution to any Owner or the mailing of such
notice, as the case may be, and no interest shall accrue for the period from and
after any such nominal date, provided such payment is made in full on such next
succeeding Business Day. In any case where the date of any Monthly Remittance
Date shall not be a Business Day, then payment or mailing need not be made on
such date, but must be made on the preceding Business Day.
Section 11.11. Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many states
and outside the United States and the desire to establish with certainty that
this Agreement will be governed by and construed and interpreted in accordance
with the law of a state having a well-developed body of commercial and financial
law relevant to transactions of the type contemplated herein, this Agreement and
each Certificate shall be construed in accordance with and governed by the laws
of the State of New York applicable to agreements made and to be performed
therein, without giving effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York state court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not
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to assert by way of motion, as a defense or otherwise in any such suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction
of such courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that the related documents or the subject matter thereof may not be litigated
in or by such courts.
(c) Each of the Depositor, Seller, the Conduit Sellers and the Servicer
hereby irrevocably appoints and designates the Trustee as its true and lawful
attorney and duly authorized agent for acceptance of service of legal process
with respect to any action, suit or proceeding set forth in paragraph (b)
hereof. Each of the Depositor, the Sellers and the Servicer agrees that service
of such process upon the Trustee shall constitute personal service of such
process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right of
the Depositor, any of the Sellers, the Servicer or the Certificate Insurer as
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Home Equity Loans against any Mortgagor in the courts of any jurisdiction.
Section 11.12. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13. Usury.
The amount of interest payable or paid on any Certificate under the terms
of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14. Amendment.
(a) The Trustee, the Depositor, the Sellers and the Servicer may, at any
time and from time to time, with the prior written approval of the Certificate
Insurer but without the giving of notice to or the receipt of the consent of the
Owners, amend this Agreement, and the Trustee
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shall consent to the amendment for the purposes of (i) if accompanied by an
approving Opinion of Counsel experienced in federal income tax matters, and an
Officer's Certificate, which shall not be at the expense of the Trustee,
removing the restriction against the transfer of a Class R Certificate to a
Disqualified Organization, (ii) complying with the requirements of the Code
including any amendments necessary to maintain REMIC status of each REMIC, (iii)
curing any ambiguity, (iv) correcting or supplementing any provisions of this
Agreement which are inconsistent with any other provisions of this Agreement or
(v) for any other purpose, provided that in the case of clause (v), such
amendment shall not adversely affect in any material respect any Owner. Any such
amendment shall be deemed not to adversely affect in any material respect any
Owner if such Owner shall have consented thereto in writing or if there is
delivered to the Trustee written notification from each Rating Agency that such
amendment will not cause such Rating Agency to reduce its then current rating
assigned to the Class A Certificates without regard to the Certificate Insurance
Policies. Notwithstanding anything to the contrary, no such amendment shall (a)
change in any manner the amount of, or delay the timing of, payments which are
required to be distributed to any Owner without the consent of such Owner, (b)
change the percentages of Percentage Interest which are required to consent to
any such amendments, without the consent of the Owners of all Certificates of
the Class or Classes affected then outstanding or (c) affect in any manner the
terms or provisions of the Certificate Insurance Policies. The Trustee shall not
be required to execute any amendment or supplement if it affects its rights,
duties, immunities or indemnities.
(b) The Certificate Insurer and the Rating Agencies shall be provided by
the Seller and the Depositor with copies of any amendments to this Agreement,
together with copies of any opinions or other documents or instruments executed
in connection therewith.
(c) Notwithstanding any contrary provisions of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (provided by the Person requesting such
amendment) to the effect that such amendment will not result in the imposition
of any tax on the Trust pursuant to the REMIC Provisions or cause either REMIC
created hereunder to fail to qualify as a REMIC at any time that any of the
Certificates are outstanding.
Section 11.15. Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Seller may, if such
Person meets the eligibility requirements for the Trustee set forth in Section
10.08 hereof, including, without limitation, the prior written consent of the
Certificate Insurer, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
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(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Distribution Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the Owners
entitled thereto until such sums shall be paid to such Owners or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16. REMIC Status.
(a) The parties hereto intend that each REMIC created hereunder shall
constitute, and that the affairs of each REMIC created hereunder shall be
conducted so as to qualify it as a REMIC in accordance with the REMIC
Provisions. In furtherance of such intention, Bank One, National Association, or
such other person designated pursuant to Section 11.18 hereof shall act as agent
for the Trust and as Tax Matters Person for the Trust and that in such capacity
it shall: (i) prepare or cause to be prepared and filed, at its own expense, in
a timely manner, annual tax returns and any other tax return required to be
filed by each REMIC created hereunder using a calendar year as the taxable year
for such REMIC; (ii) in the related first such tax return, make (or cause to be
made) an election satisfying the requirements of the REMIC Provisions, on behalf
of each REMIC created hereunder, for it to be treated as a REMIC; (iii) at the
Tax Matters Person's expense, prepare and forward, or cause to be prepared and
forwarded, to the Owners all information, reports or tax returns required with
respect to each REMIC created hereunder, including Schedule Q to Form 1066, as,
when and in the form required to be provided to the Owners, and to the Internal
Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal, state or
local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; provided
that the tax return filed on Schedule Q to Form 1066 shall be prepared and
forwarded to the Owners of the Class R Certificates no later than 50 days after
the end of the period to which such tax return was due; (iv) not take any action
or omit to take any action that would cause the termination of the REMIC status
of either REMIC created hereunder, except as provided under this Agreement; (v)
represent the Trust or each REMIC created hereunder in any administrative
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or judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to a taxable year of
the Trust or each REMIC created hereunder, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations relating to
any tax item of the Trust or each REMIC created hereunder, and otherwise act on
behalf of the Trust or each REMIC created hereunder in relation to any tax
matter involving the Trust or each REMIC created hereunder (the legal expenses
and costs of any such action described in this subsection (v) and any liability
resulting therefrom shall constitute expenses of the Trust and shall constitute
Trustee Reimbursable Expenses, unless such legal expenses and costs are incurred
by reason of the Trustee's willful misfeasance, bad faith or negligence); (vi)
comply with all statutory or regulatory requirements with regard to its conduct
of activities pursuant to the foregoing clauses of this Section 11.16,
including, without limitation, providing all notices and other information to
the Internal Revenue Service and Owners of Class R Certificates required of a
"tax matters person" pursuant to subtitle F of the Code and the Treasury
Regulations thereunder; (vii) make available information necessary for the
computation of any tax imposed (A) on transfer of residual interests to certain
Disqualified Organizations or (B) on pass-through entities, any interest in
which is held by a Disqualified Organization; and (viii) acquire and hold the
Tax Matters Person Residual Interest. The obligations of the Trustee or such
other designated Tax Matters Person pursuant to this Section 11.16 shall survive
the termination or discharge of this Agreement.
(b) The Sellers, the Depositor, the Trustee and the Servicer covenant and
agree for the benefit of the Owners and the Certificate Insurer (i) to take no
action which would result in the termination of REMIC status for either REMIC
created hereunder, (ii) not to engage in any "prohibited transaction", as such
term is defined in Section 860F(a)(2) of the Code, (iii) not to engage in any
other action which may result in the imposition on the Trust of any other taxes
under the Code and (iv) to cause the Servicer not to take or engage in any such
action, to the extent that either of the Sellers is aware of any such proposed
action by the Servicer.
(c) Each REMIC created hereunder shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) None of the Depositor, the Sellers or the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other compensation for
services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
either of the Sellers may engage in any of the transactions prohibited by such
clauses, provided that the Trustee shall have received an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
to the effect that such transaction does not result in a tax imposed on the
Trust or cause a termination of REMIC status for either REMIC created hereunder;
provided, however, that such transaction is otherwise permitted under this
Agreement.
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(g) In the event that any tax is imposed on "prohibited transactions" of
the Trust created hereunder as defined in Section 860F(a)(2) of the Code, on
"net income from foreclosure property" of the Trust as defined in Section
860G(c) of the Code, on any contributions to the Trust after the Startup Date
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 Trustee if such tax arises out of or results from the
willful misfeasance, bad faith or negligence in performance by the Trustee of
any of its obligations under Article X, or (ii) to the Servicer if such tax
arises out of or results from a breach by the Servicer of any of its obligations
under Article VIII or otherwise.
Section 11.17. Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer at the expense
of the party seeking to take such action but in no event at the expense of the
Trust to the effect that such transaction does not result in a tax imposed on
the Trust or either REMIC created hereunder or cause a termination of REMIC
status for either REMIC created hereunder, (i) sell any assets in the Trust
Estate, (ii) accept any contribution of assets after the Startup Day, (iii)
allow the Servicer to foreclose upon any Home Equity Loan if such foreclosure
would result in a tax on the Trust or either REMIC created hereunder or cause
termination of REMIC status for either REMIC created hereunder or (iv) agree to
any modification of this Agreement. To the extent that sufficient amounts cannot
be so retained to pay or provide for the payment of such tax, the Trustee is
hereby authorized to and shall segregate, into a separate non-interest bearing
account, the net income from any such Prohibited Transactions of each REMIC
created hereunder and use such income, to the extent necessary, to pay such tax;
provided that, to the extent that any such income is paid to the Internal
Revenue Service, the Trustee shall retain an equal amount from future amounts
otherwise distributable to the Owners of Class R Certificates and shall
distribute such retained amounts to the Owners of Class A Certificates to the
extent they are fully reimbursed and then to the Owners of the Class R
Certificates. If any tax, including interest penalties or assessments,
additional amounts or additions to tax, is imposed on the Trust, such tax shall
be charged against amounts otherwise distributable to the owners of the Class R
Certificates on a pro rata basis. The Trustee is hereby authorized to and shall
retain from amounts otherwise distributable to the Owners of the Class R
Certificates sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
Section 11.18. Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for each REMIC created hereunder
for all purposes of the Code and such Tax Matters Person will perform, or cause
to be performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for each REMIC created hereunder shall be the Trustee as long
as it owns a Class R Certificate. If the Trustee does not own a Class R
Certificate, the Tax Matters Person will be the holder of the largest percentage
interest in the
135
Class R Certificates. The Trustee is hereby irrevocably appointed to act as the
agent of the Tax Matters Person for all purposes of the Code and regulations
thereunder.
Section 11.19. The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder (except for the
Certificate Insurer's right of prior approval of amendments to this Agreement
that affect the Certificate Insurer's right to receive payments or the priority
of such payments to the Certificate Insurer under Section 7.03), including but
not limited to consent rights, shall be suspended and shall run to the benefit
of the Owners and shall be exercisable by a vote of Owners holding Certificates
representing at least a 51% Percentage Interest of all Class A Certificates
during any period in which there exists a Certificate Insurer Default; provided,
that the right of the Certificate Insurer to receive the Premium Amount or any
Reimbursement Amounts shall not be suspended if such Certificate Insurer Default
was a default other than a default under clause (a) of the definition thereof.
If a Certificate Insurer Default shall cease to exist, the rights of the
Certificate Issuer shall be immediately restored. At such time as the Class A
Certificates are no longer Outstanding hereunder and the Certificate Insurer has
received all Reimbursement Amounts, the Certificate Insurer's rights hereunder
shall terminate.
Section 11.20. Reserved.
Section 11.21. Third Party Rights.
The Trustee, the Sellers, the Servicer, the Depositor and the Owners agree
that the Certificate Insurer shall be deemed a third-party beneficiary of this
Agreement as if it were a party hereto.
Section 11.22. Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Office
Tel: (000) 000-0000
Fax: (000) 000-0000
The Depositor: CHEC Funding, LLC
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
136
The Seller: Centex Credit Corporation d/b/a Centex Home
Equity Corporation
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
The Conduit Seller: CHEC Conduit Funding, LLC
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
The Conduit Seller II: Xxxxxxx Street Funding II, LLC
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
The Servicer: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
The Custodian: Bank One Trust Company, N.A.
0000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxx
Fax: (000) 000-0000
Confirmation: (000) 000-0000
137
The Certificate
Insurer: MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Insured Portfolio Management-
Structured Finance (IPM-SF)
Re: Centex Home Equity Loan Trust 2001-A
Tel: (000) 000-0000
Fax: (000) 000-0000
The Underwriters: Banc of America Securities LLC
000 Xxxxx Xxxxx Xxxxxx
11th Floor
NC1-007-11-07
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx Brothers, Inc.
3 World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Sehasayee
Tel: (000) 000-0000
Moody's: Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Residential Mortgage
Monitoring Department
Tel: (000) 000-0000
Fax: (000) 000-0000
Standard & Poor's: Standard & Poor's Ratings Services,
a division of The XxXxxx-Xxxx Companies, Inc.
00 Xxxxx Xxxxxx
00xx Xxxxx
000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgage Group
Tel: (000) 000-0000
Fax: (000) 000-0000
Fitch: Fitch, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Section 11.23. Rule 144A Information. For so long as any of the Class R or
Class X-IO Certificates are "restricted securities" within the meaning of Rule
144A under the Securities Act, the Servicer (or if the Trustee is then acting as
Servicer, CHEC) agrees to provide to any Owner of the Class R or Class X-IO
Certificate and to any prospective purchaser of Class R or Class X-IO
Certificates designated by such an Owner, upon the request of such Owner or
prospective purchaser, the information specified below which is intended to
satisfy the conditions set forth in Rule 144A(d)(4) under the Securities Act;
provided that this Section 11.23 shall require, as to the Trustee or CHEC, only
that the Servicer (or if the Trustee is then acting as Servicer, CHEC) provide
publicly available information regarding it or the Trustee in response to any
such request; and provided further that the Servicer (or if the Trustee is then
acting as Servicer, CHEC) shall be obligated to provide only such basic,
material information concerning the structure of the Class R or Class X-IO
Certificates and distributions thereon, the nature, performance and servicing of
the Home Equity Loans supporting the Certificates, and any credit enhancement
mechanism, if any, associated with the Certificates. Any recipient of
information provided pursuant to this Section 11.23 shall agree that such
information shall not be disclosed or used for any purpose other than the
evaluation of the Class R or Class X-IO Certificates by the prospective
purchaser. The Trustee shall have no responsibility for the sufficiency under
Rule 144A of any information so provided by the Servicer or CHEC to any Owner or
prospective purchaser of Class R or Class X-IO Certificates.
END OF ARTICLE XI
139
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. Trust Estate and Accounts Held for Benefit of the
Certificate Insurer.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and in
the Certificates to the benefit of Owners of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain the
Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Owners shall be deemed to include the
Certificate Insurer. Unless a Certificate Insurer Default exists, the Servicer
shall not terminate any Sub-Servicing Agreements without the prior consent of
the Certificate Insurer.
Section 12.02. Claims Upon the Policies; Policy Payments Account
(a) In the event that an Insured Payment becomes due pursuant to the terms
of a Certificate Insurance Policy, the Trustee shall submit a Notice (in the
form attached to the Certificate Insurance Policy) in accordance with the terms
of such Certificate Insurance Policy and in sufficient time that payment will be
made under such Certificate Insurance Policy on the related Distribution Date.
(b) The Trustee shall establish and maintain a separate special purpose
trust account for the benefit of the Owners of the Class A Certificates and the
Certificate Insurer referred to herein as the "Policy Payments Account" over
which the Trustee shall have exclusive control and sole right of withdrawal. The
Policy Payments Account shall be an Eligible Account. The Trustee shall deposit
any amount paid under the Certificate Insurance Policies into the Policy
Payments Account and distribute such amount only for purposes of payment to the
Owners of the related Class A Certificates of the Insured Payments for which a
claim was made and such amount may not be applied to satisfy any costs, expenses
or liabilities of the Servicer, the Seller, the Depositor, the Custodian, the
Trustee or the Trust. Amounts paid under a Certificate Insurance Policy shall be
transferred to the Certificate Account in accordance with the next succeeding
paragraph and disbursed by the Trustee to Owners of the related Class A
Certificates in accordance with Section 7.03(e). It shall not be necessary for
such payments to be made by checks or wire transfers separate from the checks or
wire transfers used to pay the Insured Payments with other funds available to
make such payment. However, the amount of any payment of principal of or
interest on the related 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 Register and in the statement to be furnished to Owners of the
Class A Certificates pursuant to Section 7.08. Funds held in the Policy Payments
Account shall not be invested by the Trustee.
140
On any Distribution Date with respect to which a claim has been made under
a Certificate Insurance Policy, the amount of funds received by the Trustee as a
result of any claim under such Certificate Insurance Policy, to the extent
required to make the Insured Payment on such Distribution Date shall be
withdrawn from the Policy Payments Account and deposited in the Certificate
Account and applied by the Trustee, directly to the payment in full of the
Insured Payment due on the related Class of Class A Certificates in accordance
with Section 7.03(e). Funds received by the Trustee as a result of any claim
under either Certificate Insurance Policy shall be deposited by the Trustee in
the Policy Payments Account and used solely for payment to the Owners of the
Class A Certificates and may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Seller, the Depositor, the Custodian, the
Trustee or the Trust. Any funds remaining in the Policy Payments Account on the
first Business Day following a Distribution Date shall be remitted to the
Certificate Insurer, pursuant to the instructions of the Certificate Insurer, by
the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Class A Certificate from moneys
received under the Certificate Insurance Policies. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and Fiscal
Agent (as defined in the Certificate Insurance Policies) of any proceeding or
the institution of any action, of which an Authorized Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class A Certificates. Each
Owner of a Class A Certificate, by its purchase of such Certificate, the
Servicer and the Trustee hereby agree that the Certificate Insurer (so long as
no Certificate Insurer Default exists) 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 Servicer, the Trustee and each Owner of a Class
A Certificate 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 12.03. 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 Certificate Insurance Policies
shall not be considered payment of such Certificates from the Trust 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 7.03. The
Depositor, the Servicer and the Trustee acknowledge, and each Owner by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Servicer, the Trustee
or the Registrar (a) to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on any Class A
Certificates
141
to the Owners 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 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 Sellers, the Depositor and the Servicer shall cooperate
in all respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Owners as otherwise set forth herein.
Section 12.04. 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 Owners
shall also be sent to the Certificate Insurer.
Section 12.05. Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06. Rights to the Certificate Insurer To Exercise Rights of
Owners.
By accepting its Certificate, each Owner of a Class A Certificate agrees
that unless a Certificate Insurer Default exists, the Certificate Insurer shall
have the right to exercise all rights of the Owners of the Class A Certificates
as specified under this Agreement without any further consent of the Owners of
the Class A Certificates and that the Owners of Class A Certificates may not
exercise such rights except with the written consent of the Certificate Insurer.
Section 12.07. Trustee to Hold the Certificate Insurance Policies.
The Trustee will hold the Certificate Insurance Policies in trust as agent
for the Owners of the Class A Certificates for the purpose of making claims
thereon and distributing the proceeds thereof. Neither the Certificate Insurance
Policies nor the amounts paid on the Certificate Insurance Policies will
constitute part of the Trust created by this Agreement. Each Owner of Class A
Certificates, by accepting its Class A Certificates, appoints the Trustee as
attorney-in-fact for the purpose of making claims on the Certificate Insurance
Policy.
Section 12.08. Trustee to Act Solely with Consent of the Certificate
Insurer.
Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the Certificate
Insurer:
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 8.20 hereof;
(b) agree to any amendment pursuant to Section 11.14 hereof; or
(c) undertake any litigation with respect to the Trust.
142
END OF ARTICLE XII
143
IN WITNESS WHEREOF, the Depositor, the Sellers, the Servicer and the
Trustee have caused this Agreement to be duly executed their respective officers
thereunto duly authorized, all as of the day and year first above written.
CHEC FUNDING, LLC,
as Depositor
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Seller
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
CHEC CONDUIT FUNDING, LLC
as Conduit Seller
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
XXXXXXX STREET FUNDING II, LLC
as Conduit Seller II
By Centex Credit Corporation d/b/a
Centex Home Equity Corporation, as Manager
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
144
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Servicer
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
BANK ONE, NATIONAL ASSOCIATION
as Trustee
By: /s/ Xxxx X. Xxxx
-------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
000
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of March 2001, before me personally came Xxxxxxx X.
Xxxxxxxx to me known that he is a Vice President of CHEC Funding, LLC, a
Delaware limited liability agreement; and that he signed his name thereto by
order of the sole member of said company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxx Xxxxxx
-----------------------------------
Notary Public
000
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of March 2001, before me personally came Xxxxxxx X.
Xxxxxxxx to me known that he is a Vice President of Centex Credit Corporation
d/b/a Centex Home Equity Corporation, a Nevada corporation and that he signed
his name thereto by order of the respective Boards of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxx Xxxxxx
------------------------------------
Notary Public
000
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of March 2001, before me personally came Xxxxxxx X.
Xxxxxxxx to me known that he is a Vice President of CHEC Conduit Funding, LLC, a
Delaware limited liability corporation and that he signed his name thereto by
order of Centex Credit Corporation d/b/a Centex Home Equity Corporation, the
sole member of CHEC Conduit Funding, LLC.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxx Xxxxxx
__________________________________
Notary Public
000
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of March, 2001, before me personally came Xxxxxxx X.
Xxxxxxxx to me known that he is a Vice President of Centex Credit Corporation
d/b/a Centex Home Equity Corporation and that he signed his name thereto by
order of Centex Credit Corporation d/b/a Centex Home Equity Corporation, as
manager of Xxxxxxx Street Funding II, LLC.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxx Xxxxxx
__________________________________
Notary Public
000
XXXXX XX XXX XXXX )
: ss.:
NEW YORK COUNTY )
On the 15th day of March 2001, before me personally came Xxxx X. Xxxx, to
me known that he is a Vice President of Bank One, National Association,
described in and that he executed the above instrument as Trustee; and that she
signed her name thereto by order of the Board of Directors of said bank.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxx Xxxxxx
__________________________________
Notary Public
150
SCHEDULE I-A
GROUP I SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-A-1
SCHEDULE I-B
GROUP II SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-B-1
SCHEDULE I-C
SELLER SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-C-1
SCHEDULE I-D
CONDUIT SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-D-1
SCHEDULE I-E
CONDUIT II SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-E-1
SCHEDULE I-F
INVESTMENT INSTRUCTIONS TO TRUSTEE
Account Eligible Investment
------- -------------------
(1) Certificate Account One Group Institutional Prime Fund
(2) Supplemental Interest Reserve Fund One Group Institutional Prime Fund
I-F-1
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-1
(5.64% Certificate Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller"), Xxxxxxx
Street Funding II, LLC (the "Conduit Seller II") or Centex Credit Corporation
d/b/a Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Group I Home
Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2001-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
152314 DC 1
-----------
No: A-1-1 CUSIP
$133,000,000 February 25, 2016
Original Class A-1 Certificate March 15, 2001 Final Scheduled
Principal Balance Date Distribution Date
A-1-1
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in Schedule
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Sellers are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-1 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-1 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
April 25, 2001 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-1 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed canceled for all purposes
under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2001 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-1-2
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2001 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-2 (the "Class A-2
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class
A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class X-IO
(the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together, the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class X-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, the Owners of the Class A-1 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A Distribution Amount relating to
such Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-1 Certificates. The Percentage Interest of
each Class A-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-1 Certificates on the Startup Day.
A-1-3
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC
or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the related Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the
A-1-4
Owners of such Class A-1 Certificates, the Certificate Insurer will be
subrogated to the rights of such Owners of Class A-1 Certificates with respect
to such Insured Payment, shall be deemed to the extent of the payments so made
to be a registered Owner of such Class A-1 Certificates and shall receive all
future distributions of the Class A Distribution Amount relating to such
Certificates until all such Insured Payments by the Certificate Insurer have
been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
A-1-5
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable for new
Class A-1 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: ________________________________________
Title: _____________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By: ____________________________________
Title: _________________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-2
(5.61% Certificate Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller"), Xxxxxxx
Street Funding II, LLC (the "Conduit Seller II") or Centex Credit Corporation
d/b/a Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Group I Home
Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2001-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
152314 DD 9
-----------
No: A-2-1 CUSIP
$59,000,000 May 25, 2020
Original Class A-2 Certificate March 15, 2001 Final Scheduled
Principal Balance Date Distribution Date
A-2-1
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in Schedule
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Sellers are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-2 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-2 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
April 25, 2001 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-2 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed canceled for all purposes
under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2001 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-2-2
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class A-2 (the "Class A-2 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2001 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class
A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class X-IO
(the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together, the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class X-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, the Owners of the Class A-2 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A Distribution Amount relating to
such Certificates, on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-2 Certificates. The Percentage Interest of
each Class A-2 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-2 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-2 Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution
A-2-3
Date for distribution to the Owners provided that timely notice has been given
to the Certificate Insurer by the Trustee. "Insured Payments" shall have the
meaning as provided therefor in the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC
or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the related Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-2
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-2 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-2 Certificates and
A-2-4
shall receive all future distributions of the Class A Distribution Amount
relating to such Certificates until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of
A-2-5
transfer in form satisfactory to the Registrar duly executed by, the Owner
hereof or his attorney duly authorized in writing, and thereupon one or more new
Certificates of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable for new
Class A-2 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:______________________________________
Title:___________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By: ___________________________________
Title: ________________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-3
(5.93% Certificate Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller"), Xxxxxxx
Street Funding II, LLC (the "Conduit Seller II") or Centex Credit Corporation
d/b/a Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Group I Home
Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2001-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
152314 DE 7
-----------
No: A-3-1 CUSIP
$70,000,000 November 25, 2025
Original Class A-3 Certificate March 15, 2001 Final Scheduled
Principal Balance Date Distribution Date
A-3-1
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in Schedule
I-A to the Pooling and Servicing Agreement (as defined below) (which the Seller
and the Conduit Sellers are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-3 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-3 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
April 25, 2001 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-3 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed canceled for all purposes
under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2001 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-3-2
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class A-3 (the "Class A-3 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2001 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-4 (the "Class
A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class X-IO
(the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together, the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class X-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, the Owners of the Class A-3 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A Distribution Amount relating to
such Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-3 Certificates. The Percentage Interest of
each Class A-3 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-3 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-3 Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution
A-3-3
Date for distribution to the Owners provided that timely notice has been given
to the Certificate Insurer by the Trustee. "Insured Payments" shall have the
meaning as provided therefor in the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC
or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the related Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-3
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-3 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-3 Certificates and
A-3-4
shall receive all future distributions of the Class A Distribution Amount
relating to such Certificates until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of
A-3-5
transfer in form satisfactory to the Registrar duly executed by, the Owner
hereof or his attorney duly authorized in writing, and thereupon one or more new
Certificates of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Certificates are exchangeable for new
Class A-3 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-3-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: _____________________________________
Title: __________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:___________________________________
Title:________________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-4
(6.47% Certificate Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller"), Xxxxxxx
Street Funding II, LLC (the "Conduit Seller II") or Centex Credit Corporation
d/b/a Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Group I Home
Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2001-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
152314 DF 4
-----------
No: A-4-1 CUSIP
$80,000,000 July 25, 2029
Original Class A-4 Certificate March 15, 2001 Final Scheduled
Principal Balance Date Distribution Date
A-4-1
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in Schedule
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Sellers are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-4 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-4 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
April 25, 2001 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-4 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed canceled for all purposes
under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2001 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-4-2
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class A-4 (the "Class A-4 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2001 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class X-IO
(the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together, the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class X-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, the Owners of the Class A-4 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A Distribution Amount relating to
such Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-4 Certificates. The Percentage Interest of
each Class A-4 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-4 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-4 Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the Distribution Date for
A-4-3
distribution to the Owners provided that timely notice has been given to the
Certificate Insurer by the Trustee. "Insured Payments" shall have the meaning as
provided therefor in the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC
or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the related Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-4
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-4 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-4 Certificates and
A-4-4
shall receive all future distributions of the Class A Distribution Amount
relating to such Certificates until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of
A-4-5
transfer in form satisfactory to the Registrar duly executed by, the Owner
hereof or his attorney duly authorized in writing, and thereupon one or more new
Certificates of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable for new
Class A-4 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: _______________________________________
Title:_____________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:____________________________________
Title:_________________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-5
(6.80% Certificate Rate (or 7.30% for each Interest Period occurring after the
date on which an affiliate of the Servicer first fails to exercise its
clean-up call option),
subject to Group I Net WAC Cap)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller"), Xxxxxxx
Street Funding II, LLC (the "Conduit Seller II") or Centex Credit Corporation
d/b/a Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in Group I Home Equity
Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2001-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
152314 DG 2
-----------
No: A-5-1 CUSIP
$41,300,000 April 25, 2031
Original Class A-5 Certificate March 15, 2001 Final Scheduled
Principal Balance Date Distribution Date
A-5-1
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in Schedule
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Sellers are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-5 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-5 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
April 25, 2001 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-5 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed canceled for all purposes
under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2001 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-5-2
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class A-5 (the "Class A-5 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2001 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class X-IO
(the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together, the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class X-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, the Owners of the Class A-5 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A Distribution Amount relating to
such Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-5 Certificates. The Percentage Interest of
each Class A-5 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-5 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-5 Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution
A-5-3
Date for distribution to the Owners provided that timely notice has been given
to the Certificate Insurer by the Trustee. "Insured Payments" shall have the
meaning as provided therefor in the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC
or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the related Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-5
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-5 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-5 Certificates and
A-5-4
shall receive all future distributions of the Class A Distribution Amount
relating to such Certificates until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of
A-5-5
transfer in form satisfactory to the Registrar duly executed by, the Owner
hereof or his attorney duly authorized in writing, and thereupon one or more new
Certificates of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-5-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:_____________________________________
Title:____________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:____________________________________
Title:_________________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-6
(6.25% Certificate Rate subject to Group I Net WAC Cap)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller"), Xxxxxxx
Street Funding II, LLC (the "Conduit Seller II") or Centex Credit Corporation
d/b/a Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in Group I Home Equity
Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2001-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
152314 DH 0
-----------
No: A-6-1 CUSIP
$43,000,000
Original Class A-6 April 25, 2031
Certificate March 15, 2001 Final Scheduled
Principal Balance Date Distribution Date
CEDE & CO.
A-6-1
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in Schedule
I-A to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Sellers are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-6 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-6 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
April 25, 2001 (the first Distribution Date),be less than the original
Certificate Principal Balance of the Class A-6 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed canceled for all purposes
under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2001 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
A-6-2
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class A-6 (the "Class A-6 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2001 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class X-IO
(the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together, the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class X-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, the Owners of the Class A-6 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A Distribution Amount relating to
such Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-6 Certificates. The Percentage Interest of
each Class A-6 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-6 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-6 Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
A-6-3
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC
or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the related Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-6
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-6 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A Certificates and shall receive all future distributions of the Class A
Distribution Amount relating to such Certificates until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
A-6-4
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
A-6-5
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-6 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable for new
Class A-6 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-6-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:______________________________________
Title:_____________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_________________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-7
(Variable Certificate Rate, with an increase in margin on or
after the Clean-Up Call Date)
(Subject to Available Funds Cap)
Representing Certain Interests in a Pool of Group II Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller"), Xxxxxxx
Street Funding II, LLC (the "Conduit Seller II") or Centex Credit Corporation
d/b/a Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Group II Home
Equity Loans and certain other property held by the Trust.)
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2001-A") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
152314 DJ 6
-----------
No: A-7-1 CUSIP
$48,700,000
Original Class A-7 April 25, 2031
Certificate March 15, 2001 Final Scheduled
Principal Balance Date Distribution Date
A-7-1
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group II listed in Schedule
I-B to the Pooling and Servicing Agreement (as defined below) which the Seller
and the Conduit Sellers are causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee, together with the related
Home Equity Loan documents and the Depositor's interest in any Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts allocable to Group II as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts, and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-7 Certificates over the period from
the date of initial issuance of the Certificates to the Final Scheduled
Distribution Date for the Class A-7 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent to
April 25, 2001 (the first Distribution Date), be less than the original
Certificate Principal Balance of the Class A-7 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement
provides that, in any event, upon the making of the final distribution due on
this Certificate, this Certificate shall be deemed canceled for all purposes
under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO APRIL 25, 2001 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-7-2
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class A-7 (the "Class A-7 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2001 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class X-IO
(the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together, the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class X-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, the Owners of the Class A-7 Certificates as of the
close of business on the last Business Day immediately preceding a Distribution
Date, or if Definitive Certificates have been issued, as of the close of
business on the last Business Day of the calendar month immediately preceding
the calendar month in which a Distribution Date occurs (the "Record Date") will
be entitled to receive the Class A Distribution Amount relating to such
Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-7 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-7 Certificates. The Percentage Interest of
each Class A-7 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-7 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-7 Certificates on the Startup Day.
A-7-3
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy, to make Insured Payments available to the Trustee
on or prior to the Distribution Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC
or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the related Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-7
Certificates, the Certificate Insurer will be subrogated to the rights of
A-7-4
such Owners of Class A-7 Certificates with respect to such Insured Payment,
shall be deemed to the extent of the payments so made to be a registered Owner
of such Class A-7 Certificates and shall receive all future distributions of the
Class A Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time if a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated
A-7-5
as the location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-7 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-7 Certificates are exchangeable for new
Class A-7 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-7-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:______________________________________
Title:_____________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_________________________________
A-7-7
EXHIBIT B
FORM OF CLASS X-IO CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS X-IO CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS X-IO
(Regular Interest)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller"), Xxxxxxx
Street Funding II, LLC (the "Conduit Seller II") or Centex Credit Corporation
d/b/a Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Group I and Group
II Home Equity Loans and certain other property held by the Trust.)
No: X-IO-1
Date: March 15, 2001
Percentage Interest _____%
B-1
CHEC Residual Corporation
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in Schedule I-A and
Schedule I-B to the Pooling and Servicing Agreement (as defined below) which the
Seller and the Conduit Sellers are causing to be delivered to the Depositor and
the Depositor is causing to be delivered to the Trustee, together with the
related Home Equity Loan documents and the Depositor's interest in any Property,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, together with investment earnings on such amounts, and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, inclusive of investment earnings thereon, whether in
the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); and (c) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class X-IO (the "Class X-IO Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 2001 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates") and Class R-1 and Class R-2 (together, the "Class
R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates and the Class A-7 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates, the
Class X-IO Certificates and the Class R Certificates are together referred to
herein as the "Certificates."
B-2
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, the Owners of the Class X-IO Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class X-IO Distribution Amount relating
to such Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Class X-IO Certificates having an
aggregate Percentage Interest of at least 10% (by wire transfer or otherwise) to
the account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II,
LLC, or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
B-3
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time when a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
B-4
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner of this Certificate shall be conclusive and binding
upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class X-IO Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class X-IO Certificates are exchangeable for new
Class X-IO Certificates evidencing the same Percentage Interest as the Class
X-IO Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:______________________________________
Title:_____________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_________________________________
B-6
EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS OWNERSHIP OF
EACH OF THE SOLE CLASSES OF "RESIDUAL INTERESTS" IN TWO "REAL ESTATE MORTGAGE
INVESTMENT CONDUITS" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A XXXXXX'X COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO
C-1
THE PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION
OF THIS CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CLASS R CERTIFICATE REPRESENTS A RESIDUAL INTEREST IN EACH OF REMIC I
AND REMIC II FOR FEDERAL INCOME TAX PURPOSES.
C-2
CENTEX HOME EQUITY LOAN TRUST 2001-A
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by, CHEC Funding,
LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC or Centex Credit
Corporation d/b/a Centex Home Equity Corporation. This Certificate represents a
fractional ownership interest in the Trust Estate as defined below.)
No: R-1_
Date: March 15, 2001
Percentage Interest _____%
CHEC Residual Corporation
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in Schedule I-A and
Schedule I-B to the Pooling and Servicing Agreement which the Seller and the
Conduit Sellers are causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee, together with the related Home Equity
Loan documents and the Seller's interest in any Property which secured a Home
Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, together with investment earnings on such amounts,
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer); and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
THIS CERTIFICATE IS AN ASSET-BACKED CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
C-3
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2001-A, Home Equity Loan
Asset-Backed Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 2001 (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, Xxxxxxx Street
Funding II, LLC, as Conduit Seller II and Bank One, National Association, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates"), and Class X-IO (the "Class X-IO Certificates").
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates and the Class A-7 Certificates shall be together referred to as
the "Class A Certificates" and the Class A Certificates, the Class X-IO
Certificates and the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Distribution Date")
commencing April 25, 2001, each owner of a Class R Certificate as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which a Distribution Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificates on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Class R Certificates having an
aggregate Percentage Interest of at least 10% (by wire transfer or otherwise) to
the account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
C-4
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Funding, LLC, CHEC Conduit Funding, LLC, Xxxxxxx Street Funding II, LLC
or Centex Credit Corporation d/b/a Centex Home Equity Corporation or any of
their Affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates (from
amounts other than those available under the related Certificate Insurance
Policy) of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the Pooling and Servicing Agreement and payment in full of
all amounts owed to the Certificate Insurer upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the last Home Equity Loan in the Trust Estate, (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time when a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Trustee and the
Certificate Insurer shall be provided an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, to
the Owners of the Certificates, so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principal distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II
C-5
as REMICs under the Code, the Home Equity Loans may be sold, thereby effecting
the early retirement of the Certificates.
The Class R Certificates evidence ownership in the "residual interest" in
REMIC I and the "residual interest" in REMIC II. The registered Owner of a Class
R Certificate will be entitled to separate such Certificate into such component
parts. The Trustee shall, upon delivery to it of this Class R Certificate and a
written request of the registered Owner thereof to separate such Certificate
into its component parts, issued to such registered Owner in exchange for such
Class R Certificate (i) a separately transferable, certified and fully
registered security (a "Class R-1 Certificate") that will, from the date of its
issuance, represent the Owner's Percentage Interest in the residual interest in
REMIC I and (ii) a separately transferable, certified and fully registered
security (a "Class R-2 Certificate") that will, from the date of its issuance,
represent the Owner's Percentage Interest in the residual interest in REMIC II.
The Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with such exchange of this Class R
Certificate.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
C-6
The Class R Certificates are issuable only as registered Certificates. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
C-7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:______________________________________
Title:_____________________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:__________________________________
Title:_________________________________
C-8
EXHIBIT D
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, ______________________ of Centex Credit
Corporation d/b/a Centex Home Equity Corporation ("Centex"), hereby certify that
between the "Cut-Off Date" (as defined in the Pooling and Servicing Agreement
dated as of March 1, 2001 among CHEC Funding, LLC, as Depositor, CHEC Conduit
Funding, LLC, as Conduit Seller, Centex, as Seller and Servicer, Xxxxxxx Street
Funding II, LLC, as seller and Bank One, National Association, as Trustee) and
the "Startup Day," the following schedule of "Home Equity Loans" (each as
defined in the Pooling and Servicing Agreement) have been prepaid in full.
Account Original Current Date
Number Name Amount Balance Paid Off
------ ---- ------ ------- --------
Dated: March 15, 2001
By:______________________________________
Title:_____________________________________
D-1
EXHIBIT E-1
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Reference is made to that certain Pooling and Servicing Agreement dated as
of March 1, 2001 (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as depositor, CHEC Conduit Funding, LLC, as conduit seller, Xxxxxxx Street
Funding II, LLC, as seller, Centex Credit Corporation d/b/a Centex Home Equity
Corporation, as seller and servicer, and Bank One, National Association, as
trustee (the "Trustee"). Capitalized terms used herein but not defined herein
have the meaning assigned to them in the Pooling and Servicing Agreement.
The Trustee hereby acknowledges the receipt of the sum of $___________,
representing the net proceeds disbursed from the Underwriters, and the
Certificate Insurance Policies (numbers: ________ and ________) dated March 15,
2001, issued by MBIA Insurance Corporation.
Dated: March 15, 2001
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Name:
Title:
E-1
EXHIBIT E-2
FORM OF CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
Bank One Trust Company, N.A., in its capacity as custodian (the
"Custodian") under the Custodial Agreement dated as of March 1, 2001, among the
Custodian and Bank One, National Association, in its capacity as trustee (the
"Trustee") under that certain Pooling and Servicing Agreement dated as of March
1, 2001 (the "Pooling and Servicing Agreement") among CHEC Funding, LLC, as
depositor (the "Depositor"), CHEC Conduit Funding, LLC, as a seller, Xxxxxxx
Street Funding II, LLC, as a seller, Centex Credit Corporation d/b/a Centex Home
Equity Corporation, a Nevada corporation, as seller and servicer ("Centex"), and
the Trustee, as trustee, hereby acknowledges receipt (subject to review as
required by Section 3.06(a) of the Pooling and Servicing Agreement) of the items
delivered to it by Centex with respect to the Home Equity Loans pursuant to
Section 3.05(b)(i) of the Pooling and Servicing Agreement.
The Schedule of Home Equity Loans is attached to this receipt as Schedule
I.
The Custodian hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement and
shall otherwise comply with Section 3.06(b) and 3.06(c) of the Pooling and
Servicing Agreement as required thereby.
BANK ONE TRUST COMPANY, N.A.
as Custodian
By: ______________________________________
Name:
Title:
Dated: March 15, 2001
E-2
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bank One Trust
Company, N.A., in its capacity as custodian (the "Custodian") under the
Custodial Agreement dated March 1, 2001, between the Custodian and Bank One,
National Association, acting in its capacity as trustee (the "Trustee") of a
certain pool of home equity loans heretofore conveyed in trust to the Trustee,
pursuant to that certain Pooling and Servicing Agreement dated as of March 1,
2001, (the "Pooling and Servicing Agreement") among CHEC Funding, LLC, as
depositor, Centex Credit Corporation d/b/a Centex Home Equity Corporation, as
seller and servicer, CHEC Conduit Funding, LLC, as a seller, Xxxxxxx Street
Funding II, LLC, as a seller and the Trustee, as trustee; and
WHEREAS, the Custodian is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Home Equity
Loans within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Home Equity Loans, and the
Seller is required to remedy such defects or take certain other action, all as
set forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement requires
the Custodian to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined that
all required documents (or certified copies of documents listed in Section 3.05
of the Pooling and Servicing Agreement) have been executed or received, and that
such documents relate to the Home Equity Loans identified in the Schedule of
Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
F-1-1
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Pooling and Servicing Agreement.
BANK ONE TRUST COMPANY, N.A., as Custodian
By: ____________________________________
Name:
Title
Dated: April 30, 2001
F-1-2
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated as
of March 1, 2001 (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as Depositor, Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, as Seller and Servicer, CHEC Conduit Funding,
LLC, as a Seller, Xxxxxxx Street Funding II, LLC, as a Seller and Bank One,
National Association, as Trustee (the "Trustee"), THE DEPOSITOR HEREBY CERTIFIES
that all conditions precedent to the issuance of the Centex Home Equity Loan
Trust 2001-A Home Equity Loan Asset-Backed Certificates, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class X-IO and Class R
(the "Certificates"), HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO
AUTHENTICATE AND DELIVER said Certificates, and to RELEASE said Certificates to
the owners thereof, or otherwise upon their order. Instructions regarding the
registration of the Certificates are attached hereto.
Very truly yours,
CHEC FUNDING, LLC
By:______________________________
Title:_____________________________
Dated: March 15, 2001
G-1
EXHIBIT H
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of _________] [the United States], on behalf of which he makes
this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will not
be a "disqualified organization" as of [date of transfer] (For this purpose, a
"disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
H-1-1
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ___ day of __________, 2001.
[NAME OF INVESTOR]
By:__________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
_________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to be the same person who executed the foregoing instrument and to be the
[Title of Officer] of the Investor, and acknowledged to me that he executed the
same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this __ day of ____________, 2001.
_________________
NOTARY PUBLIC
COUNTY OF __________________
STATE OF ____________________
My commission expires the _ day of _______________, 20__.
X-0-0
XXXXXXX X-0
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates, Class ___
("Certificates")
Gentlemen:
In connection with our purchase on the date hereof of the above-referenced
Certificates from ___________________ ("Seller"), [PURCHASER] (the "Purchaser")
hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment purposes
only for]1 the Purchaser's own account and not with a view to or for sale or
transfer in connection with any distribution thereof in any manner which would
violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and will
not be registered under the Act and may not be resold or transferred unless they
are (a) registered pursuant to the Act or (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as of March 1, 2001 (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents and
information concerning the Certificates and the home equity loans in which the
Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
----------
(1) Not required if the Purchaser is a broker/dealer.
I-1
5. The Purchaser (i) is not an employee benefit plan subject to Section
406 of ERISA nor a plan or other arrangement subject to Section 406 of ERISA nor
a plan or other arrangement subject to Section 4975 of the Code (collectively, a
"Plan"), nor is acting on behalf of any Plan nor using the assets of any Plan to
effect such purchase or (ii) in the event that any Class X-IO or Class R
Certificate is purchased by a Plan, or by a person or entity acting on behalf of
any Plan or using the assets of any Plan to effect such purchase (including the
assets of any Plan held in an insurance company separate or general account), is
delivering herewith an Opinion of Counsel, acceptable to and in form and
substance satisfactory to the Trustee and the Certificate Insurer, which Opinion
of Counsel shall not be at the expense of either the Trustee, the Certificate
Insurer or the Trust, to the effect that the purchase or holding of any Class
X-IO or Class R Certificates will not result in a prohibited transaction under
ERISA and/or Section 4975 of the Code, and will not subject the Trustee to any
obligation or liability in addition to those expressly undertaken under the
Pooling and Servicing Agreement. Notwithstanding anything else to the contrary
herein, any purported transfer of a Certificate to or on behalf of any Plan
without the delivery to the Trustee and the Certificate Insurer of an Opinion of
Counsel as described above shall be null and void and no effect;
6. If the Purchaser sells any of the Certificates, it will (i) obtain from
any investor that purchases any Certificate from it a letter substantially in
the form of Exhibit I-1 or I-2 to the Pooling and Servicing Agreement and (ii)
to the extent required by the Pooling and Servicing Agreement, cause an Opinion
of Counsel to be delivered, addressed and satisfactory to the Seller and the
Trustee, to the effect that such sale is in compliance with all applicable
federal and state securities laws; and
7. For purposes of the Certificate Register, its address, including
telecopier number and telephone number, is as follows:
____________________________________
____________________________________
____________________________________
____________________________________
telecopier: ________________________
telephone: _________________________
8. The purchase of the Certificates by the Purchaser does not violate the
provisions of the first sentence of Section 5.08(c) of the Pooling and Servicing
Agreement.
I-1-2
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed by
its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By:____________________________________
Name:__________________________________
Title:___________________________________
I-1-3
EXHIBIT I-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates,
Class ___-_____ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the above-referenced
Certificates from ______________________ ("Seller"), we hereby certify that:
1. We are acquiring the Certificates for our own account for investment
and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated as
of March 1, 2001 (the "Pooling and Servicing Agreement") pursuant to which the
Certificates are being sold, and such other documents and information concerning
the Certificates and the home equity loans in which the Certificates represent
interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates, at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us a
certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 4 and this paragraph 5 or (ii)
deliver an Opinion of Counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
6. We are acquiring the Certificates for our own account and the source of
funds is not an employee benefit plan subject to Section 406 of ERISA nor a plan
or other arrangement
I-2-1
subject to Section 406 of ERISA nor a plan or other arrangement subject to
Section 4975 of the Code (collectively, a "Plan"), nor are we acting on behalf
of any Plan nor using the assets of any Plan to effect such acquisition or (ii)
in the event that any Class X-IO or Class R Certificate is purchased by a Plan,
or by a person or entity acting on behalf of any Plan or using the assets of any
Plan to effect such purchase (including the assets of any Plan held in an
insurance company separate or general account), we are delivering herewith an
Opinion of Counsel, acceptable to and in form and substance satisfactory to the
Trustee and the Certificate Insurer, which Opinion of Counsel shall not be at
the expense of either the Trustee, the Certificate Insurer or the Trust, to the
effect that the purchase or holding of any Class X-IO or Class R Certificates
will not result in a prohibited transaction under ERISA and/or Section 4975 of
the Code, and will not subject the Trustee to any obligation or liability in
addition to those expressly undertaken under the Pooling and Servicing
Agreement. Notwithstanding anything else to the contrary herein, any purported
transfer of a Certificate to or on behalf of any Plan without the delivery to
the Trustee and the Certificate Insurer of an Opinion of Counsel as described
above shall be null and void and no effect;
7. For purposes of the Certificate Register, our address, including
telecopier number and telephone number, is as follows:
_________________________________________
_________________________________________
_________________________________________
telecopier: ________________________________
telephone: _________________________________
8. If we sell any of the Certificates, we will obtain from any purchaser
from us the same representations contained in the foregoing paragraph 6 and this
paragraph 8; and
9. Our purchase of the Certificates does not violate the provisions of the
first sentence of Section 5.08(c) of the Pooling and Servicing Agreement.
I-2-2
IN WITNESS WHEREOF, we have signed this certificate as of the date first
written above.
By:_____________________________________
Name:___________________________________
Title:____________________________________
I-2-3
EXHIBIT J
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
Loan Number Borrower Name Original Loan Amount Exception
----------- ------------- -------------------- ---------
J-1-1
EXHIBIT K
DEFINITION OF GROUP II TARGET OVERCOLLATERALIZATION AMOUNT
(AND RELATED DEFINITIONS)
"Group II Delinquency Amount" means, with respect to each Distribution
Date, the product of (i) the Group II Delinquency Percentage and (ii) the
aggregate Loan Balance of the Home Equity Loans in Group II as of the end of the
related Remittance Period.
"Group II Delinquency Percentage" means with respect to Group II and any
date of determination, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Remittance
Periods (x) the numerator of each of which is equal to the sum (without
duplication) of (i) the aggregate Loan Balance of the Home Equity Loans in Group
II which are 90-Day Delinquent Loans, (ii) the aggregate Loan Balance of the
Home Equity Loans in Group II in foreclosure and (iii) the aggregate Loan
Balance of the Home Equity Loans in Group II relating to REO Properties, in each
case as of the end of such Remittance Period, and (y) the denominator of which
is the aggregate Loan Balance of the Home Equity Loans in Group II as of the end
of such Remittance Period.
"Group II Initial Target Overcollateralization Amount" means the Group II
Target Percentage times the Original Group II Pool Balance.
"Group II Target Overcollateralization Amount" means:
(a) for any Distribution Date occurring during the period commencing
on the Startup Day and ending on the later of (A) the date upon which principal
in the amount equal to one half of the Original Group II Pool Balance has been
received by the Owners of the Class A-7 Certificates and (B) the thirtieth
Distribution Date following the Startup Day, the Group II Target
Overcollateralization Amount shall be the greater of: (i) the Group II Initial
Target Overcollateralization Amount, and (ii) 110% of the Group II Delinquency
Amount.
(b) for any Distribution Date occurring after the end of the period in
clause (a) above, the Group II Target Overcollateralization Amount shall be the
greatest of (i)(x) two times the Group II Target Percentage times (y) the
aggregate Loan Balance of the Home Equity Loans in Group II as of the end of the
immediately preceding Remittance Period, (ii) 0.75% of the Original Group II
Pool Balance, (iii) 110% of the Group II Delinquency Amount and (iv) the
aggregate Loan Balance of the three Home Equity Loans with the largest
outstanding Loan Balances in Group II as of the end of the immediately preceding
Remittance Period;
provided, however, for any Distribution Date occurring after the end of the
period specified in clause (a) above, if the Group II Delinquency Percentage
exceeds 10.00%, the Group II Target Overcollateralization Amount shall be no
less than the Group II Target Overcollateralization Amount as of the previous
Distribution Date.
K-1
Notwithstanding anything contained in the Agreement to the contrary, the
Certificate Insurer may, in its sole discretion, modify this definition of Group
II Target Overcollateralization Amount (and any related definitions in this
Exhibit K) for the purpose of reducing the overcollateralization amounts hereof
or eliminating, in whole or in part, the definitions hereof, provided the
Trustee and the Rating Agencies shall have been notified in writing of such
modification prior to the related Distribution Date and such modification has
not resulted in a downgrading of the then-current ratings of the Class A
Certificates, without regard to the Certificate Insurance Policies.
"Group II Target Percentage" means 4.95%.
"Original Group II Pool Balance" means the aggregate Loan Balance of the
Home Equity Loans in Group II as of the Cut-Off Date.
K-2
EXHIBIT L
DEFINITION OF GROUP I TARGET OVERCOLLATERALIZATION AMOUNT
(AND RELATED DEFINITIONS)
"Group I Delinquency Amount" means, with respect to each Distribution
Date, the product of (i) the Group I Delinquency Percentage and (ii) the
aggregate Loan Balance of the Home Equity Loans in Group I as of the end of the
related Remittance Period.
"Group I Delinquency Percentage" means with respect to Group I and any
date of determination, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Remittance
Periods, (x) the numerator of each of which is equal to the sum (without
duplication) of (i) the aggregate Loan Balance of the Home Equity Loans in Group
I which are 90-Day Delinquent Loans, (ii) the aggregate Loan Balance of the Home
Equity Loans in Group I in foreclosure and (iii) the aggregate Loan Balance of
the Home Equity Loans in Group I relating to REO Properties, in each case as of
the end of such Remittance Period, and (y) the denominator of which is the
aggregate Loan Balance of the Home Equity Loans in Group I as of the end of such
Remittance Period.
"Group I Initial Target Overcollateralization Amount" means the Group I
Target Percentage times the Original Group I Pool Balance.
"Group I Target Overcollateralization Amount" means:
(a) for any Distribution Date occurring during the period commencing on
the Startup Day and ending on the later of (A) the date upon which principal in
the amount equal to one half of the Original Group I Pool Balance has been
received by the Owners of the Group I Certificates and (B) the thirtieth
Distribution Date following the Startup Day, the Group I Target
Overcollateralization Amount shall be the greater of: (i) the Group I Initial
Target Overcollateralization Amount, and (ii) 75% of the Group I Delinquency
Amount.
(b) for any Distribution Date occurring after the end of the period in
clause (a) above, the Group I Target Overcollateralization Amount shall be the
greatest of (i)(x) two times the Group I Target Percentage times (y) the
aggregate Loan Balance of the Home Equity Loans in Group I as of the end of the
immediately preceding Remittance Period, (ii) 0.75% of the Original Group I Pool
Balance, (iii) 75% of the Group I Delinquency Amount, and (iv) the aggregate
Loan Balance of the three Home Equity Loans with the largest outstanding Loan
Balances in Group I as of the end of the immediately preceding Remittance
Period; provided, however, for any Distribution Date occurring after the end of
the period specified in clause (a) above, if the Group I Delinquency Percentage
exceeds 8.00%, the Group I Target Overcollateralization Amount shall be no less
than the Group I Target Overcollateralization Amount as of the previous
Distribution Date.
Notwithstanding anything contained in the Agreement to the contrary, the
Certificate Insurer may, in its sole discretion, modify the definition of Group
I Target Overcollateralization Amount (and any related definitions in this
Exhibit L) for the purpose of reducing the
L-1
overcollateralization amounts hereof or eliminating, in whole or in part, the
definitions hereof, provided the Trustee and the Rating Agencies have been
notified in writing of such modification prior to the related Distribution Date
and such modification has not resulted in a downgrading of the then-current
ratings of the Class A Certificates, without regard to the Certificate Insurance
Policies.
"Group I Target Percentage" means 2.55%.
"Original Group I Pool Balance" means the aggregate Loan Balance of the
Home Equity Loans in Group I as of the Cut-Off Date.
L-2
EXHIBIT M
FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
________, 200_
Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Re: Centex Home Equity Loan Trust 2001-A
Home Equity Loan Asset-Backed Certificates,
Series 2001-A
Ladies and Gentlemen:
Pursuant to and in reference to Section 7.09(c) of the Pooling and
Servicing Agreement dated as of March 1, 2001 relating to the above referenced
Certificates, please note the following:
(a) CIK Number for Centex Home Equity Loan Trust 2001-A
(the "Trust"): .
(b) CCC for the Trust: .
In order to comply with the reporting obligations for the Trust under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Trustee
must file within 15 days following each Distribution Date a copy of the report
distributed by the Trustee to the Certificateholders in a current report on Form
8-K. Such reports provide all current information ordinarily of interest to the
Certificateholders. The Trustee must also report on a current report on Form 8-K
any significant occurrences during the reporting period that would be reportable
under Item 1, Item 2, Item 4 and Item 5. In addition, the Trustee should cause
the filing of an annual report on Form 10-K within 90 days following the end of
the Trust's fiscal year containing the following information:
Part I, Item 3. A description of any material pending litigation;
Part I, Item 4. A description of any matters submitted to vote of
Certificateholders;
Part II, Item 5. A statement of the number of Certificateholders
and the principal market, if any, in which the
Certificates trade;
Part II, Item 9. A statement as to any changes in or disagreements
with the independent public accountants for the
Trust;
Part IV, Item 14. A copy of the annual certificate of compliance by
an officer of the Servicer and any Subservicer,
and the audit of the servicing by the independent
accounting firm.
M-1
The Trustee shall timely file the Form 10-K, and the Trustee should file a Form
15 in accordance with Section 7.09(c) of the Pooling and Servicing Agreement,
deregistering the Trust and terminating the reporting obligations under the
Exchange Act.
All filings must be made through the Xxxxx System and all acceptance slips from
the filings should be saved as they will be needed for the annual certificate.
CHEC FUNDING, LLC
By: _____________________________________
Name:
Title:
M-2
EXHIBIT N
FORM OF LIQUIDATION REPORT
(1) Issue Name:
(2) Customer Name:
Loan Number:
Lien Position:
(3) Original Mortgage Amount: $_______________
Current Mortgage Amount: $_______________
(4) Interest Paid Through Date:
(5) Liquidation Date:
(6) Original Appraised Value: $_______________
(7) Most Recent Appraised Value: $_______________
Recent Appraisal Date:
(8) Interest Rate: [ ]% $_______________
(9) Sale Price: $_______________
(10) Interest Carry: $_______________
(11) Taxes Advances: $_______________
(12) Maintenance Costs $_______________
(13) Legal Expenses: $_______________
(14) Miscellaneous Expenses: $_______________
(15) Net Proceeds: $_______________
(16) Loss Severity Percentage: [ ]% $_______________
N-1
EXHIBIT O
REQUEST FOR RELEASE OF DOCUMENTS
-------------------,
TO: o
Re: Custodial Agreement, dated as of March 1, 2001, by and among Bank One,
National Association, not individually, but solely as trustee (the
"Trustee"), Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Servicer") and Bank One Trust Company, N.A. (together with any
successor in interest or any successor appointed hereunder, the
"Custodian").
In connection with the administration of Home Equity Loans held by
you as Custodian for the Trustee, we request the release, and acknowledge
receipt, of the Note for the Home Equity Loan described below, for the reason
indicated. The Servicer hereby acknowledges that the Note or other documents
released will be held by it in trust for the benefit of the Trustee on behalf of
the Trust. The Servicer agrees that it will return to the Custodian the Note and
other documents when its need for such Note or other documents no longer exists
but in any event within twenty-one (21) days if such Note remains outstanding.
Mortgagor's Name, Address and Zip Code:
Home Equity Loan Number:
Reason for Requesting Document: (check one)
__ 1. Home Equity Loan Paid in Full.
(The Servicer hereby certifies that all amounts received in connection
therewith have been finally received by and credited to the Trust as required by
the Pooling and Servicing Agreement and Custodial Agreement).
__ 2. Home Equity Loan Repurchased.
(The Servicer hereby certifies that the repurchase price has been finally
received by and credited to the Trust as required by the Pooling and Servicing
Agreement and Custodial Agreement).
O-1
__ 3. Mortgage Loan Liquidation by ________________________
(The Servicer hereby certifies that all proceeds of foreclosure, insurance
or other liquidation have been finally received and credited to the Trust as
required by the Pooling and Servicing Agreement and the Custodial Agreement).
__ 4. Mortgage Loan in Foreclosure.
__ 5. Other (explain) ___________________________________________________
___________________________________________________
If box 1, 2 or 3 above is checked, and if the Note was previously released
to us, please release to us our previous receipt on file.
If box 4 or 5 above is checked, upon our return of the Note to you as
Custodian, please acknowledge your receipt by signing in the space indicated
below, and returning this form.
[Servicer]
_________________________________________
Name:
Title:
Documents returned to Custodian:
[BANK ONE TRUST COMPANY, NA]
-------------------------
Name:
